FTC Imposes Record "Gun Jumping" Penalty For Illegal Pre-Merger Conduct

Key Takeaways

• The involved companies violated the HSR Act by assuming operational control prior to the expiration of the mandated 30-day waiting period.
• During the waiting period, the companies engaged in practices such as halting production, coordinating management decisions, and exchanging sensitive information.
• Companies should adhere strictly to antitrust regulations during mergers to avoid significant fines.

Summary

The Federal Trade Commission (FTC) announced a historic settlement involving crude oil producers XCL Resources Holdings, LLC (XCL), Verdun Oil Company II LLC (Verdun), and EP Energy LLC (EP), who will collectively pay a record $5.6 million for violating antitrust laws through illegal pre-merger coordination, commonly referred to as "gun jumping." This penalty is the largest ever imposed for such violations under the Hart-Scott-Rodino Act (HSR Act), which mandates that merging companies must observe the regulatory waiting period