DoJ Charges Qualcomm With Antitrust Actions in Merger

Qualcomm and Flarion Technologies will pay US$1.8 million in civil fines in a settlement over charges the two companies violated antitrust law before their merger in January, the U.S. Department of Justice (DoJ) announced Thursday.

The two companies violated U.S. antitrust law by breaking premerger waiting period requirements, the DoJ said. After wireless technology developer Qualcomm announced in July 2005 its plans to acquire Flarion, it obtained operational control over Flarion without observing premerger waiting period requirements, the DoJ said.

The DoJ’s Antitrust Division on Thursday filed a civil antitrust complaint in U.S. District Court for the District of Columbia, along with the proposed settlement. If approved by the court, the settlement will end the lawsuit.

The companies’ merger agreement required Flarion to seek Qualcomm’s consent before undertaking some basic business activities, such as making new proposals to customers, the DoJ said. Flarion also sought Qualcomm’s guidance before undertaking routine activities, such as hiring consultants and employees. Such conduct, commonly known as “gun jumping,” violated the Hart-Scott-Rodino (HSR) Act of 1976, the DoJ said.

The 1976 law requires some companies planning acquisitions or mergers to file premerger notification documents with the DoJ and the U.S. Federal Trade Commission. The HSR Act also requires that the merging parties observe a mandatory 30-day waiting period, after which the companies may proceed with the transaction if neither agency has requested additional information.

The purpose of the waiting period is to give the antitrust agencies an opportunity before the merger to investigate proposed transactions and determine whether they would violate federal antitrust laws, the DoJ said. Companies are subject to a civil penalty of up to $11,000 per day for each day that they are in violation of the HSR Act.

Qualcomm, based in San Diego, is a developer of code division multiple access and other wireless technologies. Flarion is a developer of orthogonal frequency division multiplex access wireless technology.

-Grant Gross, IDG News Service

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