Wireless-technology companies Qualcomm and Flarion Technologies have agreed to pay a total of $1.8 million to settle Department of Justice charges that they violated federal premerger waiting-period requirements.
In July 2005, the two companies signed an agreement for a $600 million merger, according to the DoJ. The department explained that under the Hart-Scott-Rodino Act, companies planning certain acquisitions or mergers must file notifications with the DoJ and the Federal Trade Commission. After a mandatory waiting period, designed to give the agencies the opportunity to investigate proposed transactions in light of antitrust laws, the companies may proceed if neither agency has requested additional information.
According to the complaint, after the two companies announced their merger, Qualcomm obtained operational control over Flarion in what is often referred to as “gun jumping.” The DoJ elaborated that the companies’ merger agreement required Flarion to seek Qualcomm’s consent before undertaking certain basic business activities, such as making new proposals to customers. Although not required by the agreement, Flarion also sought and followed Qualcomm’s guidance before undertaking routine activities, such as hiring consultants and employees, the department alleged.
Qualcomm and Flarion executed their merger agreement on July 25, 2005; according to the department; the Hart-Scott-Rodino waiting period ended December 23.
Although the companies faced a maximum civil penalty of $11,000 for each day they were in violation of the act, the DoJ noted that it reduced the penalty from the potential maximum because the companies voluntarily reported gun-jumping problems and took some measures to change their contract and their conduct.
“The Antitrust Division will vigorously enforce this requirement against any company that assumes operational control of a business that it is acquiring,” said assistant attorney general Thomas Barnett in a statement.
“With the successful integration of Flarion well under way, we decided to put this matter behind us to avoid diverting or distracting the Qualcomm-Flarion team from the important tasks of integrating the best of both companies’ technologies and refining our joint roadmap,” said Louis Lupin, senior vice president and general counsel for Qualcomm, in a statement.
![](https://pixel.welcomesoftware.com/px.gif?key=YXJ0aWNsZT1kOGI2ZmJhNDJmNzYxMWVjODFhZjJhZDE5YjQyODAzYQ==)