The Antitrust Section of Law of the American Bar Association prepared an Presidential Transition Report for the new administration.  The 62 page report covers a broad range of antitrust matters: the current state of antitrust and consumer protection enforcement; cartel, civil, merger, and consumer protection enforcement; important doctrinal questions facing the Agencies and courts today; competition issues that will be facing two key industrial sectors: healthcare and financial services; and the last section of the Report discusses challenges as competition enforcement regimes proliferate and continue to evolve throughout the world.

The Section on cartel enforcement is largely laudatory :

Over the past two decades, the Division has transformed cartel enforcement for the better. The Division’s enforcement efforts have had unparalleled success, an accomplishment that has had dramatic global implications. Today, more than 120 countries have cartel enforcement regimes; bid-rigging, market allocation and price-fixing are now criminal offenses in more than 20 of these jurisdictions.

Several recommendations are made:

• Transparency: “Practical guidance in the form of a “case study” addressing requirements or expectations for securing first-in conditional leniency (e.g., timing, document productions, proffers, and employee interviews) and unconditional leniency (e.g., full or partial restitution) would further the bar’s and the business community’s understanding of the Leniency Programs and what applicants should expect when seeking conditional and, ultimately, unconditional leniency. The Section encourages the Division to continue its efforts to increase transparency and provide information about its operations.”
• Fines: “The Section encourages the Division to reexamine the fundamental building blocks of the sentencing process, including, most importantly, the volume of commerce (VOC) determinations in domestic and international cartel cases.”
• Criminal prosecution of individuals: “The Section encourages the Division to provide clear and transparent guidance as to how the Yates Memo will affect Division enforcement and prosecution efforts. Specifically, further guidance is needed on the definition and identification of the “highest ranking, most culpable employee,” and how and when the Division will negotiate “carve-in” and “carve-out” determinations.”
• Compliance programs: “The Section encourages the Division to expand its review of compliance programs in place prior to the occurrence of the misconduct, and to consider providing appropriate credit for robust compliance programs.”

These recommendations are basically refinements on current Division practices.  There is one recommendation, however, that could be transformational in the area of international cartel enforcement.  The report states: “[I]n the wake of recent federal appellate decisions opining that the Federal Trade and Antitrust Improvements Act (FTAIA) is a substantive element of a Sherman Act claim, the Section recommends that the Agencies clarify that the FTAIA places a jurisdictional limit on Sherman Act enforcement.”  Whether the FTAIA is jurisdictional or substantive is a big deal.  A federal court cannot hear a matter unless it has subject matter jurisdiction so if the FTAIA is jurisdictional in nature, a plaintiff or the DOJ would bear the burden of showing in the initial filing that the FTAIA is satisfied.  This would place little burden on the DOJ because it conducts grand jury investigations before filing any criminal charges.  Civil plaintiff, however, would have to meet this burden without the benefit of discovery.  The Report argues: “Parties should not be forced to engage in discovery and merits defense of claims where it can be determined at the outset that the impugned conduct lacks the defined material nexus with U.S. economic interests specified in the FTAIA.” Report at 59.

The FTAIA could be a topic of hot debate within the new administration.  The Report states the legal argument for why the FTAIA should be a jurisdictional requirement for a Sherman Act violation. (See, e.g., Abbott B. Lipsky, Jr. & Kory Wilmot, The Foreign Trade Antitrust Improvements Act: Did Arbaugh Erase Decades of Consensus Building?, ANTITRUST SOURCE at 7-9 (2013).  But, all recent Circuit Courts of Appeals decisions that have considered the issue have held that the FTAIA establishes a substantive element of an antitrust claim.  The Antitrust Division, in its recently released Antitrust Guidelines for International Enforcement and Cooperation stated the that:

The federal courts of appeals have expressed differing views as to whether the FTAIA goes to a claim’s merits or a court’s subject-matter jurisdiction….This difference will not affect the Agencies’ decisions about whether to proceed with an investigation or an enforcement action because the Agencies will not proceed when the FTAIA precludes the claim on the merits or strips the court of jurisdiction. International Guidelines at page 18, footnote 82.  The footnote cites all the major cases on the issue.

As mentioned, the Antitrust Division does not file a case until is has satisfied itself through the grand jury investigation that the facts establish both a jurisdictional and substantive basis for the charge.  This issue will continued to be litigated in civil cases but the position the Antitrust Division takes, if it takes one at all through amicus briefs, will be important.

More to come on this issue.  Thanks for reading.