United States v. Keyspan Corp.
763 F. Supp. 2d 633
S.D.N.Y.2011Background
- United States sues Keyspan for Sherman Act Section 1 violations arising from a Swap that gave Keyspan an indirect financial stake in Astoria’s capacity sales.
- NYISO auctions set the price for installed capacity; bidding is by price-quantity bids and the Clearing Price determines market price.
- Keyspan, Astoria, and NRG were pivotal suppliers; Keyspan held the highest bid and price cap, giving it market power.
- Keyspan entered a Swap with a Bank on January 18, 2006, offset by an offsetting swap with Astoria; the Swap conditioned on the offset arrangement.
- The Government pursues a Consent Decree under Tunney Act, proposing disgorgement of Keyspan’s Swap revenues totaling $12 million; the Court must determine disgorgement availability and public interest, and then approve the decree.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether disgorgement is an available Sherman Act remedy | Disgorgement is appropriate and available | (not expressly stated in opinion excerpt) | Disgorgement available under equity powers |
| Whether the settlement is in the public interest under the Tunney Act | Decree serves public interest by deterring and remedying anticompetitive gains | Not explicitly stated in excerpt | Yes, settlement is in the public interest |
| Appropriateness of the disgorgement amount and its distribution | $12 million is a reasonable disgorgement, representing 25% of net revenues | Not explicitly stated in excerpt | $12 million disgorgement is reasonable; proceeds to Treasury is within public interest; distribution to NYC consumers not required by court order |
Key Cases Cited
- United States v. Cavanagh, 445 F.3d 105 (2d Cir. 2006) (equitable disgorgement upheld; limits tied to equity powers)
- Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999) (limits on equity disgorgement; Supreme Court view in equity context)
- Int'l Boxing Club of N.Y., Inc. v. United States, 358 U.S. 242 (1959) (disgorgement as part of remedies to deprive of benefits of conspiracy)
- Grinnell Corp., 384 U.S. 563 (1966) (monopolization relief should deprive defendants of benefits of violation)
- United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316 (1961) (antitrust remedies; injunctive relief and remedies to end monopolization)
- United States v. Microsoft Corp., 56 F.3d 1448 (D.C. Cir. 1995) (public-interest review under Tunney Act; deference to government theory)
- Alex. Brown & Sons, Inc., 963 F. Supp. 235 (S.D.N.Y. 1997) (Tunney Act public interest standard; discretionary deference to government)