Flakeboard America Limited, HSR Act Violation, Delaware 2023

Flakeboard America Limited, its parent companies Celulosa Arauco y Constitución S.A. and Inversiones Angelini y Compañía Limitada, and SierraPine have been caught with their hands in the cookie jar. The companies have agreed to a $5 million settlement for violating the Hart–Scott–Rodino (HSR) Act of 1976 and Section 1 of the Sherman Act.

The settlement requires the companies to pay a combined $3.8 million in civil penalties for violating the HSR Act. Flakeboard must also disgorge $1.15 million in illegally obtained profits, and both Flakeboard and SierraPine must establish antitrust compliance programs and agree to certain restrictions.

The scandal revolves around Flakeboard’s proposed acquisition of three SierraPine mills, which was under antitrust review by the government. Instead of competing vigorously, Flakeboard and SierraPine allegedly closed a plant and allocated customers, in direct violation of antitrust laws.

According to the complaint, before the proposed acquisition, SierraPine operated particleboard mills in Springfield, Oregon, and Martell, California, that competed directly with Flakeboard’s particleboard mill in Albany, Oregon. The complaint alleges that after announcing the proposed acquisition on Jan. 14, 2014, Flakeboard, Arauco, and SierraPine illegally coordinated to close SierraPine’s particleboard mill in Springfield, Oregon, and move the mill’s customers to Flakeboard.

This unlawful coordination led to the permanent shutdown of the Springfield mill on March 13, 2014, and enabled Flakeboard to secure a significant number of Springfield’s customers for its Albany mill. The defendants’ conduct constituted an illegal agreement to restrain trade in violation of Section 1 of the Sherman Act, and prematurely transferred operational control, and therefore beneficial ownership, of SierraPine’s business to Flakeboard in violation of the HSR Act.

The HSR Act requires companies planning acquisitions or mergers that meet certain thresholds to file premerger notification documents with the government and the Federal Trade Commission. The HSR Act also requires that the merging parties observe a mandatory waiting period before proceeding with the transaction.

Each party is subject to a maximum civil penalty of $16,000 per day for each day they violate the HSR Act. The complaint alleges that the defendants’ HSR Act violation occurred from Jan. 14, 2014, to March 13, 2014.

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