Werner founder to pay nearly $500,000 for violating antitrust laws
The founder of Werner Enterprises will pay nearly half a million dollars in penalties for failing to report large transactions to the federal government.
Filed by the Department of Justice, a civil complaint accuses Clarence L. Werner of violating the Hart-Scott-Rodino Antitrust Improvements Act. However, the truck company founder self-reported the error, allowing him to settle the case out of court.
Also known as the HSR Act, the law “requires companies to file premerger notifications with the Federal Trade Commission and the Antitrust Division of the Justice Department for certain acquisitions,” according to the FTC. From there, a waiting period begins as federal antitrust agencies determine whether the transaction violates any antitrust laws.
Simultaneously, the Justice Department filed a proposed settlement with Werner. The two parties are agreeing to Werner paying a civil penalty of nearly $500,000 to resolve the lawsuit. A court still needs to approve the proposal.
According to the complaint, Werner violated the HSR Act while acquiring voting securities of Werner Enterprises from 2007 to 2020. In May 2007, he acquired 475,000 voting securities, making his total holdings worth nearly $120 million. The threshold for filing a notification with the FTC and Justice Department is $100 million. Werner neither filed a notification nor honored the required waiting period.
Werner continued unlawful acquisitions of voting securities through at least February 2020. Among the transactions:
- 320,100 voting securities on Nov. 18, 2009.
- 8,500 voting securities on Nov. 24, 2009.
- 59,406 voting securities on Nov. 27, 2009.
- 32,094 voting securities on Nov. 30, 2009.
- 100,000 voting securities on Nov. 20, 2012.
- 3,738 voting securities on Feb. 7, 2019.
All of those transactions require notifications and waiting periods. However, Werner neglected to follow proper procedures.
Werner discovered the errors in January 2020, prompting his counsel to alert the FTC.
In March 2020, he began making corrective filings under the HSR Act. Specifically, filings were made for a May 2007, November 2012 and February 2019 transaction. According to the lawsuit, had he “filed under the HSR Act for these three acquisitions on a timely basis, all his other acquisitions of Werner Inc. voting securities during the relevant period would have been exempt.”
Despite recognizing his errors in January 2020, Werner continued to acquire voting securities without notifying the FTC in February 2020.
“Several of Mr. Werner’s acquisitions were large open-market purchases,” Holly Vedova, director of the Bureau of Competition, said in a statement. “As a director of the issuer and an active participant in these transactions, Mr. Werner should have realized that he might have regulatory obligations and sought legal advice. Even more concerning is the fact that he made some of his acquisitions after he learned that some of his prior purchases violated the antitrust laws.”
Having initiated the corrections, the truck company founder reached a deal with the federal government.
Werner will pay the United States a civil penalty of $486,900. According to court documents, the penalty is lower than the maximum $43,792 per day “because the violation was inadvertent and (Werner) is willing to resolve the matter” without extending a costly investigation and litigation.
“Given the facts of this case, including (Werner’s) self-reporting 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 violations 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,” the Justice Department says in its competitive impact statement. LL
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