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Division Update Spring 2013

Division Highlights

Criminal

Justice Department Investigates Anticompetitive Conduct in the Automobile Parts Industry

The Department’s ongoing investigation into price-fixing, bid rigging, and other anticompetitive conduct in the automobile parts industry has resulted in guilty pleas from nine companies and 12 executives. To date, the investigation has resulted in more than $809 million in criminal fines, including a $470 million fine against Yazaki Corp.—the third-largest criminal antitrust fine ever imposed. Two of the executives charged are citizens of Japan. Each was sentenced in 2012 to serve two years in prison—the longest prison term imposed on a foreign national voluntarily submitting to U.S. jurisdiction for an antitrust violation.

To date, the following corporate fines have been obtained:

Press Releases

November 16, 2012

Ohio Automobile Parts Supplier Executive Pleads Guilty in Price-Fixing and Bid-Rigging Conspiracy

October 30, 2012

Japanese Automobile Parts Manufacturer Agrees to Plead Guilty to Price Fixing and Obstruction of Justice

August 28, 2012

Japanese Automobile Parts Manufacturer Agrees to Plead Guilty to Price Fixing on Parts Installed in U.S. Cars

August 16, 2012

Yazaki Executive Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars

July 30, 2012

German Subsidiary of TRW Automotive Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars

June 6, 2012

Autoliv Inc. and a Yazaki Corp. Executive Agree to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars

April 26, 2012

DENSO Corporation Executive Agrees to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging Conspiracy

April 23, 2012

Fujikura Ltd. Agrees to Plead Guilty to Price Fixing on Auto Parts Installed in U.S. Cars

April 3, 2012

G.S. Electech Agrees to Plead Guilty to Price Fixing on Auto Parts Installed in U.S. Cars

March 26, 2012

DENSO Corporation Executive Agrees to Plead Guilty to Price Fixing and Bid Rigging on Auto Parts Installed in U.S. Cars

January 30, 2012

Yazaki Corp., DENSO Corp. and Four Yazaki Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging Conspiracies

Justice Department Investigates Price-Fixing in Liquid Crystal Display (LCD) Panel Industry

The Department’s ongoing investigation into price-fixing in the LCD panel industry has resulted in criminal fines totaling $1.39 billion. As a result of the investigation, 10 companies and 13 executives have been convicted or found guilty. On March 13, 2012, following an eight-week trial, a jury in the Northern District of California returned guilty verdicts against Taiwan-based AU Optronics (AUO), its American subsidiary, AU Optronics America, and the former president and former vice president of AUO for their participation in the price-fixing conspiracy. On September 20, 2012, AUO was sentenced to pay a $500 million fine and the convicted executives each were sentenced to serve three years in prison. In December 2012, the Department retried a third AUO executive after the jury in the March trial was unable to return a unanimous verdict. After a three week trial, on December 18, 2013, the third executive was found guilty.

Press Releases

December 18, 2012

AU Optronics Corporation Executive Convicted for Role in LCD Price-Fixing Conspiracy

September 20, 2012

Taiwan-Based AU Optronics Corporation Sentenced to Pay $500 Million Criminal Fine for Role in LCD Price-Fixing Conspiracy

March 13, 2012

Taiwan-Based AU Optronics Corporation, Its Houston-Based Subsidiary, and Former Top Executives Convicted for Role in LCD Price-Fixing Conspiracy

Justice Department Investigates Anticompetitive and Fraudulent Conduct in the Financial Services Industry

In 2012, the Department continued to investigate anticompetitive and fraudulent conduct in the financial services industry. The Department’s ongoing investigation into bid rigging in the municipal bonds market has resulted in convictions against 19 individuals and one company, including convictions against six individuals at two separate jury trials. In May 2012, three former General Electric Co. executives were convicted for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts. In August 2012, three former UBS AG executives were convicted at trial of conspiracy and fraud charges for corrupting the bidding process for more than a dozen investment agreements to increase the number and profitability of the agreements awarded to UBS. The municipal bonds investigation has also produced settlements with a number of large financial institutions involved in the conspiracies. To date, the implicated firms have agreed to pay a total of nearly $745 million in restitution, penalties, and disgorgement to Federal and state agencies.

On February 6, 2013, the Department’s investigation into manipulation of the London Interbank Offered Rate (LIBOR) resulted in RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS), agreeing to plead guilty to a criminal information charging it with one count of wire fraud for engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating the Japanese Yen LIBOR and to pay a $50 million fine. Additionally, it was announced that a criminal information also would be filed against parent company RBS as part of a deferred prosecution agreement (DPA), charging RBS with wire fraud for its role in manipulating LIBOR benchmark interest rates, and with participation in a price-fixing conspiracy by rigging the Yen LIBOR benchmark interest rate with other banks. As part of the DPA, the bank must admit and accept responsibility for its misconduct, and continue cooperating with the Justice Department in its ongoing investigation. It also had to pay a $100 million penalty beyond the fine imposed on RBS Securities Japan. In December 2012, a criminal complaint was unsealed in the U.S. District Court for the Southern District of New York, charging two former senior UBS traders with colluding to manipulate the Yen LIBOR rate. These defendants remain fugitives.

Press Releases

February 6, 2013

RBS Securities Japan Limited Agrees to Plead Guilty in Connection with Long-Running Manipulation of Libor Benchmark Interest Rates

January 3, 2013

Former Financial Services Broker Sentenced to Serve 18 Months in Prison for Role in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds

December 19, 2012

UBS Securities Japan Co. Ltd. to Plead Guilty to Felony Wire Fraud for Long-Running Manipulation of LIBOR Benchmark Interest Rates

October 18, 2012

Three Former Financial Services Executives Sentenced to Serve Time in Prison for Roles in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds

August 31, 2012

Three Former UBS Executives Convicted for Frauds Involving Contracts Related to the Investment of Municipal Bond Proceeds

July 20, 2012

Former Financial Services Executive Indicted for His Participation in a Far-Reaching Conspiracy and Scheme to Defraud Involving Investment Contracts for the Proceeds of Municipal Bonds

July 18, 2012

Former New York Employee of a Financial Institution Pleads Guilty for His Role in Fraud Conspiracy Involving Municipal Bonds

May 11, 2012

Three Former Financial Services Executives Convicted for Roles in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds

Justice Department Investigates Price-Fixing, Bid Rigging, and Other Anticompetitive Conduct in the Coastal Water Freight Transportation Industry

The department’s ongoing investigation into price-fixing, bid rigging, and other anticompetitive conduct in the coastal water freight transportation industry has resulted in convictions against three companies and six individuals. On January 29, 2013, following a two-week trial, a jury in Puerto Rico convicted the former president of a coastal shipping company for his participation in a conspiracy to fix rates and surcharges for freight between the continental United States and Puerto Rico. He now awaits sentencing. Additionally, on March 21, 2013, a seventh individual was indicted for his role in a conspiracy to fix prices on coastal freight services. To date, the investigation has resulted in $46 million in criminal fines and prison sentences for five individuals ranging from seven months to four years.

Press Releases

March 21, 2013

Former Shipping Executive Indicted for Role in Price-Fixing Conspiracy Involving Coastal Freight Services Between the Continental United States and Puerto Rico

January 29, 2013

Former Executive Convicted for Role in Price-Fixing Conspiracy Involving Coastal Freight Services Between the Continental United States and Puerto Rico

August 1, 2012

Florida-Based Crowley Liner Services Inc. Pleads Guilty to Price Fixing on Freight Services Between U.S. and Puerto Rico

November 17, 2011

Florida-Based Sea Star Line LLC Agrees to Plead Guilty and Its Former President Is Indicted for Price Fixing on Coastal Freight Services Between the Continental United States and Puerto Rico

Justice Department Investigates Bid Rigging, Fraud, and other Anticompetitive Conduct at Real Estate Foreclosure Auctions and Municipal Tax Lien Auctions

To date, 53 individuals and two companies have been charged in the Department’s ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in Alabama, California, and North Carolina.

The Department also is investigating similar anticompetitive conduct at municipal tax lien auctions. Eight individuals and three companies have pleaded guilty as part of an ongoing investigation into bid rigging and fraud related to municipal tax lien auctions in New Jersey.

Press Releases

March 7, 2013

Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

February 5, 2013

Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

December 19, 2012

New Jersey Company Pleads Guilty for Role in Bid Rigging Scheme at Municipal Tax Lien Auctions

December 12, 2012

Two Alabama Real Estate Investors and Their Company Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions

November 8, 2012

North Carolina Real Estate Investor Pleads Guilty to Mail Fraud Scheme for the Purchase of Real Estate at Public Foreclosure Auctions

November 1, 2012

Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

September 26, 2012

Pennsylvania Corporation Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey

August 15, 2012

Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

July 24, 2012

Alabama Real Estate Investor Pleads Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions

June 28, 2012

Two Alabama Real Estate Investors and Their Company Indicted for Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions

June 7, 2012

Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

April 27, 2012

Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions

April 26, 2012

Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

April 23, 2012

New Jersey Financial Investor and His Company Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions

April 20, 2012

Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions

April 17, 2012

Former Executive of New York-Based Tax Liens Company Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey

March 27, 2012

New York Financial Investor Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey

Civil Merger

Justice Department Files Antitrust Lawsuit Challenging Anheuser-Busch InBev’s Proposed Acquisition of Grupo Modelo

On January 31, 2013, the Department filed a lawsuit to block Anheuser-Busch InBev’s (ABI) proposed acquisition of total ownership and control of Grupo Modelo. The transaction would join the largest and third-largest firms in the $80 billion U.S. beer market and add the Corona and Modelo brands to ABI’s already robust portfolio. The lawsuit, which is currently pending, seeks to preserve Grupo Modelo as an important, independent competitive force.

Press Release

January 31, 2013

Justice Department Files Antitrust Lawsuit Challenging Anheuser-Busch InBev’s Proposed Acquisition of Grupo Modelo

Justice Department Files Antitrust Lawsuit Against Bazaarvoice Regarding the Company’s Acquisition of PowerReviews

In January 2013, the Department filed a civil antitrust lawsuit against Bazaarvoice Inc. challenging the company’s June 2012 acquisition of PowerReviews Inc. The Department said that the $168.2 million transaction substantially lessened competition in the market for product ratings and reviews platforms in the United States, resulting in higher prices and diminished innovation. The trial is set to begin on September 10, 2013.

Press Release

January 10, 2013

Justice Department Files Antitrust Lawsuit Against Bazaarvoice Inc. Regarding the Company’s Acquisition of PowerReviews Inc.

Justice Department Files Antitrust Lawsuit Against New York City Tour Bus Joint Venture

The Department and New York State Attorney General filed a civil antitrust lawsuit against a tour bus joint venture formed by Coach USA Inc. and City Sights LLC alleging that the joint venture, known as Twin America LLC, has resulted in higher prices for hop-on, hop-off bus tours in New York City. The Department said that the formation of Twin America gave Coach and City Sights a monopoly over the more than $100 million New York City hop-on, hop-off bus tour market and enabled Coach and City Sights to increase prices to consumers by approximately 10 percent for tourists visiting some of New York City’s leading attractions. The litigation is currently pending.

Press Release

December 11, 2012

Justice Department and New York Attorney General File Antitrust Lawsuit Against New York City Tour Bus Joint Venture of Coach USA and City Sights

Amerigroup’s Divestiture of Its Virginia Operations Addresses Justice Department’s Concerns with Wellpoint’s Proposed Acquisition of Amerigroup

Amerigroup Corp.’s sale of its subsidiary, Amerigroup Virginia Inc., addressed the Department’s concerns with WellPoint Inc.’s proposed acquisition of Amerigroup. The Department said that the merger, as originally proposed, would have substantially lessened competition in the provision of Medicaid managed care plans in Northern Virginia. WellPoint and Amerigroup are the only two providers of Medicaid managed care plans in Northern Virginia.

Press Release

November 28, 2012

Amerigroup Corp.’s Divestiture of Its Virginia Operations Addresses Department of Justice’s Concerns with WellPoint Inc.’s Proposed Acquisition of Amerigroup

3M Abandons Proposed Acquisition of Avery Dennison’s Office and Consumer Products Group After Justice Department Threatens Lawsuit

3M Co. abandoned its plan to acquire Avery Dennison Corp.’s Office and Consumer Products Group, its closest competitor in the sale of adhesive-backed labels and sticky notes, after the Department informed the companies that it would file a civil antitrust lawsuit to block the deal. The proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for products that millions of American consumers use every day.

Press Release

September 4, 2012

3M Company Abandons Its Proposed Acquisition of Avery Dennison’s Office and Consumer Products Group After Justice Department Threatens Lawsuit

Justice Department Requires Changes to Verizon-Cable Company Transactions to Protect Consumers, Allows Procompetitive Spectrum Acquisitions to Go Forward

The Department required Verizon and four of the nation’s largest cable companies—Comcast, Time Warner Cable, Bright House Networks, and Cox Communications—to make changes to a series of agreements concerning both the sale of bundled wireless and wireline services, and the formation of a technology research joint venture. The Department said that, if left unaltered, the agreements would have harmed competition by diminishing the companies’ incentive to compete, resulting in higher prices and lower quality for consumers. The announcement came after a closely coordinated investigation with the Federal Communications Commission (FCC), with additional assistance provided by the New York State Attorney General’s Office.

Press Release

August 16, 2012

Justice Department Requires Changes to Verizon-Cable Company Transactions to Protect Consumers, Allows Procompetitive Spectrum Acquisitions to Go Forward

Justice Department Requires Divestitures in Order for United Technologies to Proceed with Acquisition of Goodrich

The Department required United Technologies Corporation (UTC) to divest certain assets used in the production of electrical power systems and aircraft engine control systems in order to proceed with its $18.4 billion acquisition of Goodrich Corporation—the largest merger in the history of the aircraft industry. The acquisition, as originally proposed, likely would have resulted in higher prices, less favorable contractual terms, and less innovation for several critical aircraft components, including generators, engines, and engine control systems.

Press Release

July 26, 2012

Justice Department Requires Divestitures in Order for United Technologies Corporation to Proceed with Its Acquisition of Goodrich Corporation

Civil Nonmerger

Justice Department Files Motion to Dismiss Antitrust Lawsuit Against Blue Cross Blue Shield of Michigan After State Passes Law to Prohibit Health Insurers from Using Most-Favored-Nation Clauses

In October 2010, the Department, along with the state of Michigan, filed a civil antitrust lawsuit against Blue Cross Blue Shield of Michigan (BCBSM) alleging that the most-favored-nation (MFN) provisions of its agreements with hospitals raise hospital prices, prevent other insurers from entering the marketplace, and discourage discounts. On March 25, 2013, the Department filed a motion to dismiss the lawsuit after the state of Michigan passed a law that prohibits health insurers from using MFNs with health care providers. The combination of the new law and a previous order by the Michigan Insurance Commissioner that prohibits MFN clauses in health insurers’ provider contracts provides the relief the Department sought in its lawsuit, rendering further proceedings unnecessary. The parties moved the court to dismiss the case without prejudice and the court granted the motion on March 28, 2013.

Press Releases

March 25, 2013

Justice Department Files Motion to Dismiss Antitrust Lawsuit against Blue Cross Blue Shield of Michigan after Michigan Passes Law to Prohibit Health Insurers from Using Most-Favored-Nation Clauses in Provider Contracts

October 18, 2010

Justice Department Files Antitrust Lawsuit Against Blue Cross Blue Shield of Michigan

Remarks as Prepared for Delivery by Assistant Attorney General Christine Varney at Pen-and-Pad Briefing on Antitrust Health Care Matter

Justice Department Files Lawsuit Against Apple and Five Publishers for Conspiring to Raise Prices of E-Books

On April 11, 2012, the Department filed a civil lawsuit against Apple Inc. and five of the largest book publishers in the United States—Hachette Book Group (USA), HarperCollins Publishers L.L.C., Simon & Schuster Inc., Holtzbrinck Publishers LLC, which does business as Macmillan, and Penguin Group (USA)—for conspiring to end e-book retailers’ freedom to compete on price, take control of pricing from e-book retailers, and substantially increase the prices that consumers pay for e-books. The Department has settled with the five publishers and continues to litigate against Apple. The trial against Apple is scheduled to begin in June 2013.

Press Releases

February 8, 2013

Justice Department Reaches Settlement with Macmillan in E-Books Case

December 18, 2012

Justice Department Reaches Settlement with Penguin Group (USA) Inc. in E-Books Case

April 11, 2012

Justice Department Reaches Settlement with Three of the Largest Book Publishers and Continues to Litigate Against Apple Inc. and Two Other Publishers to Restore Price Competition and Reduce E-Book Prices

Remarks

April 11, 2012

Remarks as Prepared for Delivery by Attorney General Eric Holder at the E-Books Press Conference

Remarks as Prepared for Delivery by Acting Assistant Attorney General Sharis A. Pozen at the E-Books Press Conference

Justice Department Files Lawsuit Against eBay Over Agreement Not to Hire Intuit Employees

In November 2012, the Department filed a civil antitrust lawsuit against eBay Inc., alleging that it violated the antitrust laws when it entered into an agreement not to recruit or hire Intuit Inc.’s employees. The Department said that the agreement eliminated a significant form of competition to the detriment of affected employees who likely were deprived of access to better job opportunities and salaries. The litigation is ongoing.

Press Release

November 16, 2013

Justice Department Files Lawsuit Against eBay Inc. Over Agreement Not to Hire Intuit Inc. Employees

Justice Department Settles Civil Contempt Claim Against Exelon Corporation

Exelon Corporation agreed to pay $400,000 as part of a civil settlement with the Department of Justice that resolves Exelon’s alleged violations of two court orders entered in connection with Exelon’s acquisition of Constellation Energy Group.

Press Release

November 15, 2012

Justice Department Settles Civil Contempt Claim Against Exelon Corporation

Justice Department Closes Investigation into Entergy’s Acquisition of Hinds and Hot Spring Power Plants, Continues Investigation in Alleged Exclusionary Conduct

After a thorough review, and in light of the forthcoming changes in Entergy’s service area, the Antitrust Division determined that Entergy’s acquisitions of KGen’s power plants in Jackson, Mississippi, and Hot Spring County, Arkansas, were unlikely to substantially lessen competition, and closed its investigation into the proposed transactions. In addition to the merger investigation of the KGen transactions, the Department has been examining allegations that Entergy has engaged in exclusionary conduct in its four-state utility service area, spanning parts of Arkansas, Louisiana, Mississippi and Texas. That investigation remains open.

Press Release

November 14, 2012

Justice Department Statement on Entergy Corp.’s Transmission System Commitments and Acquisition of KGen Power Corp.’s Plants in Arkansas and Mississippi

Policy

Justice Department and Federal Trade Commission Hold Joint Workshops on Most-Favored-Nation Clauses and Patent Assertion Entity Activities

In 2012, the Department and the Federal Trade Commission (FTC) held two joint public workshops: one on the use of most-favored-nation clauses and their implications for antitrust enforcement and policy, the other on the impact of patent assertion entity (PAE) activities on innovation and competition. Both workshops provided a forum for industry participants, academics, economists, lawyers, and other interested parties to discuss these cutting-edge competition issues.

Press Releases

December 7, 2012

Department of Justice, Federal Trade Commission to Hold Workshop on Patent Assertion Entity Activities

August 17, 2012

Department of Justice, Federal Trade Commission to Hold Workshop on “Most-Favored-Nation” Clauses

Justice Department and U.S. Patent and Trademark Office Issue Joint Policy Statement Regarding Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Licensing Commitments

In January 2013, the Department and the U.S. Patent and Trademark Office issued a joint policy statement on remedies for standards-essential patents subject to voluntary F/RAND licensing commitments, which included recommendations to the U.S. International Trade Commission.

Policy Statement

January 8, 2013

Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments

Testimony

July 11, 2012

Statement of Joseph F. Wayland, Acting Assistant Attorney General for the Antitrust Division, Before the Senate Committee on the Judiciary

Justice Department and Federal Trade Commission Sign Memorandum of Understanding with Indian Competition Authorities

On September 27, 2012, the Department and the FTC signed an antitrust memorandum of understanding with the Government of India Ministry of Corporate Affairs and the Competition Commission of India to promote increased cooperation and communication among competition agencies in both countries. The ceremony took place in Washington, D.C.

Press Release

September 27, 2012

Department of Justice and Federal Trade Commission Sign Memorandum of Understanding with Indian Competition Authorities

Contacts

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