Source: https://www.federalregister.gov/documents/2018/12/14/2018-27055/united-states-v-james-dolan-proposed-final-judgment-and-competitive-impact-statement
Timestamp: 2019-01-18 12:23:48
Document Index: 538511251

Matched Legal Cases: ['§\u200918', '§\u200918', '§\u20091331', '§\u200912', '§\u200918', '§\u200912', '§\u200918', '§\u200918', '§\u200918', '§\u2009801', '§\u2009801', '§\u2009801', '§\u2009801', '§\u2009802', '§\u200918', '§\u2009701', '§\u20091', '§\u200918', '§\u200918', '§\u2009701', '§\u20091', '§\u200918', '§\u200918', '§\u200918', '§\u200931001', '§\u20092461', '§\u2009701', '§\u20091', '§\u200916', '§\u200918', '§\u200918', '§\u200916']

Federal Register :: United States v. James Dolan; Proposed Final Judgment and Competitive Impact Statement
A Notice by the Antitrust Division on 12/14/2018
December 6, 2018 Respectfully submitted,
83 FR 64359
64359-64364 (6 pages)
DEFENDANT'S PRIOR VIOLATION OF THE HSR ACT
DEFENDANT'S VIOLATION OF THE HSR ACT
https://www.federalregister.gov/d/2018-27055 https://www.federalregister.gov/d/2018-27055
Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in United States of America v. James Dolan, Civil Action No. 1:18-cv-02858. On December 6, 2018, the United States filed a Complaint alleging that James Dolan violated the notice and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 18a, with respect to his acquisition of voting securities of Madison Square Garden Company. The proposed Final Judgment, filed at the same time as the Complaint, requires James Dolan to pay a civil penalty of $609,810.
Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division's website, filed with the Court, and, under certain circumstances, published in the Federal Register. Comments should be directed to Roberta S. Baruch, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue NW, CC-8416, Washington, DC 20580 (telephone: 202-326-2861; e-mail: rbaruch@ftc.gov).
United States of America, c/o Department of Justice,Washington, D.C. 20530, Plaintiff, v. James L. Dolan, c/o The Madison Square Garden Company, Two Penn Plaza, New York, NY 10121, Defendant.
Civil Action No. 1:18-cv-02858
The United States of America, Plaintiff, by its attorneys, acting under the direction of the Attorney General of the United States and at the request of the Federal Trade Commission, brings this civil antitrust action to obtain monetary relief in the form of civil penalties against Defendant James L. Dolan (“Dolan”). Plaintiff alleges as follows:
1. Dolan violated the notice and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 18a (“HSR Act” or “Act”), with respect to the acquisition of voting securities of the Madison Square Garden Company (“MSG”) in 2017.
2. This Court has jurisdiction over the subject matter of this action pursuant to Section 7A(g) of the Clayton Act, 15 U.S.C. § 18a(g), and pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355 and over the Defendant by virtue of Defendant's consent, in the Stipulation relating hereto, to the maintenance of this action and entry of the Final Judgment in this District.
4. Defendant Dolan is a natural person with his principal office and place of business at Two Penn Plaza, New York, NY 10121. Dolan is engaged in commerce, or in activities affecting commerce, within the meaning of Section 1 of the Clayton Act, 15 U.S.C. § 12, and Section 7A(a)(1) of the Clayton Act, 15 U.S.C. § 18a(a)(1). At all times relevant to this complaint, Dolan had sales or assets in excess of $161.5 million.
5. MSG is a corporation organized under the laws of Delaware with its principal place of business at Two Penn Plaza, New York, NY 10121. MSG is engaged in commerce, or in activities affecting commerce, within the meaning of Section 1 of the Clayton Act, 15 U.S.C. § 12, and Section 7A(a)(1) of the Clayton Act, 15 U.S.C. § 18a(a)(1). At all times relevant to this complaint, MSG had sales or assets in excess of $16.6 million.
6. The HSR Act requires certain acquiring persons and certain persons whose voting securities or assets are acquired to file notifications with the Department of Justice and the Federal Trade Commission (collectively, the “federal antitrust agencies”) and to observe a waiting period before consummating certain acquisitions of voting securities or assets. 15 U.S.C. § 18a(a) and (b). These notification and waiting period requirements apply to acquisitions that meet the HSR Act's thresholds, which have been adjusted annually since 2004. The size of transaction threshold is $50 million, as adjusted ($80.8 million for most of 2017). In addition, there is a separate filing requirement for transactions in which the acquirer will hold voting securities in excess of $100 million, as adjusted ($161.5 million in 2017), and for transactions in which the acquirer will hold voting securities in excess of $500 million, as adjusted ($807.5 million in 2017). With respect to the size of person thresholds, the HSR Act requires one person involved in the transaction to have sales or assets in excess of $10 million, as adjusted ($16.6 million in 2017), and the other person to have sales or assets in excess of $100 million, as adjusted ($161.5 million in 2017).
7. The HSR Act's notification and waiting period requirements are Start Printed Page 64360intended to give the federal antitrust agencies prior notice of, and information about, proposed transactions. The waiting period is also intended to provide the federal antitrust agencies with an opportunity to investigate a proposed transaction and to determine whether to seek an injunction to prevent the consummation of a transaction that may violate the antitrust laws.
8. Pursuant to Section (d)(2) of the HSR Act, 15 U.S.C. § 18a(d)(2), rules were promulgated to carry out the purposes of the HSR Act. 16 C.F.R. §§ 801-03 (“HSR Rules”). The HSR Rules, among other things, define terms contained in the HSR Act.
9. Pursuant to section 801.13(a)(1) of the HSR Rules, 16 C.F.R. § 801.13(a)(1), “all voting securities of [an] issuer which will be held by the acquiring person after the consummation of an acquisition”—including any held before the acquisition—are deemed held “as a result of” the acquisition at issue.
10. Pursuant to sections 801.13(a)(2) and 801.10(c)(1) of the HSR Rules, 16 C.F.R. § 801.13(a)(2) and § 801.10(c)(1), the value of voting securities already held is the market price, defined to be the lowest closing price within 45 days prior to the subsequent acquisition.
11. Section 802.21 of the HSR Rules, 16 C.F.R. § 802.21, provides that once a person has filed under the HSR Act and the waiting period has expired, the person can acquire additional voting securities of the issuer without making a new filing for five years from the expiration of the waiting period, so long as the holdings do not exceed a higher threshold than was indicated in the filing.
12. Section 7A(g)(1) of the Clayton Act, 15 U.S.C. § 18a(g)(1), provides that any person, or any officer, director, or partner thereof, who fails to comply with any provision of the HSR Act is liable to the United States for a civil penalty for each day during which such person is in violation. Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, § 701 (further amending the Federal Civil Penalties Inflation Adjustment Act of 1990), and Federal Trade Commission Rule 1.98, 16 C.F.R. § 1.98, 83 Fed. Reg. 2902 (January 22, 2018), the maximum amount of civil penalty is currently $41,484 per day.
13. On March 10, 2010, Dolan acquired voting securities of Cablevision Systems Corporation (“CVC”) that resulted in holdings exceeding the adjusted $50 million threshold then in effect under the HSR Act. Although he was required to do so, Dolan did not file under the HSR Act prior to acquiring CVC voting securities on March 10, 2010.
14. Subsequently, Dolan made additional acquisitions of CVC voting securities such that on November 30, 2010 his holdings exceeded the adjusted $100 million threshold then in effect under the HSR Act. Although he was required to do so, Dolan did not file under the HSR Act prior to making the acquisition of CVC voting securities on November 30, 2010.
15. On February 24, 2012, Dolan made a corrective filing under the HSR Act for the acquisitions of CVC voting securities. In a letter accompanying the corrective filing, Dolan acknowledged that the transactions were reportable under the HSR Act, but asserted that the failure to file and observe the waiting period was inadvertent.
16. On May 4, 2012, the Premerger Notification Office of the Federal Trade Commission sent a letter to Dolan indicating that it would not recommend a civil penalty action regarding the March 10, 2010, and November 30, 2010, CVC acquisitions. The letter advised, however, that Dolan “still must bear responsibility for compliance with the Act” and was “accountable for instituting an effective program to ensure full compliance with the Act's requirements.”
17. Dolan is the Executive Chairman and a Director of MSG and, as a result of holding these positions, frequently receives restricted stock units (“RSUs”) as a part of his compensation package. On August 16, 2016, due to vesting RSUs, Dolan filed an HSR Notification for an acquisition of MSG voting securities that would result in holdings exceeding the $50 million threshold as adjusted. Early termination of the HSR Act's waiting period was granted on this filing on September 6, 2016, and Dolan completed the acquisition three days later. Dolan was permitted under the HSR Act to acquire additional voting securities of MSG without making another HSR Act filing so long as he did not exceed the $100 million threshold, as adjusted. As of February 27, 2017, the adjusted $100 million threshold was $161.5 million.
18. On September 11, 2017, Dolan acquired 591 shares of MSG due to vesting RSUs. As a result of this acquisition, Dolan held voting securities of MSG valued in excess of the $161.5 million threshold then in effect.
19. Although required to do so, Dolan did not file under the HSR Act or observe the HSR Act's waiting period prior to completing the September 11, 2017, transaction.
20. On November 24, 2017, Dolan made a corrective filing and the waiting period expired on December 26, 2017. Dolan was in continuous violation of the HSR Act from September 11, 2017, when he acquired the MSG voting securities valued in excess of the HSR Act's then applicable $100 million filing threshold, as adjusted ($161.5 million), through December 26, 2017, when the waiting period expired on his corrective filing.
a. That the Court adjudge and decree that Defendant's acquisition of MSG voting securities on September 11, 2017, was a violation of the HSR Act, 15 U.S.C. § 18a; and that Defendant was in violation of the HSR Act each day from September 11, 2017, through December 26, 2017;
b. That the Court order Defendant to pay to the United States an appropriate civil penalty as provided by the HSR Act, 15 U.S.C. § 18a(g)(1), and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, § 701 (further amending the Federal Civil Penalties Inflation Adjustment Act of 1990), and Federal Trade Commission Rule 1.98, 16 C.F.R. § 1.98, 83 Fed. Reg. 2902 (January 22, 2018);
c. That the Court order such other and further relief as the Court may deem just and proper; and
d. That the Court award Plaintiff its costs of this suit.
Makin Delrahim, D.C. Bar No. 457795, Assistant Attorney General,
Roberta S. Baruch, D.C. Bar No. 269266,
Kenneth A. Libby, Special Attorney.
Jennifer Lee, Special Attorney,
Federal Trade Commission, Start Printed Page 64361
(202) 326-2694.
United States of America, Plaintiff, v. James L. Dolan, Defendant.
Plaintiff, the United States of America, having commenced this action by filing its Complaint herein for violation of Section 7A of the Clayton Act, 15 U.S.C. § 18a, commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Plaintiff and Defendant James L. Dolan, by their respective attorneys, having consented to the entry of this Final Judgment without trial or adjudication of any issue of fact or law herein, and without this Final Judgment constituting any evidence against or an admission by the Defendant with respect to any such issue:
The Court has jurisdiction of the subject matter of this action and of the Plaintiff and the Defendant. The Complaint states a claim upon which relief can be granted against the Defendant under Section 7A of the Clayton Act, 15 U.S.C. § 18a.
Judgment is hereby entered in this matter in favor of Plaintiff and against Defendant, and, pursuant to Section 7A(g)(1) of the Clayton Act, 15 U.S.C. § 18a(g)(1), the Debt Collection Improvement Act of 1996, Pub. L. 104-134 § 31001(s) (amending the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461), the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74 § 701 (further amending the Federal Civil Penalties Inflation Adjustment Act of 1990), and Federal Trade Commission Rule 1.98, 16 C.F.R. § 1.98, 82 Fed. Reg. 8135 (January 24, 2017), Defendant is hereby ordered to pay a civil penalty in the amount of six hundred nine thousand eight hundred and ten dollars ($609,810). Payment of the civil penalty ordered hereby shall be made by wire transfer of funds or cashier's check. If the payment is made by wire transfer, Defendant shall contact Janie Ingalls of the Antitrust Division's Antitrust Documents Group at (202) 514-2481 for instructions before making the transfer. If the payment is made by cashier's check, the check shall be made payable to the United States Department of Justice and delivered to: Janie Ingalls, United States Department of Justice, Antitrust Division, Antitrust Documents Group, 450 5th Street, NW, Suite 1024, Washington, D.C. 20530
This Final Judgment shall expire upon payment in full by the Defendant of the civil penalty required by Section II of this Final Judgment.
Plaintiff United States of America (“United States”), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (“APPA”), 15 U.S.C. § 16(b)-(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding.
On December 6, 2018, the United States filed a Complaint against Defendant James L. Dolan (“Dolan”), related to Dolan's acquisitions of voting securities of the Madison Square Garden Company (“MSG”) in September 2017. The Complaint alleges that Dolan violated Section 7A of the Clayton Act, 15 U.S.C. § 18a, commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The HSR Act provides that “no person shall acquire, directly or indirectly, any voting securities of any person” exceeding certain thresholds until that person has filed pre-acquisition notification and report forms with the Department of Justice and the Federal Trade Commission (collectively, the “federal antitrust agencies” or “agencies”) and the post-filing waiting period has expired. 15 U.S.C. § 18a(a). A key purpose of the notification and waiting period requirements is to protect consumers and competition from potentially anticompetitive transactions by providing the agencies an opportunity to conduct an antitrust review of proposed transactions before they are consummated.
The Complaint alleges that Dolan acquired voting securities of MSG in excess of then-applicable statutory threshold ($161.5 million at the time of acquisition) without making the required pre-acquisition HSR Act filings with the agencies and without observing the waiting period, and that Dolan and MSG met the applicable statutory size of person thresholds.
At the same time the Complaint was filed in the present action, the United States also filed a Stipulation and proposed Final Judgment that eliminates the need for a trial in this case. The proposed Final Judgment is designed to address the violation alleged in the Complaint and deter Dolan's HSR Act violations. Under the proposed Final Judgment, Dolan must pay a civil penalty to the United States in the amount of $609,810.
Dolan is the Executive Chairman and a Director of MSG and an investor. At all times relevant to the Complaint, Start Printed Page 64362Dolan had sales or assets in excess of $161.5 million. At all times relevant to the Complaint, MSG had sales or assets in excess of $16.6 million.
In his roles as Executive Chairman and Director of MSG, Dolan frequently receives restricted stock units (“RSUs”) as a part of his compensation package. On August 16, 2016, due to the imminent vesting of RSUs, Dolan made an HSR filing for an acquisition of MSG voting securities that would result in holdings exceeding the adjusted $50 million threshold then in effect. The Premerger Notification Office granted early termination on this filing on September 6, 2016, and Dolan completed the acquisition three days later. For a period of five years, Dolan was permitted under the HSR Act to acquire additional voting securities of MSG without making another HSR Act filing so long as he did not exceed the $100 million threshold, as adjusted. As of February 27, 2017, the adjusted $100 million threshold was $161.5 million.
On September 11, 2017, Dolan acquired 591 shares of MSG due to vesting RSUs. As a result of this acquisition, Dolan held voting securities of MSG valued in excess of the $161.5 million threshold then in effect. Although he was required to do so, Dolan did not file under the HSR Act or observe the HSR Act's waiting period prior to completing the September 11, 2017, transaction.
Dolan made a corrective HSR Act filing on November 27, 2017, after learning that this acquisition was subject to the HSR Act's requirements and that he was obligated to file. The waiting period for that corrective filing expired on December 26, 2017.
The Complaint further alleges that Dolan's September 2017 HSR Act violation was not the first time Dolan had failed to observe the HSR Act's notification and waiting period requirements. On March 10, 2010, Dolan acquired voting securities of Cablevision Systems Corporation (“CVC”) that resulted in holdings exceeding the adjusted $50 million threshold then in effect under the HSR Act. Although he was required to do so, Dolan did not file under the HSR Act prior to acquiring CVC voting securities on March 10, 2010. Subsequently, Dolan made additional acquisitions of CVC voting securities such that on November 30, 2010 his holdings exceeded the adjusted $100 million threshold then in effect under the HSR Act. Although he was required to do so, Dolan did not file under the HSR Act prior to making the acquisition of CVC voting securities on November 30, 2010. On February 24, 2012, Dolan made a corrective filing under the HSR Act for the acquisitions of CVC voting securities, and explained in a letter accompanying the corrective filing that his failure to file was inadvertent. On May 4, 2012, the Premerger Notification Office of the Federal Trade Commission notified Dolan by letter that it would not recommend a civil penalty for the violations, but advised Dolan that he was “accountable for instituting an effective program to ensure full compliance with the Act's requirements.”
The proposed Final Judgment imposes a $609,810 civil penalty designed to address the violation alleged in the Complaint and deter the Defendant and others from violating the HSR Act. The United States adjusted the penalty downward from the maximum permitted under the HSR Act because the violation was inadvertent, the Defendant promptly self-reported the violation after discovery, and the Defendant is willing to resolve the matter by consent decree and avoid prolonged investigation and litigation. The relief will have a beneficial effect on competition because the agencies will be properly notified of future acquisitions, in accordance with the law. At the same time, the penalty will not have any adverse effect on competition.
The APPA provides a period of at least sixty (60) days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within sixty (60) days of the date of publication of this Competitive Impact Statement in the Federal Register, or the last date of publication in a newspaper of the summary of this Competitive Impact Statement, whichever is later. All comments received during this period will be considered by the United States Department of Justice, which remains free to withdraw its consent to the proposed Final Judgment at any time prior to the Court's entry of judgment. The comments and the response of the United States will be filed with the Court. In addition, comments will be posted on the U.S. Department of Justice, Antitrust Division's internet website and, under certain circumstances, published in the Federal Register. Written comments should be submitted to: Roberta S. Baruch, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, CC-8407, Washington, DC 20580, Email: rbaruch@ftc.gov
The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against the Defendant. The United States is satisfied, however, that the proposed relief is an appropriate remedy in this matter. Given the facts of this case, including the Defendant's self-reporting of the violation and willingness to promptly settle this matter, the United States is satisfied that the proposed civil penalty is sufficient to address the violation alleged in the Complaint and to deter violations by similarly situated entities in the future, without the time, expense, and uncertainty of a full trial on the merits.
(A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration Start Printed Page 64363of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
In determining whether a proposed settlement is in the public interest, a district court “must accord deference to the government's predictions about the efficacy of its remedies, and may not require that the remedies perfectly match the alleged violations.” SBC Commc'ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 74-75 (noting that a court should not reject the proposed remedies because it believes others are preferable and that room must be made for the government to grant concessions in the negotiation process for settlements); Microsoft, 56 F.3d at 1461 (noting the need for courts to be “deferential to the government's predictions as to the effect of the proposed remedies”); United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant “due respect to the government's prediction as to the effect of proposed remedies, its perception of the market structure, and its views of the nature of the case”). The ultimate question is whether “the remedies [obtained in the decree are] so inconsonant with the allegations charged as to fall outside of the `reaches of the public interest.'” Microsoft, 56 F.3d at 1461 (quoting United States v. Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir. 1990)). To meet this standard, the United States “need only provide a factual basis for concluding that the settlements are reasonably adequate remedies for the alleged harms.” SBC Commc'ns, 489 F. Supp. 2d at 17.
In its 2004 amendments,[2] Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement, adding the unambiguous instruction that “[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.” 15 U.S.C. § 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 (indicating that a court is not required to hold an evidentiary hearing or to permit intervenors as part of its review under the Tunney Act). This language explicitly wrote into the statute what Congress intended when it first enacted the Tunney Act in 1974. As Senator Tunney explained: “[t]he court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.” 119 Cong. Rec. 24,598 (1973) Start Printed Page 64364(statement of Sen. Tunney). Rather, the procedure for the public interest determination is left to the discretion of the court, with the recognition that the court's “scope of review remains sharply proscribed by precedent and the nature of Tunney Act proceedings.” SBC Commc'ns, 489 F. Supp. 2d at 11. A court can make its public interest determination based on the competitive impact statement and response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76. See also United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (noting that the “Tunney Act expressly allows the court to make its public interest determination on the basis of the competitive impact statement and response to comments alone”); S. Rep. No. 93-298 93d Cong., 1st Sess., at 6 (1973) (“Where the public interest can be meaningfully evaluated simply on the basis of briefs and oral arguments, that is the approach that should be utilized.”).
Date: December 6, 2018 Respectfully submitted,
Phone: (202) 326-2694
[FR Doc. 2018-27055 Filed 12-13-18; 8:45 am]