Fashion Brand Group to Pay $550,000 for Alleged HSR Act Violation

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Iconix Brand Group—owner of a diverse portfolio of fashion brands, such as Candie's and London Fog—has agreed to pay $550,000 in civil penalties to settle charges that it violated pre-merger notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when it acquired hip-hop apparel company Rocawear.

According to the Department of Justice Antitrust Division, Iconix failed to submit to the antitrust enforcement agencies certain company documents with its pre-merger notification filing. The acquisition closed in April 2007.

Filing Requirements under HSR Act

In addition to imposing notification and waiting period requirements on large acquisitions, the HSR Act requires that parties to a large acquisition supply certain documents prepared or reviewed by the company’s officers and directors in connection with their evaluation or analysis of the proposed transaction.

Iconix submitted no such documents, despite the existence of such documents, including a formal presentation made to its Board of Directors about the transaction and a less formal e-mail among officers and directors, the Antitrust Division alleged. In addition, when initially asked to review whether such documents existed, the company allegedly reaffirmed that no such documents existed.

Compliance “Fundamental”

“Compliance with Hart-Scott-Rodino Act filing obligations is fundamental to the agencies’ ability quickly and accurately to evaluate a transaction’s competitive impact,” said Thomas O. Barnett, Assistant Attorney General of the Antitrust Division. “Filing parties must understand that the Division will vigorously enforce filing requirements even if we conclude that the transaction poses no threat to competition or consumers.”

The Antitrust Division filed the complaint in the federal district court in Washington, D.C., against Iconix on October 15. At the same time, it filed a proposed settlement that, if approved by the court, will settle the charges.

An October 15 news release on this development appears on the U.S. Justice Department web site.

Iconix Brand Group, based in New York City, owns fashion brands that serve retail distribution segments from the luxury market to the mass market. It “licenses its brands to leading retailers and manufacturers worldwide and specializes in marketing its portfolio of brands with innovative and creative advertising,” according to the company.