SAN FRANCISCO (CBS SF) — The U.S. government sued a San Francisco activist hedge fund Monday alleging that the firm violated antitrust laws during a pending merger of Halliburton Co. and Baker Hughes Inc.

Activist hedge fund ValueAct Capital “used its access to senior executives of both Halliburton and Baker Hughes to formulate merger and other business strategies with the companies,” according to the U.S. Department of Justice, which along with the the Federal Trade Commission, is conducting an antitrust review of the companies’ proposed merger.

ValueAct allegedly invested over $2.5 billion in Halliburton and Baker Hughes, but failed to notify antitrust authorities and falsely claimed to have no intent to influence the companies’ business decisions, according to the U.S. Department of Justice.

ValueAct manages over $16 billion for institutional and individual investors and according to its website, “Concentrates on acquiring significant ownership stakes in companies it believes are fundamentally undervalued.”

The civil antitrust lawsuit, filed Monday by the U.S. Department of Justice in the U.S. District Court for the Northern District of California, against certain ValueAct entities could provide additional clarity over what it means to be an activist investor and further define the legal boundaries.

The Justice Department maintains that ValueAct violated the reporting and waiting period requirements of the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 in regards to the pending Halliburton-Baker Hughes merger, The U.S. government is seeking civil penalties and an injunction against further violations.

“ValueAct used its position to influence decision-making at both companies,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “ValueAct was not entitled to avoid HSR requirements by claiming to be a passive investor. Given the seriousness of the violation and ValueAct’s prior HSR violations, we will be seeking significant civil penalties and an injunction against further violations.”

Jeff Ubben, founder & CEO of ValueAct, was an advisor of the Super Bowl 50 Host Committee.

ValueAct, formed in June 2000, utilizes “an investment strategy that combines intensive due diligence, a concentrated number of investments, and active, constructive involvement in the value creation at those investments,” according to the firm’s website. ValueAct maintains that its goal is to “work constructively with management and/or the company’s board to implement a strategy or strategies that maximize returns for all shareholders.”

A statement issued by ValueAct on Monday states:

“We have acted entirely properly and in compliance with the law. We fundamentally disagree with the Department of Justice’s allegations in this case. ValueAct strongly believes in the most basic principles of shareholder rights. This includes having a relationship with company management, conducting due diligence on investments, and engaging in ordinary course communications with other shareholders. As a result, we see no alternative but to contest the Department of Justice’s action and will vigorously defend our position.”

In November 2014, Baker Hughes and Halliburton, two of the largest providers of oilfield services and products worldwide, announced Halliburton’s planned $35 billion acquisition of Baker Hughes.

Halliburton president Jeff Miller states on the Halliburton website that the company’s pending acquisition of Baker Hughes was expected to occur in late 2015, but since then the acquisition has been stalled by regulatory approvals and other closing conditions.

The two companies have extended the time period for closing their merger to “no later than April 30, 2016, as permitted under the merger agreement,” according to a statement on Halliburton’s website.

The maximum civil penalty for the alleged type of antitrust violation is $16,000 per day, according to the Justice Department.

By Hannah Albarazi – Follow her on Twitter: @hannahalbarazi.