The end of January marked the two-year anniversary of the closing of the Philadelphia Field Office and its siblings in Atlanta, Cleveland and Dallas. Among the many things I enjoyed during my career at the Antitrust Division was the great history of the institution and antitrust law in general. I remember the Department of Justice’s commemoration of the 100th Anniversary of the Sherman Act on July 20, 1990. An all-star cast of antitrust luminaries spoke at the event. The remarks made at that event have been entered in the Congressional record. Being an antitrust junkie, I’ve also enjoyed the history recounted in two excellent books, Thurman Arnold: A Biography by Spencer Weber Waller and Antitrust Stories, edited by Eleanor M. Fox and Daniel A. Crane.
I wanted to add my own small contribution to recording some antitrust history; particularly that of the Philadelphia Field Office. After the office was closed in January 2013, I wrote an article “A Short History of the Philadelphia Field Office.” More recently I came across a program from an event sponsored by the Historical Society of the United States District Court for the Eastern District of Pennsylvania to commemorate “A Celebration of 50 Years of Antitrust Enforcement: Philadelphia Field Office, Established 1948.” The program was held on November 3, 1998 and featured many distinguished speakers. Joel I. Klein, Assistant Attorney General, Antitrust Division made the Opening remarks. The event included remarks by several federal judges, including the Honorable Louis C. Bechtle. The program can be found at PhillyOffice50YearCelebration.
A few of the highlights are:
- November 8, 1948 First indictment in U.S. v. Leather and Shoe Finders Association of Philadelphia charging one trade association, two corporations and ten individuals with price-fixing and group boycott. Defendants were fined $1,000 each.
- June 2, 1950 Prosecution for criminal monopolization. Defendants pled nolo and were fined a total of $11,000.
- February 16, 1960 First indictments in the Great Electrical Equipment Conspiracy which sent senior executives to jail and also kicked off the modern class action bar.
- October 29, 1976 US v. Continental Group, the first indictment after the Sherman Act became a felony. Convicted executives were sentenced to jail.
- 1981 I don’t remember the exact date, but it was the first time (I believe) the office obtained a search warrant. We had probable cause to believe an executive at one company took the fall for his boss and an agreement setting forth his “compensation” was kept in a bank safe deposit box. Nothing was found.
- 3/ 24/1982 First indictment of the office’s 46 road cases. Jury convicted two companies and four individuals.
- 6/29/1984 Office’s first prosecution based on consensual monitoring.
- 1/27/1988 Office’s first use of industry wide search warrants during fuel oil investigation.
Some of the office’s most notable cases involved international cartels. Several of these cases came before international cartels became an Antitrust Division focus.
- US v. Amir Porat, 17 F. 3d 660 (3d Cir. 1994)
Porat was indicted in 1992 on two counts of making material false declarations before a grand jury that was investigating a bid-rigging scheme between Porat, an Israeli citizen, and two American defense department contractors. The collusion involved contracts in both the U.S. and Israel. It was alleged that Porat took a $200,000 kickback, which was deposited into his Swiss bank account, as part of the bid-rigging scheme—and lied about it before the grand jury. This was one of the wildest cases the office ever had. Porat was indicted under seal and apprehended at the Canadian border as he tried to enter the U.S. The staff had obtained the $200,000 check deposited into his Swiss back account. (Don’t ask me how; I’m sworn to secrecy.) Porat was his own attorney at trial and he was resourceful, charismatic, charming, but ultimately guilty. As part of his defense to show that someone could have opened a Swiss bank account in his name, Porat entered into evidence a Swiss bank account he had opened in the name of one of our prosecutors! Unfortunately for Porat, that account did not have $200,000 in it.
This early international cartel case involved a prosecution involving price-fixing by Mexican tampico growers who imported the product into the United States. The information/complaint charged the often talked about but rarely seen outside of a law school exam, horizontal price-fixing agreement among the Mexican tampico companies that was monitored by a resale price-fixing maintenance agreement with their U.S distributors.
- United States v. UCAR (1998)
The modern era of international cartel enforcement is often considered to start with the Chicago office’s prosecution of ADM in the lysine cartel in 1996. The Dallas Field office followed up with the massive vitamins cartel prosecutions. Philadelphia was next up with the graphite electrodes prosecutions. Graphite electrodes resulted in the Mitsubishi Corp trial and conviction. And, like most international cartels, many distinct cartels were uncovered by pulling on the thread of the graphite electrodes.
- U.S. v. Stolt-Nielsen, 524 F.Supp.2d 609 (E.D. Pa. 2007)
Well, of course, we didn’t win them all. This case involved the only attempt by the Antitrust Division to revoke the conditional leniency granted to a company and its executives. After a long battle, Stolt-Nielsen was indicted but the District Court granted a motion to dismiss the indictment, finding that the government had not carried it burden to show that the defendants had breached their obligations under the conditional leniency letter.
- U.S v. Norris, 719 F. Supp.2d 557 (E.D. Pa. 2010)
In this case, which grew out of the graphite electrodes investigation, Ian Norris was extradited by the U.K. to face obstruction of justice charges. Under the terms of the extradition order, Norris was not tried on the price-fixing count in the indictment. Norris was convicted and sentenced to 18 months in prison.
One last note. There are too many individuals who had successful careers in the Philadelphia Office to name names, but I’ll make one exception. John J. Hughes was to the Philadelphia Field Office what Vince Lombardi was to the Green Bay Packers. As the long-tenured Chief of the office, countless of us had the good fortune to learn from him how to be a tough but fair prosecutor. He was a cherished mentor and a role model in all aspects of life. John’s influence spread even wider after he stepped down as Chief in 1994. He became the trial advisor to countless Division criminal trial staffs over the next decade. I spoke to John this week and he said he’d be happy if I included his email for any old friends that wanted to say hello. firstname.lastname@example.org. Thanks for reading.
When I can gather some information, I’d also like to note the achievements of the other field offices that were closed: Atlanta, Cleveland and Dallas. Who knows, someday someone may be interested in Antitrust Division history and this blog post will pop up.