The Department of Justice (DOJ) Antitrust Division announced three new investigations and several developments in its other investigations, including new investigations in the commercial flooring industry, online auctions for surplus government equipment and insulation installation contracts. The Antitrust Division also released its Spring 2019 Division Update, which notes that the Division “is preparing for trial in six matters and had 91 pending grand jury investigations at the close of FY 2018.”
In April 2019, the Division held a public roundtable discussion on the Antitrust Criminal Penalty Enhancement & Reform Act (ACPERA), which is due to sunset next year. ACPERA reduces the criminal liability and civil damages exposure of companies and individuals who are granted leniency under the Division’s Leniency Program for cooperating in investigations into cartel and other anticompetitive conduct. The roundtable consisted of a series of panel discussions allowing judges, attorneys, economists, academics, the business community and other interested stakeholders to weigh in on how the law can be improved. The Division was particularly interested in the public’s views on whether ACPERA has properly incentivized the self-reporting of criminal conduct and whether there are issues that have impeded the law’s intended effect.
The European Commission (Commission) announced developments in ongoing investigations in the auto parts industry, and in its government bonds and car emissions cases. The Commission also launched a new online tool to make it easier for companies to submit statements and documents as part of leniency and settlement proceedings in cartel cases.
- The first new investigation disclosed by the DOJ is in the commercial flooring industry. The DOJ charged a former vice president of a commercial flooring contractor in Chicago of exchanging price information with its rivals to fix prices of contracts for removal and installation of commercial flooring. Assistant Attorney General Delrahim of the Antitrust Division said that the indictment “is the first of what we expect to be many in this ongoing investigation into bid rigging” in the commercial flooring industry.
- The DOJ disclosed a second new investigation into bid rigging of Government Services Administration (GSA) contracts. The owner of a Texas company pleaded guilty to rigging bids for surplus government equipment—computers for resale and for recycling—in online GSA auctions.
- The DOJ announced a third new investigation into bid rigging by insulation installation contractors. A manager for a Connecticut-based insulation contractor pleaded guilty for his role in rigging $45 million worth of bids for insulation installation contracts in New England from 2011 to 2018.
- The DOJ’s investigation into fuel-supply contracts for the armed services remains active. Two more Korean companies pleaded guilty for their involvement in a bid-rigging conspiracy that targeted contracts to supply fuel to US Armed Forces in South Korea.
- The DOJ’s investigation into price fixing in the promotional products space appears quite active.
- In May 2019, state attorneys general for 43 states and Puerto Rico brought federal and state antitrust, consumer protection and common law claims against 18 generic drug manufacturers and 15 individuals for what the States call an “overarching conspiracy” to fix the prices of at least 114 generic drugs. The States’ June 2018 complaint alleged 18 drug-specific conspiracies, whereas their new complaint alleges an industry-wide conspiracy.
- The Commission sent Statement of Objections in two investigations: European Government Bonds and Car Emissions.
- For the second time, the Commission imposed a fine on suppliers of car safety equipment. This is the latest Commission decision in the auto parts industry.
Real Estate Foreclosure Auctions
- The DOJ has charged more than 130 individuals with rigging bids in public real estate foreclosure auctions in Alabama, California, Georgia, North Carolina, Florida and Mississippi. Before a foreclosure auction on the courthouse steps, the conspirators would agree on a bidding scheme to depress the selling price of foreclosed properties. Across the country, the conspiracies operated similarly, which involved separate, mini auctions (sometimes called “rounds”) to award the properties to members of the conspiracy and to determine payoffs for the co-conspirators who had agreed not to bid up the selling price. These “rounds” were often held near the courthouse steps. Some of the bid-rigging schemes even operated online.
- In February 2019, the DOJ announced that nine real-estate investors were sentenced to a term of four months in prison and were ordered to pay fines ranging from $20,000 to $48,000, as well as restitution.
Electrolytic Capacitors
- This investigation involves price fixing of electrolytic capacitors, which regulate electrical current in electronic products, such as computers, televisions, car engines, airbag systems and home appliances.
- Eight companies have pleaded guilty and have been ordered to pay criminal fines of $150 million. Ten individual executives have been charged: three have pleaded guilty and seven remain under indictment.
- Judge Donato in the Northern District of California held a closed-door hearing on Nippon Chemi-Con Corporation’s change of plea after the parties filed a joint statement informing the court of a serious conflict. A DOJ attorney who worked on the case had worked in private practice prior to joining the DOJ and actually represented Nippon in the same price-fixing investigation. The parties reached a plea agreement. Since then, the court ordered Nippon Chemi-Con to pay a $60 million fine and ordered Nippon Chemi-Con to a five-year term of probation that requires annual certifications of its implementation of an antitrust compliance program. The court expressed “significant concern” that the judgment was a “windfall” given Nippon’s anticipated $190 million fine stemming from its $530 million market effect, and added that Nippon received a “discount” due to the government’s conflict that jeopardized its case.
- Follow-on civil litigation: In re Capacitors Antitrust Litigation, No. 14-cv-03264 (N.D. Cal.).
- There are no Mid-Year Updates to the capacitors investigation.
- These cases relate to the DOJ’s investigation into price fixing of packaged seafood products, particularly albacore, skipjack and yellowfin tuna in shelf-stable foil or cans. One company, Tri Union Seafoods LLC, acknowledged publicly that it applied for leniency from the DOJ.
- In 2016, two senior vice presidents of Bumble Bee Foods, LLC, pleaded guilty to fixing the price of shelf-stable tuna from at least 2011 through 2013. In June 2017, a former senior vice president of StarKist Co. pleaded guilty to one count of price fixing and agreed to cooperate with the government’s investigation. In Q4 2018, StarKist pleaded guilty for its role in a conspiracy to fix prices of canned tuna and agreed to cooperate with the government’s investigation. Bumble Bee Foods pleaded guilty and was ordered to pay a $25 million criminal fine, which could jump to over $80 million if the company is sold.
- In May 2018, a federal grand jury indicted the president and CEO of Bumble Bee for his role in the tuna price-fixing scheme. The CEO pleaded not guilty, and trial is scheduled for November 2019. In September 2018, the DOJ filed a motion in one of the follow-on civil suits requesting a stay of discovery against Bumble Bee’s CEO. The DOJ argued that discovery in the civil matter could...
