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ARTICLE · 19 NOVEMBER 2014

Five Million Penalty Is Stark Reminder About "Gun Jumping"

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On November 7, 2014, the Antitrust Division of the DOJ announced that it had imposed a civil penalty of $3.8M and disgorgement of $1.15M in profits on Flakeboard America Limited for "gun jumping".

United StatesAntitrust/Competition Law
John Ingrassia
John Ingrassia
Helene Jaffe
Helene Jaffe
Alan Kusinitz
Alan Kusinitz
Alicia Batts
Alicia Batts
Colin Kass
Colin Kass
Christopher Ondeck
Christopher Ondeck
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On November 7, 2014, the Antitrust Division of the Department of Justice ("DOJ") announced that it had imposed a civil penalty of $3.8M and disgorgement of $1.15M in profits on Flakeboard America Limited (and its parent company) for "gun jumping," that is, assuming beneficial and operational control over the seller, in this case SierraPine, in violation of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") and Section 1 of the Sherman Act. This case is notable because it marks the first "gun jumping" enforcement action in several years and the first time disgorgement has been obtained in the context of a gun jumping violation.1 In addition, the asset purchase agreement ("APA") contained an unusual provision requiring the seller to shut one of its mill operations priorto closing. The case thus provided the DOJ with an opportunity to provide some basic guidance for the conduct of a buyer and seller prior to reaching a definitive agreement and, after a

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