Notice2021-28539
United States v. Biglari Holdings Inc.; Proposed Final Judgment and Competitive Impact Statement
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 5, 2022
Issuing agencies
Justice DepartmentAntitrust Division
Full Text
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<title>Federal Register, Volume 87 Issue 3 (Wednesday, January 5, 2022)</title>
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[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Notices]
[Pages 484-489]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28539]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Biglari Holdings Inc.; Proposed Final Judgment
and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Biglari Holdings Inc., Civil Action 1:21-cv-03331.
On December 22, 2021, the United States filed a Complaint alleging that
Biglari Holdings Inc. violated the premerger notification and waiting
period requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, 15 U.S.C. 18a, in connection with the acquisition of voting
securities of Cracker Barrel Old Country Store Inc. The proposed Final
Judgment, filed at the same time as the Complaint, requires Biglari
Holdings Inc. to pay a civil penalty of $1,374,190.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at <a href="http://www.justice.gov/atr">http://www.justice.gov/atr</a> and at the Office of
the Clerk of the United States District Court for the District of
Columbia. Copies of these materials may be obtained from the Antitrust
Division upon request and payment of the copying fee set by Department
of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments in English should be directed to
Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade
Commission, 600 Pennsylvania Avenue NW, CC-8416, Washington, DC 20580
or by email to <a href="/cdn-cgi/l/email-protection#c3a1a0a0acaeb3afaaa2ada0a683a5b7a0eda4acb5"><span class="__cf_email__" data-cfemail="9ffdfcfcf0f2eff3f6fef1fcfadff9ebfcb1f8f0e9">[email protected]</span></a>.
Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.
United States District Court for the District of Columbia
United States of America, c/o Department of Justice, Washington,
DC 20530, Plaintiff, v. Biglari Holdings Inc., 17802 IH 10 West,
Suite 400, San Antonio, TX 78257, Defendant.
Civil Action No. 1:21-cv-03331
Judge: Tanya S. Chutkan
Complaint for Civil Penalties for Failure To Comply With the Premerger
Reporting and Waiting Requirements of the Hart-Scott Rodino Act
The United States of America, acting under the direction of the
Attorney General of the United States and at the request of the Federal
Trade Commission, brings this civil antitrust action to obtain monetary
relief in the form of civil penalties against Defendant Biglari
Holdings Inc. (``Biglari''). The United States alleges as follows:
Nature of the Action
1. Biglari violated the notice and waiting period requirements of
Section 7A of the Clayton Act, (15 U.S.C. 18a, commonly known as the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ``HSR Act'' or
``Act''), with respect to the acquisition of voting securities of
Cracker Barrel Old Country Store, Inc. (``Cracker Barrel'') in 2020.
Jurisdiction and Venue
2. This Court has jurisdiction over the subject matter of this
action pursuant to Section 7A(g) of the Clayton Act, 15 U.S.C. 18a(g),
and 28 U.S.C. 1331, 1337(a), 1345, and 1355 and over Defendant by
virtue of Defendant's consent, in the Stipulation relating hereto, to
the maintenance of this action and entry of the Final Judgment in this
District.
3. Venue is proper in this District by virtue of Defendant's
consent, in the Stipulation relating hereto, to the maintenance of this
action and entry of the Final Judgment in this District.
The Defendant
4. Biglari is a corporation organized under the laws of Indiana
with its principal office and place of business at 17802 IH 10 West,
Suite 400, San Antonio, TX 78257. Biglari is engaged in commerce, or in
activities affecting commerce, within the meaning of Section 1 of the
Clayton Act, 15 U.S.C. 12, and Section 7A(a)(1) of the Clayton Act, 15
U.S.C. 18a(a)(1). At all times relevant to this complaint, Biglari had
sales or assets in excess of $18.8 million.
Other Entity
5. Cracker Barrel is a corporation organized under the laws of
Tennessee with its principal place of business at 305 Hartmann Drive,
Lebanon, TN 37087. Cracker Barrel is engaged in commerce, or in
activities affecting commerce, within the meaning of Section 1 of the
Clayton Act, 15 U.S.C. 12, and Section 7A(a)(1) of the Clayton Act, 15
U.S.C. 18a(a)(1). At all times relevant to this complaint, Cracker
[[Page 485]]
Barrel had sales or assets in excess of $188 million.
The Hart-Scott-Rodino Act and Rules
6. The HSR Act requires certain acquiring persons and certain
persons whose voting securities or assets are acquired to file
notifications with the Department of Justice and the Federal Trade
Commission (collectively, the ``federal antitrust agencies'') and to
observe a waiting period before consummating certain acquisitions of
voting securities or assets. 15 U.S.C. 18a(a) and (b). The notification
and waiting period requirements apply to acquisitions that meet the HSR
Act's size of transaction and size of person thresholds, which have
been adjusted annually since 2004. The size of transaction threshold is
met for transactions valued over $50 million, as adjusted ($94 million
in 2020). In addition, there is a separate filing requirement for
transactions in which the acquirer will hold voting securities in
excess of $100 million, as adjusted ($188 million in 2020), and for
transactions in which the acquirer will hold voting securities in
excess of $500 million, as adjusted ($940.1 million in 2020). With
respect to the size of person thresholds, the HSR Act applies if one
person involved in the transaction has sales or assets in excess of $10
million, as adjusted ($18.8 million in 2020), and the other person has
sales or assets in excess of $100 million, as adjusted ($188 million in
2020).
7. The HSR Act's notification and waiting period requirements are
intended to give the federal antitrust agencies prior notice of, and
information about, proposed transactions. The waiting period is also
intended to provide the federal antitrust agencies with the opportunity
to investigate a proposed transaction and to determine whether to seek
an injunction to prevent the consummation of a transaction that may
violate the antitrust laws.
8. Pursuant to Section (d)(2) of the HSR Act, 15 U.S.C. 18a(d)(2),
rules were promulgated to carry out the purposes of the HSR Act. 16 CFR
801-03 (``HSR Rules''). The HSR Rules, among other things, define terms
contained in the HSR Act.
9. Pursuant to Section 801.13(a)(1) of the HSR Rules, 16 CFR
801.13(a)(1), ``all voting securities of [an] issuer which will be held
by the acquiring person after the consummation of an acquisition''--
including any held before the acquisition--are deemed held ``as a
result of'' the acquisition at issue.
10. Pursuant to Sections 801.13(a)(2) and 801.10(c)(1) of the HSR
Rules, 16 CFR 801.13(a)(2) and Sec. 801.10(c)(1), the value of voting
securities already held is the market price, defined to be the lowest
closing price within 45 days prior to the subsequent acquisition.
11. Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1),
provides that any person, or any officer, director, or partner thereof,
who fails to comply with any provision of the HSR Act is liable to the
United States for a civil penalty for each day during which such person
is in violation. Pursuant to the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015, Public Law 114-74, Sec. 701
(further amending the Federal Civil Penalties Inflation Adjustment Act
of 1990), the dollar amounts of civil penalties listed in Federal Trade
Commission Rule 1.98, 16 CFR 1.98, are adjusted annually for inflation;
the maximum amount of civil penalty in effect at the time of Biglari's
corrective filing was $43,280 per day. 85 FR 2014 (January 14, 2020).
Defendant's Prior Violation of the HSR Act
12. The violation alleged in this complaint is not Biglari's first
violation of the HSR Act. On June 8, 2011, Biglari acquired Cracker
Barrel voting securities that resulted in its holdings exceeding the
adjusted $50 million threshold then in effect under the HSR Act.
Biglari continued to acquire Cracker Barrel voting securities through
June 13, 2011. Although required to do so, Biglari did not file under
the HSR Act or observe the HSR Act's waiting period prior to acquiring
Cracker Barrel voting securities on June 8, 2011.
13. Biglari claimed that its acquisitions of Cracker Barrel voting
securities beginning June 8, 2011, were exempt from the reporting and
waiting period requirements of the HSR Act under the exemption for
certain acquisitions made solely for the purpose of investment. 15
U.S.C. 18a(c)(9) and 16 CFR 802.9. On August 26, 2011, Biglari filed
under the HSR Act to increase its holdings of Cracker Barrel voting
securities beyond the 10% limit of the exemption for acquisitions made
solely for the purpose of investment. The waiting period on this filing
expired on September 22, 2011.
14. On March 2, 2012, Biglari sought to re-characterize its August
2011 filing as a corrective filing for its June 2011 acquisitions of
Cracker Barrel voting securities. In the explanatory letter submitted
at that time, Biglari committed to seeking advice from HSR counsel
prior to making future acquisitions of any issuer's voting securities
that could result in its aggregated holdings crossing the $50 million
(as adjusted) threshold.
15. On September 25, 2012, the Department of Justice, acting at the
request of the Federal Trade Commission, filed a complaint for civil
penalties alleging that Biglari's acquisitions of voting securities of
Cracker Barrel in June 2011 violated the HSR Act. United States. v.
Biglari Holdings, Inc., Civil Action No. 1:12-cv-01586 (D.D.C. 2012).
The complaint alleged that Biglari did not qualify for the exemption
for acquisitions made solely for the purpose of investment, 15 U.S.C.
18a(c)(9) and 16 CFR 802.9, because Biglari's intent was inconsistent
with this exemption. This inconsistent intent was evidenced by, among
other things, a request by Biglari's CEO for two seats on Cracker
Barrel's board of directors within days after making the June 2011
acquisitions.
16. At the same time as the complaint was filed, the Department of
Justice filed a stipulation signed by Biglari and a proposed final
judgment settling the case. The final judgment required Biglari to pay
a civil penalty of $850,000 for the violations alleged in the
complaint. On May 30, 2013, the court entered the final judgment.
Defendant's Current Violation of the HSR Act
17. Prior to March 16, 2020, Biglari indirectly held 2,000,000
Cracker Barrel voting securities, valued at approximately $155.1
million. On March 16, 2020, two entities controlled by Biglari acquired
an additional 55,141 Cracker Barrel voting securities. When aggregated
with the voting securities already held by Biglari, these acquisitions
resulted in Biglari holding 2,055,141 Cracker Barrel voting securities,
valued at approximately $159.4 million. Biglari's holdings of Cracker
Barrel voting securities therefore exceeded the $50 million threshold,
which in March 2020 was $94 million. Additionally, Biglari and Cracker
Barrel exceeded the size of person thresholds, which in March 2020 were
$18.8 million and $188 million.
18. The HSR Act required Biglari to file a notification with the
federal antitrust agencies and to observe a waiting period before
consummating the March 16, 2020, acquisitions of Cracker Barrel voting
securities. Biglari and Cracker Barrel each met the HSR Act's size of
person test; the acquisitions met the HSR Act's size of transaction
test; and no exemption applied.
19. Although required to do so, Biglari did not file under the HSR
Act or observe the HSR Act's waiting period
[[Page 486]]
prior to completing the March 16, 2020, acquisitions.
20. Biglari's HSR Act violation was not discovered by Biglari
itself. Rather, on June 9, 2020, the Premerger Notification Office of
the Federal Trade Commission emailed counsel for Biglari to ask why no
filing had been made under the HSR Act prior to Biglari's March 16,
2020 acquisitions of Cracker Barrel voting securities.
21. On June 19, 2020, Biglari made a corrective filing under the
HSR Act. In the explanatory letter that accompanied Biglari's
corrective filing, Biglari acknowledged the violation that began on
March 16, 2020. Biglari also admitted in the explanatory letter that
Biglari had not sought advice from HSR counsel prior to the March 16,
2020 acquisitions, contrary to the commitment it made in connection
with its 2011 HSR Act violation.
22. The HSR waiting period on the corrective filing expired on July
20, 2020. Biglari was in continuous violation of the HSR Act from March
16, 2020, when it acquired the Cracker Barrel voting securities valued
in excess of the HSR Act's then applicable $94 million filing threshold
through July 20, 2020, when the waiting period expired on its
corrective filing.
Requested Relief
Wherefore, the United States requests:
a. That the Court adjudge and decree that Defendant's acquisitions
of Cracker Barrel voting securities on March 16, 2020 were violations
of the HSR Act, 15 U.S.C. 18a; and that Defendant was in violation of
the HSR Act each day from March 16, 2020 through July 20, 2020;
b. that the Court order Defendant to pay to the United States an
appropriate civil penalty as provided by Section 7A(g)(1) of the
Clayton Act, 15 U.S.C. 18a(g)(1), the Debt Collection Improvement Act
of 1996, Public Law 104-134 Sec. 31001(s) (amending the Federal Civil
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461), and the
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015, Public Law 114-74, 701 (further amending the Federal Civil
Penalties Inflation Adjustment Act of 1990), and Federal Trade
Commission Rule 1.98, 16 CFR 1.98, 85 FR 2014 (January 14, 2020);
c. that the Court order such other and further relief as the Court
may deem just and proper; and
d. that the Court award the United States its costs of this suit.
Dated:-----------------------------------------------------------------
FOR THE PLAINTIFF UNITED STATES OF AMERICA:
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Jonathan S. Kanter,
Assistant Attorney General, Department of Justice, Antitrust
Division, Washington, DC 20530.
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Maribeth Petrizzi,
D.C. Bar No. 435204, Special Attorney.
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Kenneth A. Libby,
Special Attorney.
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Kelly Horne,
Special Attorney, Federal Trade Commission, Washington, DC 20580,
(202) 326-2564.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Biglari Holding Inc.,
Defendant.
Civil Action No. 1:21-cv-03331
[Proposed] Judge: Tanya S. Chutkan
Final Judgment
Whereas, the United States of America filed its Complaint on
December 22, 2021, alleging that Defendant Biglari Holding Inc.
violated Section 7A of the Clayton Act (15 U.S.C. 18a, commonly known
as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the ``HSR
Act'')):
And whereas, the United States and Defendant have consented to the
entry of this Final Judgment without the taking of testimony, without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
Now, therefore, it is
Ordered, adjudged, and decreed:
I. Jurisdiction
The Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendant under Section 7A of the Clayton
Act, 15 U.S.C. 18a.
II. Civil Penalty
Judgment is hereby entered in this matter in favor of the United
States and against Defendant, and, pursuant to Section 7A(g)(1) of the
Clayton Act, 15 U.S.C. 18a(g)(1), the Debt Collection Improvement Act
of 1996, Public Law 104-134 Sec. 31001(s) (amending the Federal Civil
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461), the
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015, Public Law 114-74 Sec. 701 (further amending the Federal Civil
Penalties Inflation Adjustment Act of 1990), and Federal Trade
Commission Rule 1.98, 16 CFR 1.98, 86 FR 2541 (January 13, 2021),
Defendant is hereby ordered to pay a civil penalty in the amount of one
million, three hundred seventy four thousand, one hundred ninety
dollars ($1,374,190). Payment of the civil penalty ordered hereby must
be made by wire transfer of funds or cashier's check. If the payment is
to be made by wire transfer, prior to making the transfer, Defendant
will contact the Budget and Fiscal Section of the Antitrust Division's
Executive Office at <a href="/cdn-cgi/l/email-protection#c5849197eb809d8ae883acb6a6a4a9e88cabb4b0acb7aca0b685b0b6a1aaafeba2aab3"><span class="__cf_email__" data-cfemail="bbfaefe995fee3f496fdd2c8d8dad796f2d5caced2c9d2dec8fbcec8dfd4d195dcd4cd">[email protected]</span></a> for
instructions. If the payment is made by cashier's check, the check must
be made payable to the United States Department of Justice and
delivered to: Chief, Budget & Fiscal Section, Executive Office,
Antitrust Division, United States Department of Justice, Liberty Square
Building, 450 5th Street NW, Room 3016, Washington, DC 20530.
Defendant must pay the full amount of the civil penalty within
thirty (30) days of entry of this Final Judgment. In the event of a
default or delay in payment, interest at the rate of eighteen percent
(18%) per annum will accrue thereon from the date of the default or
delay to the date of payment.
III. Costs
Each party will bear its own costs of this action, except as
otherwise provided in Paragraph IV.C.
IV. Enforcement of Final Judgment
A. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. Defendant agrees that in a civil contempt
action, a motion to show cause, or a similar action brought by the
United States regarding an alleged violation of this Final Judgment,
the United States may establish a violation of this Final Judgment and
the appropriateness of a remedy therefor by a preponderance of the
evidence, and Defendant waives any argument that a different standard
of proof should apply.
B. Defendant agrees that it may be held in contempt of, and that
the Court may enforce, any provision of this Final Judgment that is
stated specifically and in reasonable detail, whether or not it is
clear and unambiguous on its face. The terms of this Final Judgment
should not be construed against either party as the drafter.
C. In connection with a successful effort by the United States to
enforce this Final Judgment against Defendant, whether litigated or
resolved before litigation, Defendant agrees to reimburse the United
States for the fees and
[[Page 487]]
expenses of its attorneys, as well as all other costs including
experts' fees, incurred in connection with that enforcement effort,
including in the investigation of the potential violation.
V. Expiration of Final Judgment
This Final Judgment will expire upon payment in full by the
Defendant of the civil penalty required by Section II of this Final
Judgment.
VI. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Dated:-----------------------------------------------------------------
[Court approval subject to the procedures of the Antitrust Procedures
and Penalties Act, 15 U.S.C. 16]
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United States District Judge
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Biglari Holdings Inc.,
Defendant.
Civil Action No. 1:21-cv-03331
Judge: Tanya S. Chutkan
Competitive Impact Statement
The United States of America (``United States''), under Section
2(b) of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h)
(``APPA'' or ``Tunney Act''), files this Competitive Impact Statement
related to the proposed Final Judgment submitted for entry in this
civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On December 22, 2021, the United States filed a Complaint against
Defendant Biglari Holdings Inc. (``Biglari'' or ``Defendant''), related
to Biglari's acquisitions of voting securities of Cracker Barrel Old
Country Store, Inc. (``Cracker Barrel'') in March 2020. The Complaint
alleges that Biglari violated Section 7A of the Clayton Act, 15 U.S.C.
18a, commonly known as the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the ``HSR Act''). The HSR Act requires certain acquiring
persons and certain persons whose voting securities or assets are
acquired to file notifications with the Department of Justice and the
Federal Trade Commission (collectively, the ``federal antitrust
agencies'') and to observe a waiting period before consummating certain
acquisitions of voting securities or assets. 15 U.S.C. 18a (a) and (b).
These notification and waiting period requirements apply to
acquisitions that meet the HSR Act's size of transaction and size of
person thresholds, which have been adjusted annually since 2004. The
size of transaction threshold is met for transactions valued over $50
million, as adjusted ($94 million in 2020). In addition, there is a
separate filing requirement for transactions in which the acquirer will
hold voting securities in excess of $100 million, as adjusted ($188
million in 2020), and for transactions in which the acquirer will hold
voting securities in excess of $500 million, as adjusted ($940.1
million in 2020).
With respect to the size of person thresholds, the HSR Act applies
if one person involved has sales or assets in excess of $10 million, as
adjusted ($18.8 million in 2020), and the other person has sales or
assets in excess of $100 million, as adjusted ($188 million in 2020). A
key purpose of the notification and waiting period requirements is to
protect consumers and competition from potentially anticompetitive
transactions by providing the federal antitrust agencies the
opportunity to conduct an antitrust review of proposed transactions
before they are consummated.
The Complaint alleges that Biglari acquired voting securities of
Cracker Barrel without filing the required pre-acquisition HSR Act
notifications with the federal antitrust agencies and without observing
the waiting period. Biglari's acquisition of Cracker Barrel voting
securities exceeded the $50-million statutory threshold, as adjusted,
($94 million at the time of the acquisition) and Biglari and Cracker
Barrel met the then-applicable statutory size of person thresholds
(which were $18.8 and $188 million, respectively).
At the same time the Complaint was filed in the present action, the
United States also filed a Stipulation and Order and proposed Final
Judgment that resolve the allegations made in the Complaint. The
proposed Final Judgment is designed to address the violation alleged in
the Complaint and to penalize Biglari's HSR Act violations. Under the
proposed Final Judgment, Biglari must pay a civil penalty to the United
States in the amount of $1,374,190.
The United States and Biglari have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA, unless
the United States first withdraws its consent. Entry of the proposed
Final Judgment will terminate this action, except that the Court will
retain jurisdiction to construe, modify, or enforce the provisions of
the proposed Final Judgment and punish violations thereof.
II. Description of the Events Giving Rise to the Alleged Violation
The crux of Biglari's violation is that it failed to submit an HSR
Act notification even though its acquisition of Cracker Barrel voting
securities satisfied the HSR Act filing requirements. At all times
relevant to the Complaint, Biglari had sales or assets in excess of
$18.8 million. At all times relevant to the Complaint, Cracker Barrel
had sales or assets in excess of $188 million.
On March 16, 2020, two entities controlled by Biglari acquired
55,141 Cracker Barrel voting securities. When aggregated with the
voting securities already held by Biglari, these acquisitions resulted
in Biglari holding 2,055,141 Cracker Barrel voting securities, valued
at approximately $159.4 million. Although required to do so, Biglari
did not file under the HSR Act and observe the HSR Act's waiting period
prior to completing the March 16, 2020 acquisitions.
Biglari made a corrective HSR Act filing on June 19, 2020, but
Biglari's HSR Act violation was not discovered by Biglari itself.
Rather, prior to Biglari's corrective filing, the Premerger
Notification Office of the Federal Trade Commission emailed counsel for
Biglari and asked why Biglari had not made an HSR filing before the
March 16, 2020, acquisitions of Cracker Barrel voting securities. The
waiting period for that corrective filing expired on July 20, 2020.
In addition to alleging that Biglari failed to file a required HSR
notification, the Complaint further alleges that this was not the first
time Biglari had failed to observe the HSR Act's notification and
waiting period requirements. In June 2011, Biglari acquired voting
securities of Cracker Barrel that resulted in its holdings exceeding
the then-applicable HSR Act notification thresholds. In the explanatory
letter that accompanied Biglari's corrective filing, Biglari committed
to seeking advice from HSR counsel prior to making future acquisitions
of any issuer's voting securities that could result in its aggregated
holdings crossing the $50 million (as adjusted) threshold.
On September 25, 2012, the Department of Justice, acting at the
[[Page 488]]
request of the Federal Trade Commission, filed a complaint for civil
penalties alleging that Biglari's acquisitions of voting securities of
Cracker Barrel in June 2011 violated the HSR Act. At the same time as
the complaint was filed, the Department of Justice filed a stipulation
signed by Biglari and a proposed final judgment settling the case. The
final judgment required Biglari to pay a civil penalty of $850,000 for
the violations alleged in the complaint. On May 30, 2013, the court
entered the final judgment. See United States. v. Biglari Holdings,
Inc., Civil Action No. 1:12-cv-01586 (D.D.C. 2012).
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment imposes a $1,374,190 civil penalty
designed to address the violation alleged in the Complaint, penalize
the Defendant, and deter others from violating the HSR Act. The United
States adjusted the penalty downward from the maximum permitted under
the HSR Act because the violation was inadvertent, and the Defendant is
willing to resolve the matter by proposed final judgment and thereby
avoid prolonged investigation and litigation. However, the penalty
amount reflects that this is Defendant's second violation of the HSR
Act in connection with the same issuer (i.e., Cracker Barrel), that
Defendant did not make a corrective filing until the FTC's Premerger
Notification Office notified Biglari of its failure to file, and that
Defendant did not consult HSR counsel prior to its acquisitions as it
had committed to do in connection with its 2011 HSR Act violation. The
penalty will not have any adverse effect on competition; instead, the
relief should have a beneficial effect on competition because it will
deter the Defendant and others from failing to properly notify the
federal antitrust agencies of future acquisitions, in accordance with
the law.
IV. Remedies Available to Potential Private Litigants
There is no private antitrust action for HSR Act violations;
therefore, entry of the proposed Final Judgment will neither impair nor
assist the bringing of any private antitrust action.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and the Defendant have stipulated that the
proposed Final Judgment may be entered by the Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty (60) days of the date of publication of this Competitive Impact
Statement in the Federal Register, or the last date of publication in a
newspaper of the summary of this Competitive Impact Statement,
whichever is later. All comments received during this period will be
considered by the United States, which remains free to withdraw its
consent to the proposed Final Judgment at any time before the Court's
entry of the Final Judgment. The comments and the response of the
United States will be filed with the Court. In addition, the comments
and the United States' responses will be published in the Federal
Register unless the Court agrees that the United States instead may
publish them on the U.S. Department of Justice, Antitrust Division's
internet website. Written comments should be submitted in English to:
Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade
Commission, 600 Pennsylvania Avenue NW, CC-8416, Washington, DC 20580,
<a href="/cdn-cgi/l/email-protection#a4c6c7c7cbc9d4c8cdc5cac7c1e4c2d0c78ac3cbd2"><span class="__cf_email__" data-cfemail="f29091919d9f829e9b939c9197b2948691dc959d84">[email protected]</span></a>.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against the Defendant. The
United States is satisfied, however, that the proposed relief is an
appropriate remedy in this matter. Given the facts of this case,
including the Defendant's acknowledgment of the violations and
willingness to promptly settle this matter, the United States is
satisfied that the proposed civil penalty is sufficient to address the
violation alleged in the Complaint and to deter violations by similarly
situated entities in the future, without the time, expense, and
uncertainty of a full trial on the merits.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
Under the Clayton Act and APPA, proposed Final Judgments or
``consent decrees'' in antitrust cases brought by the United States are
subject to a 60-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the Court, in accordance with the statute as amended in 2004, is
required to consider:
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the Court's inquiry is necessarily a limited one as the government is
entitled to ``broad discretion to settle with the defendant within the
reaches of the public interest.'' United States v. Microsoft Corp., 56
F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp.,
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the
``court's inquiry is limited'' in Tunney Act settlements); United
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court's review of a
proposed Final Judgment is limited and only inquires ``into whether the
government's determination that the proposed remedies will cure the
antitrust violations alleged in the complaint was reasonable, and
whether the mechanism to enforce the final judgment are clear and
manageable'').
As the U.S. Court of Appeals for the District of Columbia Circuit
has held, under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations in
the government's complaint, whether the proposed Final Judgment is
sufficiently clear, whether its enforcement mechanisms are sufficient,
and whether it may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the
[[Page 489]]
adequacy of the relief secured by the proposed Final Judgment, a court
may not ``make de novo determination of facts and issues.'' United
States v. W. Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 1993) (quotation
marks omitted); see also Microsoft, 56 F.3d at 1460-62; United States
v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); United States v.
Enova Corp., 107 F. Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S.
Dist. LEXIS 84787, at *3. Instead, ``[t]he balancing of competing
social and political interests affected by a proposed antitrust consent
decree must be left, in the first instance, to the discretion of the
Attorney General.'' W. Elec. Co., 993 F.2d at 1577 (quotation marks
omitted). ``The court should bear in mind the flexibility of the public
interest inquiry: the court's function is not to determine whether the
resulting array of rights and liabilities is one that will best serve
society, but only to confirm that the resulting settlement is within
the reaches of the public interest.'' Microsoft, 56 F.3d at 1460
(quotation marks omitted); see also United States v. Deutsche Telekom
AG, No. 19-2232 (TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020).
More demanding requirements would ``have enormous practical
consequences for the government's ability to negotiate future
settlements,'' contrary to congressional intent. Microsoft, 56 F.3d at
1456. ``The Tunney Act was not intended to create a disincentive to the
use of the consent decree.'' Id.
The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' (internal
citations omitted)); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case.''). The ultimate
question is whether ``the remedies [obtained by the Final Judgment are]
so inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461
(quoting W. Elec. Co., 900 F.2d at 309).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he
`public interest' is not to be measured by comparing the violations
alleged in the complaint against those the court believes could have,
or even should have, been alleged.''). Because the ``court's authority
to review the decree depends entirely on the government's exercising
its prosecutorial discretion by bringing a case in the first place,''
it follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of using judgments proposed by the
United States in antitrust enforcement, Public Law 108-237, 221, and
added the unambiguous instruction that ``[n]othing in this section
shall be construed to require the court to conduct an evidentiary
hearing or to require the court to permit anyone to intervene.'' 15
U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76
(indicating that a court is not required to hold an evidentiary hearing
or to permit intervenors as part of its review under the Tunney Act).
This language explicitly wrote into the statute what Congress intended
when it first enacted the Tunney Act in 1974. As Senator Tunney
explained: ``[t]he court is nowhere compelled to go to trial or to
engage in extended proceedings which might have the effect of vitiating
the benefits of prompt and less costly settlement through the consent
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen.
Tunney). ``A court can make its public interest determination based on
the competitive impact statement and response to public comments
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F.
Supp. 2d at 17).
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Date: December 22, 2021.
Respectfully submitted,
/s/ Kenneth A. Libby,
Kenneth A. Libby,
Special Attorney, U.S. Department of Justice, Antitrust Division, c/o
Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC
20580, Phone: (202) 326-2694, Email: <a href="/cdn-cgi/l/email-protection#214a4d48434358614755420f464e57"><span class="__cf_email__" data-cfemail="204b4c49424259604654430e474f56">[email protected]</span></a>.
[FR Doc. 2021-28539 Filed 1-4-22; 8:45 am]
BILLING CODE 4410-11-P
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</html>Indexed from Federal Register on January 5, 2022.
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