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Certain Financial Hedge Arrangements Can Violate Sherman Act Section 1

25 June 2010

ACER (Antitrust) Alert

On 11 June 2010, the Department of Justice (DOJ) responded to critics of its proposed consent agreement in United States v. KeySpan Corporation, Civ. Action No. 10-cv-1415(WHP) (Feb. 22, 2010). Although DOJ received kudos from New York and Pennsylvania state regulators for aggressive enforcement against a financial hedge agreement that diminished price competition, it drew criticism because the proposed remedy – disgorgement of $12 million in profits – does not fully or directly compensate consumers. In response, DOJ maintained that its unprecedented request for disgorgement vindicates the public interest in antitrust enforcement against anticompetitive agreements because damages in this case likely would not have been available in a civil lawsuit. On 17 June 2010, DOJ requested the Southern District of New York to approve a modified proposed final judgment.

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