Antitrust

DOJ’s Antitrust Division Reverses Policy on Individual Carve-Outs in Company Plea Agreements

By Wilson Sonsini Goodrich & Rosati | Posted on

[Editor’s Note:  The following is a Wilson Sonsini Goodrich & Rosati Client Alert.]

On Friday, April 12, 2013, the Antitrust Division of the United States Department of Justice announced a reversal in policy relating to its negotiations with companies that plead guilty of criminal antitrust violations.  The new policy significantly affects how the Antitrust Division will approach the plea negotiation process and enforce the criminal antitrust laws.

First, the Antitrust Division announced that it would no longer publicly disclose the names of individuals excluded (or “carved out”) from the non-prosecution provision of company plea agreements.  This provision protects the company and its employees from further prosecution under the antitrust laws for the conduct at issue (a core benefit for companies entering into the plea), but some employees typically are carved out from this protection.  Prior to the announcement last week, the Antitrust Division had a long-standing practice of disclosing the names of these carve-out employees in the plea agreement, a practice that some have called a “perp walk.”  The division now has put an end to this practice, recognizing that “[a]bsent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrongdoers.”

Second, the Antitrust Division announced that it no longer would carve out individuals from pleas merely for not cooperating in its investigation.  Instead, the division will carve out only those individuals who are “potential targets” of the investigation (i.e., only those whom the division has reason to believe were engaged in the criminal conduct at issue and targets for potential prosecution).  Prior to the announcement, the Antitrust Division had a long-standing practice of carving out from the non-prosecution protection of a plea agreement two categories of individuals:  (1) those the division has reason to believe were involved in criminal wrongdoing (i.e., potential targets) and (2) those who are uncooperative in its investigation or are difficult to find or contact.  Under the new policy, the division will limit the carve-outs to the first category of individuals.  The Assistant Attorney General of the Antitrust Division, Bill Baer, elaborated publicly, stating:  “I reached the conclusion that . . . focusing on the group of people who are potentially targets of the investigation, potentially liable, [and] can be charged [] was a better way of defining our carve-out groups.”

To read the rest of the WSGR Article, click here.

AT&T Mobility LLC v. AU Optronics Corp.: Out-of-State Price Fixing Still Actionable Under California’s Cartwright Act

By Valerie Ramos, J.D. Candidate 2015 | Posted on

The Ninth Circuit recently held that the Cartwright Act, California’s antitrust law, applies not only to “the indirect purchase of price-fixed goods,” but also where “the conspiratorial conduct that led to the sale of those goods” occurs in California.  AT&T Mobility v. AU Optronics Corp.  The civil action follows on the heels of a DOJ criminal investigation that resulted in more than $890 million in fines.  In 2001, AU Optronics Corporation and other Asian manufacturers of liquid crystal display (LCD) panels had met secretly and agreed to exchange information regarding shipping, production, supply, and demand.  The complaint alleges the result was fixed prices of LCDs in the U.S. and other regions.

Unlike federal antitrust law, California’s Cartwright Act provides a private cause of action for damages caused by indirect purchasers of price-fixed goods.  The Cartwright Act thus reaches beyond the Sherman Act in the sense that its focus has always been on “the punishment of violators for the larger purpose of promoting free competition.”

The plaintiffs, all of which are companies that provide voice and data communication services and sell mobile wireless handsets, sued a collective of manufacturers and distributers of LCD panels.  Plaintiffs alleged that from 1996 to 2006, “they purchased billions of dollars worth of mobile handsets containing Defendants’ LCD panels” at artificially inflated prices due to a global conspiracy to fix the LCD panel prices.  The sale of these LCD panels did not occur in California.

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Firm Advice: Your Weekly Update

By Joseph Santiesteban, J.D. Candidate 2014 | Posted on

The DOJ recently entered into its first deferred prosecution agreement with a financial institution related to the LIBOR-fixing conspiracy.  We’ve written about the LIBOR scandal here and here.  While deferred prosecution agreements are common in white collar criminal prosecutions, this was a first for the DOJ in an antitrust prosecution.  Instead, the DOJ historically has used its leniency program as its primary investigative tool.  In a recent Client Alert, Cadwalader, Wickersham & Taft explains the DOJ’s recent shift and its implications for financial antitrust enforcement.

Many large corporations are sitting on stockpiles of cash.  Options for these companies include investing the money, returning it to investors through dividends, or a stock buyback program. Holding on to the stockpile can pose serious headaches for corporations.  In a recent Corporate Finance Alert, Skadden explains the strategic considerations for different types of share-repurchasing programs, including their advantages and legal implications.  The Alert also presents an FAQ-style, how-to guide for implementing the various options.

Wilson Sonsini recently published its “Entrepreneurs Report: Private Company Financing Trends.”  From the Report:  “[T]he percentage of up rounds increased during Q4 2012 from the prior quarter.  Also, while median pre-money valuations in Q4 declined somewhat from earlier in the year, they still remained higher than those in 2011 and 2010.  Finally, preferred stock terms continued to be more company-favorable in 2012 than in prior years.  For example, the percentage of deals with senior liquidation preferences was lower in 2012 than in 2011 and 2010, and the percentage of deals with non-participating preferred stock was higher in 2012 than in the two prior years.  In sum, although total venture dollars raised in 2012 decreased from the previous year, the venture funding environment continues to be strong for entrepreneurs and early-stage companies.” 

The Week in Review: Major Suits and Proposed Legislation

By Christopher Hammond, J.D. Candidate 2015 | Posted on

The director of the U.S. Consumer Financial Protection Bureau may be facing a challenge the constitutionality of his “recess appointment,” following a January 25 ruling by the D.C. Circuit Court of Appeals.  In that case, the court held three of President Obama’s appointments to the NLRB were unconstitutional.  The party challenging director Richard Cordray’s status would likely argue that the opinion applies to him as well, as he was appointed via the same process.  For more, see Bloomberg.

The Justice Department has sued Anheuser-Busch InBev in Washington D.C. district court, attempting to block the company’s proposed $20.1 billion merger with Modelo.  The head of the DOJ’s antitrust division, William J. Baer, said the deal would reduce competition in the American beer industry, as InBev would control 46 percent of the country’s annual sales.  “Even small price increases could lead to significant harm,” Baer said.  For more, see the NYTimes.

The Commodity Futures Trading Commission is drafting rules for “swaps,” under the directive of the Dodd-Frank financial markets overhaul.  The stakes are high, as the complex instruments account for eight-ninths of the derivatives market—and Wall Street banks have been jockeying to frame the proposals as too burdensome for their respective industries.  For more, see Reuters.

Capitol Hill may again take up a system of voluntary cybersecurity standards.  According to a new Senate Commerce Committee report, there is strong support among Fortune 500 companies.  U.S. Senator Jay Rockefeller (D., W.Va.) has spearheaded the effort, and his data suggests differing perspectives from industry leaders and the U.S. Chamber of Commerce.  Sen. Rockefeller hopes to pass a bill this year.  For more, see the Wall Street Journal.

Google’s New Years Resolution: FTC Settles with Google After Two-Year Antitrust Investigation

By Valerie Jon Ramos, J.D. Candidate 2015 | Posted on

The FTC recently dropped its two-year antitrust investigation of Google after the company voluntarily committed to license certain patents to mobile rivals, and upon request, stop “scraping,” which is the practice of including snippets of information from other websites in its search results. Google has already started to cut back on its use of “scraping” after Yelp’s complaint, which had helped ignite the FTC’s investigation. Google also promised to allow its advertisers easier movement of advertising campaigns to rival platforms.

Google was investigated on allegations that it was abusing its dominance in internet search through methods such as tying, exclusive dealings, deceptive practices, monopoly pricing, and privacy abuse. These accusations, if proven, violate section 1 and 2 of the Sherman Act and section 5 of the FTC Act. Most of these allegations stemmed from the adoption in 2007 of Google’s Universal Searching (which presents listings from news, video, images, local, and books at the top of the search results) and the merger with Motorola.

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Firm Advice: Your Weekly Update

By Joseph Santiesteban, J.D. Candidate 2014 | Posted on

The FTC recently revised the Hart-Scott-Rodino thresholds effective for transactions closing on or after February 14, 2013. Transactions that exceed the thresholds must be reported to the FTC and DOJ for antitrust review before closing. The FTC annually updates the thresholds when there are changes to gross national product. In a recent client alert, Wilson Sonsini summarizes the updated thresholds and compares them to last year’s amounts.

FINRA recently invited those intending to become crowdfunding portals to voluntarily share information about their business.  FINRA stated that submissions will be free and all information will be kept confidential. FINRA plans to use the information to develop rules for the portals. In a recent client alert, Davis Polk summarizes what information FINRA is seeking and how it may play into the larger scheme of crowdfunding rule development.

The SEC recently approved new compensation committee requirements for companies listed on the NYSE and Nasdaq.  The requirements are designed to enhance compensation committee independence and specify compensation committee authority and responsibility. Companies are required to comply by the earlier of their first board meeting following January 15, 2014 or October 31, 2014.  In a recent client alert, Skadden explains the new requirements and which companies are subject to them.

 

Firm Advice: Your Weekly Update

By Joseph Santiesteban, J.D. Candidate 2014 | Posted on

Regulation FD mandates that issuers disclose material nonpublic information through “a Form 8-K, or by another method… reasonably designed to effect broad, non-exclusionary distribution of the information to the public.”  As the SEC’s recent investigation of Netflix shows, a disclosure by the CEO of such information on Facebook likely is insufficient.  In a similar incident earlier this year, Francesca’s Holding Corp. terminated its CFO after he tweeted, “Board meeting. Good numbers = Happy Board.”  This incident, however, did not result in an SEC investigation.  Despite these and other similar incidents, the SEC has provided no guidance on the applicability of Regulation FD to social networking.  In a recent Client Alert, Weil, Gotshal & Manges makes the case for additional guidance and explains how the SEC’s 2008 guidance on corporate website disclosures could be applied to social media.

UBS has agreed to pay a total of $1.5 Billion to regulators in the U.S., U.K., and Switzerland to resolve claims that it manipulated LIBOR.  The fine includes $1.2 Billion to the DOJ and CFTC.  The remainder will be paid to U.K. and Swiss regulators.  As part of the U.S. agreement, UBS must “take steps to ensure the integrity and reliability of UBS’s future benchmark interest rate submissions” and have its Japanese subsidiary plead guilty to one count of wire fraud.  The DOJ also filed a criminal complaint against two former UBS traders.  In a recent Client Alert, Goodwin Proctor has a full summary of the actions and links to the complaint and settlement agreements.

Fiscal year 2012 was significant for criminal cartel enforcement in the U.S.  The DOJ extracted $1.1 billion in fines, more than double that of 2011.  The average prison sentence for individuals also increased to 28 months from 17 months.  The banner year for the DOJ included investigations of 1) a five-year conspiracy to fix the prices of LCD panels, 2) an international conspiracy to fix LIBOR, and 3) a conspiracy among automotive part manufacturers, which has become the broadest antitrust investigation in U.S. history.  In the recently published U.S. Chapter of “Cartels: Enforcement, Appeals & Damages Actions,” Skadden succinctly explains U.S. antitrust laws regarding cartel enforcement and summarizes their application in 2012.

Judge Orders Emails Published in Private Equity Antitrust Case

By Joseph Santiesteban, J.D. Candidate 2014 | Posted on

Following a request from the New York Times, a Federal Judge in the District of Massachusetts recently unsealed the complaint in a lawsuit against 11 private equity firms alleging a market allocation and bid-rigging conspiracy in violation of Section 1 of the Sherman Act. The complaint concerns 27 private equity company purchases from 2003-2007, and alleges that the private equity firms “agreed to work together to allocate deal outcomes and purchase the target companies at artificially suppressed prices.” The class-action complaint was brought on behalf of shareholders of the target companies.

The firms named as defendants in the lawsuit include Blackstone Group, Kohlberg Kravis Roberts, Bain Capital, and Carlyle Group.  The alleged conspiratorial transactions include the purchases of some of the most well known names in American commerce, including Toys R Us, Warner Music, Neiman Marcus, and Clear Chanel. (more…)

Out, Out Brief Candle: European Union Competition Commission Blocks NYSE Euronext-Deutsche Boerse Merger

By By Mike Perez, J.D. Candidate Class of 2012 | Posted on

As reported by the Network last month, the proposed merger between NYSE Euronext and Deutsche Boerse (DB) was in jeopardy as Juan Alumnia, head of the European Union’s Competition Commission, publicly stated that he would recommend prohibiting the deal from going forward. On February 1, the commission officially blocked the proposed merger that would have created the world’s largest exchange operator. As a result of the decision, NYSE Euronext announced that “both companies have agreed to a mutual termination of the business combination agreement originally signed by the companies on February 15, 2011.”

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The Largest Exchange Operator That May Never Be

By By Mike Perez, J.D. Candidate Class of 2012 | Posted on

On January 10th, 2012, it was reported that European Competition commissioner Joaquin Alumnia would recommend blocking the proposed merger between NYSE Euronext and Deutsche Boerse by the European Union’s Competition Commission at its February 1st meeting. For 11 months, NYSE’s Duncan Niederauer and Deutsche Boerse’s Reto Francioni have been trying to quell Mr. Alumnia’s concern that such a merger would give the resulting exchange control over approximately 90% of Europe’s traded derivatives. If allowed to proceed, the merger would create the world’s largest stock exchange operator.

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