Three Third Point Funds Agree to Pay $609,810 in Civil Penalties for Violating the Hart-Scott-Rodino Act

Investment advisor Third Point LLC and three funds that it controls have agreed to settle Federal Trade Commission charges that the funds violated the premerger notification and waiting period requirements of the Hart-Scott-Rodino Act, or HSR Act, after they acquired the voting securities of DowDuPont Inc.

The FTC alleges that on Aug. 31, 2017, the shares of Dow Inc. held by the three Third Point funds—Third Point Partners Qualified L.P., Third Point Ultra, Ltd., and Third Point Offshore Fund Ltd.—converted to shares of the newly formed DowDuPont Inc. following the merger of Dow Inc. and E.I. du Pont de Nemours & Company. As a result of that conversion, the Third Point funds were required to file with the federal antitrust authorities pursuant to the HSR Act.

But the three funds failed to file and observe the HSR waiting period, and Third Point LLC failed to file on behalf of the three funds even though it had the power and authority to do so. After realizing that they failed to file, the three Third Point funds made corrective filings with the federal antitrust agencies on Nov. 8, 2017, and the waiting period for those corrective filings expired on Dec. 8, 2017.

The FTC alleges that each defendant fund was in violation of the HSR Act each day between Aug. 31, 2017 and Dec. 8, 2017.

Under the stipulated proposed order that the Department of Justice filed on behalf of the FTC in the U.S. District Court for the District of Columbia, the three Third Point funds will collectively pay $609,810 in civil penalties, and they, together with Third Point LLC, will be barred from committing future violations of the HSR Act in connection with corporate consolidations.

The three Third Point funds and Third Point LLC are already under federal court order stemming from allegations that the defendants violated the HSR Act in connection with acquisitions of voting securities of Yahoo! Inc. That order, which Judge Ketanji Brown Jackson of the U.S. District Court for the District of Columbia entered in December 2015, prohibited the three funds and Third Point LLC from relying on the investment-only exemption to avoid making HSR filings if they engaged in activities inconsistent with having investment-only intent. The FTC, however, does not claim that the defendants’ conduct alleged in the current complaint violated the 2015 court order.

The Commission vote to accept the settlement and refer the matter to the Department of Justice for filing was 5-0. The Department of Justice filed the complaint and proposed stipulated order on the FTC’s behalf in the U.S. District Court for the District of Columbia on Aug. 28, 2019.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Kenneth A. Libby, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580, klibby@ftc.gov. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.