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The Federal Trade Commission today announced a federal district court action against ValueAct Capital Partners, L.P. alleging violations related to the acquisitions of stock of three companies that required filings with the government under the Hart-Scott-Rodino (HSR) Premerger Notification Act. In settling the Commission’s charges, ValueAct, an investment firm based in San Francisco, will pay a civil penalty of $1.1 million for failing to make appropriate and timely HSR filings. The action was filed by FTC attorneys acting as deputized agents of the U.S. Department of Justice (DOJ).

“The Commission takes compliance with the premerger notification rules seriously, and will not hesitate to seek civil penalties against companies or individuals that fall short of their filing responsibilities,” said Jeffrey Schmidt, Director of the FTC’s Bureau of Competition. “While we are flexible and may forgive an inadvertent error, we are less so in cases where multiple errors have been made despite earlier promises of diligent oversight.”

The Commission’s Complaint

According to the Commission, ValueAct violated the HSR Act’s reporting requirements in 2005 when it acquired voting securities of Gartner, Inc., Catalina Marketing Group, and Acxiom Corp. These violations came after similar violations the firm made in connection with three other transactions.

Founded in 2000 as a financial investment firm, the San Francisco-based firm previously made a set of three corrective filings with the FTC on October 3, 2003, related to its acquisitions of Gartner, Martha Stewart Living Omnimedia (MSO), and Mentor Corp. As these were ValueAct’s first HSR violations and because the firm claimed that it was not aware that it had HSR filing obligations, the FTC staff did not initiate an action to impose penalties for those violations. At that time, ValueAct outlined steps it would take in the future to ensure that similar HSR violations did not occur.

Less than two years later, however, on June 13, 2005, ValueAct made another set of corrective premerger filings, this time related to its acquisitions of Gartner, Catalina, and Acxiom voting securities. Under the HSR rules, a purchaser who meets the thresholds of the Act and who has filed the required notifications and observed the premerger waiting period before acquiring more than $50 million of another entity’s voting securities, must file an additional notification and observe another waiting period before acquiring more than $100 million of the voting securities of that entity. Also under the HSR Rules, acquisitions made solely for the purpose of investment are exempt from the reporting requirements if as a result of the acquisition, the securities held or acquired do not exceed 10 percent of the outstanding voting securities of the issuer. If the shares held or acquired will exceed 10 percent of the outstanding voting securities, then the acquiring entity must file and observe the premerger waiting period regardless of the intent of the acquisition. The FTC contends that ValueAct did not follow these procedures, resulting in three separate violations of the HSR rules.

On October 3, 2003, ValueAct filed a notification to acquire more than $50 million, but less than $100 million, of the voting securities of Gartner. In October 2004, ValueAct and other entities formed a Master Fund, which combined their holdings in a non-reportable transaction, but resulted in that entity having more than $100 million worth of Gartner shares. Then on February 7, 2005, Master Fund – whose ultimate parent entity was ValueAct – purchased additional Gartner shares in a reportable transaction that brought its total holdings to a value of approximately $248 million. According to the FTC, ValueAct violated the HSR Rules by failing to notify the FTC and DOJ and to observe the HSR Act’s waiting period before acquiring shares that brought its holdings to more than $100 million of Gartner securities. On June 13, 2005, ValueAct filed its notification with the Commission to cover the February 7 acquisition, with the waiting period expiring on July 13, 2005. As the HSR Act imposes penalties for each day that the company holds stock without observing the Rules, ValueAct was in violation of the HSR Act from February 7, 2005, when it purchased stock and held more than $100 million of Gartner voting securities, until July 13, 2005 when the waiting period expired.

The second and third alleged violations relate to Master Fund acquisitions of a greater than 10 percent interest in shares of voting securities of Catalina and Acxiom. On April 28, 2005, Master Fund made purchases that resulted in it holding more than 10 percent of the outstanding voting securities of both Catalina and Acxiom. Neither ValueAct – as the ultimate parent entity of the Master Fund – nor Master Fund filed notice as required by the HSR Rules for either of these purchases until June 13, 2005, with the waiting period expiring on July 13, 2005. From April 28 through July 13, 2005, ValueAct allegedly was in violation of the HSR Rules for its purchases of Catalina and Acxiom securities.

The Court Settlement

The court order settling the Commission’s charges requires ValueAct to pay a civil penalty of $1.1 million for three separate violations of the HSR Rules. The FTC staff took no action against ValueAct following its first HSR Act violation in 2003, and relied on the firm’s assurances that it would implement appropriate HSR monitoring procedures going forward. Based on the HSR violations that have occurred since then, the Commission believes the $1.1 million penalty announced today is appropriate. The penalty must be paid within 30 days of the court’s entry of the final judgment. If the defendants default in making the payment, interest will accrue at the rate of 18 percent annually until it is paid in full.

The Commission vote to refer the complaint to the U.S. Department of Justice for filing on the FTC’s behalf was 5-0. It was filed in the U.S. District Court for the District of Columbia on December 19, 2007.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at

Contact Information

Mitchell J. Katz
Office of Public Affairs
Roberta S. Baruch
Bureau of Competition