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2019 in Review: Overview of Cartel Investigations

The Department of Justice Antitrust Division (DOJ) was active in 2019. At the beginning of 2019, the DOJ was preparing for trial in six matters and had 91 pending grand jury investigations. Throughout 2019, the DOJ made public several new investigations, including in the commercial flooring industry, online auctions for surplus government equipment, the insulation installation industry and suspension assemblies used in hard disk drives. The DOJ also announced developments in other ongoing investigations. Meanwhile, the European Commission (Commission) entered into settlements with parties in three cartel cases: Occupant Safety Equipment, FOREX and Canned Vegetables. The Commission imposed total fines of €1,469 million in 2019. In March 2019, the Commission launched an online tool to submit documents and information in the context of leniency and settlement proceedings. Read the full report.

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Clean Hands Can Stop More than COVID-19: Antitrust Risks in Times of Supply and Demand Shocks

The potential for government investigation increases during periods of rapid and extreme movement in price. The US Department of Justice (DOJ) recently reiterated its focus on prosecuting violations of antitrust laws, especially in areas affected by the coronavirus outbreak. On March 9, 2020, the DOJ announced that individuals or companies engaging in price fixing, bid-rigging, customer or region allocation, or other antitrust violations could face criminal prosecution. Government scrutiny is likely to be even higher on companies that produce items for sale to federal, state or local governments, as the DOJ’s Procurement Collusion Strike Force acts as a dedicated watchdog over government contractors to prevent bid-rigging in government contracts. More information on the Strike Force is available here. Access the full article.

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Procurement Collusion Strike Force’s Focus on Detection Yielding New Investigations

On March 3, 2020, the American Bar Association (ABA) hosted a Q&A with two members of the Procurement Collusion Strike Force (PCSF)—Mark Grundvig, the Assistant Chief of the DOJ Antitrust Division’s Criminal II section, and Marcus Mills, Special Agent, Major Fraud Investigations Division, USPS Office of Inspector General. During the course of the Q&A, Mr. Grundvig and Mr. Mills provided their perspective on the goals and progress of the PCSF. WHAT HAPPENED: The PCSF representatives explained that the PCSF is heavily focused on improving detection of per se antitrust violations such as bid-rigging, price-fixing and market-allocation. To improve detection, the PCSF is: Training agents on per se antitrust violations and other anticompetitive conduct to improve agents’ ability to spot antitrust violations; Training industry participants via tradeshows and industry conferences on per se antitrust violations and other anticompetitive conduct to increase...

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Aerospace and Defense Series: DOJ and FTC Vertical Merger Guidelines Will Impact Government Contractors

Last month, the Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) released updated Vertical Merger Guidelines in draft form. These guidelines provide a useful resource for aerospace and defense contractors involved in M&A transactions. Vertical competition issues frequently arise in this industry given the nature of the supply base and contracting and supply relationships between companies operating at different levels of the supply chain. This is the first time the antitrust agencies have released updated guidelines for analyzing vertical mergers since 1984. Although the agencies have updated the Horizontal Merger Guidelines several times since then (most recently in 2010), they have not provided similar updated guidance to businesses regarding vertical merger enforcement until now. The new guidelines summarize the practices, standards, and theories the agencies have used in evaluating vertical mergers for a number of...

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Antitrust M&A Snapshot | FTC and DOJ Continue M&A Transaction Investigation While UK CMA Continues Role as Key Jurisdiction in Merger Clearance Process

Antitrust regulators in the United States and Europe were very active in the final quarter of 2019. The FTC and DOJ continue to investigate and challenge M&A transactions in a variety of industries. Events of this quarter highlight the importance of states in merger enforcement. As well, recent FTC activity highlights the regulators' focus on preventing monopolists from buying nascent competitors. In Europe, the UK CMA continues to expand its role as a key jurisdiction in the merger clearance process, which will only accelerate with Brexit. The EC agreed to clear, subject to conditions, acquisitions in the aluminum production and battery industries as well as in the wholesale supply and retail distribution of TV channels after conducting Phase II reviews. Moreover, the EC opened new in-depth investigations into transactions in the copper refining and engineering sectors. Access the full issue.

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Notification Threshold Under the Hart-Scott-Rodino Act Increased to $94 Million

The US Federal Trade Commission today announced increased thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act. Notification Threshold Adjustments The US Federal Trade Commission (FTC) announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) pre-merger notifications on January 28, 2020. These increased thresholds will become effective on February 27, 2020. These new thresholds apply to any transaction that closes on or after the effective date. The base filing threshold, which frequently determines whether a transaction requires filing of an HSR notification, will increase to $94 million. The alternative statutory size-of-transaction test, which captures all transactions valued above a certain size (even if the “size-of-person” threshold is not met), will be adjusted to $376...

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FTC and DOJ Draft Vertical Merger Guidelines Provide Additional Transparency to Agency Practice

For the first time since the Department of Justice Antitrust Division (DOJ) published non-horizontal merger guidelines in 1984, the DOJ and Federal Trade Commission (FTC) issued updated Vertical Merger Guidelines to explain how the antitrust agencies analyze vertical mergers. The guidelines were published in draft on January 10, 2020, and are now open for a 30-day public comment period. WHAT HAPPENED: The DOJ and FTC released draft guidelines outlining the principal analytical techniques, practices and enforcement policies the antitrust agencies will use to analyze vertical mergers and acquisitions. Vertical mergers combine firms or assets that operate at different stages of the same supply chain. For example, vertical mergers or acquisitions could combine companies such as: a satellite maker and a payload provider; an automaker and an aluminum supplier; an automaker and an automotive retailer; a filmmaker and a cable television company; or a pharmaceutical...

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Recent Merger Reviews Demonstrate Increased FTC and DOJ Focus on Acquisitions of Nascent Competitors

Three recent antitrust merger reviews involving nascent competition demonstrate enforcers are paying close attention to acquisitions by industry leaders of emerging, but early-stage competitors. The US antitrust agencies have been criticized for allowing leading technology companies to extend their entrenched positions to multiple markets or technologies through acquisitions. We are now seeing regulators increasing their scrutiny of acquisitions of nascent competitors that were positioning themselves to challenge an entrenched, strong rival. WHAT HAPPENED: Illumina / Pacific Biosciences. On December 17, 2019, the Federal Trade Commission (FTC) announced an action to block Illumina Inc.’s proposed $1.2 billion acquisition of Pacific Biosciences of California (PacBio). The FTC complaint alleged the acquisition of a competitor in the DNA sequencing industry would substantially lessen competition by “eliminating current competition and preventing future...

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Antitrust M&A Snapshot | DOJ Arbitrates Market Definition Dispute While EC Clears Acquisition of Broadband and Energy Networks

There was significant antitrust activity in the third quarter of 2019. In the United States, the Federal Trade Commission (FTC) and Department of Justice (DOJ) continued an active docket challenging M&A transactions. DOJ is resolving antitrust reviews significantly faster than the FTC, following DOJ's 2018 policy establishing a six-month target. The DOJ also made use, for the first time, of its authority to arbitrate a market definition dispute, potentially opening the door for a new tool the DOJ could employ to resolve challenges more rapidly. In the European Union, the European Commission (EC) agreed to clear, subject to conditions, the acquisition of broadband and energy networks following lengthy Phase 2 investigations. Meanwhile, the national European regulators opened new in-depth investigations into commercial radio advertising, software as a service for airlines, autonomous sea surface vehicles and the promotion of live music events (all in the...

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DOJ Set to Increase Scrutiny of Government Contractors with New Procurement Collusion Strike Force

Government contractors should be aware that the Department of Justice (DOJ) is taking new steps to scrutinize public procurement. The DOJ Antitrust Division’s creation of the Procurement Collusion Strike Force (PCSF) means that government procurement enforcement will be a significant focus for the agency moving forward. Although the new strike force builds on past government-wide efforts to detect illegal conduct in public procurement, recent activity from the Antitrust Division has raised the stakes. In light of this, government contractors should broaden their compliance programs to include antitrust so they can avoid heightened monetary penalties and possible prison terms for implicated employees. I. What Happened The DOJ’s Antitrust Division took another step to increase its attention on government procurement by focusing resources on a new task force designed to detect anticompetitive behavior amongst government contractors. On October 24, 2019, the...

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