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It’s A Crime There Isn’t a Criminal Antitrust Whistleblower Statute

April 9, 2018 by Robert Connolly

Kimberly Justice and I are continuing to write about what we believe is a very important issue in cartel fighting–the passing of criminal antitrust whistleblower legislation.  Below are the opening paragraphs of our latest article on the subject.  The full article, kindly posted by Wolters Kluwer in their Antitrust Law Daily, can be found here.

“The SEC’s wildly successful whistleblower program has returned hundreds of millions of dollars to investors as a result of actionable whistleblower information over the past six years.  The IRS paid one whistleblower more than $100 million for information that helped the government uncover a massive tax evasion scheme and led to a $780 million settlement.  The CFTC predicts that the results of its whistleblower program this year will be “huge.”  The Antitrust Division has paid $0 to whistleblowers and received $0 from cartels exposed by whistleblowers.  Or, as Charlie Brown would say, the Antitrust Division “got a rock.”

There is no cartel whistleblower program and this should change now.  Price-fixing and bid-rigging conspiracies are felonies costing American consumers millions of dollars in the form of artificially high prices.  These fraudulent schemes are particularly suited to exposure by whistleblowers because senior corporate executives frequently use lower level employees (and potential whistleblowers) to carry out the illegal scheme.  The time is right for serious antitrust whistleblower legislation.”

Full article here

Thanks for reading.  If you have any reaction/comment you’d like to share please use the comment section or through LinkedIn (here).

Filed Under: Blog

Antitrust Division Files Civil “No-Poach” Employee Agreement Case

April 5, 2018 by Robert Connolly

The Antitrust Division, US Department of Justice has put industry on notice since 2016 that naked “no poach” agreements–agreements not to compete for each other’s employees– could be treated as criminal antitrust violations.  In other words “no-poach” employee agreements between competitors will be treated the same as “no-poach” customer agreements between competitors.  The Antitrust Division’s press release stated:  “Under the antitrust laws, no-poach agreements that are naked (i.e., not reasonably necessary for a separate, legitimate business transaction or collaboration) eliminate competition in the same irredeemable way as agreements to fix product prices or allocate customers, which have traditionally been criminally investigated and prosecuted as hardcore cartel conduct.”

In this particular case, the Division reached a civil settlement with rail equipment suppliers Knorr-Bremse and Wabtec over allegations of a long-standing agreement to not compete for each other’s employees.  In October 2016 the Antitrust Division and Federal Trade Commission published Antitrust Guidance for Human Resource Professionals and announced that employee “no-poach” agreements that are not tied to some legitimate transaction or collaboration can be prosecuted criminally, like any other traditional naked agreement not to compete.  But, in this case the government brought a civil action, stating, “In an exercise of prosecutorial discretion, the department will pursue as civil violations no-poach agreements that were formed and terminated before those announcements were made.”  The Antitrust Division warned, however, that it still has open civil and criminal investigations into other no-poach agreements in the rail equipment industry as well as in other sectors.  In early 2018 the Division warned that criminal “no-poach” cases were in the pipeline (here).

Some highlights from the Antitrust Division’s press release:

The department’s complaint alleges that:

  • Beginning no later than 2009, Knorr and Wabtec reached agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees. For example, in a letter dated January 28, 2009, a director of Knorr Brake Company wrote to a senior executive at Wabtec’s headquarters, “[Y]ou and I both agreed that our practice of not targeting each other’s personnel is a prudent cause for both companies. As you so accurately put it, ‘we compete in the market.’”
  • Beginning no later than 2011, Knorr Brake Company (a wholly-owned subsidiary of Knorr) and Faiveley Transport North America (the U.S. subsidiary of Faiveley before Faiveley was acquired by Wabtec) agreed to get the other’s permission before pursuing each other’s employees. For example, in October 2011, a senior executive at Knorr Brake Company explained that he had a discussion with an executive at Faiveley’s U.S. subsidiary that “resulted in an agreement between us that we do not poach each other’s employees. We agreed to talk if there was one trying to get a job[.]”
  • Beginning no later than 2014, Wabtec Passenger Transit, a U.S. business unit of Wabtec, and Faiveley Transport North America similarly agreed not to hire each other’s employees without prior approval. For example, in an e-mail to his colleagues, a Wabtec Passenger Transit executive explained that a candidate for employment “is a good guy, but I don’t want to violate my own agreement with [Faiveley Transport North America].”

Reuters reported that Wabtec said in a statement that it had settled even though it committed no wrongdoing.

“We firmly believe that our recruiting policies have been consistent with the antitrust laws and have in no way diminished competition for talent in the marketplace,” the company said. “We have elected to settle this matter to avoid the cost and distraction of litigation.”

Thanks for reading.

Filed Under: Blog

FYI: Upcoming 2018 Antitrust in Asia Conference

April 5, 2018 by Robert Connolly

Concurrences Review, with the support of the Chinese University of Hong Kong and the Hong Kong Competition Association will hold the 2018 Antitrust in Asia Conference on Friday, May 18, 2018.

There will be four panels:

  • Extraterritoriality Enforcement: A Rising Concern?
  • Due Process: Could There Be a Global Standard?
  • Foreign Direct Investment & Mergers: Towards Broader Provisions?
  • A Brand New Digital World: Price Parity, Big Data, Vertical Search… What Is the Asian Perspective?


Speakers include, among others, Toh Han Li (Singapore Competition Commission), Frédéric Jenny (OECD Competition Committee), Justice Godfrey Lam Wan-Ho (Hong Kong Competition Tribunal) and Brent Snyder (Hong Kong Competition Commission).

You can see the full agenda online here:

Filed Under: Blog

Antitrust Division to Hold Roundtable on Criminal Antitrust Compliance

March 12, 2018 by Robert Connolly

From the Press Release (here):

On April 9, the Department of Justice’s Antitrust Division will hold a public roundtable discussion to explore the issue of corporate antitrust compliance and its implications for criminal antitrust enforcement policy.

The roundtable will provide a forum for the Antitrust Division to engage with inside and outside corporate counsel, foreign antitrust enforcers, international organization representatives, and other interested parties on the topic of antitrust compliance.  Participants will discuss the role that antitrust compliance programs play in preventing and detecting antitrust violations, and ways to further promote corporate antitrust compliance.  The format of the program will be a series of panel discussions with featured speakers.  Audience participation in the discussions will be encouraged.

The Roundtable will take place in the Great Hall of the Robert F. Kennedy Department of Justice Building, 950 Pennsylvania Avenue, NW, Washington, DC, from 1:00 p.m. to 5:00 p.m. EDT.  The agenda can be found here.

This should be an interesting and spirited program.  There is some disagreement between enforcers and the defense bar/compliance community about what credit a company should receive for a compliance program if, despite the program, company officials engage in cartel behavior.

For previous posts on antitrust compliance programs see:

https://cartelcapers.com/blog/brent-snyder-explains-antitrust-division-approach-to-credit-for-compliance-programs/

https://cartelcapers.com/blog/senior-antitrust-division-official-comments-on-credit-for-compliance-programs/

https://cartelcapers.com/blog/hitachi-chemical-plea-agreement-part-1-enhancement-compliance-program-condition-probation/

Filed Under: Blog

Recommended Article/Book About Tom Hayes and the LIBOR Scandal

February 28, 2018 by Robert Connolly

I recommend reading an interview with author David Enrich who wrote a book “The Spider Network:  The Wild Story of a Math Genius, and a Gang of Backstabbing Bankers, And One of The Greatest Scams in Financial History.”  Below are excerpts of comments made by Mr. Enrich during the interview, “What’s Behind One of the Biggest Financial Scams in History.”  The interview appeared on February 19, 2017 in Knoweldge@Wharton.[1]

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  • “The mastermind of the LIBOR scandal was a guy named Tom Hayes, a mildly autistic mathematician who was a star trader at some of the world’s biggest banks.”

 

  • “[m]y iPhone buzzed with a text message from a number I didn’t recognize. And it said, “This goes much, much higher than me. Not even the Justice Department knows the full story. I’m willing to talk to you, but I need to make sure I can trust you.” It was Tom Hayes.”

 

  • “He felt like he was doing something that was really just false and misleading. And he took solace in the fact that the bosses knew about and generally approved of what he was doing. But as most of us learn from a very early age, just because everyone is doing something bad doesn’t mean it’s OK for you to do something bad yourself. That’s a message that was really lost on an entire generation of people in the financial industry, I think.”

 

  • “And prosecutors, instead of going after people at the top of the food chain — the CEOs and business leaders who are responsible for setting the culture at their institution, responsible for in many cases the practices of their institutions — instead of going after those guys, they uniformly went after a small group of relatively low-level people. Don’t get me wrong, Hayes in particular did things that were wrong, he knew they were wrong, or at least should have known they were wrong, and deserves to be punished. But what is crazy to me is that Tom Hayes is currently serving an 11-year sentence in a maximum-security prison. And as far as I can tell, he is the only banker currently in jail for crimes committed during the financial crisis.”

 

  • “The thing is, prosecutors do not like to lose cases, so they’ve taken, in general, a very conservative approach to what cases they’re going to bring because they don’t want to gamble on losing. They’ve built up these very impressive win/loss records as prosecutors. Some of them are undefeated. And they boast about that.”

 

  • “To me, that’s a really unhealthy sign, because the thing that would scare some of these bank CEOs is not losing some money or losing their jobs; it’s the prospect of being perp-walked in front of TV cameras in handcuffs, or the prospect of possibly losing your liberty in front of a jury of your peers. That is a terrifying thing. To me, the great missed opportunity of the financial crisis was that prosecutors didn’t do that a single time with a CEO or a top executive of any major financial institution. They might have lost those cases, but at least it would have struck some fear in the hearts of people.”

 

  • “Again, I’ve developed a lot of sympathy for them [Hayes and his family] and their situation there. I do want to make clear that he is not an innocent victim here. He is someone who was participating, and he was not acting properly. He was acting illegally, and I think deserves to be punished. I just find it galling that he is alone in being punished.”

 

  • “My concern is that as memories of these massive penalties [fines] fade and memories of the crisis fade, the pressure is going to return for banks to amp up their profits. As that becomes the priority among shareholders, it’s going to become the priority among senior executives. At that point, the cultural stuff goes out the window, and the No. 1 priority once again becomes just making as much money as quickly as you can.”

 

The book, The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History is available on Amazon here.

 

Thanks to my friend Toni Hill who forwarded the Wharton@Knowledge interview to me.  Toni and I worked together in the Philadelphia Field Office of the Antitrust Division on several high profile (and many low-profile but fascinating) cartel cases.

*************************************************

[1]   The Wharton@Knowledge interview recap had this introduction:

David Enrich followed the story while he was working for The Wall Street Journal and got close to the central figure in the scandal — star derivatives trader Tom Hayes. In the book, The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History, Enrich, now with The New York Times, shares the tale of this brazen scam on the Knowledge@Wharton show on Sirius XM channel 111.

 

Filed Under: Blog

Was Heir Locators Indictment a Hair Too Late?

February 21, 2018 by Robert Connolly

Below is a post that I wrote with a friend and former Antitrust Division colleague, Karen Sharp.  The post originally appeared in Law 360 Competition (here). I am reposting for those that don’t have access to the article.

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Was Heir Locators Indictment a Hair Too Late?

by Robert Connolly and Karen Sharp[1]

            On August 17, 2016, a Utah grand jury returned a one count Sherman Act indictment against Kemp & Associates, Inc. and Daniel J. Mannix,[2] a Kemp corporate officer.  According to the indictment, the conspiracy was an agreement to “allocate customers of Heir Location Services sold in the United States” that began as early as September 1999 and continued as late as January 29, 2014.

Heir location service companies identify heirs to estates of intestate decedents and, in exchange for a contingency fee, develop evidence and prove heirs’ claims to an inheritance in probate court.  The indictment charged that there was an allocation scheme whereby the defendants agreed with a competing heir location service company that the first company to contact an heir would be allocated certain remaining heirs to the estate and, in return, would pay the other company a portion of the collusive contingency fees collected from the heirs.

In pretrial orders issued last August, U.S. District Court Judge David Sam, 1) dismissed the indictment as time barred by the five-year statute of limitations; and 2) held that if there were a trial, the agreement would not be considered per se, but instead judged by the jury under the Rule of Reason.  The Antitrust Division is challenging both rulings on appeal in the Tenth Circuit.  In this article we discuss the court’s ruling that the indictment was time barred by the statute of limitations.

A full exposition of the facts can be found in the indictment,[3] Judge Sam’s Memorandum Decision and Order[4], the government’s opening brief in the Tenth Circuit,[5] and the defendants’ response.[6]  But in short, the relevant facts are these:

  • There was a written allocation agreement between competing heir location service companies to divide certain customers.
  • On July 30, 2008, defendant Mannix wrote to Kemp & Associates colleagues in an email: “The ‘formal’ agreement that we have had with [Blake & Blake] for the last decade is over.”
  • There were in fact no other heirs allocated after July 30, 2008.
  • Payments made by previously allocated customers, however, occurred within the Sherman Act five-year statute of limitations period preceding the indictment.

The government argues on appeal that the conspiracy did not end on July 30, 2008 when the agreement was abandoned but continued based on the “payments theory.” The payments theory is straightforward: conspirators rig bids, fix prices and/or allocate customers to reap the higher prices that come from eliminating/restraining competition.  As long as a conspirator is being paid as a result of the illegal agreement, the conspiracy continues.

The government has the weight of authority and specifically, Tenth Circuit precedent, on its side.  The government argues on appeal that Judge Sam “mistakenly concluded that the alleged conspiracy ended after the last customers were allocated, rather than continuing as long as the conspirators collected and distributed payments from the contracts with the allocated customers.”  The indictment specifically alleged that as part of the customer allocation conspiracy, the defendants “accepted payment for Heir Location Services sold to heirs in the United States at collusive and noncompetitive contingency fee rates.”  The indictment alleges that the conspiracy continued at least as late as January 29, 2014, which is the date when, according to the defendants’ motion to dismiss the indictment, “a large team of law enforcement agents and prosecutors served subpoenas on, and sought to interview, many of the Company’s employees.”

The payments theory is well accepted, including in the Tenth Circuit.  United States v. Evans & Associates Construction Co.[7] was a bid-rigging case where the contract was rigged outside the statute of limitations, but the defendant received payments for the work done on the contract within the statute period.  The Tenth Circuit in Evans concluded that “the statute did not begin to run until after the successful contractor accepted the last payment on the contract.”[8] According to the court, “the Sherman Act violation was ‘accomplished both by the submission of noncompetitive bids and by the request for and receipt of payments at anti-competitive levels.’”[9] Similarly, in the more recent case of United States v. Morgan, the Tenth Circuit held that “the distribution of the proceeds of a conspiracy is an act occurring during the pendency of the conspiracy.”[10]

Judge Sam did not agree that the indictment before him alleged a conspiracy that would properly invoke the payments theory.  He concluded that the primary purpose of the anticompetitive agreement was the allocation of customers.  According to Judge Sam, “[i]t then follows that any conspiratorial agreement ceased to exist once the allocation of customers through the [agreed-upon] Guidelines ceased.”  Judge Sam distinguished the heir locators’ agreement from the bid-rigging agreement in Evans, stating, “[T]he evidence in Evans and Morgan shows that the central purpose of the conspiracy was to obtain wrongful proceeds or money.  While the Indictment here mentions the payment of proceeds, Ind. ¶¶ 11 (h), (i), the central purpose of the conspiracy charged was not ‘economic enrichment.’” Judge Sam found, without even a hearing or trial, that the “central purpose” of the heir locators’ allocation agreement was not “economic enrichment.”  The statute of limitations, therefore, expired on July 30, 2013, five years after defendant Mannix sent an internal Kemp & Associates email abandoning the allocation agreement.

In our opinion the judge was grasping at straws to distinguish (and extinguish) this case from Evans to avoid application of the payments theory.  Payments by allocated heir locator customers seem like payments made on rigged contracts.  Since the judge also found this to be a Rule of Reason case, he apparently felt that the agreement on balance was procompetitive–and not designed to generate supra competitive profits.  The court’s logic seems to be a real-life application of the “bad facts make bad law” principle.  But, there was simply no record on which to base a finding that the payments made and accepted by defendants and their co-conspirators within the statute were merely administrative tasks that “bore no relation to customer allocation.”

A Better Way to Judge The Validity of Using a Payments Theory To Extend the Statute

  1. The Judicial Concern with Prosecutorial Delay

            Judge Sam was clearly troubled by the fact that the defendants were indicted in August 2016, several years after the five-year statute of limitations would have appeared to have run on an agreement that was abandoned in July 2008.  Moreover, since there was no fixed time when an estate distribution would be finalized, there was no telling when the statute of limitations would begin to run in this type of case. The court noted:

“Additionally, the government has identified 269 allegedly affected estates, the administration of which consisted of a series of ordinary, non-criminal events that could last many years. In contrast, Evans involved the bid for one contract which was bid, granted, completed and fully paid within the two years. [citation omitted] . . .. This arbitrariness is not consistent with the very reasons limitations periods exist in criminal cases.”

In bid-rigging cases, the outer limits of the statute of limitations is at least defined by the length of the contract.  But here, as the court noted, the payments theory could extend the statute of limitations for an unknown, and possibly very long time.

2.    The “Payments Theory” as a Due Process Violation

A more direct and fair method to address the concern that Judge Sam and other courts may have with an indefinite extension of a statute of limitations is to consider the application of the payments theory as a possible violation of due process.  Does extending the statute of limitations for an indefinite and arbitrary period deprive the defendants of due process?

The Supreme Court has recognized that prosecutorial delay may constitute a due process violation but has set an extremely high bar for a would-be successful defendant.  In United States v. Marion,[11] the Court held that in order for the Due Process Clause of the Fifth Amendment to require dismissal of an indictment the defendant must show that the pre-indictment delay:

1)         caused substantial prejudice to the defendant’s rights to a fair trial; and

2)         that the delay was an intentional device to gain tactical advantage over the accused.[12]

There is a critical difference, however, between the facts in Marion and the heir location services case.  In Marion there was a three-year delay between the commission of the crime and the charged case.  The defendants alleged this delay was a prejudicial due process violation.  But, the case was still brought within the statute of limitations.  However, where, as here, the application of a payments theory leads to an arbitrary and indefinite extension of the statutorily set limitations period, Marion can be distinguished.  We suggest it would be appropriate to apply a different/lesser test in this case.  The near-impossible-to-meet prong of showing that the prosecution intentionally engaged in delay tactics to gain an advantage should be dropped.  Instead, the defendants should be required to make the Marion showing of substantial prejudice suffered by the application of the payments theory. A showing of substantial prejudice would require for example a witness’ death or illness, loss of physical evidence, or a witness who was once available is now not available; i.e., something more than a general allegation that memories fade with time.

Another aspect of due process that can arise in payments theory cases, and may be what really troubles courts, is that an individual who is the subject or target of a criminal antitrust investigation is often without a job and can find it difficult to get one while possible legal charges hang over his or her head.  A company may also suffer negative financial consequences while a “cloud of suspicion” from a grand jury investigation lingers.  Being a subject/target of an antitrust criminal investigation is an incredibly stressful and expensive ordeal.  If this status is going to continue, perhaps indefinitely, past the traditional statute of limitations, there should be a very good reason.  Depending on the circumstance, a judge, like Judge Sam, may find that the delay in bringing a case was a due process violation of the defendants’ property rights—the right to earn a living.

We also suggest, however, that if the defendant can make a showing of substantial prejudice, the government should have the opportunity to explain why there was a need to resort to a payments theory. Was the crime or industry investigated very complex?  Did the subjects themselves stonewall the investigation and cause delays?  Did the defendants successfully conceal the conspiracy until very near the typical running of the statute?  If the government has a satisfactory explanation of why it has resorted to the payments theory, and especially if the defendant’s conduct during the investigation contributed to the delay, then the court should find no due process violation.

The due process analysis we are suggesting is, of course, a deviation from the two-step test the Supreme Court established in Marion, but it is based on a valid distinction from Marion—but for the payments theory, the heir locators’ indictment is barred.  A balancing of the prejudice to the defendant versus the government’s need to use the payments theory, is a more appropriate way for a court to decide whether a case is time-barred than by finding that the ultimate goal of a customer allocation scheme was not economic enrichment.

Some Thoughts on the Case as Former Prosecutors

            Another benefit of a due process analysis is that it would help explain why the government brought a case that is facially so far out of the statute of limitations.  One might conclude, and perhaps Judge Sam did, that the government was simply negligent, and the defendants should not bear the cost of that negligence. After all, the allocation agreement itself was in the form of written “Guidelines,” and the directive ending the “formal” agreement was in a July 2008 email.  The defendants further allege that two disgruntled former Kemp & Associates employees (and potential witnesses) first approached the Antitrust Division in 2008 or 2009.  By all appearances, this seems like a relatively easy conspiracy to “uncover” and prove, so why did the Antitrust Division wait until it had to rely on a payments theory to bring an indictment?

As former prosecutors we can speculate—and it is just speculation– as to why the case was brought using a payments theory to extend the statute.  One possibility that comes to mind is that the government believes that the conspiracy was not abandoned in July 2008.  Perhaps the government has evidence that additional customers were allocated after July 2008 and that the conspiracy in fact continued until the date the defendants received the subpoenas.  Was the Mannix email withdrawing from the conspiracy just a cover and the allocation actually continued “underground?” The government may simply have found it expedient to go with the payments theory rather than disprove the withdrawal email beyond a reasonable doubt.  This, of course, is just speculation–there may be other valid reasons why a payments theory was necessary.  But, often the public facts do not tell the entire story. The Antitrust Division brought a case that appeared to be a straightforward per se customer allocation agreement and used the well accepted payments theory to bring the case within the statute of limitations.  Without a trial or a record of any sort, there is no way to tell whether this was a sound exercise of prosecutorial discretion or not.[13]

The Tenth Circuit may reverse Judge Sam on the statute of limitations issue, in which case the rule of reason versus per se issue will take center stage. Or the appeals court may agree with Judge Sam and limit the payments theory to situations, like Evans, where there is a fixed contract performance time that limits the payments theory extension of the statute of limitations.  But, even in this situation, contracts typically have delays, so the idea of a “fixed contract time” may be somewhat illusory.  While it is not the law currently, our suggestion is that rather than have courts chip away at the legally sound payments theory based on dubious distinctions, defendants should challenge, and courts should assess the fairness of, the government’s use of the payments theory on the basis of due process; i.e., balancing the harm to the defendants against the justification offered by the government for relying on this theory to extend the statute.

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[1] Bob Connolly is a partner with GeyerGorey LLP.  He is the former chief of the Antitrust Division’s Philadelphia Field Office and served for 34 years in the Antitrust Division. He publishes a blog, Cartel Capers.

Karen Sharp is a former trial attorney with the DOJ Antitrust Division, where she investigated and prosecuted national and international antitrust matters for 25 years. She also served as a special assistant United States attorney in the Eastern District of California. Most recently she was counsel for Wilson Sonsini Goodrich & Rosati in San Francisco.  Ms. Sharp can be reached at Sharpkj100@gmail.com.

[2] United States v. Kemp & Associates, Inc., et al., No. 2:16-cr-00403 (D. Utah Aug. 17, 2016) (David Sam J.)16-

[3]   The indictment can be found on the Antitrust Division’s website at https://www.justice.gov/atr/file/887761/download.

[4]  Judge Sam’s memorandum opinion is linked at Law 360, Aug. 29, 2017, Antitrust Charges Against Heir-Tracker Co. Dismissed, available at https://www.law360.com/articles/958574/doj-antitrust-charges-against-heir-tracker-co-dismissed. It can also be found here JudgeSamSOLOrderandMemorandum.

[5]   Opening Brief for the United States, (corrected) (filed January 3, 2018), available at https://www.justice.gov/atr/case-document/file/1020466/download.

[6]  The defendants’ brief is linked at Law 360, February 5, 2018, Heir-Tracking Firm Urges 10th Circ. to Refuse Antitrust Case, available at https://www.law360.com/competition/articles/1009042/heir-tracking-co-urges-10th-circ-to-refuse-antitrust-case.  It can also be found here defendants’ kemp-brief.

[7]   United States v. Evans & Associates Construction Co., 839 F.2d 656 (10th Cir. 1988).

[8]   Id. at 661.

[9]   Id. (quoting United States v. Northern Improvement Co., 814 F.2d 540 (8th Cir. 1987)).

[10]  United States v. Morgan, 748 F.3d 1024, 1036-37 (10th Cir. 2014).

[11]  United States v. Marion, 404 U.S. 307 (1971).

[12]  Id. at 324.

[13] The Antitrust Division already had a significant setback on the “payments theory” in United States v. Grimm, 738 F.3d 498 (2d Cir. 2013), a case where the jury returned guilty verdicts for fixing of municipal bonds.  The last bond fixed was outside the five-year statute of limitations, but payments on the fixed bonds could extend over the life of the bonds—up to thirty years.  The Second Circuit could not accept this extreme extension of the statute of limitations and reversed the convictions ruling that a “[criminal] conspiracy ends notwithstanding the [later] receipt of anticipated profits where the payoff merely consists of a lengthy, indefinite series of ordinary, typically noncriminal, unilateral actions.” Id. at 502 (quotation marks, ellipses, and brackets omitted).

 

Filed Under: Blog

Concurrences 2018 Antitrust Writing Awards Voting

February 7, 2018 by Robert Connolly

Concurrences is conducting voting for its 2018 Antitrust Writing Awards.  There were nominations for more than 600 papers.   The Awards Editorial Committee selected for voting:

  • 92 academic articles
  • 134 business articles
  • 24 soft laws

You can vote here.  The deadline for voting has been extended to Friday, February 16. Check out the Awards website.  There are many great articles on a wide variety of subjects and all of the shortlisted articles are temporarily available for free.

Results will be announced at the Gala Dinner on Tuesday, April 10, in Washington, DC, the night before the ABA Spring Meeting. Bill Kovacic and Andrew Finch, among others, will give remarks and present the awards.

Registration is available here on the dedicated Eventbrite page.

Thanks for reading.

Filed Under: Blog

An Antitrust Lawyer’s Guide to Machine Learning (Guest Post by Ai Deng PhD.)

December 6, 2017 by Robert Connolly

Below is a post by valued guest contributor, Ai Deng, PhD. of Bates White Economic Consulting.

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There has been growing interest in the legal community in artificial intelligence (AI), and more specifically in machine learning (ML). This recent interest in AI is at least in part driven by concerns about algorithmic collusion, i.e., the possibility that computer algorithms could ultimately collude on their own, without human facilitation.

There is no question that the antitrust community is largely playing catch-up when it comes to the technical subject matters of AI and ML. As the Acting Chair of the Federal Trade Commission Maureen K. Ohlhausen noted, “The inner workings of these tools are poorly understood by virtually everyone outside the narrow circle of technical experts that directly work in the field.”

While there is no point to antitrust attorneys understanding the nuts and bolts of AI and ML technology, a basic understanding is necessary to better understand and assess the implications of the AI/ML research on antitrust and related legal and economic issues. That is the motivation behind my latest article. Through a series of simple examples, I introduce some fundamental concepts in ML. Along the way, I also discuss a wide variety of ML applications in the law and economics field. I conclude with a brief discussion of the hot topic of algorithmic collusion.

You can download the paper here https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3082514

As always, I appreciate your thoughts and comments. You can reach me at ai.deng@bateswhite.com or connect with me on LinkedIn [here].

Ai Deng, PhD

Principal

direct: 2022161802 | fax: 2024087838

1300 Eye Street NW, Suite 600, Washington, DC 20005

ai.deng@bateswhite.com

BATESWHITE.COM

Filed Under: Blog

FYI: Concurrence Review 2018 Antitrust Writing Awards Nominations

November 21, 2017 by Robert Connolly

Concurrence Review has announced that nominations for the 2018 Antitrust Writing Awards are now open. For the 6th consecutive year, Concurrences Review has brought together an impressive jury panel consisting of antitrust enforcers, professors, and in-house counsels to select the Best Articles and Best Soft Laws published and released in 2017.

Nominations for the 2018 Antitrust Writing Awards are open.

The present Call for Nominations concerns 3 types of publications:

  • Best Articles: Articles published or accepted for publication in 2017, in both academic journals and professional magazines.
  • Best Soft Law: Most innovative non-enforcement tools issued by competition agencies in 2017, such as guidelines, market studies, white books, etc.
  • Best Newsletters: Leading antitrust newsletters published by law firms that outstand for coverage, contents, readership or innovation.

To nominate an Article, Soft Law or Newsletter, email a PDF version or a link to the relevant publication(s) to awards@concurrences.com and indicate in the subject line: “Antitrust Writing Awards 2018: Submission.”  Deadline for submission is December 1, 2017. Interested authors may simply e-mail links to or PDFs of their articles to awards@concurrences.com for consideration. The Editorial Committee will select 100 Articles, 30 Soft Law and 30 Newsletters. You may also visit awards.concurrences.com for more information, including rules, samples of submissions for the 2018 AWA, and winners of the 2017 AWA.

 

Filed Under: Blog

Top Comments on Antitrust Whistleblower Posts

November 20, 2017 by Robert Connolly

I’ve received several comments on the idea of an Antitrust Whistleblower Statute.  Some of the top comments are:

  1.    Didn’t you retire?  No.
  2.    Well, you should have.  I sometimes think the same thing, but what could be more fun than     being an antitrust lawyer?
  3.    Your website design stinks and for a nominal fee I can fix it and help you lose weight.  I’m not worried about the website design.  But, please email me with the weight loss help.  
  4.    There were concerns that, particularly with international cartels, a whistleblower award could be excessive.  We agree that some allowance should be made to address this possibility.  John Connor offered this helpful comment:  “What is an appropriate standard for the size of the award? Using a percentage the employer’s fine is likely to be excessive. What about 5 or 10 years’ of the whistle-blower’s compensation?”   
  5.  There were some questions as to whether cartel whistleblower bounty provisions exist in other countries.  That is a good question.  We are researching that and will follow up.   
  6. Several people noted that an antitrust whistleblower idea is not a new idea and has never received support in the past from the Antitrust Division or Congress.  This is true, and we may get nowhere with our proposal this time.  But, as we’ve noted, the leniency “cash cow” is slowing down and the SEC whistleblower provision has been a huge success (by most people’s estimation).   Sometimes persistence pays off and the time may have come has come for a successful antitrust whistleblower push.  And, I may humbly suggest that Kimberly Justice and I may have some insights based on our many years with the Antitrust Division that have not been considered before.  We’ll see.

P.S.

The Grassley-Leahy Criminal Antitrust Anti-Retaliation Act of 2017, was just passed unanimously in the Senate.  The legislation would make it unlawful for an employer to retaliate against an employee who reports a violation of antitrust laws or a crime connected to antitrust laws.  This is the third time this legislation has passed the Senate unanimously, but it has never even been taken up by the House.

Stay tuned….

Thanks for reading.

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The US Supreme Court has called cartels "the supreme evil of antitrust." Price fixing and bid rigging may not be all that evil as far as supreme evils go, but an individual can get 10 years in jail and corporations can be fined hundreds of millions of dollars. This blog will provide news, insight and analysis of the world of cartels based on the many years my colleagues and I have as former feds with the Antitrust Division, USDOJ.

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