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ValueAct Case Could Clarify Investment Notification Rule

April 04, 2016

The Department of Justice has filed a complaint against ValueAct Capital in a federal court in California, claiming the company should have informed regulators about investments it made in support of a merger between Halliburton and Baker Hughes. Fenwick antitrust & unfair competition chair Mark Ostrau spoke with Law360 about the case.

ValueAct said it would fight the DOJ accusations. If it does, it could be precedent-setting, because investors do not usually defend themselves against such enforcement actions in court. And, entities that are involved simply via investments enjoy a notification exemption under some antitrust laws.

“There isn’t a lot of clear guidance from a court on exactly what the ‘solely for the purpose of investment’ exemption means,” Ostrau told Law360. The case could result in the court broadening the notification exemption. Ostrau said he believes it is unlikely the court will tighten the exemption.

“The court’s not going to impose a more stringent rule than the one that already exists, so it may be that, given that ValueAct’s reason for being is exactly to take an activist role, if they’re able to get a little daylight between the HSR rules and what their business proposition is, there is upside and there may not be much downside,” he said.

The full article is available th​rough the Law360 website​ (subscription required).