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DOJ Requires Disgorgement to Settle Exelon Contempt Claim
Practical Law Legal Update 5-522-4808 (Approx. 3 pages)
DOJ Requires Disgorgement to Settle Exelon Contempt Claim
by PLC Antitrust
| Published on 19 Nov 2012 • USA (National/Federal) |
The Department of Justice settled a civil contempt claim against Exelon Corporation in the amount of $400,000 in disgorged profits and reimbursement to the DOJ for the cost of its investigation.
The DOJ announced that Exelon Corporation agreed to pay $400,000 to settle a DOJ civil contempt claim related to Exelon's $7.9 billion merger with its competitor Constellation Energy Group. The DOJ had investigated the Exelon/Constellation deal in 2011 and the parties settled. As part of that settlement, the DOJ filed a Hold Separate Stipulation and Order (Hold Separate Order) and Final Judgment requiring Exelon to divest three electricity generating plants. Until the divestiture was complete, the Hold Separate Order required Exelon to maintain competition by, among other things, bidding some of its electricity plants at- or below-cost so that the market price for electricity would not increase.
According to the civil contempt claim, Exelon violated the Hold Separate Order by:
- Submitting offers for electricity sales at above-cost prices during the period between March 12 and March 28, 2012.
- Failing to take all measures to ensure that its offers of electricity complied with the settlement terms.
Exelon voluntarily disclosed the Hold Separate Order violations to the DOJ and market regulators (the Federal Energy Regulatory Commission and the Maryland Public Service Commission). In addition, as remedial steps, Exelon:
- Adopted measures to prevent additional above-cost offers.
- Agreed to return revenues earned from the above-cost offers.
The DOJ considered the remedial measures in determining the disgorgement amount.