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Antitrust Alert

A Global Resource for Compliance Officers & Legal Advisors

DOJ Issues First Business Review Letter Following Agencies’ Joint Policy Statements on Cybersecurity

Posted in DOJ Developments, FTC Developments

On October 2, 2014, the U.S. Department of Justice (DOJ) issued its first business review letter since issuing jointly with the Federal Trade Commission (FTC) the Agencies’ Antitrust Policy Statement on Sharing of Cybersecurity Information in April 2014 (the Policy Statement).  The Policy Statement recognized that sharing cyber threat information is integral to defending against cyber-attacks.  It states that cyber information sharing will be reviewed under a rule of reason analysis that focuses on the improved efficiency and security of cyber networks, the nature of the cyber information to be shared, and whether the information exchange is likely to harm competition.

CyberPoint International, LLC, requested the business review letter for its cyber intelligence data-sharing platform called TruSTAR.  The TrueStar platform collects incident reports, anonymously submitted, that include technical information, targets of the attack, contextual information and remediation solutions, which help members analyze their organization’s risk and current defenses.  The platform also contains a members-only forum where members can anonymously interact with the member that submitted a particular incident report, but requires as a prerequisite for participation a certification that members will not exchange “competitively sensitive information—such as recent, current, and future prices, cost data, or output levels—or otherwise attempt price or other coordination.”  Members must also have a Dun and Bradstreet D-U-N-S number, be in good standing with local, state and federal government and agencies, as well as satisfy minimum technical performance criteria.

In analyzing the proposed data-sharing platform, the DOJ found significant that “the business purpose and nature of the information sharing agreement does not suggest competition or consumers will be harmed.”  Notably, “the nature of the information that will be shared is unlikely to facilitate tacit or explicit price or other competitive coordination among competitors,” because “[t]he information to be shared through incident reports and the collaboration forum are very technical and is the type of information sharing contemplated by the . . . Policy Statement.”  Specifically, “no competitively sensitive information about recent, current, and future prices, cost data, output levels, or capacity will be exchanged,” and “CyberPoint will obtain commitments from members that competitively sensitive information won’t be exchanged.”  Therefore, the DOJ concluded that competitive harm was unlikely and that consumers would likely benefit from the lower cost and more efficient means of establishing network security.

The business review letter is available at http://www.justice.gov/atr/public/busreview/309071.pdf.

Mushroom Growers Denied Capper-Volstead Antitrust Immunity

Posted in Agriculture, Private Litigation

On October 14, 2014, the Eastern District of Pennsylvania denied a motion for reconsideration brought by members and affiliates of the former Eastern Mushroom Marketing Cooperative (EMMC).  In re Mushroom Direct Purchaser Antitrust Litig., No. 06-0620 (E.D. Pa. Oct. 14, 2014).  In 2009, the court denied defendants’ motion for partial summary judgment, which argued that defendants were immune from antitrust liability as members of an agricultural cooperative under the Capper-Volstead Act, 7 U.S.C. § 291.  The court gave two reasons for denying the motion: (1) the EMMC allegedly conspired with entities that were not engaged in agricultural production and (2) non-grower M. Cutone’s membership in the cooperative destroyed Capper-Volstead immunity.  Defendants moved for reconsideration in light of intervening authority from the Supreme Court in American Needle Inc. v. Nat’l Football League, 560 U.S. 783 (2010), and the Third Circuit in Deutscher Tennis Bund v. APT Tour, Inc., 610 F.3d 820 (3d Cir. 2010).

Defendants argued that, under American Needle, an unlawful conspiracy could not exist between an EMMC grower member and its affiliated distributor.  The court analyzed American Needle and emphasized that “substance, not form, should determine whether a[n] . . . entity is capable of conspiring under § 1 [of the Sherman Act].”  Mushroom, No. 06-0620 at 6 (quoting American Needle, 560 U.S. at 195).  The court held that its prior conclusion that member Kaolin/South Mill and its distribution centers were not a single entity was undisturbed by American Needle.  That the entities were “separate decision makers pursuing separate economic interests” was strongly evidenced, in the court’s eyes, by litigation that had occurred between the entities.  Mushroom, No. 06-0620 at 9.

Defendants also argued that participation in the cooperative by M. Cutone, a non-grower affiliate of grower-member M&V Enterprises, was protected under Capper-Volstead under the same rationale behind the intra-enterprise conspiracy doctrine discussed in American Needle.  The court held that this argument “misconstrue[d] the nature of the single entity defense. . . . Merely because two parties are considered to be a single entity for the purpose of a conspiracy claim under American Needle does not require that they be similarly considered in order to determine whether the cooperative’s membership included non-growers.”  Mushroom, No. 06-0620 at 12.  Therefore, M. Cutone’s “power to participate in the control and policy making of the association through voting . . . destroyed the availability of Capper-Volstead immunity for the cooperative.”  Id. at 11-12 (internal quotation marks omitted).

The court certified both issues for interlocutory review under 28 U.S.C. § 1292(b), as well as the question of whether a cooperative member’s good faith reliance on the advice of counsel can shield it from antitrust liability.  It remains to be seen whether the Third Circuit will take up the appeal.

Japanese Shipping Company Rolls Over, Pleads Guilty to Price Fixing

Posted in Cartel Enforcement, DOJ Developments

On September 26, 2014 Japanese transportation company Kawasaki Kisen Kaisha Ltd. (K-Line) agreed to plead guilty to price fixing, bid rigging and allocating customers for international ocean shipping services for “roll-on, roll-off” cargo. K-Line will be fined $67.7 million. Roll-on, roll-off cargo is a special type of ocean shipping for cars, trucks, agricultural and construction equipment, and other objects that can be rolled on and rolled off a vessel. Roll-on, roll-off cargo does not involve shipping containers.

K-Line pleaded guilty to one count—a violation of Section One of the Sherman Act. The plea agreement states K-Line participated in the conspiracy from at least February 1997 until at least September 2012. The conspiracy involved customers and shipping routes both to and from the United States at the Port of Baltimore and other ports. The conspiracy regarding roll-on, roll-off ocean shipping involved only deep-sea (or trans-ocean) shipping. It did not include short-sea or coastal water freight shipping.

K-Line and its co-conspirators attended meetings and engaged in communications to discuss bids and tenders, including refraining from competing for certain bids and tenders for ocean shipping; to allocate customers by refraining from competing for each other’s existing business on certain routes; and to discuss prices. K-Line acted on these illegal restraints of trade by submitting in accordance with its agreement with co-conspirators and providing roll-on, roll-of shipping services at supra-competitive rates.

K-Line’s guilty plea is the second plea agreement in the Department of Justice’s investigation into the international shipping cartel for roll-on, roll-off cargo. In February 2014, Chilean company, Compania Sud Americana de Vapores SA pleaded guilty and agreed to pay a $8.9 million criminal fine.

S.D.N.Y. Dismisses Cotton Traders’ § 1 Claims Under Copperweld

Posted in Agriculture, Monopolization/Abuse of Dominance, Private Litigation

On September 30, 2014, the Southern District of New York reconsidered the Commodities Exchange Act (CEA) and Sherman Act claims brought against Louis Dreyfus Commodities B.V. and its affiliates in In re Term Commodities Cotton Futures Litigation, 12 Civ. 5126 (ALC)(KNF) (S.D.N.Y. Sept. 30, 2014).  The plaintiffs, cotton futures traders, alleged that the defendants manipulated the price of cotton futures by “unreasonably and uneconomically demanding delivery of certificated cotton in fulfillment of futures contracts,” among other allegations of manipulative behavior.  In December 2013, the court denied defendants’ motion to dismiss, and defendants subsequently moved for reconsideration.  On reconsideration, the court dismissed plaintiffs’ § 1 claim under the intra-enterprise conspiracy doctrine set forth in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), but declined to dismiss the CEA or § 2 claims.

The court began its analysis by emphasizing the narrow holding of Copperweld.  It noted that Copperweld’s holding was limited to the relationship between “a parent and its wholly owned subsidiary”; where the relationship between two conspirators is anything less than complete ownership, lower courts “must draw from the analysis in Copperweld without the benefit of a bright line rule.”  Cotton, 12 Civ. 5126 at 6-7.  While the court rejected an interpretation of the intra-enterprise conspiracy doctrine that “Section One claims are not viable where the only named coconspirators are a parent corporation and its subsidiaries” as an overstatement of the law, it did not go so far as to hold that the doctrine only applies to parents and their wholly owned subsidiaries.

The five defendants in Cotton were all related through a web of parent-subsidiary relationships.  The plaintiffs did not specify whether each subsidiary was wholly owned, or clearly plead the nature of the defendants’ relationships.  The court held that, viewing the allegations in the light most favorable to the plaintiffs, it could not conclude that the allegations supported “a reasonable inference that Defendants ha[d] ‘separate corporate consciousnesses.’”  Cotton, 12 Civ. 5126 at 10.  For the defendants that were not wholly owned by other defendants, “the allegations portray[ed] the other Defendants as having ‘ownership’ and ‘control over’ them and giving ‘directions to’ them.  Nothing in the [complaint] demonstrate[d] a rational possibility that Defendants were ‘previously separate and competing entities [that combined] to act as one for their common benefit.’”  Id.

Regarding the § 2 claim, defendants argued that the court should apply the pleading standards for predatory pricing claims established by the Supreme Court in Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., 549 U.S. 312 (2007).  The court disagreed and concluded that Weyerhaeuser was inapplicable to these facts because the case did not present a classic predatory bidding scheme.  Due to the procedural posture of the case, the court did not discuss any additional issues related to defendants’ alleged monopolization.  Though it did not dismiss the § 2 claim, the court noted “the delicate factual balance in which Plaintiffs’ remaining claims hang” and granted defendants leave to move for summary judgment before the plaintiffs could move for class certification.

Local Wholesaler-Retailer Dispute Has Federal Implications

Posted in Distribution/Franchising, Monopolization/Abuse of Dominance, Private Litigation

On August 14, the U.S. District Court for the Southern District of Mississippi issued an opinion finding that state regulations bolstered one antitrust claim and hindered another in an ongoing dispute between a northern Mississippi convenience store chain, Major Mart, and an Anheuser-Busch InBev (ABI, a/k/a “Red Network”) distributor, Mitchell Distributing Company.

In Mississippi, by statute, like those of many other states, beer manufacturers must designate exclusive sales territories for each brand.  Mitchell holds the exclusive right to sell ABI brands to retailers in the counties in which Major Mart operates its 11 convenience stores.

The relationship between Mitchell and Major Mart started to break down in 2010, when Major Mart claimed that it was receiving inaccurate and confusing price information from Mitchell.  Major Mart asked Mitchell for compensation of lost profits due to the incorrect pricing information.  Mitchell denied the request, and Major Mart decided later to remove ABI displays and signs, lower the prices of competitors’ products, and reduce the cooler space allocated to ABI in some of its stores.  According to Major Mart’s complaint, Mitchell retaliated by (1) demanding shelving allocation that represented ABI’s market share of approximately 70 percent, (2) demanding price parity with competing products of ABI, (3) changing its deliveries to Major Mart stores to once a week so as to fill up Major Mart’s coolers and storerooms, leaving no room for competitor products and (4) delivering on Fridays so that Major Mart stores would not have cold beer on the “best selling day of the week.”

After litigation was first initiated, the parties reached a settlement in 2011, agreeing that Mitchell would increase its deliveries to at least twice per week and Major Mart would reconsider shelf space allocation and increase prices on competing brands of beers to the same price as ABI products.  This temporary resolution, however, failed when Major Mart did not reallocate its shelf space.  In response, Mitchell once again cut deliveries to one day per week and thereafter began to provide sales coupons and promotional giveaways exclusively to Major Mart’s competitors.  Major Mart also claimed that Mitchell delivered beer that was close to the end of its shelf-life, replaced fresher beer Major Mart had with older beer and missed deliveries during key dates, including July 4 and just as students were returning to college.  Eventually, Major Mart sued.

Major Mart alleged that Mitchell engaged in monopolization and attempted monopolization in violation of the Sherman Act and price discrimination in violation of the Robinson-Patman Act.  In response, Mitchell filed a motion for summary judgment asserting that the Sherman Act did not apply, as (1) Mitchell’s actions were immunized by the State Action Doctrine—the principle that the Sherman Act does not apply to states acting in their capacities as sovereigns—and (2) Mitchell’s actions, which occurred solely in Mississippi, did not affect interstate commerce—as required for Sherman Act jurisdiction.

Quickly discarding the State Action Doctrine assertion, the court noted that to qualify as a state’s action, conduct must be “undertaken pursuant to a clearly articulated an affirmatively expressed state policy to displace competition.”  And, while Mississippi’s statutory scheme clearly prevents intra-brand competition by requiring exclusive territories, it does nothing to restrict competition between brands, which was the subject of Major Mart’s claims.  Further, no state statute or regulation expressly or impliedly allowed any of Mitchell’s actions.

The court also found that Major Mart had met the interstate commerce requirement because the beer sold by Mitchell had been acquired from breweries outside the state and the restrictions on beer sales affected sales of other products in interstate commerce, such as the tobacco, food and gasoline sold at Major Mart stores.

Regarding Major Mart’s monopolization claim, the court analyzed the elements of that claim under the Sherman Act: that the defendant (1) possesses monopoly power in the relevant market, and (2) has willfully acquired, maintained or enhanced that monopoly power through exclusionary conduct.  Mitchell argued that no evidence showed that it had effectively wielded any monopoly power and that Major Mart had not demonstrated that other wholesalers are so “capacity constrained” as to prevent them from effectively competing with Mitchell. The court disagreed, pointing to Mitchell’s 70-75 percent market share of wholesale beer sales as sufficient evidence to raise a question of fact as to Mitchell’s monopoly power.

On the issue of Mitchell’s exclusionary conduct, Major Mart argued that Mitchell was using its market power to punish Major Mart for selling other brands of beer by slowing or ceasing deliveries, delivering damaged product, and taking other retaliatory actions when Major Mart lowered prices or refused to reconsider allocation of shelf space.  The court ultimately denied Mitchell’s summary judgment motion, finding that the issues presented in Mitchell’s motion required the evaluation of testimony to resolve.

Major Mart’s price discrimination claims centered on Mitchell’s practice of “granting discounts, promotions, special services and rebates to other retailers, but not to Major Mart.” Sections 2(d) and 2(e) of the Robinson-Patman Act protect against suppliers granting promotional benefits in connection with sales to favored customers.  A supplier violates 2(d) if it discriminates by compensating only selected customers for customer-performed promotion and violates 2(e) if it discriminates in performing promotional services for selected buyers.

The court never evaluated these claims, however, as Mitchell successfully contended that Major Mart did not satisfy the “in commerce” requirement for jurisdiction under the Fifth Circuit’s interpretation of the Robinson-Patman Act.  This “in commerce” requirement is interpreted more narrowly than the interstate commerce requirement of the Sherman Act.  Under Fifth Circuit precedent, the “in commerce” requirement “is not satisfied unless the sales actually cross a state line,” which may be met if the goods are sold or resold in interstate commerce or the goods were sold to those who compete in interstate commerce.  Because Major Mart did not buy the beer or resell the beer in interstate commerce—just in Mississippi—nor compete in interstate commerce, since “those who received rebates and coupons from Mitchell are located in Mississippi,” the “in commerce” requirement of Robinson-Patman was not met.  So, while Major Mart satisfied the Sherman Act interstate commerce requirement because its purchase of beer from a wholesaler affected interstate commerce, it could not satisfy the Robinson-Patman Act “in commerce” requirement because its sales of beer did not take place across state lines.

This case serves as a reminder of how regulation can affect the antitrust treatment of beer and other beverage distributors.  Regulation of licensing procedures or territorial restrictions, for example, can erect barriers to entry that practically insulate wholesalers from competition within a brand, but cannot shield a wholesaler from antitrust claims of misuse of market power bestowed by that state-sanctioned “monopoly.”  While distributors of dominant brands who have exclusive rights within a geographic area do not have to worry about losing those rights to competing firms absent rare circumstances, they must be on guard against antitrust claims arising from their dealings.  Conduct toward retailers, manufacturers or other distributors that would otherwise be considered merely “rough dealing” can rise to the level of a federal antitrust violation or invite state and federal regulatory antitrust scrutiny because of that exclusive distribution relationship.

This case also reminds us that state regulatory schemes and franchise laws cannot insulate wholesalers from antitrust scrutiny under state action immunity, even though a wholesaler’s exclusive right to distribute the brands it carries often is conferred by state law.  For a private actor to obtain state action immunity, the state must clearly articulate a policy to displace competition and actively supervise the private actor’s conduct under the statutory scheme.  These types of regulations and laws typically make no such articulation, and in this case, the alleged exclusionary conduct of the wholesaler bore no relation to the regulatory scheme that permitted its exclusive distribution relationship.

Finally, as illustrated by this case, despite the risk of federal antitrust violations for wholesalers of dominant brands articulated above, wholesalers of any brands typically face no risk of violating federal price discrimination laws related to the pricing of beer to retailers because those transactions do not cross state lines.  Perhaps that is small comfort, however, given the existence of state price discrimination laws and the potential for certain pricing schemes by wholesalers of dominant brands to constitute exclusionary conduct in violation of the Sherman Act.

New EU Competition Commissioner’s Priorities For 2014-2019: Hearing Before The European Parliament

Posted in EC Developments, EU Developments

Margrethe Vestager, former Deputy Prime Minister of Denmark, is designated to become the next European Union Competition Commissioner in November 2014. In a three hour hearing before the European Parliament (EP) last night (2 October), Ms Vestager answered the EP’s questions and revealed a number of issues that she would like to focus on during her five year term of office. These priorities include vigorous cartel enforcement and—at least initially—assessment of whether or not certain tax arrangements in a small number of EU Member States infringe State aid rules.

Read the full article.

Sham-Wow! Antitrust Liability May Attach to Sham Administrative Petitions

Posted in Healthcare Antitrust, IP Antitrust

Addressing whether the “sham” exception to Noerr-Pennington immunity is limited to sham litigation in courts, the U.S. Court of Appeals for the Federal Circuit vacated a lower court’s summary judgment of no antitrust liability, finding that antitrust liability can attach to sham administrative petitions and that the sham litigation exception is not limited to court litigation.  Tyco Healthcare Group LP v. Mutual Pharm. Co., Inc., Case No. 13-1386 (Fed. Cir., Aug. 6, 2014) (Bryson, J.) (Newman, J., dissenting).

Tyco Healthcare acquired patents relating to temazepam, an insomnia drug marketed as Restoril.  Seeking Food and Drug Administration (FDA) approval to manufacture and sell generic temazepam, Mutual Pharmaceutical filed an Abbreviated New Drug Application (ANDA), certifying that its generic product would not infringe any patents.  Tyco disagreed and sued Mutual for infringement under the Hatch-Waxman Act.  The district court rejected this claim, reasoning that products manufactured to the ANDA’s specification could not infringe.  Tyco then filed a citizen petition with the FDA, urging new guidelines to require generic temazepam manufacturers to more extensively demonstrate bioequivalence to Restoril.  The FDA denied Tyco’s citizen’s petition “indicating that, in the FDA’s view, it was wholly without merit.”

In response to Tyco’s infringement suit, Mutual brought antitrust counterclaims, including allegations that Tyco’s suit and citizen petition were shams.  In other words, Mutual argued that Tyco used illegitimate means to keep Mutual’s product off the market.  On summary judgment, the district court rejected these counterclaims, holding that it was reasonable for Tyco to proceed with its infringement action and that antitrust liability for sham claims cannot apply to filing administrative petitions because the exception “is expressly limited to litigation.” Mutual appealed.

The Federal Circuit vacated the rulings on antitrust issues and remanded for further consideration.  With regard to Tyco’s Hatch-Waxman claim, the Federal Circuit found that it was not unreasonable for a patent owner to allege infringement under Hatch-Waxman if the patent owner has evidence that the as-marketed commercial ANDA product will infringe, even though the hypothetical product specified in the ANDA could not infringe.  The Court concluded that further inquiry was necessary to determine if Tyco’s factual theory of infringement was objectively baseless.  With regard to the administrative proceeding, the Court found that the sham exception to Noerr-Pennington is not limited to court litigation, and that it has been applied to administrative petitions, including FDA citizen petitions.  Accordingly, it remanded this counterclaim for resolution of fact issues regarding whether the citizen petition was objectively baseless and motivated by a subjective desire to directly interfere with Mutual, as well as whether Mutual suffered any anticompetitive injury.

Judge Newman dissented from the court’s conversion of routine patent litigation into antitrust violations, arguing that “[e]nforcement of a presumptively valid patent against a product that infringes by statute [Hatch-Waxman] cannot be deemed objectively baseless” and patent holders have “the right to communicate with the FDA concerning public information on matters within the agency’s authority and responsibility without incurring antitrust liability.”

California Court Finds Lack of Antitrust Standing for Price-Fixed Component Parts

Posted in Private Litigation

On Sept. 22, 2014, the U.S. District Court for the Northern District of California issued an important opinion regarding antitrust standing in Los Gatos Mercantile, Inc. v. E.I. DuPont de Nemours & Co. (DuPont), No. 13-cv-01180-BLF (N.D. Cal. Sept. 22, 2014).  The DuPont opinion is one of several recent opinions handed down on the topic by the Northern District of California in cases involving price-fixed component products.  In DuPont, the U.S. District Court for the Northern District of California granted in part and denied in part the defendants’ motion to dismiss for lack of constitutional and antitrust standing.

Much of the court’s analysis focused on whether the plaintiffs pleaded sufficient facts in their complaint to allege to demonstrate antitrust standing for certain claims.  The court held that the plaintiffs failed to establish antitrust standing.  The court analyzed antitrust standing using a well-known five-factor test promulgated by the Supreme Court in Assoc. Gen. Contractors v. Cal. State Council of Carpenters (AGC), 459 U.S. 519 (1983).

To assess standing under AGC, courts consider: (1) the nature of the alleged injuries and whether the plaintiffs were participants in the relevant market; (2) the directness of the alleged injury; (3) the speculative nature of the harm alleged; (4) the risk of duplicative recovery and (5) the complexity in apportioning damages.  Id. at 536-39.

Because the plaintiffs alleged a Sherman Act Section One claim for which damages are not available, two of the factors—risk of duplicative recovery and complexity in apportioning damages—did not apply. DuPont, No. 13-cv-01180-BLF, at *8.  Thus, the court considered whether the facts pleaded by the plaintiffs demonstrated: (1) that they were participants in the relevant market; (2) that they suffered a sufficiently direct injury and (3) that the harm alleged was not speculative.  Id. at *11-14.

First, the court found that the plaintiffs did not plead they were participants in the relevant market.  The plaintiffs’ complaint listed a broad array of products containing the price-fixed component.  Id. at *11-13.  Although courts have applied different tests—such as whether the market for the price-fixed component and the finished product were inextricably linked or whether the plaintiffs alleged they were participants in the same market as the price-fixed component—to analyze this factor in different price-fixing litigations, the DuPont plaintiffs failed to meet any of these tests because they listed such a broad array of products.  Id.

The court also emphasized that two recent price-fixing cases analyzing antitrust standing focused on the fact that the price-fixed component could be physically traced through the supply chain because they were “identifiable, discrete components that did not become indistinguishable parts” of the finished product.  Id.  In contrast, the price-fixed component in DuPont was a chemical ingredient.  The chemical became an indistinguishable part of the finished product.  Id.  The plaintiffs alleged that they were able to physically trace the price-fixed component through the distribution chain.  Id.  In contrast, in past decisions, courts have found the mere allegation of traceability to be sufficient.  Id.  However, the DuPont court stated this allegation was “implausible” because of the “manner in which [the product] is incorporated into the finished consumer product.” Id.

Second, the court found the plaintiffs’ injury was not sufficiently direct and that the harm alleged was too speculative.  Id.  at *13-14.  Notably, many products included in the plaintiffs’ complaint were “far down the distribution chain” and did not contain significant amounts of the price-fixed products.  Id.  Thus, the harm alleged was too remote.  Id.  at *14.

As a result, the court found antitrust standing lacking and dismissed certain state claims.  The court did not dismiss claims for two states whose antitrust laws do not apply the AGC factors.  Parties looking to argue the existence of—or a lack of—antitrust standing should carefully consider the various tests and reasoning articulated by courts in recent prominent cases addressing antitrust standing in the context of price-fixed component parts and consider how the their factual scenario is conceptually similar—or can be fundamentally distinguished—from these recent cases.

Agencies Sign New Cooperation Agreement with Colombia

Posted in DOJ Developments, FTC Developments

The Department of Justice (DOJ) Antitrust Division announced on September 16 that the DOJ and Federal Trade Commission (FTC) have entered into a new antitrust cooperation agreement with Colombia’s Superintendence of Industry and Commerce, stating that the “agreement will enable the antitrust agencies in the two countries to further enhance their law enforcement relationship.”

According to DOJ Assistant Attorney General Bill Baer, cooperation between the United States and Colombia is “critical to maintaining competitive markets in the Americas, particularly for economies as linked as ours.”  The agreement contains provisions for enforcement cooperation and coordination, conflict avoidance and consultations for enforcement actions, and technical cooperation.  It also contains a provision to maintain the confidentiality of any sensitive information.

The agreement, effective September 16, 2014, is similar to those previously entered into with other countries such as Brazil, Canada, Chile and Mexico, and does not change any current laws in either country.  Antitrust agencies from both countries have already established a strong working relationship under the U.S.-Colombia Trade Promotion Agreement which was signed in 2006.  “We look forward to working with the Superintendence to advance our shared goal of promoting convergence around sound competition policy throughout the hemisphere,” stated FTC Chairwoman Edith Ramirez.

The Importance of an Effective Compliance Program

Posted in DOJ Developments

On September 9, 2014, Brent Snyder, Deputy Assistant Attorney General of the U.S. Department of Justice Antitrust Division, provided prepared remarks on the subject of “Compliance is a Culture, Not Just a Policy,” before the International Chamber of Commerce/United States Council of International Business Joint Antitrust Compliance Workshop in New York City.  Snyder explained that an effective corporate compliance program is an important part of a company’s effort to prevent antitrust violations.

According to Snyder, compliance programs make good business and common sense.  He noted that compliance programs help prevent companies from committing crimes.  And, that even if a compliance program is not entirely successful, a partially successful compliance program may help a company qualify for leniency.  Snyder believes there is no one-size-fits-all compliance program. Instead, an effective compliance program should be designed to account for the markets a company operates in and the nature of a company’s business.  He also reviewed five things the Antitrust Division looks at when evaluating a company’s compliance program.

First, a company’s board of directors and senior executives must engage in and be fully supportive of the company’s compliance efforts.  This means that senior management must be fully knowledgeable about the company’s compliance efforts, including providing the necessary resources and having the appropriate personnel oversee the program.  Second, the entire company needs to be committed to executing the policy.   Companies show this by training all executives and managers, and most employees, especially the employees with pricing and sales responsibilities.  Third, the compliance policy should be proactive. To do so, companies should monitor and audit “risk activities.”  Fourth, a company should have an approach to individuals that break the antitrust laws, including being willing to discipline employees for any violations.  Finally, a company that uncovers criminal antitrust conduct should be equipped to prevent the conduct from happening again, which can mean making changes to its compliance program and being prepared to accept responsibility for that conduct.

Snyder also mentioned that having a compliance program may still benefit a company planning to plead guilty to an antitrust crime.  The examples he provided were companies with compliance policies possibly being able to avoid additional oversight by the court and the Division.  The Sentencing Guidelines require an effective compliance program.  If a company does not have one or can’t show it is updating its existing one, a company will most likely be on probation.  However, if a company can show that they adopted or strengthened an existing compliance program it may be able to avoid probation.  The Division is also considering possible ways to credit a company that proactively strengthens or adopts a compliance program after the commencement of an investigation.

In the end, however, Snyder was clear that the purpose of “having an effective compliance program is not so that the Division will cut you a break if your company commits a crime.”  Instead, the purpose of an effective compliance program, as described by Snyder, is to be a “good and responsible corporate citizen.”