[Federal Register Volume 90, Number 241 (Thursday, December 18, 2025)]
[Notices]
[Pages 59205-59223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-23298]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States et al. v. Constellation Energy Corporation et al.;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America et al. v. Constellation Energy Corporation et al.,
Civil Action No. 1:25-cv-04235-ABJ. On December 5, 2025, the United
States filed a Complaint alleging that Constellation Energy
Corporation's proposed acquisition of Calpine Corporation would violate
Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final
Judgment, filed at the same time as the Complaint, requires
Constellation to divest the Calpine electric generating facilities
listed below.
In the area operated by the Electric Reliability Council of Texas:
Jack A. Fusco Energy Center, located southwest of the city
of Houston, Texas; and
Calpine's minority ownership interest in the Gregory
Energy Center, located northeast of the city of Corpus Christi, Texas.
In the area operated by PJM Interconnection, LLC:
Bethlehem Energy Center, located in Bethlehem,
Pennsylvania;
Edge Moor Energy Center, located in Wilmington, Delaware;
Hay Road Energy Center, located in Wilmington, Delaware;
and
York Energy Center (York 1 and York 2), located southeast
of the city of York, Pennsylvania.
A Competitive Impact Statement filed by the United States on
December 12, 2025, describes the Complaint, the proposed Final
Judgment, the industry, and the remedies available to private litigants
who may have been injured by the alleged violation.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at http://www.justice.gov/atr and at the Office of
the Clerk of the United States District Court for the District of
Columbia. Copies of these materials may be obtained from the Antitrust
Division upon request and payment of the copying fee set by Department
of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be submitted in English and
directed to Patricia Cororan, Acting Chief, Transportation, Energy &
Agriculture Section, Antitrust Division, Department of Justice, 450
Fifth Street NW, Suite 8000, Washington, DC 20530 (email address:
[email protected]).
Suzanne Morris,
Deputy Director Civil Enforcement Operations, Antitrust Division.
United States District Court for the District of Columbia
UNITED STATES OF AMERICA, U.S. Department of Justice, Antitrust
Division, 450 5th Street NW, Suite 8000, Washington, DC 20001, and
STATE OF TEXAS, Office of the Texas Attorney General, Antitrust
Division, P.O. Box 12548, Austin, TX 78711, Plaintiffs, v.
CONSTELLATION ENERGY CORPORATION, 1310 Point Street, Baltimore, MD
21231, CALPINE CORPORATION, 717 Texas Avenue, Suite 1000, Houston,
TX 77001, and CPN CS HOLDCO CORP., 717 Texas Avenue, Suite 1000,
Houston, TX 77001, Defendants.
Case No.: 1:25-cv-04235-ABJ
COMPLAINT
Constellation Energy Corporation (``Constellation'') seeks to buy
one of its largest rivals, Calpine Corporation (``Calpine''), in a
proposed acquisition that would create the largest wholesale power
generator in the United States with a formidable array of assets. The
combination of those assets would risk affording Constellation the
opportunity to profitably raise the price of electricity for millions
of citizens and businesses in Texas and parts of the mid-Atlantic,
likely resulting in increased energy costs of more than $100 million
per year. The United States and the State of Texas bring this suit to
preserve competition.
I. Introduction
1. Electricity is an essential resource to people and companies
across the country.
Whether storing food in refrigerators, keeping the lights on in
workplaces, watching a football game, or powering lifesaving support
systems in hospitals, Americans depend on electricity for almost every
facet of their daily lives. Demand for electricity is increasing
rapidly, as the population grows and innovative technologies like cloud
computing and artificial intelligence rely ever more on energy-
intensive data centers. In Texas, the highest level of electricity
consumption (so-called ``peak load'') handled by its largest electrical
grid is expected to increase by 72% from 2024 to 2030. In the
multistate power grid that includes the mid-Atlantic, summer peak load
is expected to increase by 3.1% per year over the next decade. Despite
this rapidly increasing demand, it is challenging to
[[Page 59206]]
add new reliable generation to the nation's power grids.
2. Consumers and businesses demand instantaneous access to
electricity to avoid disruption to their lives and work. Demand for
electricity changes depending on weather and patterns of social and
business activity that vary with the time of day, day of week, and
season of year. For example, peak demand may be reached during the
hottest summer days or coldest winter nights, when air conditioning or
electric heating are most needed. Lower demand may occur on some
weekends or major holidays when many businesses are closed. Electricity
must be produced and delivered in line with this fluctuating demand,
and electrical grid operators call upon power generators like
Constellation and Calpine to turn power generation plants on or shut
them off to balance the supply of electricity with demand.
3. To determine which plants should be turned on or shut off, and
how much electricity each plant should produce, the grid operator
conducts daily and intra-day auctions. These electricity auctions set
the prices paid to every generation unit. Constellation and Calpine
compete against each other and against other generators in these
auctions by submitting offers from each of their individual generation
units to produce certain amounts of electricity at certain times and
prices to meet demand. The offers of individual generation units are
accepted from lowest to highest price until the total amount of
electricity from the generation units combined satisfies the demand for
a particular period. The price for the last unit's offer necessary to
meet real-time demand, referred to as the market-clearing price, sets
the price paid at that auction for every other individual unit that has
received an accepted offer.
4. In other words, the price of electricity is set by the highest
price offered by the individual power generating unit whose offer is
accepted. All other generating units with lower offers that had offers
accepted receive the same market-clearing price for the electricity
they produce within a given period, despite having offered lower
prices. Because the same price is paid by all wholesale electricity
customers, even small price increases driven by one generator's offer
strategy, executed during specific times throughout the year, can lead
to market-wide price increases, adding tens or even hundreds of
millions of dollars annually in increased electricity bills for
consumers and businesses.
5. On January 10, 2025, Constellation announced plans to acquire
Calpine for a net purchase price of $26.6 billion (the
``Acquisition''). If allowed to proceed, the Acquisition would create
the largest wholesale electricity generating company in the United
States.
6. Constellation and Calpine each sell wholesale electricity to two
of the nation's major electricity grids, among others. The Electric
Reliability Council of Texas (``ERCOT'') encompasses most of Texas, and
PJM Interconnection LLC (``PJM'') includes all or parts of Delaware,
Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North
Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and
the District of Columbia.
7. The Acquisition would eliminate substantial competition between
Constellation and Calpine within both of these grids by increasing the
opportunity for the combined firm to engage profitably in a strategy
that withholds output from one of its plants, forcing the grid operator
to call on a higher-cost plant to set the market price. Increasing the
market-clearing price would benefit the combined firm's plants that
have had offers accepted, as well as all other active plants in the
market. The aggregation of Constellation and Calpine's portfolios of
generation capacity within each of these two grids confers more
opportunities for the combined firm to engage profitably in
anticompetitive withholding that would raise wholesale electricity
prices within those grids.
8. In short, the Acquisition would eliminate competition between
Constellation and Calpine, thereby increasing Constellation's ability
and incentive to anticompetitively withhold electricity to raise
wholesale electricity prices beyond what either company could do today
as independent competitors. A successful withholding strategy could
result in increased retail electricity prices paid by tens of millions
of residential, commercial, and industrial customers across Texas and
the area that includes southeastern Pennsylvania, New Jersey, Delaware,
and the eastern shores of Maryland and Virginia.
II. The Defendants
9. Constellation is a Pennsylvania corporation headquartered in
Baltimore, Maryland. Constellation is one of the largest competitive
electric generation companies in the nation, as measured by owned and
contracted megawatts.
10. In ERCOT, Constellation owns or exercises control over two
combined-cycle natural gas plants and one steam turbine plant. In
addition, it has a 44% interest in the South Texas Project nuclear
plant and two wind farms. Constellation's combination of nuclear, wind,
and natural gas electricity power plants collectively have the capacity
to generate approximately 5,000 megawatts (MW) of electricity in Texas.
(For context, one megawatt serves between 800 to 1,000 homes.)
11. In PJM, Constellation owns or exercises control over 25 total
plants and has a partial ownership interest in three. This includes
combined-cycle natural gas plants, nuclear plants, coal plants, oil
plants, and solar and wind renewals. These plants collectively provide
more than 20,000 MW of electric capacity across PJM.
12. Calpine is a Delaware corporation headquartered in Houston,
Texas. Calpine is the largest generator of electricity from natural gas
and geothermal resources in the United States.
13. In ERCOT, Calpine owns or exercises control over 13 combined-
cycle plants and one combustion turbine natural gas plant. In addition,
Calpine is constructing another combustion turbine natural gas plant
expected to come online in 2026 and holds a 28% interest in one
additional operating combined-cycle natural gas plant. Calpine's power
plants collectively have the capacity to generate approximately 9,000
MW of electricity, making it the third-largest electricity generation
supplier in the state.
14. In PJM, Calpine owns or exercises control over 14 total plants,
including natural gas plants, oil plants, and solar facilities. These
plants collectively provide more than 5,000 MW of electric capacity.
15. CPN CS Holdco Corp. (``Holdco'') is a Delaware corporation
headquartered in Houston, Texas and a direct wholly owned subsidiary of
Calpine. Calpine created Holdco as a vehicle for its sale to
Constellation.
III. How Electricity Is Generated and Sold
A. Wholesale Electricity
16. Electricity supplied to retail customers is produced at power
plants. Wholesale electricity is electricity that is generated for
``sale for resale'' to utilities or retail electric providers that in
turn resell it to end consumers, such as households and businesses.
Power plants often contain several individual generating units that
transform energy from fuel or a renewable resource into electricity.
Important generating technologies in these units include steam
turbines, combustion turbines,
[[Page 59207]]
and combined-cycle turbines powered by natural gas, oil, or coal, as
well as nuclear reactors, wind turbines, and solar panels.
17. Generating units vary considerably in their operating costs,
which are determined primarily by the cost of fuel and how efficiently
that fuel can be converted into electricity.
Renewable units, such as solar farms and wind turbines,
have very low operating costs, but can operate only when the sun is
shining or the wind is blowing.
Baseload units, such as nuclear plants and some coal-fired
steam turbine units, also have relatively low operating costs and
provide consistent generation throughout the day and across each season
of the year. Nuclear plants are designed to operate at full capacity
unless they are offline for refueling outages. For many coal units, it
is impractical to turn them on and off on a short-term basis because of
long startup times and mechanical stress from cycling the units on and
off.
Mid-merit units, such as combined-cycle natural gas units
and some coal steam turbines, can typically be turned on or have their
output adjusted more quickly than baseload units.
Peaking units, such as oil- and gas-fired combustion or
gas-fired steam turbine units, tend to run only during periods of high
(or ``peak'') electricity demand. They typically have the highest
operating costs of any generation units but are also the easiest to
turn on and shut off. This makes them critical for balancing supply and
demand to keep the lights on without overloading the system.
18. Electricity generated at a plant is transported via an
extensive set of interconnected high voltage lines and equipment, known
as the transmission grid, to lower voltage distribution lines that
relay electricity to homes and businesses. Transmission grid operators
closely monitor the grid to prevent too little or too much electricity
from flowing over the grid, either of which can risk widespread
blackouts through damage to the lines, equipment, or generating units
connected to the grid. To avoid damage and service interruptions, grid
operators manage a grid to prevent additional electricity from flowing
over a transmission line as that line approaches its operating limit (a
``transmission constraint'').
B. The Electric Reliability Council of Texas
19. ERCOT is an independent system operator that serves as the
electricity grid and market operator for most of Texas. This means it
manages the purchase of wholesale electricity from Constellation,
Calpine, and their competitors, as well as the resale and transmission
of that electricity to utilities and retail electric providers that
directly serve end customers.
20. ERCOT is a membership-based nonprofit corporation subject to
oversight by the Public Utility Commission of Texas. Its members
include consumers, cooperatives, generators, power marketers, retail
electricity providers, investor-owned electric utilities, transmission
and distribution providers, and municipally owned electric utilities.
C. PJM Interconnection
21. PJM is a regional transmission organization that manages the
wholesale electricity market and transmission grid that supplies
electricity to all or parts of Delaware, Illinois, Indiana, Kentucky,
Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania,
Tennessee, Virginia, West Virginia, and the District of Columbia.
22. PJM is a private, nonprofit organization whose members include
transmission line owners, generation owners, distribution companies,
retail customers, and retail electricity suppliers.
23. PJM manages the largest transmission grid in the United States,
which provides electricity to more than 67 million people. Each year,
PJM is responsible for overseeing more than $25 billion in wholesale
electricity sales.
D. ERCOT and PJM Use Auctions To Set the Price of Electricity
24. ERCOT and PJM each oversee two auctions to set the price of
wholesale electricity and ensure there is enough supply to meet demand
in their respective parts of the country. The first is a ``day-ahead''
auction that sets hourly prices for the next day, and the second is a
``real-time'' auction that sets prices for each five-minute interval
throughout the operating day to reflect changing demand for electricity
at specific times. In both auctions, competing generators, including
Constellation and Calpine, submit offers for each of their generation
units to sell electricity to electricity retailers at a specific price.
These offers are the primary means by which electricity generators
compete to supply electricity in ERCOT and PJM and drive the price
consumers ultimately pay for it.
25. In the day-ahead auctions, each buyer typically submits a bid
to ERCOT or PJM that identifies the amount of electricity that the
buyer expects to need for each hour of the next day. ERCOT or PJM then
adds up the bids to determine how much total electricity is expected to
be demanded by buyers each hour. Each generator offering electricity in
the day-ahead market (such as Constellation and Calpine) submits an
offer to sell electricity to ERCOT or PJM that indicates, for each
generating unit, the amount of electricity it is willing to sell the
next day and the price at which it is willing to sell.
26. Subject to the physical limitations of their transmission
grids, ERCOT and PJM seek to ``dispatch'' generating units, that is, to
call on them to generate electricity in ``merit'' order, meaning from
lowest offer price to highest. In the day-ahead auction, subject to
expected transmission constraints, ERCOT and PJM take the least
expensive offer first and then accept offers at progressively higher
prices until the needs for each hour of the next day are covered. This
minimizes the total cost of generating the electricity required for the
next day. The clearing price for any given hour is determined by the
generating unit with the highest offer price that is needed for that
hour. All other sellers for that hour receive that identical price
regardless of the individual unit's own offer price or costs. So, a
generating unit that offers a lower price to ERCOT or PJM is paid the
higher clearing price if electricity from additional, higher-priced
generating units is needed to meet demand.
27. The real-time auctions reconcile the outcome of the day-ahead
auctions with actual supply and demand. ERCOT and PJM follow the same
auction mechanism as in the day-ahead auctions, by accepting sellers'
offers in merit order, subject to the physical and/engineering
limitations of the transmission grid, until there is enough electricity
to meet actual demand. In the real-time auctions, however, ERCOT and
PJM set prices for each five-minute interval of the day.
28. Transmission constraints sometimes affect PJM's merit order.
When the lowest- cost generation cannot be dispatched because it would
overload a transmission constraint, it is called ``congestion.'' To
avoid congestion while still satisfying demand, PJM must call on
higher-priced units that, given their location on the grid, do not
overload transmission constraints. When this happens, prices are lower
on one side of the constraint and higher on the other side. In other
words, when the capacity of the transmission lines connecting two
regions within PJM is reached so that electricity cannot flow from one
region to another, the demand within each region has to be met by
electricity that
[[Page 59208]]
is generated within that region. In these situations, competition and
thus pricing can be different across the different regions within PJM.
IV. The Relevant Markets for Evaluating the Proposed Acquisition
A. Wholesale Electricity Is a Relevant Product Market
29. Wholesale electricity is a relevant product market for
evaluating the potential competitive impact of the Acquisition. And
each hourly increment in which wholesale electricity is sold in ERCOT's
or PJM's ``day-ahead'' auction, as well as each five-minute increment
in the ERCOT or PJM ``real-time'' auctions, constitutes a separate
relevant product market. This is because electricity available in one
time period is not a substitute for electricity available in another
time period (notwithstanding the ability to use batteries to some
extent to transfer electricity from one time period to another). While
supply and demand for wholesale electricity can vary in different
periods, both auctions share a common feature: in the event of a small
but significant non-transitory increase in the price of wholesale
electricity at relevant times, not enough purchasers are likely to
switch away from wholesale electricity to make that increase
unprofitable. Additionally, in the event of a small but significant
non-transitory increase in the price of wholesale electricity within an
hourly or five-minute interval, not enough purchasers would switch to
consuming wholesale electricity in a different time period to make that
price increase unprofitable. This means that each of these specific
auction time intervals markets is a relevant product market and a
``line of commerce'' within the meaning of Section 7 of the Clayton
Act.
30. While each of these specific time intervals is a relevant
product market, they can be aggregated into a ``cluster market'' for
analytical convenience for considering whether the Acquisition violates
the antitrust laws. For example, all 24 hours in a single day in either
PJM or ERCOT's ``day-ahead'' auction could be aggregated into one
market, as could all five-minute intervals in a single hour in PJM or
ERCOT's ``real-time'' auction. Separate cluster markets could also be
created for periods of time that exhibit similar market contexts and
competitive dynamics--for example, summer afternoons or winter nights.
B. ERCOT Is a Relevant Geographic Market
31. The region covered by ERCOT is a relevant geographic market for
evaluating the potential competitive impact of Constellation's purchase
of Calpine and a ``section of the country'' within the meaning of
Section 7 of the Clayton Act. ERCOT serves more than 27 million Texans,
who collectively account for about 90% of the state's electricity
demand. In 2024, ERCOT was responsible for overseeing the sale of more
than $14.4 billion in wholesale electricity.
32. In the event of a small but significant non-transitory increase
in the price of wholesale electricity within ERCOT, not enough
purchasers in the ERCOT region are likely to switch to purchasing from
regions outside ERCOT to make that increase unprofitable. At its annual
peak, electricity demand in ERCOT exceeds 85,000 MW. ERCOT's
connections to Mexico's grid and to the Southwest Power Pool grid,
which collectively can allow about 1,200 MW of electricity to flow into
ERCOT, are insufficient to prevent generators from imposing a small but
significant non-transitory price increase within ERCOT.
C. PJM Coastal Mid-Atlantic Is a Relevant Geographic Market
33. The PJM Coastal Mid-Atlantic geographic area is a relevant
geographic market for evaluating the potential competitive impact of
Constellation's purchase of Calpine and a ``section of the country''
within the meaning of Section 7 of the Clayton Act. The PJM Coastal
Mid-Atlantic geographic area is a distinct area within the PJM region
that includes southeastern Pennsylvania, New Jersey, Delaware, and the
eastern shores of Maryland and Virginia. In 2024, approximately $4
billion of wholesale electricity was generated and supplied to more
than 10 million people and businesses in PJM Coastal Mid-Atlantic.
34. PJM Coastal Mid-Atlantic is affected by a major transmission
constraint located near the Maryland-Pennsylvania border, called
Nottingham, that divides PJM Coastal Mid-Atlantic from the rest of the
PJM region. Generators within PJM Coastal Mid-Atlantic frequently sell
electricity into other areas to the west and south. But when
transmission lines are constrained, the amount of electricity that
generators within PJM Coastal Mid-Atlantic can sell outside of the area
is limited. As a result, electricity prices in PJM Coastal Mid-Atlantic
often differ from prices in other areas within the PJM region.
35. When Nottingham is constrained, purchasers of wholesale
electricity for use in PJM Coastal Mid-Atlantic have limited ability to
turn to generation originating outside of PJM Coastal Mid-Atlantic.
During these times, the amount of electricity that purchasers could
obtain from generators outside PJM Coastal Mid-Atlantic is insufficient
to deter generators located in PJM Coastal Mid-Atlantic from imposing a
small but significant non-transitory price increase.
V. The Acquisition Is Reasonably Likely To Raise Electricity Prices
36. The combination of Constellation and Calpine's electricity
generating units serving ERCOT and PJM Coastal Mid-Atlantic would
eliminate competition between them and enhance Constellation's post-
Acquisition ability and incentive to withhold electricity to raise
wholesale electricity price anticompetitively in those markets.
A. Constellation's Ability and Incentive To Raise Wholesale Electricity
Price in ERCOT
37. The Acquisition would increase opportunities for Constellation
to profitably engage in a withholding strategy that would increase
wholesale electricity prices in Texas. The Acquisition would almost
triple Constellation's generation capacity to nearly 14,000 MW in ERCOT
and add to its Texas portfolio a fleet of gas plants that have
relatively higher operating costs than Constellation's current fleet.
Constellation has three gas plants--one steam turbine plant and two
combined-cycle plants--that total approximately 3,500 MW. It also has a
44% share in a nuclear plant with a capacity of approximately 2,600 MW
and owns two small wind generating assets that collectively have about
170 MW of capacity. Calpine owns or controls 13 combined-cycle gas
plants in ERCOT and has a minority share in a fourteenth plant that
together have 9,000 MW of capacity.
38. The Acquisition would make Constellation the second-largest
electric generation company in Texas, controlling more than 12% of
ERCOT's generating capacity and over 20% of the natural gas generation
capacity in ERCOT that often sets the clearing price. This portfolio of
gas generation plants represents the ``marginal fuel'': natural gas
sets the price for all customers in ERCOT the majority of the time, and
is particularly valuable in ERCOT, where the electricity grid relies on
gas to complement and support its increasing use of intermittent
renewable resources such as sun and wind to generate electricity.
39. The Acquisition would give Constellation a broader portfolio of
assets that can be turned on and shut off more readily and quickly
would enable it to more frequently and more
[[Page 59209]]
strategically withhold electricity at lower opportunity costs in order
to enjoy increased market prices on the other generation units it
continues to operate. By withholding a unit--or combination of units--
from ERCOT's ``day-ahead'' or ``real-time'' auctions, Constellation
could force ERCOT to accept an offer from a higher-priced unit. This
would in turn raise the market-wide price to the benefit of
Constellation's other units. The additional revenues received by
Constellation's lower-cost generating unit(s) because of
anticompetitively higher market-wide prices would frequently more than
compensate for the lost profits from the generating unit(s) withheld.
In other words, after the Acquisition, Constellation would be in a
better position than either it or Calpine are today as independent
competitors to profit from withholding output and raising the market-
wide price to anticompetitive levels.
40. Because every other generation unit needed to meet demand in
ERCOT would also receive the anticompetitively higher market-wide
prices, the market-wide harm is much greater than simply
Constellation's increased profits and the harm would be felt across the
entire region. A small price increase that results in only millions in
profit to Constellation could result in more than $100 million in harm
to Texas consumers.
B. Constellation's Ability and Incentive To Raise Wholesale Electricity
Price in PJM Coastal Mid-Atlantic
41. The Acquisition would enhance Constellation's ability to
withhold output and raise the wholesale electricity price in PJM
Coastal Mid-Atlantic by increasing its ownership of mid-merit and
peaking units, which can be turned on or shut off more quickly than
other types of generation assets. The Acquisition would enable
Constellation to more frequently and more strategically withhold
generation capacity at lower opportunity costs.
42. Constellation can withhold capacity in several ways, such as by
submitting high offers in the PJM auctions for some of the capacity
from its higher-cost units so that they are not called on to produce
electricity. By withholding capacity from a unit--or combination of
units--from PJM's ``day-ahead'' or ``real-time'' auction, Constellation
could force PJM to accept an offer from a higher-priced unit in order
to meet demand. This would raise the price in PJM Coastal Mid-Atlantic
to the benefit of Constellation's other units supplying power to this
area.
43. The additional revenues received by Constellation's lower-cost
generation units, including its nuclear plants, because of
anticompetitively higher prices in PJM Coastal Mid-Atlantic would more
than compensate for the lost profits from the generating unit(s)
withheld. In other words, after the Acquisition, Constellation would be
in a better position than either it or Calpine is today as an
independent competitor to profit from reducing output and raising the
wholesale electricity price in PJM Coastal Mid-Atlantic.
44. Increasing Constellation's incentive and ability to profitably
withhold capacity for PJM Coastal Mid-Atlantic increases the likelihood
that Constellation will exercise market power after its acquisition of
Calpine.
VI. Potential Entry Would Not Offset Anticompetitive Effects
45. Entry into wholesale electricity markets by building new
generation capacity in either ERCOT or PJM Coastal Mid-Atlantic
requires significant capital investment in generating equipment,
infrastructure, and technology, and generally takes many years,
considering the necessary environmental, safety, zoning, and regulatory
approvals.
46. In both ERCOT and PJM Coastal Mid-Atlantic, recent supply chain
dynamics and rising inflation have made it more difficult and expensive
for companies to procure transformers and turbines to build gas-fired
generation plants. Furthermore, the anticipated increase in electricity
demand (e.g., to power AI data centers as well as population growth and
increased economic activity) has led to long queues for the delivery of
new gas turbines, so that new entry is unlikely to be timely.
47. In PJM, interconnection queue wait times, or the duration from
initial connection request to commercial operations, have increased
substantially since the early 2000s. Building new high-voltage
transmission that would relieve the constraints that limit the flow of
electricity out of PJM Coastal Mid-Atlantic would also generally take
many years, and require significant capital investment and multiple
environmental, safety, zoning, and regulatory approvals.
48. Entry into wholesale electricity markets in ERCOT and PJM
Coastal Mid-Atlantic would not be timely, likely, or sufficient in
magnitude, character, or scope to defeat an anticompetitive price
increase resulting from the Acquisition.
49. To the extent that there is new entry, including entry from
renewable generation units, it will likely lag behind the substantial
increases in demand projected in ERCOT and PJM Coastal Mid-Atlantic.
50. Defendants also cannot demonstrate verifiable, merger-specific
efficiencies sufficient to offset the Acquisition's anticompetitive
effects.
VII. Jurisdiction and Venue
51. The United States brings this action pursuant to Section 15 of
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
52. The State of Texas brings this action under Section 16 of the
Clayton Act, 15 U.S.C. 26, as parens patriae on behalf of and to
protect its general economy and the health and welfare of its residents
and to prevent and restrain the violation by Defendants of Section 7 of
the Clayton Act, 15 U.S.C. 18.
53. Defendants are engaged in interstate commerce and in activities
substantially affecting interstate commerce. The Court has subject-
matter jurisdiction over this action pursuant to Section 15 of the
Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
54. Defendants have consented to venue and personal jurisdiction in
this judicial district. Venue is therefore proper in this District
under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C.
1391(c).
VIII. Violation Alleged
55. The Acquisition, if it were consummated, likely would lessen
competition substantially for wholesale electricity in ERCOT and PJM
Coastal Mid-Atlantic, in violation of Section 7 of the Clayton Act, 15
U.S.C. 18.
56. Unless restrained, the Acquisition likely would have the
following anticompetitive effects, among others:
(a) Competition in wholesale electricity markets in ERCOT and PJM
Coastal Mid-Atlantic would be substantially lessened;
(b) Constellation would wield increased market power in wholesale
electricity markets in ERCOT and PJM Coastal Mid-Atlantic; and
(c) Prices for wholesale electricity in ERCOT and PJM Coastal Mid-
Atlantic would increase.
IX. Request for Relief
57. Plaintiffs request that this Court:
(a) Adjudge Constellation's proposed acquisition of Calpine to
violate Section 7 of the Clayton Act, 15 U.S.C. 18;
(b) Permanently enjoin and restrain Defendants from consummating
the proposed acquisition of Calpine by
[[Page 59210]]
Constellation or from entering into or carrying out any contract,
agreement, plan, or understanding, the effect of which would be to
combine Calpine and Constellation;
(c) Award the Plaintiffs their costs for this action; and
(d) Award the Plaintiffs such other and further relief as the Court
deems just and proper.
Dated: December 5, 2025.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
ABIGAIL A. SLATER
(D.C. Bar #90027189)
Assistant Attorney General
MARK H. HAMER
(D.C. Bar #1048333)
Deputy Assistant Attorney General
RYAN DANKS
Director of Civil Enforcement
GEORGE C. NIERLICH
(D.C. Bar #1004528)
Deputy Director of Civil Enforcement
PATRICIA C. CORCORAN
(D.C. Bar #461905)
Acting Chief, Transportation, Energy & Agriculture Section
KATHERINE CELESTE SPEEGLE
Assistant Chief, Transportation, Energy, & Agriculture Section
CATHERINE R. REILLY
(D.C. Bar #1002308)
Acting Assistant Chief, Transportation, Energy, & Agriculture
Section
-----------------------------------------------------------------------
JOSEPH CHANDRA MAZUMDAR *
JOHN M. BRIGGS (D.C. Bar #90035937)
J. RICHARD DOIDGE
JEREMY EVANS (D.C. Bar #478097)
WILLIAM M. MARTIN
MICHAEL T. NASH
MICHELLE PARK (D.C. Bar #90005251)
KATHRYN TRINKA (D.C. Bar #90010251)
Trial Attorneys
HENRY C. SU (D.C. Bar #441271)
PAUL J. TORZILLI (D.C. Bar #986767)
Senior Litigation Counsel
United States Department of Justice
Antitrust Division
Transportation, Energy & Agriculture Section
450 Fifth Street NW, Suite 8000
Washington, DC 20530
Telephone: (202) 353-1560
Email: [email protected]
* LEAD ATTORNEY TO BE NOTICED
FOR PLAINTIFF STATE OF TEXAS:
KEN PAXTON
Attorney General
BRENT WEBSTER
First Assistant Attorney General
RALPH MOLINA
Deputy First Assistant Attorney General
AUSTIN KINGHORN
Deputy Attorney General for Civil Litigation
OFFICE OF THE ATTORNEY GENERAL
P.O. Box 12548
Austin, Texas 78711-2548
(512) 936-1162
THOMAS D. YORK
Chief, Antitrust Division
-----------------------------------------------------------------------
COLE PRITCHETT
Assistant Attorney General
Texas State Bar No. 24134376
KATHERINE DANNENMAIER
Assistant Attorney General
Texas State Bar No. 24125093
WILLIAM SHIEBER
Senior Staff Attorney
Texas State Bar No. 24012167
COUNSEL FOR THE STATE OF
TEXAS
United States District Court for the District of Columbia
UNITED STATES OF AMERICA and STATE OF TEXAS, Plaintiffs, v.
CONSTELLATION ENERGY CORPORATION, CALPINE CORPORATION, and CPN CS
HOLDCO CORP., Defendants.
Case No. 1:25-cv-04235-ABJ
Proposed Final Judgment
Whereas, Plaintiffs, United States of America and the State of
Texas (``Texas''), filed their Complaint on December 5, 2025;
And whereas, Plaintiffs and Defendants, Constellation Energy
Corporation, Calpine Corporation, and CPN CS Holdco Corp., have
consented to entry of this Final Judgment without the taking of
testimony, without trial or adjudication of any issue of fact or law,
and without this Final Judgment constituting any evidence against or
admission by any party relating to any issue of fact or law;
And whereas, Defendants agree to make certain divestitures to
remedy the loss of competition alleged in the Complaint;
And whereas, Defendants represent that the divestitures and other
relief required by this Final Judgment can and will be made and that
Defendants will not later raise a claim of hardship or difficulty as
grounds for asking the Court to modify any provision of this Final
Judgment;
Now therefore, it is ordered, adjudged, and decreed:
I. Jurisdiction
The Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities
approved by the United States, in its sole discretion, to which
Defendants divest any of the Divestiture Assets or with which
Defendants, after approval by the United States in its sole discretion,
have entered into definitive contracts to sell any of the Divestiture
Assets. The word ``Acquirer'' in this Final Judgment may have both
singular and plural meaning.
B. ``Calpine'' means Defendant Calpine Corporation, a Delaware
corporation with its headquarters in Houston, Texas, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
C. ``Constellation'' means Defendant Constellation Energy
Corporation, a Pennsylvania corporation with its headquarters in
Baltimore, Maryland, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
D. ``CPN'' means Defendant CPN CS Holdco Corp., a Delaware
corporation headquartered in Houston, Texas and a direct, wholly-owned
subsidiary of Calpine. Calpine created CPN as a vehicle for its sale to
Constellation.
E. ``Divestiture Assets'' means the ERCOT Divestiture Assets and
the PJM Divestiture Assets.
F. ``Divestiture Date'' means each date on which the ERCOT
Divestiture Assets or the PJM Divestiture Assets are divested to an
Acquirer or Acquirers under this Final Judgment. There may be different
Divestiture Dates for each of the ERCOT Divestiture Assets and each of
the PJM Divestiture Assets.
G. ``ERCOT'' means the Electric Reliability Council of Texas, Inc.,
8000 Metropolis Drive, Building E, Suite 100, Austin, Texas 78744.
H. ``ERCOT Divestiture Assets'' means all of Defendants' rights,
titles, and interests in and to all property and assets, tangible and
intangible, wherever located, relating to or used in connection with
the generation, dispatch, and offer of electricity from the ERCOT
Divestiture Facilities, including:
1. the ERCOT Divestiture Facilities;
2. all other real property, including fee simple interests, real
property leasehold interests and renewal rights thereto, improvements
to real property, and options to purchase any adjoining or other
property, together with all buildings, facilities, and other
structures;
3. all tangible personal property, including fixed assets,
machinery and manufacturing equipment, tools, vehicles, inventory,
materials, office equipment and furniture, computer hardware, and
supplies;
[[Page 59211]]
4. all contracts, contractual rights, and customer relationships,
and all other agreements, commitments, and understandings, including
supply agreements, teaming agreements, and leases, and all outstanding
offers or solicitations to enter into a similar arrangement;
5. all contracts, contractual rights, or other agreements,
commitments, and understandings relating to employment of Relevant
Personnel who elect employment with an Acquirer pursuant to Paragraph
IV.J within 180 calendar days of the Divestiture Date;
6. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations, including those issued or
granted by any governmental organization, and all pending applications
or renewals;
7. all equipment associated with connecting to ERCOT (including
automatic generation control equipment);
8. all remote start capability or equipment;
9. all other interests, assets, or improvements;
10. all records and data, including (a) customer lists, accounts,
sales, and credit records, (b) production, repair, maintenance, and
performance records, (c) manuals and technical information Defendants
provide to their own employees, customers, suppliers, agents, or
licensees, (d) records and research data relating to historic and
current research and development activities, including designs of
experiments and the results of successful and unsuccessful designs and
experiments, and (e) drawings, blueprints, and designs;
11. all intellectual property owned, licensed, or sublicensed,
either as licensor or licensee, including (a) patents, patent
applications, and inventions and discoveries that may be patentable,
(b) registered and unregistered copyrights and copyright applications,
and (c) registered and unregistered trademarks, trade dress, service
marks, trade names, and trademark applications; and
12. all other intangible property, including (a) commercial names
and d/b/a names, (b) technical information, (c) computer software and
related documentation, know-how, trade secrets, design protocols,
specifications for materials, specifications for parts, specifications
for devices, safety procedures (e.g., for the handling of materials and
substances), quality assurance and control procedures, (d) design tools
and simulation capabilities, and (e) rights in internet websites and
internet domain names.
Provided, however, that the ERCOT Divestiture Assets do not include
Excluded Assets.
I. The ``ERCOT Divestiture Facilities'' means:
1. Jack A. Fusco Energy Center, a natural gas combined cycle plant,
located at 3440 Lockwood Rd, Richmond, TX 77469, and its contents; and
2. Calpine's interest in the Gregory Power Plant, a natural gas
combined cycle plant, located at 4633A TX-361, Gregory, TX 78359.
J. ``Excluded Assets'' means master parts and services agreements,
master consulting or professional services agreements, master
subscription and software licenses and any other assets, rights, or
properties of Defendants that Defendants use on a corporate-wide basis,
ERCOT-wide basis, or PJM-wide basis. Any asset, right, or property
necessary for the Acquirer to operate a Divestiture Asset that is
transferable within the Defendants' control and not otherwise
reasonably available to the Acquirer is not an Excluded Asset. The
United States, in its sole discretion, after consultation with Texas,
will resolve any disagreement relating to which assets, rights, or
properties are Excluded Assets.
K. ``Good Utility Practice'' means any of the applicable practices,
methods and acts (a) required by Federal Energy Regulatory Commission,
North American Electric Reliability Council, Mid-Atlantic Area Council,
PJM, ERCOT, or the successor of any of them, whether or not the party
whose conduct is at issue is a member thereof, (b) required by
applicable law or regulation, or (c) any of the practices, methods and
acts which, in the exercise of reasonable judgment in the light of the
facts known at the time the decision was made, could have been expected
to accomplish the desired result at a reasonable cost consistent with
good business practice, reliability, safety and expedition. ``Good
Utility Practice'' is not intended to be limited to the optimum
practice, method, or act to the exclusion of all others, but rather is
intended to include acceptable practices, methods, or acts generally
accepted in the region.
L. ``Including'' means including, but not limited to.
M. ``Offer'' or ``Offers'' means either (1) an offer to sell energy
submitted into the PJM Market pursuant to the version of PJM ``Amended
and Restated Operating Agreement of PJM Interconnection, LLC,''
available at www.pjm.com in effect at the time the offer is made, or
(2) an offer to sell energy submitted into the ERCOT Market pursuant to
the Real-Time and Day-Ahead Market rules, as defined in the ERCOT Nodal
Protocols, available at https://www.ercot.com/mktrules/nprotocols/current, in effect at the time the offer is made.
N. ``PJM'' means PJM Interconnection, LLC, 2750 Monroe Blvd.,
Audubon, Pennsylvania 19403.
O. ``PJM Divestiture Assets'' means all of Defendants' rights,
titles, and interests in and to all property and assets, tangible and
intangible, wherever located, relating to or used in connection with
the generation, dispatch, and offer of electricity from the PJM
Divestiture Facilities, including:
1. the PJM Divestiture Facilities;
2. all other real property, including fee simple interests, real
property leasehold interests and renewal rights thereto, improvements
to real property, and options to purchase any adjoining or other
property, together with all buildings, facilities, and other
structures;
3. all tangible personal property, including fixed assets,
machinery and manufacturing equipment, tools, vehicles, inventory,
materials, office equipment and furniture, computer hardware, and
supplies;
4. all contracts, contractual rights, and customer relationships,
and all other agreements, commitments, and understandings, including
supply agreements, teaming agreements, and leases, and all outstanding
offers or solicitations to enter into a similar arrangement;
5. all contracts, contractual rights, or other agreements,
commitments, and understandings relating to employment of Relevant
Personnel who elect employment with an Acquirer pursuant to Paragraph
IV.J within 180 calendar days of the Divestiture Date;
6. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations, including those issued or
granted by any governmental organization, and all pending applications
or renewals;
7. all equipment associated with connecting to PJM (including
automatic generation control equipment);
8. all remote start capability or equipment;
9. all other interests, assets, or improvements;
10. all records and data, including (a) customer lists, accounts,
sales, and credit records, (b) production, repair, maintenance, and
performance records, (c) manuals and technical information Defendants
provide to their own employees, customers, suppliers, agents, or
licensees, (d) records and research
[[Page 59212]]
data relating to historic and current research and development
activities, including designs of experiments and the results of
successful and unsuccessful designs and experiments, and (e) drawings,
blueprints, and designs;
11. all intellectual property owned, licensed, or sublicensed,
either as licensor or licensee, including (a) patents, patent
applications, and inventions and discoveries that may be patentable,
(b) registered and unregistered copyrights and copyright applications,
and (c) registered and unregistered trademarks, trade dress, service
marks, trade names, and trademark applications; and
12. all other intangible property, including (a) commercial names
and d/b/a names, (b) technical information, (c) computer software and
related documentation, know-how, trade secrets, design protocols,
specifications for materials, specifications for parts, specifications
for devices, safety procedures (e.g., for the handling of materials and
substances), quality assurance and control procedures, (d) design tools
and simulation capabilities, and (e) rights in internet websites and
internet domain names.
Provided, however, that the PJM Divestiture Assets do not include
any Excluded Assets.
P. ``PJM Divestiture Facilities'' means the following facilities
and their contents:
1. Bethlehem Energy Center, a natural gas combined cycle plant,
located at 2254 Applebutter Road, Bethlehem, PA 18015;
2. York 1 Energy Center, a dual-fuel combined cycle natural gas
plant, located at 1055 Pikes Peak Road, Delta, PA 17314;
3. York 2 Energy Center, a dual-fuel combined cycle natural gas
plant, located at 1597 Atom Road, Delta, PA 17314;
4. Hay Road Energy Center, a dual-fuel combined cycle natural gas
plant, located at 198 Hay Road, Wilmington, DE 19809; and
5. Edge Moor Energy Center, a simple cycle natural gas plant,
located at 200 Hay Road, Wilmington, DE 19809.
Q. ``Regulatory Approvals'' means (1) any approvals or clearances
from the Federal Energy Regulatory Commission or any local, state, or
other federal regulatory body that are required for the Transaction to
proceed; and (2) any approvals or clearances from the Federal Energy
Regulatory Commission or any local, state, or other federal regulatory
body that are required for an Acquirer's acquisition of any Divestiture
Asset to proceed.
R. ``Relevant Personnel'' means all full-time, part-time, or
contract employees of Defendants, wherever located, who as of the date
of filing this document with the Court are or have been stationed at or
assigned to a specific Divestiture Asset and are involved in the
operation of a Divestiture Asset, for the period between the date of
the filing of this document and the Divestiture Date. The United
States, in its sole discretion, will resolve any disagreement relating
to which employees are Relevant Personnel.
S. ``Transaction'' means Constellation's acquisition of Calpine
that is the subject of the ``Agreement and Plan of Merger'' between
Constellation and Calpine dated January 10, 2025.
III. Applicability
A. This Final Judgment applies to Constellation, Calpine, and CPN,
as defined above, and all other persons in active concert or
participation with any Defendant who receive actual notice of this
Final Judgment.
B. If, prior to complying with Section IV and Section V of this
Final Judgment, Defendants sell or otherwise dispose of all or
substantially all of their assets or of business units that include
Divestiture Assets, Defendants must require any purchaser to be bound
by the provisions of this Final Judgment. Defendants need not obtain
such an agreement from Acquirers.
IV. Divestitures
A. Defendants are ordered and directed to divest the Divestiture
Assets in a manner consistent with this Final Judgment to an Acquirer
or Acquirers acceptable to the United States, in its sole discretion,
after consultation with Texas. Defendants must enter into a definitive
contract or contracts for sale of the Divestiture Assets within 240
calendar days after consummation of the Transaction. The United States,
in its sole discretion, may grant up to two thirty (30) day extensions
of this time period, not to exceed sixty (60) calendar days in total,
and will notify the Court in such circumstances. Defendants must seek
Regulatory Approvals within five calendar days after the United States
provides written notice pursuant to Paragraph VI.C. that it does not
object to the proposed Acquirer or Acquirers. Defendants must divest
the relevant Divestiture Assets no later than thirty (30) calendar days
after receiving, for all of any Acquirer's Divestiture Assets, the last
necessary Regulatory Approvals required for that Acquirer's Divestiture
Assets. The United States, in its sole discretion, may grant up to one
fifteen (15) day extension of this time period, and will notify the
Court in such circumstances. For the avoidance of doubt, the deadlines
set forth in this Paragraph apply independently to each set of
Divestiture Assets (ERCOT Divestiture Assets and PJM Divestiture
Assets), such that the timing of receipt of Regulatory Approvals
required for divestiture of one set of Divestiture Assets does not
provide a basis to delay the divestiture of the other set of
Divestiture Assets. For the avoidance of doubt, the divestiture of
assets to a particular Acquirer need only be completed once all
relevant Regulatory Approvals have been received for all assets to be
divested to that Acquirer.
B. For all contracts, agreements, and customer relationships (or
portions of such contracts, agreements, and customer relationships)
included in the Divestiture Assets, Defendants must assign or otherwise
transfer all contracts, agreements, and customer relationships to
Acquirer or Acquirers within the deadlines for divestiture set forth in
Paragraph IV.A; provided, however, that for any contract or agreement
that requires the consent of another party to assign or otherwise
transfer, Defendants must use best efforts to accomplish the assignment
or transfer but it may not be a violation of this Final Judgment to
fail to obtain the required consents. Defendants must not interfere
with any negotiations between an Acquirer and a contracting party.
C. Defendants must use best efforts to divest the Divestiture
Assets as expeditiously as possible. Defendants must take no action
that would jeopardize the completion of the divestitures ordered by the
Court, including any action to impede the permitting, operation, or
divestiture of the Divestiture Assets.
D. Unless the United States otherwise consents in writing, the
divestitures pursuant to this Final Judgment must include the entire
Divestiture Assets and must be accomplished in such a way as to satisfy
the United States, in its sole discretion, after consultation with
Texas, that the Divestiture Assets can and will be used by Acquirer or
Acquirers as part of a viable, ongoing business of electric generation
services and that divestiture to Acquirer or Acquirers will remedy the
competitive harm alleged in the Complaint.
E. The divestitures must be made to one or more Acquirers that, in
the United States' sole judgment, after consultation with Texas, have
the intent and capability, including the necessary managerial,
operational, technical, and financial capability, to compete
[[Page 59213]]
effectively in the business of the provision of electric generation
services.
F. The divestitures must be accomplished in a manner that satisfies
the United States, in its sole discretion, after consultation with
Texas, that none of the terms of any agreement between an Acquirer and
Defendants give Defendants the ability unreasonably to raise an
Acquirer's costs, to lower an Acquirer's efficiency, or otherwise
interfere in the ability of an Acquirer to compete effectively in the
provision of electric generation services.
G. Divestiture of the Divestiture Assets may be made to one or more
Acquirers, provided that it is demonstrated to the sole satisfaction of
the United States, after consultation with Texas, that the criteria
required by Paragraphs IV.D., IV.E., and IV.F. will still be met.
H. In accomplishing the divestitures ordered by this Final
Judgment, Defendants promptly must make known, by usual and customary
means, the availability of the Divestiture Assets, except that, for
Calpine's interest in the Gregory Power Plant, such notice of
availability will be subject to any third-party rights under the
existing partnership agreements relating to the Gregory Power Plant.
Defendants must inform any person making an inquiry relating to a
possible purchase of the Divestiture Assets that the Divestiture Assets
are being divested in accordance with this Final Judgment and must
provide that person with a copy of this Final Judgment. Defendants must
offer to furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating to
the Divestiture Assets that are customarily provided in a due diligence
process; provided, however, that Defendants need not provide
information or documents subject to the attorney-client privilege or
work-product doctrine. Defendants must make all information and
documents available to Plaintiffs at the same time that the information
and documents are made available to any other person.
I. Defendants must provide prospective Acquirers with (1) access to
make inspections of the Divestiture Assets; (2) access to all
environmental, zoning, and other permitting documents and information
relating to the Divestiture Assets; and (3) access to all financial,
operational, or other documents and information relating to the
Divestiture Assets that would customarily be provided as part of a due
diligence process. Defendants also must disclose all encumbrances on
any part of the Divestiture Assets, including on intangible property.
Provided, however, that a prospective Acquirer interested in purchasing
only one or some of the Divestiture Assets must be provided with (1)-
(3) for only the relevant Divestiture Assets of interest.
J. Defendants must cooperate with and assist any Acquirer in
identifying and, at the option of Acquirer, hiring all Relevant
Personnel, including:
1. Within 10 business days following receipt of a request by an
Acquirer or a Plaintiff, Defendants must identify all Relevant
Personnel to the requesting Acquirer and the Plaintiffs, including by
providing organization charts covering all Relevant Personnel.
2. Within 10 business days following receipt of a request by an
Acquirer or a Plaintiff, Defendants must provide to the requesting
Acquirer and Plaintiffs additional information relating to Relevant
Personnel, including name, job title, reporting relationships, past
experience, responsibilities, training and educational histories,
relevant certifications, and job performance evaluations. Defendants
must also provide to a requesting Acquirer and Plaintiffs information
relating to current and accrued compensation and benefits of Relevant
Personnel, including most recent bonuses paid, aggregate annual
compensation, current target or guaranteed bonus, if any, any retention
agreement or incentives, and any other payments due, compensation or
benefits accrued, or promises made to the Relevant Personnel. If
Defendants are barred by any applicable law from providing any of this
information, Defendants must provide, within 10 business days following
receipt of the request, the requested information to the full extent
permitted by law and also must provide a written explanation of
Defendants' inability to provide the remaining information, including
specifically identifying the provisions of the applicable laws.
3. At the request of an Acquirer, Defendants must promptly make
Relevant Personnel available for private interviews with the requesting
Acquirer during normal business hours at a mutually agreeable location.
4. Defendants must not interfere with any effort by an Acquirer to
employ any Relevant Personnel. Interference includes offering to
increase the compensation or improve the benefits of Relevant Personnel
at any time after the date of the filing of this document, unless (a)
the offer is part of an annual compensation increase or improvement in
benefits pursuant to the Defendants' compensation and benefit programs
existing as of December 1, 2025, (b) the offer is part of a tenure-
based, automatic increase in compensation or improvement in benefits,
(c) the offer is otherwise required pursuant to the terms of collective
bargaining agreements relating to the Divested Assets, (d) the offer is
consistent with the terms of the Asset Preservation and Hold Separate
Stipulation and Order, or (e) the offer is approved by the United
States in its sole discretion. Defendants' obligations under this
Paragraph IV.J.4. will expire 150 calendar days after the Divestiture
Date for the relevant Divestiture Assets.
5. For Relevant Personnel who elect employment with an Acquirer
within 150 calendar days of the Divestiture Date for the relevant
Divestiture Assets, Defendants must waive all non-compete and non-
disclosure agreements; vest and pay to the Relevant Personnel (or to
Acquirer for payment to the employee) on a prorated basis any bonuses,
incentives, other salary, benefits, or other compensation fully or
partially accrued at the time of the transfer of the employee to
Acquirer; vest any unvested pension and other equity rights; and
provide all other benefits that those Relevant Personnel otherwise
would have been provided had the Relevant Personnel continued
employment with Defendants, including any retention bonuses or
payments. Defendants may maintain reasonable restrictions on disclosure
by Relevant Personnel of Defendants' proprietary non-public information
that is unrelated to the Divestiture Assets and not otherwise required
to be disclosed by this Final Judgment.
K. Defendants must warrant to any Acquirer that (1) the Divestiture
Assets to be divested to that Acquirer will be operational and without
material defect on the date of their transfer to the Acquirer; (2) the
Divestiture Assets to be divested to that Acquirer will be consistent
with Good Utility Practice, subject to legal or regulatory restrictions
on any of the Divestiture Assets in existence on the date of sale; (3)
there are no material defects in the environmental, zoning, or other
permits relating to the operation of the Divestiture Assets to be
divested to that Acquirer; and (4) Defendants have disclosed all
material encumbrances on any part of the Divestiture Assets to be
divested to that Acquirer, including on intangible property. Following
the sale of any Divestiture Assets, Defendants must not undertake,
directly or indirectly, challenges to the environmental, zoning, or
other permits relating to the operation of those Divestiture Assets.
L. Defendants must use best efforts to assist the Acquirer or
Acquirers to obtain all necessary licenses,
[[Page 59214]]
registrations, and permits to operate the relevant Divestiture Assets.
Until an Acquirer obtains the necessary licenses, registrations, and
permits, Defendants must provide that Acquirer with the benefit of
Defendants' licenses, registrations, and permits to the full extent
permissible by law.
M. If any term of an agreement between Defendants and an Acquirer,
including an agreement to effectuate any of the divestitures required
by this Final Judgment, varies from a term of this Final Judgment, to
the extent that Defendants cannot fully comply with both, this Final
Judgment determines Defendants' obligations.
V. Appointment of Divestiture Trustee
A. If Defendants have not divested all of the Divestiture Assets
within the period specified in Paragraph IV.A., Defendants must
immediately notify Plaintiffs of that fact in writing. Upon application
of the United States, which Defendants may not oppose, the Court will
appoint a divestiture trustee selected by the United States and
approved by the Court to effect the divestiture of any of the
Divestiture Assets that have not been sold during the time periods
specified in Paragraph IV.A.
B. After the appointment of a divestiture trustee by the Court,
only the divestiture trustee will have the right to sell those
Divestiture Assets that the divestiture trustee has been appointed to
sell. The divestiture trustee will have the power and authority to
accomplish the divestitures to an Acquirer or Acquirers acceptable to
the United States, in its sole discretion, after consultation with
Texas, at a price and on terms obtainable through reasonable effort by
the divestiture trustee, subject to the provisions of Sections IV, V,
and VI of this Final Judgment, and will have other powers as the Court
deems appropriate. The divestiture trustee must sell the Divestiture
Assets as quickly as possible.
C. Defendants may not object to a sale by the divestiture trustee
on any ground other than malfeasance by the divestiture trustee.
Objections by Defendants must be conveyed in writing to the United
States and the divestiture trustee within 10 calendar days after the
divestiture trustee has provided the notice of proposed divestiture
required by Section VI.
D. The divestiture trustee will serve at the cost and expense of
Defendants pursuant to a written agreement, on terms and conditions,
including confidentiality requirements and conflict of interest
certifications, approved by the United States in its sole discretion.
E. The divestiture trustee may hire at the cost and expense of
Defendants any agents or consultants, including investment bankers,
attorneys, and accountants, that are reasonably necessary in the
divestiture trustee's judgment to assist with the divestiture trustee's
duties. These agents or consultants will be accountable solely to the
divestiture trustee and will serve on terms and conditions, including
confidentiality requirements and conflict-of-interest certifications,
approved by the United States in its sole discretion.
F. The compensation of the divestiture trustee and agents or
consultants hired by the divestiture trustee must be reasonable in
light of the value of the Divestiture Assets and based on a fee
arrangement that provides the divestiture trustee with incentives based
on the price and terms of the divestiture and the speed with which it
is accomplished. If the divestiture trustee and Defendants are unable
to reach agreement on the divestiture trustee's compensation or other
terms and conditions of engagement within 14 calendar days of the
appointment of the divestiture trustee by the Court, the United States,
in its sole discretion, may take appropriate action, including by
making a recommendation to the Court. Within three business days of
hiring an agent or consultant, the divestiture trustee must provide
written notice of the hiring and rate of compensation to Defendants and
the United States.
G. The divestiture trustee must account for all monies derived from
the sale of the Divestiture Assets by the divestiture trustee and all
costs and expenses incurred. Within 30 calendar days of the Divestiture
Date, the divestiture trustee must submit that accounting to the Court
for approval. After approval by the Court of the divestiture trustee's
accounting, including fees for unpaid services and those of agents or
consultants hired by the divestiture trustee, all remaining money must
be paid to Defendants, and the trust will then be terminated.
H. Defendants must use best efforts to assist the divestiture
trustee to accomplish the required divestitures, including best efforts
to obtain all necessary Regulatory Approvals. Subject to reasonable
protection for trade secrets, other confidential research, development,
or commercial information, or any applicable privileges, Defendants
must provide the divestiture trustee and agents or consultants retained
by the divestiture trustee with full and complete access to all
personnel, books, records, and facilities of the Divestiture Assets.
Defendants also must provide or develop financial and other information
relevant to the Divestiture Assets that the divestiture trustee may
reasonably request. Defendants must not take any action to interfere
with or to impede the divestiture trustee's accomplishment of the
divestitures.
I. The divestiture trustee must maintain complete records of all
efforts made to sell the Divestiture Assets, including by providing
monthly reports to the Plaintiffs setting forth the divestiture
trustee's efforts to accomplish the divestitures ordered by this Final
Judgment. The reports must include the name, address, and telephone
number of each person who, during the preceding month, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring any
interest in the Divestiture Assets and must describe in detail each
contact.
J. If the divestiture trustee has not accomplished the divestitures
ordered by this Final Judgment within 180 calendar days of appointment,
the divestiture trustee must promptly provide Plaintiffs with a report
setting forth: (1) the divestiture trustee's efforts to accomplish the
required divestitures; (2) the reasons, in the divestiture trustee's
judgment, why the required divestitures have not been accomplished; and
(3) the divestiture trustee's recommendations for completing the
divestitures. Following receipt of that report, the United States may
make additional recommendations to the Court. The Court thereafter may
enter such orders as it deems appropriate to carry out the purpose of
this Final Judgment, which may include extending the trust and the term
of the divestiture trustee's appointment by a period requested by the
United States.
K. The divestiture trustee will serve until divestiture of all
Divestiture Assets is completed or for a term otherwise ordered by the
Court.
L. If the United States determines that the divestiture trustee is
not acting diligently or in a reasonably cost-effective manner, the
United States may recommend that the Court appoint a substitute
divestiture trustee.
VI. Notice of Proposed Divestiture
A. Within two business days following execution of a definitive
agreement to divest the Divestiture Assets, Defendants or the
divestiture trustee, whichever is then responsible for effecting the
divestitures, must
[[Page 59215]]
notify Plaintiffs of the proposed divestiture. If the divestiture
trustee is responsible for completing the divestiture, the divestiture
trustee also must notify Defendants. The notice must set forth the
details of the proposed divestiture and list the name, address, and
telephone number of each person not previously identified who offered
or expressed an interest in or desire to acquire any ownership interest
in the Divestiture Assets.
B. After receipt of the notice required by Paragraph VI.A., the
United States, after consultation with Texas, may make one or more
requests to Defendants or the divestiture trustee for additional
information concerning the proposed divestiture, the proposed
Acquirers, and other prospective Acquirers. Defendants and the
divestiture trustee must furnish any additional information requested
within 15 calendar days of the receipt of each request unless the
United States provides written agreement to a different period.
C. Within 45 calendar days after receipt of the notice required by
Paragraph VI.A or within 20 calendar days after the United States has
been provided the additional information requested pursuant to
Paragraph VI.B, whichever is later, the United States will provide
written notice to Defendants and any divestiture trustee that states
whether the United States, in its sole discretion, after consultation
with Texas, objects to the proposed Acquirers or any other aspect of
the proposed divestitures. Without written notice that the United
States does not object, a divestiture may not be consummated. If the
United States provides written notice that it does not object, the
divestiture may be consummated, subject only to Defendants' limited
right to object to the sale under Paragraph V.C. of this Final
Judgment. Upon objection by Defendants pursuant to Paragraph V.C., a
divestiture by the divestiture trustee may not be consummated unless
approved by the Court.
VII. Financing
Defendants may not finance all or any part of any Acquirer's
purchase of all or part of the Divestiture Assets.
VIII. Asset Preservation and Hold Separate Obligations
Defendants must take all steps necessary to comply with the Asset
Preservation and Hold Separate Stipulation and Order entered by the
Court.
IX. Affidavits
A. Within 20 calendar days of entry of the Hold Separate
Stipulation and Order in this matter, and every 30 calendar days
thereafter until all divestitures required by this Final Judgment have
been completed, each Defendant must deliver to Plaintiffs an affidavit,
signed by each Defendant's Chief Financial Officer and General Counsel,
describing in reasonable detail the fact and manner of that Defendant's
compliance with this Final Judgment. The United States, in its sole
discretion, may approve different signatories for the affidavits.
B. Each affidavit required by Paragraph IX.A. must include: (1) the
name, address, and telephone number of each person who, during the
preceding 30 calendar days, made an offer to acquire, expressed an
interest in acquiring, entered into negotiations to acquire, or was
contacted or made an inquiry about acquiring, an interest in the
Divestiture Assets and describe in detail each contact with such
persons during that period; (2) a description of the efforts Defendants
have taken to solicit buyers for and complete the sale of the
Divestiture Assets and to provide required information to prospective
Acquirers; and (3) a description of any limitations placed by
Defendants on information provided to prospective Acquirers. Objection
by the United States to information provided by Defendants to
prospective Acquirers must be made within 14 calendar days of receipt
of the affidavit, except that the United States may object at any time
if the information set forth in the affidavit is not true or complete.
C. Defendants must keep all records of any efforts made to divest
the Divestiture Assets until one year after the Divestiture Date.
D. Within 20 calendar days of the filing of the Complaint in this
matter, each Defendant must deliver to Plaintiffs an affidavit signed
by each Defendant's Chief Financial Officer and General Counsel that
describes in reasonable detail all actions that Defendant has taken and
all steps that Defendant has implemented on an ongoing basis to comply
with Section VIII of this Final Judgment. The United States, in its
sole discretion, may approve different signatories for the affidavits.
E. If a Defendant makes any changes to actions and steps described
in affidavits provided pursuant to Paragraph IX.A, the Defendant must,
within 15 calendar days after any change is implemented, deliver to
Plaintiffs an affidavit describing those changes.
F. Defendants must keep all records of any efforts made to comply
with Section IX until one year after the Divestiture Date.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment or of related orders such as the Asset Preservation and
Hold Separate Stipulation and Order or of determining whether this
Final Judgment should be modified or vacated, upon written request of
an authorized representative of the Assistant Attorney General for the
Antitrust Division and reasonable notice to Defendants, Defendants must
permit, from time to time and subject to legally recognized privileges,
authorized representatives, including agents retained by the United
States:
1. to have access during Defendants' office hours to inspect and
copy, or at the option of the United States, to require Defendants to
provide electronic copies of all books, ledgers, accounts, records,
data, and documents, wherever located, in the possession, custody, or
control of Defendants relating to any matters contained in this Final
Judgment; and
2. to interview, either informally or on the record, Defendants'
officers, employees, or agents, wherever located, who may have their
individual counsel present, relating to any matters contained in this
Final Judgment. The interviews must be subject to the reasonable
convenience of the interviewee and without restraint or interference by
Defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General for the Antitrust Division, Defendants must
submit written reports or respond to written interrogatories, under
oath if requested, relating to any matters contained in this Final
Judgment.
XI. No Reacquisition
Defendants may not reacquire any part of or any interest in the
Divestiture Assets during the term of this Final Judgment without prior
written authorization of the United States.
XII. Public Disclosure
A. No information or documents obtained pursuant to any provision
in this Final Judgment may be divulged by Plaintiffs to any person
other than an authorized representative of the executive branch of the
United States or an authorized representative of Texas, except in the
course of legal proceedings
[[Page 59216]]
to which the United States or Texas are a party, including grand-jury
proceedings, for the purpose of evaluating a proposed Acquirer or
securing compliance with this Final Judgment, or as otherwise required
by law.
B. In the event of a request by a third party, pursuant to the
Freedom of Information Act, 5 U.S.C. 552, or similar state disclosure
laws, for disclosure of information obtained pursuant to any provision
of this Final Judgment, the United States will act in accordance with
that statute and the Department of Justice regulations at 28 CFR part
16, including the provision on confidential commercial information at
28 CFR 16.7, and Texas will act in accordance with its applicable
disclosure laws. Defendants submitting information to the Antitrust
Division or Texas should designate the confidential commercial
information portions of all applicable documents and information under
28 CFR 16.7 or the relevant state statute. Designations of
confidentiality under 28 CFR part 16 expire 10 years after submission,
``unless the submitter requests and provides justification for a longer
designation period.'' See 28 CFR 16.7(b).
C. If at the time that Defendants furnish information or documents
to the United States or Texas pursuant to any provision of this Final
Judgment, Defendants represent and identify in writing information or
documents for which a claim of protection may be asserted under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure, and Defendants
mark each pertinent page of such material, ``Subject to claim of
protection under Rule 26(c)(1)(G) of the Federal Rules of Civil
Procedure,'' the United States and Texas must give Defendants 10
calendar days' notice before divulging the material in any legal
proceeding (other than a grand jury proceeding).
XIII. Retention of Jurisdiction
The Court retains jurisdiction to enable any party to this Final
Judgment to apply to the Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIV. Enforcement of Final Judgment
A. The United States and Texas retain and reserve all rights to
enforce the provisions of this Final Judgment, including the right to
seek an order of contempt from the Court. In a civil contempt action, a
motion to show cause, or a similar action brought by the United States
or Texas relating to an alleged violation of this Final Judgment, the
United States or Texas may establish a violation of this Final Judgment
and the appropriateness of a remedy therefor by a preponderance of the
evidence, and Defendants waive any argument that a different standard
of proof should apply.
B. This Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore the
competition the Plaintiffs allege was harmed by the challenged conduct.
Defendants may be held in contempt of, and the Court may enforce, any
provision of this Final Judgment that, as interpreted by the Court in
light of these procompetitive principles and applying ordinary tools of
interpretation, is stated specifically and in reasonable detail,
whether or not it is clear and unambiguous on its face. In any such
interpretation, the terms of this Final Judgment should not be
construed against either party as the drafter.
C. In an enforcement proceeding in which the Court finds that
Defendants have violated this Final Judgment, the United States may
apply to the Court for an extension of this Final Judgment, together
with other relief that may be appropriate. In connection with a
successful effort by the United States or Texas to enforce this Final
Judgment against a Defendant, whether litigated or resolved before
litigation, Defendant must reimburse the United States and Texas for
the fees and expenses of their attorneys, as well as all other costs
including experts' fees, incurred in connection with that effort to
enforce this Final Judgment, including in the investigation of the
potential violation.
D. For a period of four years following the expiration of this
Final Judgment, if the United States has evidence that a Defendant
violated this Final Judgment before it expired, the United States, may
file an action against that Defendant in this Court requesting that the
Court order: (1) Defendant to comply with the terms of this Final
Judgment for an additional term of at least four years following the
filing of the enforcement action; (2) all appropriate contempt
remedies; (3) additional relief needed to ensure the Defendant complies
with the terms of this Final Judgment; and (4) fees or expenses as
called for by this Section XIV.
XV. Expiration of Final Judgment
Unless the Court grants an extension, this Final Judgment will
expire 10 years from the date of its entry, except that after five
years from the date of its entry, this Final Judgment may be terminated
upon notice by the United States to the Court, Defendants, and Texas
that the divestitures have been completed and continuation of this
Final Judgment is no longer necessary or in the public interest.
XVI. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including by making available to the
public copies of this Final Judgment and the Competitive Impact
Statement, public comments thereon, and any response to comments by the
United States. Based upon the record before the Court, which includes
the Competitive Impact Statement and, if applicable, any comments and
response to comments filed with the Court, entry of this Final Judgment
is in the public interest.
Date:------------------------------------------------------------------
[Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16]
-----------------------------------------------------------------------
United States District Judge
United States District Court for the District of Columbia
UNITED STATES OF AMERICA, and STATE OF TEXAS, Plaintiffs, v.
CONSTELLATION ENERGY CORPORATION, CALPINE CORPORATION, and CPN CS
HOLDCO CORP., Defendants.
Case No. 1:25-cv-04235-ABJ
Competitive Impact Statement
In accordance with the Antitrust Procedures and Penalties Act, 15
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of
America files this Competitive Impact Statement related to the proposed
Final Judgment filed in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On January 10, 2025, Constellation Energy Corporation
(``Constellation'') announced its agreement to acquire Calpine
Corporation (``Calpine'') for a net purchase price of $26.6 billion
(the ``Acquisition''), a transaction that would create the largest
wholesale electricity generating company in the United States. The
United States and the State of Texas (collectively, the
``Plaintiffs''), filed a civil antitrust Complaint on December 5, 2025,
seeking to enjoin the Acquisition.
The Complaint alleges that the likely effect of this Acquisition
would be to substantially lessen competition for wholesale electricity
in two relevant geographic markets in violation of
[[Page 59217]]
Section 7 of the Clayton Act, 15 U.S.C. 18. One market comprises the
area operated by the Electric Reliability Council of Texas (``ERCOT''),
an independent system operator that serves as the electricity grid and
market operator for most of Texas. ERCOT's electricity is delivered to
more than 27 million Texans, supplying approximately 90% of the state's
electricity demand. In 2024, ERCOT oversaw the sale of more than $14.4
billion in wholesale electricity. The second market comprises the
Coastal Mid-Atlantic area of the PJM Interconnection, LLC (``PJM'').
PJM is a regional transmission organization that manages the largest
electricity transmission grid in the United States. It serves all or
parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New
Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West
Virginia, and the District of Columbia, supplying electricity to more
than 67 million Americans. The PJM Coastal Mid-Atlantic geographic area
is a distinct area within PJM that includes southeastern Pennsylvania,
New Jersey, Delaware, and the eastern shores of Maryland and Virginia.
In 2024, approximately $4 billion of wholesale electricity was
generated and supplied to more than 10 million people and businesses in
PJM's Coastal Mid-Atlantic area.
Concurrent with filing the Complaint, the United States filed a
proposed Final Judgment \1\ and an Asset Preservation and Hold Separate
Stipulation and Order (``Stipulation and Order''),\2\ which are
designed to remedy the loss of competition alleged in the Complaint.
---------------------------------------------------------------------------
\1\ Proposed Final Judgment, United States et al. v.
Constellation Energy Corporation, et al., No. 25-cv-4235, ECF 2-2
(D.D.C. Dec. 5, 2025).
\2\ Asset Preservation And Hold Separate Stipulation And Order,
United States et al. v. Constellation Energy Corporation, No. 25-cv-
4235, ECF 2-1 (D.D.C. Dec. 5, 2025).
---------------------------------------------------------------------------
Under the proposed Final Judgment, which is explained more fully
below, Constellation, Calpine, and CPN CS Holdco Corp. (collectively
the ``Defendants'') are required to divest the Calpine electric
generating facilities listed below.
In ERCOT:
Jack A. Fusco Energy Center, located southwest of the city
of Houston, Texas (``Jack A. Fusco''); and
Calpine's minority ownership interest in the Gregory
Energy Center, located northeast of the city of Corpus Christi, Texas
(``Gregory'').
In PJM:
Bethlehem Energy Center, located in Bethlehem,
Pennsylvania (``Bethlehem'');
Edge Moor Energy Center, located in Wilmington, Delaware
(``Edge Moor'');
Hay Road Energy Center, located in Wilmington, Delaware
(``Hay Road''); and
York Energy Center (York 1 and York 2), located southeast
of the city of York, Pennsylvania (``York'').
The Stipulation and Order requires the Defendants to take certain
steps to operate, preserve, and maintain the full economic viability,
marketability, and competitiveness of the assets that must be divested
pending entry of the proposed Final Judgment by this Court. Plant
management and operations of the assets to be divested must be held
entirely separate, distinct, and apart from Defendants' other
operations.
For the four PJM electric generating facilities the Defendants must
divest, the Stipulation and Order requires the Defendants to submit
offers into the PJM day-ahead auction market, described in detail at
Section II.B.2 below, at a price not greater than its costs. For each
of these facilities, the Defendants must submit offers to this market
at cost or lower, unless unable to do so due to an outage, as defined
in the Stipulation and Order. In the event of an outage, the Defendants
must submit offers for all output that is unaffected by the outage.
Similarly, for Jack A. Fusco, the Defendants must submit offers into
ERCOT's day-ahead auction, described in detail at Section II.B.2 below,
at a price not greater than its costs in accordance with the physical
characteristics of the applicable units unless unable to do so due to
an outage or because ERCOT has issued an Advanced Action Notice or
Weather Watch as specified in the Stipulation and Order. In the event
of an outage, ERCOT Advanced Action Notice, or ERCOT Weather Watch, the
Defendants must submit offers for all output that is unaffected by the
outage, ERCOT Advanced Action Notice, or ERCOT Weather Watch. The
Stipulation and Order prohibits the Defendants from participating in
the formulation, determination, or direction of the strategy for
Gregory's offers into the ERCOT auction markets.
The purpose of these terms in the Stipulation and Order is to
ensure that competition is maintained during the pendency of the
required divestiture of the six Calpine electric generating facilities
listed above.
The Plaintiffs and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment will terminate this action, except that the
Court will retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of Events Giving Rise to the Alleged Violations
A. The Defendants and the Proposed Acquisition
Constellation is a publicly held Pennsylvania corporation
headquartered in Baltimore, Maryland. The company is one of the largest
competitive electric generation companies in the nation, as measured by
owned and contracted megawatts, generating $23.6 billion in revenue in
2024. Constellation controls approximately 5,000 megawatts (MW) of
electric generation capacity in ERCOT and over 20,000 MW in PJM. For
context, one MW serves between 800 to 1,000 homes.
Calpine is a privately held Delaware corporation headquartered in
Houston, Texas. Calpine is the largest generator of electricity from
natural gas and geothermal resources in the United States. Calpine's
power plants collectively have the capacity to generate approximately
9,000 MW of electricity in ERCOT, making it the third-largest
electricity generation supplier in the state. In PJM, Calpine owns or
exercises control over 14 total plants. These plants collectively
provide more than 5,000 MW of capacity.
Defendant CPN CS Holdco Corp. (``Holdco'') is a Delaware
corporation headquartered in Houston, Texas. It is a direct wholly
owned subsidiary of Calpine that was created to serve as a vehicle for
Calpine's sale to Constellation.
Pursuant to an Agreement and Plan of Merger dated January 10, 2025,
Defendant Constellation proposes to acquire Defendant Calpine for a net
purchase price of $26.6 billion.
B. The Acquisition's Competitive Effects
The Complaint alleges that the Acquisition would result in likely
anticompetitive effects in the markets for wholesale electricity in
ERCOT and PJM's Coastal Mid-Atlantic area.
1. Electricity Background
Generating companies such as Constellation and Calpine own power
plants that produce electricity. Electric utilities and retail
providers purchase that electricity from the generating companies and
resell it to their end customers, such as households and businesses.
Power plants, which often contain several individual generating
units, transform fuel or renewable resources
[[Page 59218]]
into electricity. Steam turbines, combustion turbines, and combined-
cycle turbines powered by natural gas, oil, or coal, as well as nuclear
reactors, wind turbines, and solar panels are important electric
generating technologies.
The cost to operate generating units varies considerably, based
primarily on the cost of fuel and the efficiency of converting that
fuel into electricity:
Renewable units, such as solar farms and wind turbines,
have very low operating costs, but can operate only when the sun is
shining or the wind is blowing.
Baseload units, such as nuclear plants and some coal-fired
steam turbine units, also have relatively low operating costs and
provide consistent generation throughout the day and across each season
of the year. Nuclear units are designed to operate at full capacity
unless they are offline for refueling outages. For many coal units, it
is impractical to turn them on and off on a short-term basis because of
long startup times and mechanical stress from cycling the units on and
off.
Mid-merit units, including combined-cycle natural gas
units and some coal steam turbines, can typically turn on or have their
output adjusted more quickly than baseload units.
Peaking units, such as oil- and gas-fired combustion or
gas-fired steam turbine units, tend to run only during periods of high
(or ``peak'') electricity demand. They typically have the highest
operating costs of any generation units but are also the easiest to
turn on and shut off. This makes them critical for balancing supply and
demand to keep the lights on without overloading the system.
Electricity generated at a plant is transported via an extensive
set of interconnected high voltage lines and equipment, known as the
transmission grid, to lower voltage distribution lines that relay
electricity to businesses and consumers in their homes. Operators, such
as ERCOT and PJM, monitor the transmission grid closely to prevent too
little or too much electricity from flowing over the grid, either of
which can risk widespread blackouts through damage to the lines,
equipment, or generating units connected to the grid. To avoid damage
and service interruptions, grid operators manage the grid to prevent
additional electricity from flowing over a transmission line as it
approaches its operating limit (a ``transmission constraint'').
2. ERCOT and PJM Use Auctions to Set the Price of Electricity
ERCOT and PJM each oversees two auctions that set the wholesale
electricity price in their respective areas. These auctions are the
primary means by which electricity generators compete to supply
electricity in ERCOT and PJM and drive the price consumers ultimately
pay for it.
The first auction is called the ``day-ahead auction.'' Each
generator offering electricity in the day-ahead market submits an
individual offer for each of its participating generating units
indicating the amount of electricity the unit is willing to sell each
hour of the following day and the price at which it is willing to sell.
Similarly, each buyer typically submits a bid identifying the amount of
electricity that the buyer expects to need for each hour of the
following day. ERCOT and PJM will take each of the bids and offers, add
them up, and determine how much electricity will be demanded each hour.
ERCOT and PJM will then ``dispatch'' generating units to meet each
hour's demand. Subject to the physical limitations of their
transmission grids, ERCOT and PJM will call on individual units to
operate in ``merit'' order, meaning that each will begin by accepting
the least-expensive offer and thereafter, accept offers from units at
progressively higher prices until the needs for each hour of the next
day are met. The price offered by the last unit to be accepted to meet
demand for an individual hour sets the clearing price for that hour.
All other units whose offers also have been accepted for that
individual hour receive the price of that highest cost unit, regardless
of their individual offer price (or their units' costs). Thus, a
generator may be paid a higher clearing price than its own offer price
if electricity from additional, higher-priced generating units is
needed to meet demand.
The second auction is a ``real-time'' auction that operates
functionally in the same way. However, it clears the same day the
electricity is required and reconciles the results of the day-ahead
auctions with actual supply and demand. In the real-time auctions,
ERCOT and PJM set prices for each five-minute interval of the day
rather than each hour as in the day-ahead auction.
3. Wholesale Electricity Markets
As alleged in the complaint, wholesale electricity is a relevant
product for evaluating the competitive impact of the Acquisition. Each
hourly increment in which wholesale electricity is sold in ERCOT's or
PJM's ``day-ahead'' auction and each five-minute increment in the ERCOT
or PJM ``real-time'' auctions is a separate relevant product market.
This is because electricity in one time period is not a substitute for
electricity in another time period. While supply and demand for
wholesale electricity varies in different periods, both auctions share
a common feature: in the event of a small but significant non-
transitory increase in the price of wholesale electricity at relevant
times, not enough purchasers are likely to switch away from wholesale
electricity to make that increase unprofitable. Additionally, in the
event of a small but significant non-transitory increase in the price
of wholesale electricity within an hourly or five-minute time period,
not enough purchasers would switch to consuming wholesale electricity
in a different time period to make that price increase unprofitable.
This means that each of these specific auction time periods is a
relevant product market and a ``line of commerce'' within the meaning
of Section 7 of the Clayton Act.
Although each of these specific time periods is a relevant product
market, they can be aggregated into a ``cluster market'' for analytical
convenience for considering whether the Acquisition violates the
antitrust laws. For example, all 24 hours in a single day in either PJM
or ERCOT's ``day-ahead'' auction could be aggregated into one market,
as could all five-minute intervals in a single hour in PJM or ERCOT's
``real-time'' auction.
4. Geographic Markets
At times, transmission constraints within power grids limit the
free flow of electricity across a geographic region. Energy produced on
one side of a constraint cannot easily flow to the other side of the
constraint once the transfer limit has been reached. Transmission
constraints can affect electricity flow within ERCOT and PJM to varying
degrees with PJM, in particular, impacted. When constraints arise, PJM
cannot dispatch generating units in merit order if doing so would
overload a transmission constraint, a concept called ``congestion.'' To
avoid congestion while still satisfying demand, PJM must call on
higher-priced units that, given their grid location, do not overload
the transmission constraint. When this happens, prices are lower on one
side of the constraint and higher on the other side.
a. PJM's Coastal Mid-Atlantic Market
The Complaint alleges that the PJM Coastal Mid-Atlantic geographic
area is a relevant geographic market for evaluating the potential
competitive
[[Page 59219]]
impact of the Acquisition. PJM Coastal Mid-Atlantic is a distinct area
within PJM that includes parts of southeastern Pennsylvania, New
Jersey, Delaware, and the eastern shores of Maryland and Virginia.
PJM Coastal Mid-Atlantic is affected by Nottingham, a major
transmission constraint located near the Maryland-Pennsylvania border
that divides PJM Coastal Mid-Atlantic from the rest of the PJM region.
Generators within PJM Coastal Mid-Atlantic frequently sell electricity
into other areas to the west and south. However, when transmission
lines are constrained, the amount of electricity that generators within
PJM Coastal Mid-Atlantic can sell outside of the area is limited. As a
result, electricity prices in PJM Coastal Mid-Atlantic often differ
from other areas within the PJM region.
When Nottingham is constrained, purchasers of wholesale electricity
for use in PJM Coastal Mid-Atlantic have limited capability to turn to
generation outside of PJM Coastal Mid-Atlantic. At such times, the
amount of electricity that purchasers could obtain from generators
outside PJM Coastal Mid-Atlantic is insufficient to deter generators
located in PJM Coastal Mid-Atlantic from imposing a small but
significant non-transitory price increase. Thus, PJM Coastal Mid-
Atlantic is a relevant geographic market and a ``section of the
country'' within the meaning of Section 7 of the Clayton Act.
b. ERCOT Market
The Complaint also alleges that the entire ERCOT region is a
relevant geographic market for evaluating the potential competitive
impact of the Acquisition. The ERCOT grid experiences very little
congestion. In the event of a small but significant non-transitory
increase in the price of wholesale electricity within ERCOT, not enough
purchasers in the ERCOT region are likely to switch to purchasing from
regions outside ERCOT to make that increase unprofitable. At its annual
peak, the electricity in demand in ERCOT exceeds 85,000 MW. ERCOT's
connections to Mexico's grid and to the Southwest Power Pool grid,
which collectively can for approximately 1,200 MW of electricity to
flow into ERCOT. The volume of these power flows is insufficient to
prevent generators from imposing a small but significant non-transitory
price increase within ERCOT. Thus, the region covered by ERCOT is a
relevant geographic market and a ``section of the country'' within the
meaning of Section 7 of the Clayton Act.\3\
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\3\ Section 7 of the Clayton Act covers ERCOT, a geographic
region located entirely within the state of Texas.
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5. Anticompetitive Effects
As alleged in the Complaint, the Acquisition risks substantially
lessening competition in the ERCOT and PJM Coastal Mid-Atlantic
wholesale electricity markets. The combination of Constellation and
Calpine's electricity generating units serving ERCOT and PJM Coastal
Mid-Atlantic would eliminate competition between them and enhance
Constellation's post-Acquisition ability and incentive to withhold
electricity to raise wholesale electricity price anticompetitively in
those markets.
Under certain circumstances, a wholesale electricity generator,
such as Constellation or Calpine, may profitably withhold electricity,
leading to increased wholesale electricity prices. An operator of a
generating unit may withhold capacity in several ways, including by
submitting high offers for some of its higher-cost units into the day-
ahead or real-time auctions so that its units are not dispatched. If a
unit is withheld from an auction, then a higher-priced unit may need to
take the place of the withheld capacity because the units are
dispatched in merit order, that is from the lowest-priced unit to the
highest until demand matches supply. Thus, withholding a unit (or
units) can lead to a higher market-clearing price because the withheld
units force ERCOT or PJM to accept higher-priced offers from units that
end up setting the market clearing price. All accepted units are paid
the identical price regardless of the unit's offer price or its
operating cost. Withholding can be profitable for generating companies
that offer multiple units into an auction. For example, a generator
might have four units accepted and a fifth higher-cost unit that, if
accepted, would be one of the last units needed to meet demand and thus
affect the market clearing price. If that fifth unit were withheld,
then ERCOT or PJM would be required to accept an even higher-priced
unit, thereby increasing the market-clearing price that would benefit
the generator's four other units which had been accepted. In this
example, withholding the fifth unit would be profitable for the
generator if it increases the market-clearing price such that increased
profits from the four dispatched units attributable to that price
increase exceed the lost profits that would have been earned by the
fifth unit if it were offered into the market at the lower market-
clearing price. This type of electricity withholding is well
established in a large body of theoretical and empirical literature in
economics, public policy, and electricity markets analysis.
The risk that an electricity generator such as Constellation or
Calpine may profitably withhold depends in part on the generator's
asset mix. A profitable withholding strategy typically requires a
combination of units that confer the ability to withhold and relatively
low-cost units that provide an incentive to withhold. Units that
provide an incentive to withhold typically are relatively low cost and
operate consistently throughout the day and across all seasons of the
year. As the Complaint describes, baseload units, such as nuclear
plants and some coal-fired steam turbine units, are low cost and
consistently operating. Because these types of units run frequently and
at operating costs lower than the market-clearing price, they benefit
from the higher prices and provide a significant incentive for their
owner to withhold another, higher-cost generating asset.
These higher-cost units provide the ability to raise the market-
clearing price. As the Complaint describes, peaking units, such as oil-
and gas-fired combustion turbine or internal combustion units, are
among the highest-cost electricity generators. Peaking units are also
relatively easy to turn on and shut off and typically operate during
high-demand periods, often setting the market-clearing price. Mid-merit
units, including combined-cycle natural gas units and some coal steam
turbines, often possess similar characteristics. As the Complaint
describes, such units can typically be turned on and off or adjust
their output more rapidly than baseload units. Although they are
typically lower cost than peaking units, mid-merit units set the
market-clearing price during periods of lower demand. This means that
an owner of a peaking or mid-merit unit can raise the market-clearing
price by withholding the unit. Withholding a unit is profitable to the
extent that the company also owns enough low-cost units that confer
incentive to at least recoup the profit foregone by withholding the
unit that confers the withholding ability.
The Acquisition would likely enhance Constellation's ability and
incentive to withhold electricity to raise prices in ERCOT and PJM
Coastal Mid-Atlantic by giving Constellation a broader portfolio of
units and a richer mix of assets. This combination of assets would
enable Constellation to profitably
[[Page 59220]]
withhold one or more units in the ERCOT and PJM day-ahead and real-time
auctions to a greater degree than either it or Calpine would have had
individually, leading to higher market-clearing prices.
As the Complaint alleges, through the Acquisition, Constellation is
increasing its share of mid-merit and peaking units serving PJM Coastal
Mid-Atlantic. The acquisition of mid-merit and peaking units would give
Constellation an enhanced ability to profitably withhold in that
market. The additional revenues received by Constellation's lower-cost
generation units, including its nuclear plants, because of
anticompetitively higher prices in PJM Coastal Mid-Atlantic would more
than compensate for the lost profits from the generating unit(s)
withheld.
Similarly, in ERCOT, the Complaint alleges that after the
Acquisition, Constellation would control more than 12% of ERCOT's
generating capacity, and over 20% of the natural gas generation units
in ERCOT that often set the clearing price. As the Complaint alleges,
natural gas units set the market-clearing price in ERCOT the majority
of the time, making them particularly valuable in Texas, where the
electricity grid relies on gas to complement and support its increasing
use of intermittent renewable resources such as sun and wind to
generate electricity. Thus, the Acquisition would confer on
Constellation an enhanced ability to profitably withhold. The
additional revenues received by Constellation's lower-cost generating
units because of anticompetitively higher market-wide prices would
frequently more than compensate for the lost profits from the
generating unit(s) withheld.
6. Possible Entry and Expansion Unlikely To Offset Anticompetitive
Effects
Entry of additional generation into either the PJM Coastal Mid-
Atlantic market or ERCOT market is unlikely to be timely or sufficient
in deterring or counteracting the competitive harm that may result from
the Acquisition. Expansion by existing generators in those markets is
similarly unlikely to occur in a sufficient and timely fashion to
prevent such harm. Wholesale electricity markets feature high barriers
to entry and expansion. Among those barriers, building new generation
capacity in either the ERCOT and PJM Coastal Mid-Atlantic regions
requires significant capital investment in generating equipment,
infrastructure, and technology, and generally takes many years,
considering the necessary environmental, safety, zoning, and regulatory
approvals. Furthermore, the anticipated increase in electricity demand
(e.g., to power AI data centers) has led to long queues for the
delivery of new gas turbines. There are additional barriers affecting
the PJM Coastal Mid-Atlantic market. For example, building new high-
voltage transmission lines that would relieve the constraints that
limit the flow of electricity out of PJM Coastal Mid-Atlantic would
also generally take many years, and require significant capital
investment and multiple environmental, safety, zoning, and regulatory
approvals.
III. Explanation of the Proposed Final Judgment
The relief required by the proposed Final Judgment will remedy the
loss of competition alleged in the Complaint by establishing one or
more independent and economically viable competitors in the ERCOT and
PJM Coastal Mid-Atlantic wholesale electricity markets.
A. Divestitures
Paragraph IV.A of the proposed Final Judgment requires Defendants,
within 240 calendar days after consummation of the Acquisition, to
enter into a definitive contract or contracts to divest two sets of
assets to an acquirer or acquirers acceptable to the United States.
Allowing Defendants a 240-day period will help ensure that the
transition of generation assets to an acquirer or acquirors will not
occur during peak summer months.
Defendants must divest the ``ERCOT Divestiture Assets'' as that
term is defined in Paragraph II.H of the proposed Final Judgment. The
ERCOT Divestiture Assets include Calpine's Jack A. Fusco plant and
Calpine's ownership interest in the Gregory plant, including all of
Defendants' rights, titles, and interests in and to all property and
assets, tangible and intangible, relating to or used in connection with
the plants' generation, dispatch, and offer of electricity from these
plants.
Defendants must also divest the ``PJM Divestiture Assets'' as that
term is defined in Paragraph II.O of the proposed Final Judgment. The
PJM Divestiture Assets include Calpine's Bethlehem, York, Hay Road, and
Edge Moor plants, including all of Defendants' rights, titles, and
interests in and to all property and assets, tangible and intangible,
relating to or used in connection with the plants' generation,
dispatch, and offer of electricity in PJM.
Defendants are responsible for divesting to an acquirer or
acquirers acceptable to the United States in its sole discretion. The
assets must be divested in such a way as to satisfy the United States,
in its sole discretion, that the assets can and will be operated by an
acquirer or acquirers as a viable, ongoing business that can compete
effectively in the ERCOT and PJM Coastal Mid-Atlantic markets.
Defendants must take all reasonable steps necessary to accomplish the
divestitures quickly and must cooperate with any acquirer.
1. Divestiture Assets
Calpine's two ERCOT plants to be divested as part of the ERCOT
Divestiture Assets are Jack A. Fusco and Gregory. Jack A. Fusco is a
557 MW combined-cycle natural gas facility located in Richmond, Texas.
Gregory is a 365 MW combined-cycle natural gas facility located in
Gregory, Texas. Calpine owns approximately 28.5% of Gregory.
Calpine's four PJM Coastal Mid-Atlantic plants to be divested as
part of the PJM Divestiture Assets are Bethlehem, York, Hay Road, and
Edge Moor. Bethlehem is a 1,134 MW natural gas-fired combined cycle
plant located in Bethlehem, Pennsylvania. It began commercial
operations in 2003. York comprises two generating units, known as York
1 and York 2. York 1 is a 569 MW natural gas-fired combined-cycle unit.
It began operations in 2011. York 2 is an 828 MW natural gas-fired
combined-cycle unit. It is newer than York 1, having begun operations
in 2019, eight years later. York 1 and 2 are in Peach Bottom Township,
Pennsylvania. Hay Road is a 1,136 MW dual-fuel combined cycle plant. It
began commercial operations in 1989. Edge Moor is a 707 MW simple cycle
natural gas-fired plant that began commercial operations in 1965. Both
Hay Road and Edge Moor are in Wilmington, Delaware.
For each plant, the Defendants must divest the entirety of their
rights, titles, and interests in and to all property and assets,
tangible and intangible, relating to or used in connection with the
generation, dispatch, and offer of electricity. This includes all real
property, tangible personal property, intangible property, and
intellectual property relating to each plant. This also includes all
customer contracts and relationships, as well as all supply agreements.
The proposed Final Judgment defines the entirety of the assets that the
Defendants must divest as the ``Divestiture Assets.''
The divestiture requirements of the proposed Final Judgment will
maintain competition for wholesale electricity in the ERCOT and PJM
Coastal Mid-
[[Page 59221]]
Atlantic markets by allowing one or more competitors independent of the
Defendants to acquire the Divestiture Assets. The proposed Final
Judgment seeks to preserve competition by depriving Constellation of
assets that are key to making it profitable for Constellation to
withhold electricity generation to raise the market-clearing price in
ERCOT and PJM's day-ahead and real-time auctions. In ERCOT, Defendants
must divest the Jack A. Fusco plant and Calpine's interest in the
Gregory plant. These plants are natural-gas plants, a critical fuel
type in ERCOT that, as the Complaint alleges, set the market-clearing
price the majority of the time. Constellation's divestiture of these
plants will keep it from gaining an enhanced ability to raise the
market-clearing prices in the ERCOT auctions. In the PJM Coastal Mid-
Atlantic market, Defendants must divest the Bethlehem, York, Hay Road,
and Edge Moor plants. These are mid-merit and peaking units, which
often set the market-clearing price in the PJM Coastal Mid-Atlantic
market. Divestiture of these four plants ensures that the Acquisition
does not confer on Constellation an enhanced ability to withhold
electricity to raise the market-clearing price and the incentive to
make withholding profitable. Accordingly, the proposed Final Judgment
protects competition in these markets.
2. Relevant Personnel
The proposed Final Judgment contains provisions intended to
facilitate an acquirer's efforts to hire certain employees.
Specifically, Paragraph IV.J of the proposed Final Judgment requires
Defendants to provide an acquirer, the United States, and the State of
Texas with organization charts and information relating to these
employees and to make them available for interviews. It also provides
that Defendants must not interfere with any negotiations by an acquirer
to hire these employees. In addition, for employees who elect
employment with an acquirer, Defendants must waive all non-compete and
non-disclosure agreements, vest all unvested pension and other equity
rights, provide any pay pro rata, provide all compensation and benefits
that those employees have fully or partially accrued, and provide all
other benefits that the employees would generally be provided had those
employees continued employment with Defendants, including but not
limited to any retention bonuses or payments.
3. Divestiture Trustee
If Defendants do not accomplish the divestitures within the period
prescribed in Paragraph IV.A of the proposed Final Judgment, Section V
of the proposed Final Judgment provides that the Court will appoint a
divestiture trustee selected by the United States to effect the
divestiture. If a divestiture trustee is appointed, the proposed Final
Judgment provides that Defendants must pay all costs and expenses of
the trustee. The divestiture trustee's commission must be structured to
provide an incentive for the trustee based on the price obtained and
the speed with which the divestiture is accomplished. After the
divestiture trustee's appointment becomes effective, the trustee must
provide monthly reports to the United States and State of Texas setting
forth his or her efforts to accomplish the divestiture. If the
divestiture has not been accomplished within 180 calendar days of the
divestiture trustee's appointment, the United States may make
recommendations to the Court, which will enter such orders as
appropriate, to carry out the purpose of the Final Judgment, including
by extending the term of the divestiture trustee's appointment by a
period requested by the United States.
B. Other Provisions To Ensure Compliance
The proposed Final Judgment also contains provisions designed to
promote compliance with and make enforcement of the Final Judgment as
effective as possible. Paragraph XIV.A provides that the United States
and the State of Texas retain and reserve all rights to enforce the
Final Judgment, including the right to seek an order of contempt from
the Court. Under the terms of this paragraph, Defendants have agreed
that in any civil contempt action, any motion to show cause, or any
similar action brought by the United States or the State of Texas
regarding an alleged violation of the Final Judgment, the United States
or the State of Texas may establish the violation and the
appropriateness of any remedy by a preponderance of the evidence and
that Defendants have waived any argument that a different standard of
proof should apply. This provision aligns the standard for compliance
with the Final Judgment with the standard of proof that applies to the
underlying offense that the Final Judgment addresses.
Paragraph XIV.B provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment is intended to remedy the loss of competition
the United States and the State of Texas allege would otherwise result
from the Acquisition. Defendants agree that they will abide by the
proposed Final Judgment and that they may be held in contempt of the
Court for failing to comply with any provision of the proposed Final
Judgment that is stated specifically and in reasonable detail, as
interpreted in light of this procompetitive purpose.
Paragraph XIV.C provides that, if the Court finds in an enforcement
proceeding that a Defendant has violated the Final Judgment, the United
States may apply to the Court for an extension of the Final Judgment,
together with such other relief as may be appropriate. In addition, to
compensate American taxpayers for any costs associated with
investigating and enforcing violations of the Final Judgment, Paragraph
XIV.C provides that, in any successful effort by the United States or
the State of Texas to enforce the Final Judgment against a Defendant,
whether litigated or resolved before litigation, the Defendant must
reimburse the United States and the State of Texas for attorneys' fees,
experts' fees, and other costs incurred in connection with that effort
to enforce the Final Judgment, including the investigation of the
potential violation.
Paragraph XIV.D states that the United States may file an action
against a Defendant for violating the Final Judgment for up to four
years after the Final Judgment has expired or been terminated. This
provision is meant to address circumstances such as when evidence that
a violation of the Final Judgment occurred during the term of the Final
Judgment is not discovered until after the Final Judgment has expired
or been terminated or when there is not sufficient time for the United
States to complete an investigation of an alleged violation until after
the Final Judgment has expired or been terminated. This provision,
therefore, makes clear that, for four years after the Final Judgment
has expired or been terminated, the United States may still challenge a
violation that occurred during the term of the Final Judgment.
Finally, Section XV of the proposed Final Judgment provides that
the Final Judgment will expire ten years from the date of its entry,
except that after five years from the date of its entry, the Final
Judgment may be terminated upon notice by the United States to the
Court, Defendants and the State of Texas that the divestitures have
been completed and continuation of the Final Judgment is no longer
necessary or in the public interest.
[[Page 59222]]
IV. Remedies Available to Potential Private Plaintiffs
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment neither impairs
nor assists the bringing of any private antitrust damage action. Under
the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the
proposed Final Judgment has no prima facie effect in any subsequent
private lawsuit that may be brought against Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within 60
days of the date of publication of this Competitive Impact Statement in
the Federal Register, or within 60 days of the first date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the U.S. Department of Justice, which remains
free to withdraw its consent to the proposed Final Judgment at any time
before the Court's entry of the Final Judgment. The comments and the
response of the United States will be filed with the Court. In
addition, the comments and the United States' responses will be
published in the Federal Register unless the Court agrees that the
United States instead may publish them on the U.S. Department of
Justice, Antitrust Division's internet website.
Written comments should be submitted in English to: Patricia C.
Corcoran, Acting Chief, Transportation, Energy & Agriculture Section,
Antitrust Division, United States Department of Justice, 450 Fifth St.
NW, Suite 8000, Washington, DC 20530, [email protected].
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
As an alternative to the proposed Final Judgment, the United States
considered a full trial on the merits against Defendants. The United
States could have pursued litigation and sought preliminary and
permanent injunctions against the Acquisition. The United States is
satisfied, however, that the relief required by the proposed Final
Judgment will remedy the anticompetitive effects alleged in the
Complaint, preserving competition in the markets for wholesale
electricity in ERCOT and PJM's Coastal Mid-Atlantic area. Thus, the
proposed Final Judgment achieves all or substantially all of the relief
the United States would have obtained through litigation but avoids the
time, expense, and uncertainty of a full trial on the merits.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
Under the Clayton Act and APPA, proposed Final Judgments, or
``consent decrees,'' in antitrust cases brought by the United States
are subject to a 60-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the Court, in accordance with the statute as amended in 2004, is
required to consider:
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the Court's inquiry is necessarily a limited one, as the government is
entitled to ``broad discretion to settle with the defendant within the
reaches of the public interest.'' United States v. Microsoft Corp., 56
F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp.,
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the
``court's inquiry is limited'' in Tunney Act settlements); United
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a court's review of a
proposed Final Judgment is limited and only inquires ``into whether the
government's determination that the proposed remedies will cure the
antitrust violations alleged in the complaint was reasonable, and
whether the mechanisms to enforce the final judgment are clear and
manageable'').
As the U.S. Court of Appeals for the District of Columbia Circuit
has held, under the APPA, a court considers, among other things, the
relationship between the remedy secured and the specific allegations in
the government's complaint, whether the proposed Final Judgment is
sufficiently clear, whether its enforcement mechanisms are sufficient,
and whether it may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the proposed Final Judgment, a court may not ``make de novo
determination of facts and issues.'' United States v. W. Elec. Co., 993
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F.
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. Instead, ``[t]he balancing of competing social and political
interests affected by a proposed antitrust decree must be left, in the
first instance, to the discretion of the Attorney General.'' W. Elec.
Co., 993 F.2d at 1577 (quotation marks omitted). ``The court should
also bear in mind the flexibility of the public interest inquiry: the
court's function is not to determine whether the resulting array of
rights and liabilities is the one that will best serve society, but
only to confirm that the resulting settlement is within the reaches of
the public interest.'' Microsoft, 56 F.3d at 1460 (citation and
internal quotation marks omitted) (emphases in original); see also
United States v. Deutsche Telekom AG, No. 19-2232 (TJK), 2020 WL
1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding requirements
would ``have enormous practical consequences for the government's
ability to negotiate future settlements,'' contrary to congressional
[[Page 59223]]
intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was not intended
to create a disincentive to the use of the consent decree.'' Id.
The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' (internal
citations omitted)); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case.''). The ultimate
question is whether ``the remedies [obtained by the Final Judgment are]
so inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest.' '' Microsoft, 56 F.3d at 1461
(quoting W. Elec. Co., 900 F.2d at 309).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``[T]he
`public interest' is not to be measured by comparing the violations
alleged in the complaint against those the court believes could have,
or even should have, been alleged''). Because the ``court's authority
to review the decree depends entirely on the government's exercising
its prosecutorial discretion by bringing a case in the first place,''
it follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of using judgments proposed by the
United States in antitrust enforcement, Public Law 108-237 Sec. 221,
and added the unambiguous instruction that ``[n]othing in this section
shall be construed to require the court to conduct an evidentiary
hearing or to require the court to permit anyone to intervene.'' 15
U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76
(indicating that a court is not required to hold an evidentiary hearing
or to permit intervenors as part of its review under the Tunney Act).
This language explicitly wrote into the statute what Congress intended
when it first enacted the Tunney Act in 1974. As Senator Tunney
explained: ``[t]he court is nowhere compelled to go to trial or to
engage in extended proceedings which might have the effect of vitiating
the benefits of prompt and less costly settlement through the consent
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen.
Tunney). ``A court can make its public interest determination based on
the competitive impact statement and response to public comments
alone.'' U.S. Airways, 38 F. Supp. 3d at 76 (citing Enova Corp., 107 F.
Supp. 2d at 17).
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: December 12, 2025
Respectfully submitted,
FOR PLAINTIFF
UNITED STATES OF AMERICA
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JOSEPH CHANDRA MAZUMDAR
JEREMY EVANS (D.C. Bar #478097)
KATHRYN TRINKA (D.C. Bar #90010251)
Trial Attorneys
PAUL J. TORZILLI (D.C. Bar #986767)
Senior Litigation Counsel
United States Department of Justice
Antitrust Division
450 Fifth Street, NW
Washington, DC 20530
Telephone: (202) 353-1560
Email: [email protected]
[FR Doc. 2025-23298 Filed 12-17-25; 8:45 am]
BILLING CODE 4410-11-P