The government will be receiving $896,000 from Warren Buffet’s Berkshire Hathaway after the company allegedly violated the antitrust law filing requirements for yet another time.
According to the Federal Trade Comission, Warren Buffet’s Berkshire should have disclosed its plan to increase its stake in USG before last year’s close of the deal. As a result, the company has now settled the Justice Department lawsuit and will now be paying $896,000 so as to conform to the Hart-Scott-Rodino antitrust law.
This penalty is the highest that could have been imposed in such a case (as by law, the penalty cannot exceed $16,000 per day of violation). As such, Berkshire’s violation spanned over a period of 56 days, from the moment of its acquisition of USG stock until the end of the waiting period that was legally mandated.
The Federal Trade Commission noted that it would not enforce penalties on every inadvertent error but that they will seek to apply penalties if and when a particular company repeats certain mistakes or makes additional ones in spite of promises of improved oversight.
Back in June 2013, Berkshire made a similar mistake when filling the necessary forms for the acquisition of Symetra Financial shares.
At the time of this first mistake, the Federal Trade Commission agreed to not enforce penalties after Berkshire made promises that it would closely monitor its procedures going forward so that mistakes would not happen in the future.
The penalty itself will surely not bankrupt a company such as Berkshire but it could bring significant embarrassment to Buffet, a CEO that values integrity and honesty above anything at his company.
He declared that the company simply made a mistake when they overlooked some filling requirements.
According to the law, companies must inform the government about future deals that will make their holdings go over certain reported thresholds. Such reports are required so as to allow regulators to determine if competition would be lessened by such deals.
While Berkshire acquired some USG stock on the 9th of December, they only disclosed the information in early January. According to their SEC filing, Berkshire decided to convert USG debt into stock so as to make use of its greater value. Apparently, the value of the stock was superior to the cash that Berkshire would have received if USG had redeemed the $244 million worth of notes they had bought in 2009.
The company is now holding 39 million shares of USG, which is around 27% of the outstanding shares.