Client Alert - Record Setting Fine in 'Gun-Jumping' / Premerger Coordination Action

February 27, 2003 Advisory

On February 6, 2003, the United States Department of Justice announced the settlement of an action resulting in the largest-ever civil penalty for so-called "gun jumping," or coordination between companies before they have formally consummated a merger. The consent decree provides that the newly merged Gemstar-TV Guide International Inc. will pay a record $5.67 million in civil penalties, and also agree to certain restrictions in their ongoing operations, in order to resolve the government's allegations that Gemstar and TV Guide fixed prices, allocated customers, and violated pre-merger waiting period requirements prior to their merger in July 2000. This consent decree should highlight the seriousness of the rules regarding premerger coordination for any parties considering a merger, including – but not limited to – those transactions that fall within the thresholds for premerger notification under the Hart-Scott-Rodino Act of 1976 (the "HSR Act").