DOJ Suit Against Activist Investor Highlights Narrow Interpretation of HSR “Investment Only” Exemption

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On April 4, 2016, the U.S. Department of Justice (DOJ) filed a civil antitrust lawsuit against activist investor ValueAct Capital (“ValueAct”). DOJ asserts that ValueAct improperly relied on the “investment only” exemption to the Hart-Scott-Rodino Act (the “HSR Act”) reporting requirements when it bought over $2.5 billion worth of stock in Halliburton and Baker Hughes (collectively, “the Companies”) with the intention of influencing the business activities and strategies of the Companies. ValueAct has indicated that it may fight the DOJ lawsuit, but this action nonetheless underscores that investors should exercise care when relying on the investment-only HSR exemption, because the antitrust enforcement agencies show no sign of relaxing their narrow interpretation of the exemption and strict enforcement program against perceived violations.

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