Antitrust authorities in the U.S. will sign later this summer an agreement with their counterparts in China to collaborate in reviewing mergers that need to be cleared by both countries, a top Justice Department official said Friday.

The DOJ, the Federal Trade Commission, and three agencies in China will sign on July 27 a memorandum of understanding, Antitrust Division chief Christine Varney said at a speech at the U.S. Chamber of Commerce.

“This is a breakthrough moment for us,” Varney said.

The agreement will allow the agencies to conduct joint reviews, exchange information, and work together on matters in front of regulators in both countries, Varney said.

The memorandum resembles a two-decade agreement in place between U.S. and European antitrust enforcers. That cooperation has been expanding to other countries in the past few years.

The agencies signed a similar agreement with Russia in 2009, and is drafting one with Indian authorities.

“These are our stepping stones to get us further along the line of a  universal commitment to procedural fairness, due process, and transparency,” Varney said.

As emerging economies put in place antitrust regimes, the business community has raised concerns that foreign regulators could use competition laws to promote their own trade interests.

“An MOU among competition agencies will not cure this problem, but it is a first step,” Varney said.

In an 18-minute speech at the top business lobby, Varney defended her two-year record at the helm of the Antitrust Division.

“Many of you, either with gleeful anticipation or with horrified anticipation, thought I had a big agenda, and I was going to go around using Section Two to devastate or liberate the American economy,” Varney said, referring to her decision to withdraw a controversial Bush-era report on the section of antitrust law that deals with monopolies as one of her first acts on the job.

“You were wrong,” she said. “I didn’t have an agenda, I don’t have an agenda,” she said.

A federal employee has pleaded guilty to failing to file a federal income tax return for 2008, admitting also that at her husband’s direction she claimed not to be subject to the U.S. Constitution, the Department of Justice and the Internal Revenue Service said on Thursday.

This is the time of year when the DOJ issues news releases about crackdowns on tax-evaders, no doubt hoping to deter others from fudging on their returns. But the case of Janet Jaensch stands out as stranger than usual.

She pleaded guilty in U.S. District Court in Alexandria, Va., the agencies said.  The defendant admitted that she got $152,725 in gross income in 2008, yet did not file a return. “She further admitted that between 2002 and 2009, she failed to timely pay approximately $226,685 in taxes to the IRS,” the authorities said.

The DOJ and IRS described a pattern of bizarre behavior over several years in which Jaensch, whose position with the federal government was not identified, claimed at her husband’s urging that the IRS could not instruct her employer to withhold taxes from her and sending certified letters to the IRS and other agencies declaring that she was not a taxpayer.

Janet Jaensch’s husband, Richard Jaensch, a self-employed plumber, was indicted in March by an Alexandria  federal grand jury that accused him of one count of corruptly endeavoring to impede the IRS, one count of filing a false claim for a refund and four counts of failing to file a tax return for 2004 through 2007.   His trial is scheduled for July 20. He could be sentenced to up to 12 years in prison if he is convicted.

Janet Jaensch faces up to a year in prison when she is sentenced on Aug. 16.

Christine Varney (doj)

The Justice Department and the Federal Trade Commission on Thursday released new guidelines for regulators to use in evaluating mergers between rival companies.

The changes, proposed in April and finalized this month, mark the first significant revisions to the horizontal-merger guidelines in 18 years.

As expected, the revised guidelines move away from a formal, step-by-step approach that begins with defining the market in which the merging companies operate. In the past decade, both agencies have lost merger challenges in court, hamstrung in part by their own guidelines.

As highlighted by the Justice Department, the new guidelines

Clarify that merger analysis does not use a single methodology, but is a fact-specific process through which the agencies use a variety of tools to analyze the evidence to determine whether a merger may substantially lessen competition.

Introduce a new section on “Evidence of Adverse Competitive Effects.”  This section discusses several categories and sources of evidence that the agencies, in their experience, have found informative in predicting the likely competitive effects of mergers.

Explain that market definition is not an end in itself or a necessary starting point of merger analysis, and market concentration is a tool that is useful to the extent it illuminates the merger’s likely competitive effects.

Provide an updated explanation of the hypothetical monopolist test used to define relevant antitrust markets and how the agencies implement that test in practice.

Update the concentration thresholds that determine whether a transaction warrants further scrutiny by the agencies.

Provide an expanded discussion of how the agencies evaluate unilateral competitive effects, including effects on innovation.

Provide an updated section on coordinated effects.  The guidelines clarify that coordinated effects, like unilateral effects, include conduct not otherwise condemned by the antitrust laws.

Provide a simplified discussion of how the agencies evaluate whether entry into the relevant market is so easy that a merger is not likely to enhance market power.

Add new sections on powerful buyers, mergers between competing buyers, and partial acquisitions.

“The revised guidelines better reflect the agencies’ actual practices,” said Christine Varney, Assistant Attorney General for the Antitrust Division, in a statement. “The guidelines provide more clarity and transparency, and will provide businesses with an even greater understanding of how we review transactions.”

Said FTC Chairman Jon Leibowitz in an accompanying statement:  “Because of the hard work of all involved at both agencies, private parties and judges will be better equipped to understand how the agencies evaluate deals. That improvement in clarity and predictability will benefit everyone.”

The guidelines are available here.

FOR IMMEDIATE RELEASE

TUESDAY, JULY 27, 2010

WWW.JUSTICE.GOV

FORMER CEO OF THE MORGAN CRUCIBLE CO. FOUND GUILTY OF CONSPIRACY TO OBSTRUCT JUSTICE

WASHINGTON — A federal jury in Philadelphia today convicted Ian P. Norris, the former CEO of The Morgan Crucible Company plc, a United Kingdom corporation, of conspiring with others to obstruct justice, the Department of Justice announced.

In 2004, a federal grand jury indicted Norris, a citizen of the United Kingdom, on one count of fixing prices of carbon brushes and other carbon products, one count of conspiring to obstruct justice, and two counts of obstructing justice in connection with the Department of Justice’s antitrust investigation of price fixing in the carbon products industry. Norris was extradited to the United States in March 2010 on the three obstruction charges. The jury returned a guilty verdict today on the conspiracy to obstruct justice count and not guilty verdicts on the witness tampering count and the count of corruptly persuading others to destroy or conceal documents. Sentencing has been scheduled for Nov. 2, 2010.

The department said that Norris conspired with his subordinates to obstruct the grand jury’s investigation. Morgan Crucible employees conspired with Norris to create a false script that employees of both Morgan Crucible and a competitor were to follow when questioned in the investigation. Also, a document destruction task force was formed to collect and destroy or conceal documents from the grand jury, the department said.

“The Antitrust Division uncovered this elaborate and egregious obstruction of justice scheme,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s verdict holds Norris accountable for his actions and sends a message that corporate leaders must promote a culture of law abiding conduct within their companies or be prepared to face stiff prison sentences. The Antitrust Division will remain vigilant in protecting the integrity of its criminal investigations from obstruction in order to effectively carry out its mandate to protect American businesses and consumers from price-fixing cartels.”

Carbon products are used to transfer electrical current in automobiles, trains, public transit vehicles and consumer products and are used in pumps and compressors to contain liquids and gases.

Including today’s conviction, more than $11 million in criminal fines have been obtained and four executives and two companies have pleaded guilty or have been convicted as a result of the department’s antitrust investigation of price fixing in the carbon products industry.

The Morgan Crucible Company plc, based in Windsor, England, pleaded guilty in 2002 to one count of tampering with witnesses and one count of document destruction. The company paid a $1 million criminal fine.

A former subsidiary of the company, Morganite Inc., which was based in Dunn, N.C., pleaded guilty in 2002 to fixing prices of carbon brushes and other carbon products and paid a $10 million fine.

In addition, three subordinates of Norris previously pleaded guilty to obstruction charges. Jacobus Johan Anton Kroef, the former Chairman of the Industrial and Traction Division of The Morgan Crucible Company plc, pleaded guilty in 2003 to witness tampering. Robin D. Emerson, former pricing coordinator at Morganite Electrical Carbon Ltd. of Swansea, U.K., pleaded guilty in 2003 to corruptly persuading another person to destroy or conceal documents in connection with the investigation. F. Scott Brown, the former Global President and a member of the Board of Directors of Morgan Advanced Materials and Technology Inc. (MAMAT), now headquartered in Greenville, S.C., pleaded guilty in 2003 to aiding and abetting document destruction in connection with the investigation. Morganite Electrical Carbon Ltd. and MAMAT are subsidiaries of The Morgan Crucible Company plc.

The conspiracy count carries a maximum penalty of five years in prison and a $250,000 fine.

Trial attorneys Lucy McClain, Richard Rosenberg, and Kimberly Justice of the Antitrust Division’s Philadelphia Field Office prosecuted the case.

A federal jury in Philadelphia on Tuesday convicted a British national of one count of conspiring to obstruct justice, after he spent years fighting extradition to the U.S. on price-fixing allegations.

Ian Norris, former chief executive of carbon products manufacturer Morgan Crucible Co., at home in Buckinghamshire, U.K., in 2005. (Getty)

But Ian P. Norris, 67, the former chief executive of United Kingdom carbon products manufacturer The Morgan Crucible Company plc, was found not guilty of two other obstruction charges. The jury acquitted him of attempting to sway grand jury witness testimony and of intending to cause the destruction of records.

The case was closely watched as a test of the U.S.’s ability to extradite foreign nationals to face criminal antitrust charges.

“We are gratified that the jury acquitted Mr. Norris on all counts alleging obstruction of justice as well as attempted obstruction of justice,” Norris’s attorneys, Christopher M. Curran and J. Mark Gidley of White & Case LLP, said in a statement.

They added: “We are disappointed by the jury’s conviction of Mr. Norris on the conspiracy count (24 hours after the jury announced an “impasse” on this count).  But based upon juror interviews, we believe that the jury was confused. We intend to act quickly to overturn the sole count of conviction.”

Assistant Attorney General Christine Varney, who heads the Justice Department’s Antitrust Division, said in a statement: “Today’s verdict holds Norris accountable for his actions and sends a message that corporate leaders must promote a culture of law abiding conduct within their companies or be prepared to face stiff prison sentences.”

Click here to read the Justice Department news release.

The original charge against Norris was lodged in 2004, when a federal grand jury indicted him on charges of price fixing and obstruction of justice. But the case stalled as Norris fought extradition from the U.K.

After vigorously contesting extradition, Norris won a 2008 ruling in England that blocked his removal to the U.S. on the price-fixing charges. The U.K., however, permitted his extradition on the obstruction of justice allegations, and he arrived in the U.S. in March for trial.

The Justice Department had accused Norris of conspiring with his employees to create a fake script for them to use when questioned in the investigation.

The company and three of its employees pleaded guilty in 2002 to tampering with witnesses and destroying documents, and the company paid a $1 million criminal fine.

A former U.S. subsidiary of the firm also pleaded guilty that year to price fixing charges and paid a $10 million fine.

Trial attorneys Lucy McClain, Richard Rosenberg, and Kimberly Justice of the Antitrust Division’s regional office in Philadelphia prosecuted the case.

This story has been updated.

The Justice and Agriculture Departments have launched a new task force to consider how to promote competition in the agriculture industry, Assistant Attorney General Christine Varney said at a conference on competition in the dairy business in Madison, Wis. on Friday.

The task force will review enforcement of the Packers and Stockyards Act, according to Varney’s prepared remarks. That law regulates the livestock and dairy industries and prohibits them from engaging in unfair practices. The law is administered by the Department of Agriculture.

Today’s workshop is the latest installment in a series of town-hall meetings on competition issues in agriculture. The DOJ heard from poultry farmers in Alabama last month and discussed the seed industry in March in Iowa.

The Wisconsin workshop focused on the state’s $26 billion dairy industry, where farmers are unhappy about the low prices they are paid for raw milk.

Sen. Herb Kohl (D-Wis.), who urged Varney to include the state in her agriculture itinerary and was on hand at the conference, said retail prices for dairy products have not kept pace with the sharp declines in farm milk prices. That discrepancy, he said, according to prepared remarks, has lead him to question whether consolidation in the industry had given some firms too much power in the market.

“We have to ask if our farmers are getting a fair shake,” said Kohl, who chairs the Senate Judiciary antitrust subcommittee.

Varney said the Justice Department was tracking the development. “[W]e are keeping a watchful eye on this industry,” Varney said. “We know that dairy farmers are concerned about a lack of choices for buyers, about the way that their milk is priced, and about a year of dispiriting returns for their labors.”

The Agriculture Department has predicted that farmers will receive around $1.35 for a gallon of milk this year, down 30 cents from 2007, according to the Burlington Free Press, and it’s a problem for which farmers largely blame large dairy processors and co-ops.

The Antitrust Division sued Dean Foods in January alleging that the dairy processor’s acquisition of two Foremost Farms processing plants in Wisconsin last year removed competition in the milk industry.

Varney said at the panel she has heard from large co-ops and they are working to be more transparent and accessible to member needs, according to Dairy Farmers of America spokeswoman Monica Massey’s tweets from the event.

According to the magazine Progressive Dairyman, Varney also said: “We have a pro-farmer agenda and will take that where ever it leads us.”

Around 500 people attended the workshop, according to the Associated Press.

Sen. Herb Kohl (D-Wis.) urged regulators Wednesday to adopt conditions before approving Comcast Corp.’s blockbuster bid to take a majority stake in NBC Universal.

The acquisition would “combine two media powerhouses …[and] give the nation’s leading cable TV company control over one of the four main broadcast television networks” and a “treasure trove” of programming, Kohl said in a letter to regulators.

The deal has the potential for “serious anticompetitive and anti-consumer effects,” he said.

Comcast’s vice president for government communications, Sena Fitzmaurice, said in a statement responding to the letter: “This partnership is pro-competitive, pro-consumer and in the public interest…We expect a thorough and expeditious regulatory review and that any conditions will not unduly burden either Comcast or NBCU’s businesses.”

In Kohl’s letter, addressed to Assistant Attorney General Christine Varney and Federal Communications Commission chairman Julius Genachowski, Kohl outlined three areas of concern.

The first affects Comcast’s rivals. Cable and satellite providers need access to NBC programming, but a combined Comcast-NBC would have the incentive to raise NBC’s rates for other providers, he said.

The second affects competition on the content side. The deal, Kohl said, would hurt independent programmers who compete with NBC content but need access to the Comcast distribution platform.

The third area of concern, Kohl said, involves the nascent market for watching television online. The combined company would have the incentive to stifle video on the internet in order to keep the medium from emerging as a viable competitor to cable services.

In order to address his concerns, Kohl asked the agencies to require Comcast to offer NBC programming at non-discriminatory rates and promise not discriminate against other content in favor of NBC’s.

Comcast has suggested it would subject itself to such requirements in order to win approval of the deal.

Kohl also suggested that Comcast should divest its stake in Hulu, an online television service of which NBC is part owner.

Kohl, who chairs the Senate’s antitrust subcommittee and was the letter’s only signatory, held a hearing on the deal in February.

updated at 4:36 p.m. to include comment from Comcast

Regulators at both the Justice Department and the Federal Trade Commission are examining Apple for possible antitrust violations, the New York Times reported late Tuesday.

The DOJ is focusing on Apple’s music platform, iTunes, and exploring whether the company used its dominant position in digital music distribution to keep record labels from offering one-day exclusives to rival retailer Amazon.com, according to the paper.

The FTC, the Times reported, is separately looking at Apple’s rules for developers who create applications for the iPhone operating system. Apple’s recent entry into the advertising market, with its mobile ad platform iAd, helped Google secure antitrust clearance for its own push into mobile advertising in its purchase of AdMob.

The New York Post reported earlier this month that the agencies were in talks to decide which one would take on an investigation into Apple.

Read the full New York Times story here.

The Justice Department’s top antitrust cop had a warning on Monday for health insurers: regulators will be looking closely at insurers that offer plans for individuals and small employers and will go after any deals that create or increase the size of a dominant plan in one of those markets.

DOJ's Christine Varney, head of the Antitrust Division. (photo by Ryan J. Reilly / Main Justice)

In remarks at a trade conference on antitrust in health care, Assistant Attorney General Christine Varney outlined the Antitrust Division’s priorities in light of the health care overhaul signed into law in March. The legislation creates a set of exchanges, where individuals and small businesses can compare prices and purchase insurance.

In order for those exchanges to work, Varney said, antitrust regulators need to police the markets to ensure there are enough choices on the exchanges.

According to an internal DOJ study, Varney said, new insurers have trouble competing with large players in certain markets because they can’t recruit new patients without provider discounts. It becomes a catch-22, she said, because they can’t negotiate for discounts without a large number of patients.

But in markets with a few medium-sized players, where no one plan has the clout to demand a larger discount, new firms are more likely to secure similar discounts, she said.

“It is, therefore, imperative that the division prevent mergers or acquisitions that will create, or even increase the size of, dominant health insurance plans, particularly in the small-group and individual markets,” Varney said.

The Justice Department will also challenge exclusive contracts between insurers and large providers that make it harder for the provider to negotiate with a new insurer, she said.

In her remarks at the conference, sponsored by the American Bar Association and the American Health Lawyers Association, Varney also advocated for a repeal of the McCarran-Ferguson Act, which exempts insurers from some federal antitrust scrutiny. The House overwhelmingly passed a partial repeal before health care reform became law, but it has stalled in the Senate despite Sen. Patrick Leahy (D-Vt.) efforts to include it in the financial regulation legislation the Senate passed last week. “I am hopeful that health care reform is not completely over on the legislative front,” Varney said.