Message from Bill Baer, Assistant Attorney General
Despite the challenges of a hiring freeze, furloughs, and budget cuts, the dedicated women and men of the Antitrust Division stayed focused and accomplished much during the last year. We remedied two large mergers, prevailed in a major civil nonmerger trial, proved to a court the need to unwind a consummated transaction in a high-tech market, and obtained record sanctions in prosecuting a wide-ranging criminal cartel.
The Division newsletter describes each of these matters and other civil and criminal enforcement activities and summarizes the Division’s competition advocacy efforts at home and abroad. We hope it provides you with a window into the Division’s internal operations, including an opportunity to meet just a few of the many hard-working public servants who are responsible for our successes.
I am honored to be a part of this team. We at the Division look forward to continuing to uphold our commitment to ensuring the American consumer receives the benefits of a vigorously competitive marketplace.
A Strong Return on Investment
Antitrust enforcement is a smart national investment. When competition is protected, American consumers win, innovation thrives, and the nation’s businesses operate more efficiently. Even when confronted with unprecedented fiscal challenges, the Division deploys the resources entrusted to us by Congress to secure the biggest possible returns for American taxpayers.
Our criminal program continues to uncover and prosecute price-fixing, bid-rigging, and other cartel behavior, protecting consumers against higher prices. It sanctions bad conduct—including generating criminal fines that are more than 10 times the Division’s annual direct budget appropriation. These fines are contributed to the Crime Victims Fund, which helps victims of all types of crime throughout the country.
We hold accountable both corporations and the executives who conspire on their behalf. In FY 2013, the Division charged 21 corporations and 34 individuals and obtained more than $1 billion in criminal fines. Courts imposed 28 prison terms with an average sentence of more than two years per defendant. The Criminal Program page provides additional detail, including a discussion of the Division’s wide-ranging auto parts investigation.
Civil enforcement likewise safeguards American consumers. Our successful prosecution of the Apple/e-book publishers’ conspiracy shows how consumers benefit from stopping anticompetitive collusion. Once the anticompetitive behavior by the five major publishers and Apple was halted, competition resumed, and the average price of e-book bestsellers dropped from a little over $11 to closer to $6. Consumers also win when the Division blocks or remedies anticompetitive mergers. Last April, the Division reached a structural settlement that preserved competition in beer markets that otherwise would have been lost due to Anheuser-Busch InBev’s acquisition of Grupo Modelo. In November, the Division announced a settlement that remedied the competitive threat to air travel posed by US Airways’ acquisition of American Airlines, through the divestiture of slots and gates at key capacity-constrained airports throughout the country. These and other recent enforcement actions safeguard competition in markets where Americans spend tens of billions of dollars each year. Preventing even a relatively small price effect in these markets provides real value to consumers. More on the Division’s civil enforcement activities can be found on the Civil Program page.
Vigorous and effective antitrust enforcement also has a deterrent effect beyond the directly affected markets. Every time the Division brings an enforcement action, it sends a clear message to would-be antitrust violators that the Division will not hesitate to protect competition and American consumers.
Reducing Burdens on Business
At the same time, we strive to minimize unnecessary costs and disruption to U.S. businesses. The Division continues to pioneer the use of technology-assisted document review in government investigations. With proper consultation and safeguards, these new technologies can save parties time and money, while still providing the Division the information we need to carry out our mission. Tracy Greer, the Division’s point-person for the adoption of these technologies, is profiled.
Continued Focus on Litigation Effectiveness
The willingness to litigate and the ability to win cases are critical to successful antitrust enforcement. Our record in court over the last year proves the point. Our talented and experienced litigators, under the leadership of Deputy Assistant Attorney General for Litigation Dave Gelfand and Director of Litigation Mark Ryan, achieved a string of trial victories in 2013. In the process we provided unprecedented opportunities for the next generation of litigators.
The e-books case was the first significant civil conduct case the Division had tried in several years. Over the course of a three-week trial in June 2013, the Division proved that Apple had participated in and facilitated a conspiracy to fix the prices of e-books, in violation of Section 1 of the Sherman Act. A few months later, in September 2013, another team successfully challenged Bazaarvoice’s consummated acquisition of PowerReviews, its only meaningful competitor in the market for online ratings and reviews platforms. In the coming months, the Division’s challenge to American Express’ merchant restraints on credit card competition is scheduled for trial in New York.
Our criminal prosecutors have been equally busy and successful. Just two weeks ago, following a four-week trial, a federal jury in Sacramento, California convicted two real estate investors for conspiring to rig bids at public real estate foreclosure auctions in San Joaquin County, California. These convictions followed guilty pleas by 11 other individuals in connection with that investigation and 72 guilty pleas in real estate investigations nationwide. Last September, following a two-week trial, a jury in New Jersey convicted a former project manager for his central role in multiple bid-rigging, kickback, and fraud conspiracies at two Environmental Protection Agency Superfund sites in New Jersey. The perpetrator was sentenced earlier this month to serve 14 years in prison.
We litigate when necessary to protect the public’s right to competitive markets. But the Division is always open to negotiated remedies that provide meaningful relief in civil cases and to plea agreements that appropriately meet the criminal law enforcement goals of punishment, deterrence, and restitution.
Sound Economic Analysis
Economic analysis remains a pillar of our enforcement efforts. The Division’s talented economists are critical contributors to investigations, litigation, and policy formation. They work jointly with the legal staff to ensure sound economic analysis is used. Economics also plays an important role in informing our approach to emerging issues. For example, the Division’s Economic Analysis Group’s work has advanced our thinking about the potential anticompetitive effects of mergers that increase bargaining leverage.
Enforcing the Antitrust Laws Across All Sectors of the American Economy
Our efforts this past year have confirmed that the antitrust laws apply with equal force across the American economy. The Division’s trial victories in Bazaarvoice and e-books demonstrated that evolving technology markets are not immune from both antitrust misconduct and effective enforcement. Likewise, in allowing the Division’s no-poach case against eBay to proceed, the district judge endorsed our view that per se violations of Section 1 of the Sherman Act can be challenged in employment markets. Our successful criminal prosecutions in financial markets—including municipal bonds and LIBOR—have shown that participants in those markets must play by the same rules as other businesses.
Competition is important in all markets, and the antitrust laws are flexible and durable enough to respond. Though high-tech, labor, and financial markets may raise complex factual challenges, the Division is committed to doing the hard work necessary to uncover and stamp out cartels and other anticompetitive behavior in areas of critical importance to our economy.
Promoting Competition at Home
Effective enforcement is central to the Division’s mission. But we also achieve important results by working with other parts of the federal government to promote policies that are sensitive to competition concerns. During last year’s Spring Meeting, I discussed the Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, which we jointly issued with the Patent & Trademark Office last January. Last summer, the administration applied the policy statement when the U.S. Trade Representative disapproved an International Trade Commission exclusion order that would have barred importation of certain products, thereby ensuring that U.S. consumers will continue to have access to more affordable technology. More recently, the Division submitted comments to the Federal Communications Commission, in which we shared the Division’s experience analyzing the competitive risks associated with joint sales agreements in broadcast television and radio industries.
We appreciate that our enforcement actions and policy announcements are watched closely in jurisdictions around the world. We meet regularly with our partners in the European Commission, and we have enhanced that relationship in recent years. In February, I had the privilege of speaking about U.S. enforcement efforts with a large group of career enforcers at the Commission’s DG Competition. The Division also continues to engage bilaterally with enforcement colleagues in China, India, and elsewhere to promote transparency, procedural fairness, and enforcement cooperation. And, through our involvement with multilateral institutions, including the International Competition Network and the Organisation for Economic Co-operation and Development, we continue to share best practices and work toward policy convergence around sound antitrust principles. More on our international competition advocacy can be found on the International Program page.
The other articles in this newsletter provide more information about the work the Division has done in the past year to protect competition and consumers. We remain steadfast in our efforts to ensure that markets are free of anticompetitive restraints and consumers benefit from robust competition. All of us at the Division look forward to another productive and exciting year.