Month: April 2022

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Security News: Antitrust Division Updates Its Leniency Policy and Issues Revised Plain Language Answers to Frequently Asked Questions

Source: United States Department of Justice 2

The Justice Department’s Antitrust Division today announced updates to its Leniency Policy and issued a revised set of frequently asked questions (FAQs). The Antitrust Division also launched a new dedicated email address to make it easier for companies and individuals to apply for leniency. These changes reaffirm the Antitrust Division’s commitment to transparency, predictability and accessibility in criminal enforcement.

The Antitrust Division Leniency Policy allows the first individual or company to self-report its involvement in an antitrust cartel to avoid prosecution if it cooperates with the Division’s investigation and prosecutions, and meets other conditions. The updated policy announced today now also requires that a corporate applicant promptly self-report after discovering its wrongful conduct and undertake remedial measures to prevent reoffending.

“It’s important for the rules of the road to be clear so the business community knows what to expect and appreciates the costs of losing the race for leniency,” said Assistant Attorney General Jonathan Kanter of the Antitrust Division. “Corporate boards and executives, and the counsel advising them, should understand that sitting on their hands after detecting an antitrust crime will have real ramifications — losing out on leniency means severe consequences.”

As part of the updates, the Leniency Policy was centralized in the Antitrust Division’s chapter of the Justice Manual, 7-3.000 – Criminal Enforcement | JM | Department of Justice. The revised FAQs, available at Leniency Program (justice.gov), include nearly 50 new questions and answers about the Division’s practices concerning leniency. They are written in plain language and provide guidance to outside and in-house counsel, and businesspeople in all sectors of the economy and at all levels of sophistication.

Anyone seeking to apply for leniency should contact the Division at antitrust.leniency@usdoj.gov or 202-307-0719.

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Security News: Shipping Equipment Giants Cargotec and Konecranes Abandon Merger After Justice Department Threatens to Sue

Source: United States Department of Justice 2

Deal Would Have Eliminated Competition for Shipping Container Handling Equipment and Harmed the Global Supply Chain

Cargotec Corporation (Cargotec) confirmed today that it has abandoned its intended merger of equals with Konecranes Plc (Konecranes) one day after the Justice Department’s Antitrust Division informed the parties that the settlement proposal was not sufficient to address concerns that the proposed combination would eliminate important competition in four types of shipping container handling equipment used by port customers to move goods in the global supply chain. 

“The Justice Department’s Antitrust Division will vigorously investigate potential violations of our antitrust laws, no matter the industry, no matter the company, and no matter the individual,” said Attorney General Merrick B. Garland. “The proposed merger of these two shipping equipment giants would have harmed American consumers. It threatened the global supply chain and the free and fair markets upon which the integrity of our economy depends. I commend the outstanding work of our Antitrust attorneys and investigators that led to this outcome and the cooperation of our enforcement partners around the world.”

“Cargotec’s and Konecranes’ proposed merger threatened to harm competition in the sale of container handling equipment to U.S. port customers and terminal operators that move consumer products, medicines, and other important goods through the global supply chain,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The combination of Cargotec and Konecranes would have been the culmination of decades of consolidation — and the companies proposed to accomplish it by extracting and retaining the strongest parts of both businesses and selling off the least desirable assets to placate the department. But the Clayton Act is clear: acquisitions that create or entrench market power are illegal. The department will not accept patchwork settlements that do not replace the competition that is lost by a merger.”

The proposed transaction would have eliminated intense competition between Cargotec and its closest rival, Konecranes, in markets that are already highly concentrated. In particular, the merger would have led to illegal consolidation in the manufacture and supply of four types of container handling equipment: straddle carriers, rubber-tired gantry cranes, automated stacking cranes, and rail-mounted gantry cranes. Each piece of equipment has a unique design that allows the equipment to move containers between different modes of transportation in the supply chain. Cargotec and Konecranes are also at the forefront of automating port operations and reducing carbon emissions by electrifying equipment — megatrends that are likely to drive purchasing decisions from port customers in the coming years.

The department expresses thanks to its enforcement partners, including the Australian Competition and Consumer Commission, the European Commission, and the United Kingdom’s Competition and Markets Authority, for their close and constructive collaboration on this matter.

Cargotec Corporation, operating under the Finnish name Cargotec Oyj, is a public limited company headquartered in Helsinki, Finland. Cargotec earned revenues of approximately $900 million in the United States in 2021.

Konecranes Plc, operating under the Finnish and Swedish names Konecranes Oyj and Konecranes Abp, is a Finnish public limited company headquartered in Hyvinkää, Finland. Konecranes earned revenues of approximately $1.1 billion in the Americas in 2021. 

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Security News: Two Individuals and Four Companies Indicted for Price Fixing DVDs and Blu-Ray Discs Sold on the Amazon Marketplace

Source: United States Department of Justice 2

A federal grand jury in Knoxville, Tennessee, returned an indictment charging two individuals and four companies with participating in a conspiracy to fix prices of DVDs and Blu-Ray Discs sold on the Amazon Marketplace. 

According to the one-count felony indictment filed in the U.S. District Court for the Eastern District of Tennessee, Victor Btesh, of Brooklyn, New York, and Bruce Fish of Hayfield, Minnesota; along with BDF Enterprises Inc., a Minnesota corporation; Michelle’s DVD Funhouse Inc., a New York corporation; MJR Prime LLC, a New York corporation; and Prime Brooklyn LLC, a New York corporation, were charged with conspiring with each other and others to fix prices of DVDs and Blu-Ray Discs sold through storefronts on the Amazon Marketplace. The price-fixing conspiracy was ongoing from at least as early as October 2016 until at least Oct. 29, 2019.

“This indictment – the fifth charge to date in the ongoing investigation – demonstrates our commitment to protecting consumers and prosecuting individuals who conspire to fix prices in online marketplaces,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division.

“Price-fixing conspiracies in online marketplaces harm consumers and will be prosecuted,” said U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. 

“This indictment shows that the FBI is dedicated to protecting American consumers from unfair prices in all areas of the marketplace,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI and our law enforcement partners will continue to investigate conspiracies to fix prices and hinder competition for all.”  

“We are gratified to have contributed to this investigation and applaud the exceptional work by the investigative team for both protecting the individual consumer and the deterrence of activities in violation of the Sherman Act,” said Special Agent in Charge Ken Cleevely of the U.S. Postal Service, Office of Inspector General (USPS-OIG). “Along with our law enforcement partners, the USPS OIG will continue to aggressively investigate those who would engage in this type of harmful conduct.”

The Amazon Marketplace is an e-commerce platform owned and operated by Amazon.com Inc. that enables third-party vendors to sell new or used products alongside Amazon’s own offerings.

Four other individuals have been previously charged and pleaded guilty in this ongoing investigation.

A criminal violation of the Sherman Act carries a statutory maximum penalty of 10 years in prison and a $1 million criminal fine for individuals, and a $100 million fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

The Antitrust Division’s Chicago Office and the U.S. Attorney’s Office in the Eastern District of Tennessee are prosecuting the case, which was investigated with the assistance of the FBI’s New York Field Office and the USPS-OIG’s Contract Fraud Investigations Division. 

Anyone with information concerning price fixing or other anticompetitive conduct related to the sale of DVDs, Blu-Rays Discs, or other products sold through Amazon Marketplace should contact the Antitrust Division’s Chicago Office at 312-984-7200, Antitrust Division’s Citizen Complaint Center at 888-647-3258 or www.justice.gov/atr/contact/newcase.html, FBI’s New York Field Office at 212-384-1000, or the USPS-OIG’s Fraud, Waste, & Misconduct Hotline at 888-877-7644.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Security News: Contractors Indicted for Rigging Bids on Subcontract Work and Defrauding U.S. Military Bases in South Korea

Source: United States Department of Justice 2

A federal grand jury in the Western District of Texas returned an indictment charging two South Korean nationals for their roles in a conspiracy to restrain trade and a scheme to defraud the United States in connection with operation and maintenance work for U.S. military installations in South Korea.

According to the indictment, Hyun Ki Shin and Hyuk Jin Kwon were officers of a South Korean construction company that performed subcontract work on U.S. military installations in South Korea. Kwon was also a part owner of the company. Beginning at least as early as November 2018, Kwon and Shin, along with others, conspired to rig bids and fix prices for subcontract work, and defrauded the U.S. Department of Defense in order to obtain millions of dollars in repair and maintenance subcontract work at U.S military installations in South Korea.

“Bid rigging, price fixing and fraud are crimes,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “We will not stand by as criminals engage in illegal conduct to harm our military installations overseas.”

“By allegedly rigging bids with their competitors, the defendants cheated to obtain U.S. Army-funded repair and construction subcontracts,” said Special Agent-in-Charge Ray Park of the U.S. Army Criminal Investigation Division’s (Army CID) Major Procurement Fraud Field Office-Pacific. “U.S Army CID Special Agents remain on guard to investigate and hold individuals accountable who corrupt the integrity of the Army’s procurement process.”

“The defendants allegedly conspired to fix prices and rig bids for repair and maintenance work at U.S. military bases,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “These actions are not only illegal, but they fundamentally violate the tenets of fair trade. This indictment shows that the FBI and our law enforcement partners are committed to investigating schemes intended to defraud others, even those devised on foreign soil.”  

The seven-count indictment filed in the U.S. District Court for the Western District of Texas charges Kwon and Shin with one count of conspiracy to restrain trade and six counts of wire fraud. This indictment is the first in an ongoing investigation into bid rigging and price fixing for operation and maintenance work for U.S. military installations in South Korea.

The maximum penalty for conspiracy to restrain trade under the Sherman Antitrust Act is 10 years of imprisonment and a fine of $1 million. For the wire fraud counts, Kwon and Shin face a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime, or twice the loss suffered by victims of the crime, if either of those amounts is greater than the statutory maximum fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The charges are a result of a federal investigation conducted by the Antitrust Division’s Washington Criminal II Section, Army CID and the FBI, with assistance from the U.S. Attorney’s Office for the Western District of Texas.

Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal II Section at 202-598-4000 or visit https://www.justice.gov/atr/contact/newcase.html.

In November 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government – federal, state and local. In fall 2020, the Strike Force expanded its footprint with the launch of PCSF: Global, designed to deter, detect, investigate and prosecute collusive schemes that target government spending outside of the United States. To learn more about the PCSF, or to report information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to defense-related spending, go to https://www.justice.gov/procurement-collusion-strike-force.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Security News: Justice Department and FTC Launch Listening Forums on Firsthand Effects of Mergers and Acquisitions

Source: United States Department of Justice 2

Forums to Focus on Markets Commonly Impacted by Mergers: Food and Agriculture, Health Care, Media and Entertainment, and Technology

The Department of Justice and Federal Trade Commission (FTC) will host a series of listening forums to hear from those who have experienced firsthand the effects of mergers and acquisitions beyond antitrust experts, including consumers, workers, entrepreneurs, start-ups, farmers, investors and independent businesses. The four forums will be held virtually over the next three months and helmed by Assistant Attorney General Jonathan Kanter of the Antitrust Division and FTC Chair Lina M. Khan.

The four forums will focus on industries and labor markets that are commonly impacted by mergers that may reduce competition. The dates are as follows:

  • Monday, March 28 at 3pm ET – Food and Agriculture
  • Thursday, April 14 at 2pm ET – Health Care
  • Wednesday, April 27 at 1:30pm ET – Media and Entertainment
  • Thursday, May 12 at 2pm ET – Technology

The listening forums will be open to the public, webcast on the FTC’s website, transcribed, posted online, and included as part of the public record.

Assistant Attorney General Kanter and Chair Khan will attend each event with staff from both agencies. At each event, Assistant Attorney General Kanter and Chair Khan will provide a brief introduction followed by remarks from each speaker. Speakers will include independent business owners, entrepreneurs, farmers, workers and other market participants. At the conclusion of the speakers’ remarks, members of the public will have an opportunity to comment. Those who wish to participate may register to speak virtually at one of the events. Due to challenges related to the ongoing COVID-19 public health crisis, these forums will be held virtually. Additional forums may be added at a later date.

The forums will supplement the agencies’ recent request for comments on merger enforcement guidelines to ensure that the agencies hear from affected groups who might not otherwise participate in the process. The agencies have also extended the deadline for written comments submitted through regulations.gov. Comment submission will be open through April 21.

In January, the Justice Department’s Antitrust Division and FTC launched a joint public inquiry aimed at strengthening enforcement against illegal mergers. Recent evidence indicates that many industries across the economy are becoming more concentrated and less competitive – imperiling choice and economic gains for consumers, workers, entrepreneurs and small businesses. These problems are likely to persist or worsen due to an ongoing merger surge that has more than doubled merger filings from 2020 to 2021. To address mounting concerns, the agencies are soliciting public input on ways to modernize federal merger guidelines to better detect and prevent illegal, anticompetitive deals in today’s modern markets.

In addition to the public comment period and these listening forums, the agencies will hold a Spring Enforcers Summit on April 4. The summit will include conversations about merger enforcement as well as discussions on how to work with industry regulators as part of a whole-of-government approach to competition policy. 

For more information on these listening forums, please visit the event page.