While researching an article regarding the search and seizure of computer hardware and electronic data in criminal antitrust investigations, I noticed a distinct lack of case law. There is a lot of case law regarding the search and seizure of computer hardware and electronic data in other types of criminal cases. But I did not find any significant cases involving antitrust investigations. Putting aside for the moment any speculation as to the reasons for this (whether due to my poor legal research skills or the “low” number of criminal antitrust investigations in the last 10 years), if you are feeling generous and are aware of any such cases, feel free to mention them in the comments or email them to us.
“>This presentation pulls together a wealth of empirical data on cartels, their economic effects, and cartel prosecution statistics. Essential reading.
Today, the U.S. Department released redacted copies of its leniency (amnesty) letters. DOJ explains that it did not want to release the letters but:
in light of the Court’s opinion in FOIA litigation titled Stolt-Nielsen Transportation Group Ltd. v. United States, 534 F.3d 728 (D.C. Cir. 2008), and the settlement agreement reached by the parties, the Division has released redacted copies of its leniency (amnesty) letters to its FOIA electronic reading room to give the pubic equal access to the terms and conditions of the letters.
In addition to redacting “(1) names, titles and other personal and corporate identifiers; (2) dates and temporal information; (3) industries; (4) miscellaneous identifiers and confidential source provided information; (5) geographic information; and (6) specific cartel conduct and offense descript” DOJ also “arranged” the letters:
In order to mitigate concerns that the identity of specific leniency applicants or the information provided by applicants could be determined, even with redactions, the Division is able to release redacted leniency letters in large batches only, such as the groups of letters below. Additional large batches of redacted leniency letters will be added to the Web site at future intervals.
Gary Becker and Richard Posner have a piar of interesting posts about the UAW and costs to American car manufacturers (Posner’s post, Becker’s post). Posner on unions as a cartel:
Unions, in other words, are worker cartels. Workers threaten to withhold their labor unless paid more than a competitive wage (including benefits and work rules), but unless their union is able to organize all the major competitors in a market, the cartel will be eroded by the entry of nonunionized firms, which by virtue of not being unionized will have lower labor costs. The parallel to producer cartels is exact–workers are producers.
and:
By driving up employers’ costs, unions cause prices to increase, which harms consumers, who are not on average any better off than unionized workers are.
I suspect it is only a matter of time until an ”enterprising” class action attorney reads this and files a lawsuit against the UAW on behalf of consumers who have purchased an “Big Three” car in the last, oh, 50 years (give or take a statute of limitations or two).
1. Whether deceptive conduct that significantly contributes to a defendant’s acquisition of monopoly power violates Section 2 of the Sherman Act.
2. Whether deceptive conduct that distorts the competitive process in a market, with the effect of avoiding the imposition of pricing constraints that would otherwise exist because of that process, is anticompetitive under Section 2 of the Sherman Act.
Three leading flat-screen producers — LG Display of South Korea, Sharp of Japan and Chunghwa Picture Tubes of Taiwan — pleaded guilty and agreed to pay a total of $585 million in criminal fines for their role in fixing the price of liquid-crystal display panels.
LG is paying the most: a $400 million fine, the second-highest criminal fine ever imposed by the Justice Department’s antitrust division. …
The settlement, legal experts say, is unlikely to be the end of the flat-panel case. Under the settlement, the three companies have agreed to cooperate with the Justice Department’s continuing investigation. Thomas O. Barnett, assistant attorney general in charge of the department’s antitrust division, pointed out at a news conference on Wednesday that the American investigation involved the coordinated efforts of enforcement officials in Europe and Asia, as well as the United States.
Government investigations, legal specialists said, are under way in Europe, Japan and South Korea. In the United States, private class-action suits have already been filed seeking damages for companies that purchased flat-panel screens, and for consumers who bought flat-panel-equipped products. Some of the private suits, if successful, could provide a way for consumers to benefit, though the compensation for any individual would probably be slight.
The EU’s antitrust chief on Wednesday fined car glass producers Asahi, Pilkington, Saint-Gobain and Soliver more than 1.3 billion euros ($1.66 billion) for price-fixing, the largest sum ever levied by the EU for a cartel.
France’s Compagnie de Saint-Gobain SA must pay 896 million euros ($1.14 billion) - more than any other company has been fined before.
The European Commission said the four companies control 90 percent of the glass used to make European cars, a market worth 2 billion euros in 2003.
EU Competition Commissioner Neelie Kroes said the companies fixed prices over a period of five years. She said the fines were high because European industry had to “learn the lessons the hard way.”
…
The EU said it increased Saint-Gobain’s fine by 60 percent because the company was a cartel repeat offender. It was fined last year for an EU-wide window glass cartel, following earlier fines for a Belgian flat glass cartel in 1988 and a similar cartel on the Italian market in 1984.
The five executives charged today work for large U.S. companies that provide freight shipping services to customers transporting goods between the continental U.S. and Puerto Rico. These companies transport a variety of cargo shipments, such as heavy equipment, medicines and consumer goods, on scheduled ocean voyages between the continental U.S. and Puerto Rico. ….
The four individuals charged with violating the federal antitrust laws have agreed to plead guilty for their roles in a conspiracy that began at least as early as May 2002 and continued until as late as April 2008, the object of which was to eliminate competition and raise prices for the movement of goods in the U.S. to Puerto Rico shipping lane. The Department charged that the executives sought to eliminate competition and raise prices by agreeing not to compete for one another’s customers; agreeing to rig bids submitted to government and commercial buyers; and agreeing to fix the prices of rates, surcharges and other fees charged to customers.
Federal prosecutors have opened separate criminal probes into possible price-fixing by major egg producers and California tomato processors, the latest in a series of U.S. investigations of alleged collusion in food and agriculture.
The investigations, which have not been previously reported, add to concerns that beyond the rising cost of fuel and feed, a hidden factor may be driving food prices higher: collusion among farmers, food processors or exporters.
A Justice Department official confirmed that it had opened investigations into tomatoes and eggs. Federal agencies already are pursuing criminal or civil inquiries in markets including fertilizer, cheese and milk, examining whether suppliers worked in league to manipulate prices. The Justice Department said it had also opened a probe last year into the citrus-fruit industry.
…
Under U.S. law, it’s a crime for competitors to collaborate on production or prices. However, many farm groups and cooperatives are allowed to work together under antitrust exemptions such as the 1922 Capper-Volstead Act. The act, one of a web of loopholes carved out over the years, was originally meant to help small farms bargain with big processors. Egg and tomato producers say their cooperation is shielded by these exemptions. In stepping up enforcement in food, prosecutors are signaling a new willingness to test these exemptions’ limits.
The affair also offered one other result: a clear view into why the Justice Department lost a case of major importance. While the history of the case sounds complicated, the issue at the center of it all was quite simple. The Stolt case is a classic example of how two contracting parties can misunderstand each other. It all came down to one sticking point — the “stop date,” the point at which Stolt was supposed to have ceased its illegal conduct, in which it divided up lucrative shipping routes with two other companies. Was it March 1, 2002, as Justice contended, when the company first discovered the wrongdoing? Or was it months later, on Nov. 22, when Nannes first contacted the government to seek amnesty? Or was it Jan. 15, 2003, when both sides signed the amnesty agreement? Curiously, neither side included the stop date in the agreement.
Yesterday, the House of Representatives passed HR 6074 which, in part, would amend the Sherman Antitrust Act.* The bill provides, in part:
The Sherman Act (15 U.S.C. 1 et seq.) is amended by adding after section 7 the following:
Sec. 7A. (a) It shall be illegal and a violation of this Act for any foreign state, or any instrumentality or agent of any foreign state, to act collectively or in combination with any other foreign state, any instrumentality or agent of any other foreign state, or any other person, whether by cartel or any other association or form of cooperation or joint action–
(1) to limit the production or distribution of oil, natural gas, or any other petroleum product;
(2) to set or maintain the price of oil, natural gas, or any petroleum product; or
(3) to otherwise take any action in restraint of trade for oil, natural gas, or any petroleum product;
when such action, combination, or collective action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of oil, natural gas, or other petroleum product in the United States.
(b) A foreign state engaged in conduct in violation of subsection (a) shall not be immune under the doctrine of sovereign immunity from the jurisdiction or judgments of the courts of the United States in any action brought to enforce this section
(c) No court of the United States shall decline, based on the act of state doctrine, to make a determination on the merits in an action brought under this section.
(d) The Attorney General of the United States may bring an action to enforce this section in any district court of the United States as provided under the antitrust laws.
The bill also would require the Attorney General to establish a Petroleum Industry Antitrust Task Force.
The new “Petroleum Industry Antitrust Task Force” would be charged with determining the existence and extent of gasoline price gouging, anticompetitive price discrimination by refiners, actions to inflate prices by constraining supplies, and possible oil price manipulation in futures markets, Kagen said.
The bill, which would amend the Sherman Antitrust Act, also requests a Government Accountability Office study on the effects on competition of prior oil industry mergers and divestitures, he indicated.
…
This would be the second time the House considered a No Oil Producing and Exporting Cartels (NOPEC) bill, which would attempt to change the Act of State doctrine and the concept of sovereign immunity, King said. “There is no certainty that enabling the attorney general to sue [the Organization of Petroleum Exporting Countries] for an antitrust violation will result in lower gas prices for Americans. Given the instability that such a suit might create in the world oil market, this legislation would be long on psychic compensation but short on actual returns to America’s pocketbook,” he maintained.
On Tuesday, the Department of Justice confirmed that it is investigating price fixing in the chocolate industry. According to the Wall Street Journal:
The investigation, which had been previously reported, had not been acknowledged by the federal officials. Price fixing is a criminal violation that can bring stiff fines and sometimes prison terms for executives. In recent years, U.S. and foreign antitrust enforcers have aggressively pursued such cases.
“The Department of Justice antitrust division is investigating the possibility of anticompetitive practices in the chocolate manufacturing industry,” a department spokeswoman, Gina Talamona, said Tuesday. She declined to elaborate.
Canadian regulators in November began probing whether the Canadian divisions of Hershey Co., Mars Inc. and Nestle SA fixed prices. Since then, European antitrust regulators have opened inquiries and dozens of civil lawsuits have been filed against the chocolate companies. The companies have said they’re cooperating with the investigations.
After 11 trial days, the first thing jurors talked about when they could finally discuss the price-fixing case before them was the government’s star witness, foreperson Phyllis McCaughey said Thursday.
And she was blunt about their assessment of Micron executive Michael Sadler, who testified in the high-stakes DRAM antitrust prosecution against his counterpart at Hynix, defendant Gary Swanson: “Mr. Sadler, we all felt, was a lying sack of shit.”
…
Speaking in the courtroom after Judge Phyllis Hamilton released them, jurors indicated they were evenly split when they first began deliberations. But they quickly tilted 11-1 for acquittal and stayed that way for several days. Just before they entered the courtroom for the final time, McCaughey said one of her colleagues in favor of acquittal wavered, so the final count was 10-2.
The foreperson said she believed Sadler was a “ringleader” in the price-fixing conspiracy and didn’t deserve a pass from the government. Since Micron was the first computer memory company to report the price-fixing scheme, all of its executives — and the company — received amnesty.
Even Joe Supple, the teacher who was the government’s lone defender in the jury room, acknowledged misgivings about Sadler.
“He didn’t sit well with many of us,” Supple said. “It seemed to be like the bad guy getting away with it.” Swanson was the only executive caught up in the government’s DRAM investigation to go to trial, and the case was closely followed by dozens of lawyers.
Since the NFL announced its suspension of Michael Vick, many of my esteemed colleagues have presumed that Vick will also get banned from the Canadian Football League (”CFL”) based on the “Ricky Williams Rule,” which prevents any player suspended by the NFL from entering the CFL.
But is there an antitrust problem?
Isn’t it true that an agreement amongst all of the teams in a pro sports league to boycott a class of players would indicate a prima facie case of an antitrust violation? Isn’t it also the case that the CFL has market power in the labor market for players banned by the NFL (presuming that issue is even relevant) because NFL teams are not part of the viable market for such players’ services?
… under antitrust law, there are less restrictive alternatives for the CFL to prevent the entry of troublesome players, such as for the CFL to review the candidacy of each prospective player on a case-by-case basis. A case-by-case review of players banned by the NFL would make more sense given that the CFL has already “grandfathered” players that are currently playing in the CFL but previously banned from the NFL. In a statement that may prove especially damning to the CFL, the CFL in November of 2006 stated that “one of the reasons for the ban is to maintain a good relationship with the NFL.”
Indeed, the biggest challenge to bringing a suit against the CFL may involve proving U.S.-based anti-competitive effects given that much of this allegedly anti-competitive conduct occurred outside of the United States. However, given that most of the football players that would be banned from the CFL under this rule live in the United States, as well as that some of the CFL fans reside in the United States, and that CFL games are broadcast into the American market through Dish Network, DirecTV and America One, these concerns should not prevent a bona fide antitrust challenge against the Ricky Williams Rule in United States federal courts.
Of course, the question is a slightly premature as Vick will have to serve twelve to eighteen (at least) first.
would allow the federal government to take legal action against foreign states, including members of OPEC, for price fixing and artificially limiting the amount of available oil.
…
The bill, which would amend the Sherman Act, would clear the way for the federal courts to hear antitrust suits against OPEC, according to Senator Herb Kohl, the bill’s sponsor and chairman of the Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights Subcommittee.
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