USA Law and Practice Contributed by: David P. Flynn, Lindsey E. Haubenreich, Thomas F. Puchner and Dennis W. Elsenbeck, Phillips Lytle LLP
(MPS), issued in 1996, to analyse the transac- tion. The MPS articulates methods for further computing market concentration, identifies safe-harbour concentration levels and outlines the methods to be undertaken if a transaction failed either screen. Role of Other Bodies Energy industry M&A are also subject to review by the US Department of Justice (DOJ) and the Federal Trade Commission (FTC). While FERC’s review M&A is a relatively straightforward public interest inquiry, the DOJ and FTC will typically follow their 2010 Horizontal Merger Guidelines (HMG) for a more complex analysis. DOJ and FTC authorisation may still be required upon FERC’s approval of a transaction. State utility commissions may also have juris- diction to review public utility M&A transactions. However, instead of focusing on the wholesale market, their review focuses on the impact on The EPAct significantly augmented FERC’s authority to prohibit market manipulation, anti- competitive behaviour and fraud. FERC remains the primary authority overseeing competition in the wholesale electricity markets, while a variety of other federal agencies, such as the FTC or DOJ, may also have jurisdiction over electricity market participants (particularly over antitrust violations and criminal behaviour) as part of their generalised authority to regulate anti-competi- tive behaviour across a variety of market sectors. In the EPAct, Congress enhanced and added sections to the FPA, NGA and NGPA, which pro- hibit manipulative or deceptive practices, and retail rates and the public interest. 2.5 Surveillance to Detect Anti- Competitive Behaviour The EPAct
provided for maximum civil penalties of USD1 million per day, per violation of rules, regula- tions and orders issued under those acts. It also expanded FERC’s authority with respect to anti- competitive behaviour by expressly prohibiting fraudulent or manipulative acts by “any entity” in the sale or purchase of electrical energy or the sale or purchase of transmission services – not merely entities providing service under FERC- approved, MBR authority (16 USC Section 824v). Anti-Manipulation Rule FERC implemented its authority under the EPAct by promulgating the Anti-Manipulation Rule in Order No 670 in 2006. The Anti-Manipulation Rule broadly defines market manipulation to include conduct such as: • using or employing any device, scheme or artifice to defraud; • making untrue statements or omitting to state material facts; or • engaging in any act, practice or course of business that would operate as fraud or deceit upon another entity (16 USC Section 824v). Office of Enforcement For market surveillance and enforcement, FERC has an Office of Enforcement (OE), which is comprised of scientists, engineers, attorneys, auditors, financial analysts and energy analysts. Each division of OE oversees a variety of func- tions, including: • ensuring compliance from market partici- pants; • initiating and executing investigations; • providing warning of vulnerable market condi- tions; • maintaining an Enforcement Hotline to infor- mally resolve disputes; and
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