Archive for the ‘Antitrust’ Category
Friday, March 28th, 2014

Americans have seen more than a 10-fold return on the tax dollars spent on antitrust enforcement, even as Justice Department staff has weathered a hard year of budget restrictions and furlough threats, William Baer, head of the department’s Antitrust Division, said today.

Baer, who has led the division for just over a year, said his staff has delivered while confronting hiring freezes, pay freezes, travel restrictions and a 16-day shutdown, during which they wanted to work but couldn’t come in.

“Through it all, these folks have kept their eye on the ball and they made a positive difference in so many ways,” Baer said, citing the recent American Airlines merger settlement, among others and criminal efforts to crack down on collusion in foreclosure auctions.

Baer, speaking at the spring meeting of the American Bar Association’s Antitrust Section in Washington, D.C., said the division has a yearly appropriation of about $70 million, while it has put roughly 10 times that in the U.S. Treasury in criminal fines alone.

William Baer (Elizabeth Murphy/Main Justice)

Times are getting easier though, and with relaxed budget restrictions, the division recently hired 11 attorneys and five economists throughout the division, a department representative said this week.

While a November settlement in the merger between American Airlines and U.S. Airways has been criticized for going too light on what is now the world’s largest airline, Baer said the deal will clearly give consumers more choices at a lower cost.

To satisfy the Justice Department, American agreed to divest plane slots in Washington, D.C. and five other major cities. Some groups said the impact will do little to help consumers in smaller markets, but Baer said the benefits are clear.

“The settlement we achieved is actually going to enhance the competitive environment in that very concentrated industry providing  better services and lower prices to millions of consumers across the United States,” Baer said.

The Justice Department in 2011 blocked a proposed merger between AT&T and T-Mobile, and Baer today said the action has caused a “burst of competition” among wireless carriers.

Similarly, he said enforcement against e-book sellers has caused the price of best sellers to decrease nearly by half. Consumers received credit this week in the $166 million settlement with sellers who allegedly conspired with Apple Inc. to set book prices, though many have complained about the miniscule payoff.

Apple has not settled and in February lost its latest bid to block an antitrust compliance monitor.

Baer today said that his lawyers are trial ready but also willing to work with companies to address competition problems with mergers.

“We’re open to meaningful structural settlements in merger cases and other cases where there is consensual agreement that can be reached that’ll protect consumer interests,” he said.

Also speaking today was Joaquin Almunia, a vice president at the European Commission responsible for antitrust policy. Almunia’s mandate ends in October, but in five years, he said he has seen a convergence between Europe and enforcers at the Justice Department and Federal Trade Commission. FTC Chairwoman Edith Ramirez also delivered remarks at the event.

“We are dealing with more and more similar cases – or the same cases – and we need convergence and cooperation,” Almunia said.

Baer noted the strength of international cooperation but said that enforcers around the world need to be sure their actions – not just their words — align on issues like due process in antitrust matters.

“While we are pretty good about general principles — that’s talking the talk,” Baer said, explaining that countries need to walk the walk.

Cooperation is also important at between the federal government and state antitrust officials, who have varying enforcement capabilities.

Kathleen Foote, head of a multi-state antitrust task force for the National Association of Attorneys General, said companies generally should disclose potential problems to state and federal authorities at the same time.

Criminal antitrust enforcement at the state level increased in the 1970s, Foote said, but has tapered off, in part because federal enforcement has increased

“They of course have additional resources, not the least of which is the FBI,” Foote said.

Baer advised antitrust lawyers against using a “divide and conquer” approach for the companies they represent by dealing separately with state and federal investigators.

“That strategy is unlikely to be effective,” Baer said.

While federal authorities have intervened in major mergers like the deal between American Airlines and U.S. Airways and the Anheuser-Busch InBev acquisition of Mexican brewer Grupo Modelo, the Assistant Attorney General said his staff is sensitive to business interests, so long as they don’t harm competition.

“Effective antitrust enforcement and advocacy also involves, I think,  sensitivity to the impact of what we’re doing and respect for the business community’s legitimate objectives,” Baer said.

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Saturday, November 16th, 2013

Did the Justice Department cave?

This week, the government announced that it was dropping its lawsuit to block the merger of American Airlines and US Airways after the parties reached a settlement. The new American will be the world’s largest airline and one of just three remaining legacy carriers in the United States, along with Delta Air Lines and United Airlines.

“This settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country,” Attorney General Eric H. Holder Jr. said this week.

But three months ago, in August, he had this to say about the proposed merger: “The American people deserve better. This transaction would result in consumers paying the price — in higher airfares, higher fees and fewer choices.” And in its complaint, the Justice Department noted that the three legacy carriers and Southwest would control 80 percent of domestic air service.

No wonder this week’s settlement left many antitrust experts scratching their heads, even as the airlines and their shareholders celebrated. (Read more).

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Wednesday, November 6th, 2013

The Antitrust Division’s longtime leader Scott Hammond is joining Gibson, Dunn & Crutcher LLP in Washington, D.C.

Scott Hammond

Hammond, who will start in January after leaving the government last month, spent 25 years in the Antitrust Division and was a major force in the Justice Department’s enforcement efforts against cartels.

At the Justice Department, Hammond led criminal enforcement against antitrust practices relating to LCD panels, air transportation, auto parts, real estate foreclosure auctions, municipal bonds, construction, chemicals and coastal freight.

He was appointed deputy assistant attorney general in 2005 and supervised the division’s investigations and prosecutions worldwide.

Hammond is also credited for playing a major role in the division’s Corporate and Individual Leniency Program. The program was introduced in 1978 but was revised in 1993 and 1994 to create incentives for parties to cooperate with law enforcement.

The program has been emulated abroad, notably in the European Union.

Hammond also built relationships with enforcers in Australia, Brazil, Canada, Japan, Korea, Poland and the United Kingdom.

After joining the Justice Department in 1988 through the Attorney General’s Honors Program, Hammond started as a trial attorney in the Antitrust Division and moved to the front office of policy makers.

Gibson Dunn partner Gary Spratling served as deputy assistant attorney general when Hammond was senior counsel.

Hammond was promoted to director of criminal enforcement in 2000.

Ken Doran, Gibson Dunn’s chairman and managing partner, said Hammond’s background with authorities around the world will benefit clients.

“His deep experience in working on policy and enforcement issues with international antitrust authorities will be an invaluable asset to our clients around the world,” Doran said in a statement.

Recently, Gibson Dunn welcomed Ali Nikpay, former senior director for cartels and criminal enforcement at the United Kingdom’s Office of Fair Trading.

From 2005 to 2013, Hammond served as co-chair of the Cartel Working Group of the International Competition Network. He also served as the Antitrust Division’s liaison with the International Cartel Task Force of the American Bar Association.

Hammond graduated with honors from the University of North Carolina School of Law in 1988.

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Wednesday, June 19th, 2013

In a final address to the Senate Judiciary Committee, FBI Director Robert Mueller emphasized the necessity of the National Security Agency’s classified surveillance programs and the efficacy of existing oversight measures.

Mueller, who will conclude his 12-years at the helm of the bureau in September, said that counter-terrorism remains the agency’s highest priority and that the FBI must evolve to address the issue of cyber terrorism.

FBI Director Robert Mueller testifies before the Senate Judiciary Committee (June 19, 2022)

He also acknowledged the practice of using drones on U.S. soil for surveillance purposes.

“Our footprint is very small, and we have very few [drones] of limited use,” he said.” we’re exploring not only the use but also the necessary guidelines for that use,” Mueller told ranking member Sen. Charles Grassley (R-Iowa).

The FBI issued a statement following the hearing elaborating on the director’s comments.

“As the director stated, we have used surveillance aircraft in very limited circumstances to support operations where there was a specific operational need,” the statement read. “Unmanned aerial vehicles (UAV) allow us to learn critical information that otherwise would be difficult to obtain without introducing serious risk to law enforcement personnel.”

Senators pressed Mueller about the use of surveillance drones as another potential violation of privacy rights.

Senate Intelligence Committee Chairwoman Dianne Feinstein (D-Calif.), emphasized the effectiveness of existing oversight for the program but questioned the use of drones to conduct domestic surveillance.

“People are concerned about privacy,” she said. “I think the greatest threat is drones,” Feinstein continued, citing a booming industry of commercial drones and a lack of regulation.

Feinstein raised the possibility of using telephone call records held by private companies as an alternative.

“I have long said that protecting national security and protecting Americans’ fundamental rights are not mutually exclusive. We can and must do both,” said Committee Chairman Patrick Leahy (D-Vt.), voicing concern about the expansive nature of metadata collection under the USA PATRIOT Act of 2001.

Leahy said planned he to re-introduce a version of his 2009 bill to reform the act to protect privacy rights and strengthen oversight.

Mueller defended the NSA’s 215 program, which allows the FBI to query a database of telephone calls made overseas in cases linked to terrorism under the Foreign Intelligence Surveillance Act.

Senators asked the director how many terrorist plots were disrupted as a result of the program. He said information obtained through 215 had helped prevent between 10 and 12 potential terrorist attacks.

“You never know which dot is going to be key,” he said. “There will be fewer dots to connect if you don’t have that ability to go back and retain the toll records and identify that particular person in the United States who is in communication with the terrorist member overseas.”

Mueller responded that private companies do not preserve records for extended periods. Under FISA, the United States can hold call records for up to five years.

Meanwhile, Sen. Al Franken (D-Minn.) asked Mueller whether the FBI could increase transparency around its surveillance programs without undermining national security.

“I think what’s hard here is it’s hard for Americans to debate the merits of the law when the law is secret,” Franken said, asking: “Do you believe that the American people [could] regain trust and benefit from perhaps a redacted version of these decisions and opinions by the FISA court?”

“I think it would be educating our adversaries in terms of what our capabilities are,” Mueller replied.

Sen. Sheldon Whitehouse (D-R.I.) pressed Mueller on the FBI’s work to address cyber security threats.

“It’s a huge vulnerability,” Whitehouse said. “I hope [this is] one of your departing messages to the bureau. We need to be looking forward to take on the threat in years ahead…. We’re on loosing end of biggest trend of intellectual theft in human history.”

Sen. Dick Durbin (D-Ill.) praised Mueller for the transformation of the FBI’s computing system under his tenure following the terrorist attacks of Sept. 11. The FBI’s computer system was “archaic” when Mueller took office, said Durbin.

“[There was] no access to the Internet, no word search capability. [It was] unable to transmit documents. [They had to be] sent by overnight mail, [they] couldn’t be sent by the computer system that you inherited,” he said.

Turning to an issue that has rankled Republicans on the Hill, Sen. Jeff Sessions (R-Ala.) questioned Mueller about whether the bureau had begun conducting interviews as part of its investigation into the IRS tax scandal.

While thanking the director for his 12 years of service, senators expressed broad concerns about the future of the bureau and the selection of Mueller’s successor.

Grassley asked Mueller whether he’d discussed his potential successor with President Barack Obama. The director said he had although he didn’t elaborate. The Iowa senator then asked whether a transition plan had put put into place.

“We have been preparing for the past two and a half years,” Mueller said. “We are prepared to start the briefings as soon as the person is sworn in.”

According to reports, Obama plans to nominate former Deputy Attorney General James Comey to replace Mueller.

Congress will likely take up the nomination before the August recess. Although federal law limits the term of FBI directors to 10 years, Mueller served an extra two after Obama requested an extension.

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Friday, November 16th, 2012

The Justice Department on Friday said Antitrust Division attorney Renata Hesse has replaced Joseph Wayland as Acting Assistant Attorney General for the Antitrust Division. Wayland has left the department and may return to private practice.

Renata Hesse

Hesse was a Justice Department attorney from 1997 to 2006, serving in the Merger Task Force and then the Transportation, Energy and Agriculture Section. From 2002 to 2006, she was chief of Networks and Technology in the Antitrust Division. She lead the remedy phase of the Antitrust Division’s monopoly case against Microsoft Corp.

In remarks released by the department, Attorney General Eric Holder was quoted as praising Hesse’s experience.

“Renata is a veteran antitrust lawyer who will lead the Antitrust Division during this time of transition on its mission to vigorously and effectively enforce the antitrust laws and protect American consumers from anticompetitive behavior,” Holder said.

Hesse previously served as senior counsel to  the chairman for transactions at the Federal Communications Commission and was also a partner at Wilson Sonsini Goodrich & Rosati PC, a Justice Department spokeswoman said in an e-mail.

Hesse returned to the department this year in March, serving as a special adviser for civil enforcement and then as Deputy Assistant Attorney General in the Antitrust Division.

William J. Baer, a partner at Arnold & Porter LLP, has been nominated to head the Antitrust Division but has yet to be confirmed for the role.

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Monday, December 12th, 2011
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Friday, June 24th, 2011

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.

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Thursday, April 14th, 2011

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.

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Thursday, August 19th, 2010

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.

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Tuesday, July 27th, 2010


TUESDAY, JULY 27, 2022



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.