General Bill Baer
Here is the Antitrust Division’s 2016 Spring Update. It has been quite a year.
Just a few weeks ago, the Supreme Court denied cert. and ended Apple’s efforts to avoid responsibility for orchestrating an agreement with five of the six largest U.S. book publishers to raise e-book prices. That action left standing findings at the trial and appellate level that this was a per se unlawful antitrust conspiracy. It also triggered a requirement—negotiated by our state attorney general colleagues and others—for Apple to credit e-book purchasers with $400 million in overcharges. With the $166 million previously paid by the conspiring publishers, Apple’s payment brings to $566 million the amounts repaid to e-book customers harmed by this unlawful conspiracy. All told, consumers will receive more than $6 for each e-book purchased at inflated prices during the conspiracy.
Merger enforcement in the midst of a consolidation blitz remains a top priority. Last year, just after the Spring Meeting ended, Comcast and Time Warner ended their plans to merge in light of concerns expressed by the Division and our colleagues at the Federal Communications Commission about its likely impact on competition in video programming and internet distribution markets. Three days later, Applied Materials and Tokyo Electron—the two leading makers of semiconductor manufacturing equipment—scrapped their merger plans after the Division determined that the parties’ proposed remedy did not adequately address the likely competitive harms. In December, Chicken of the Sea and Bumble Bee abandoned a deal we opposed that would have effectively left consumers with only two choices of, and at risk of paying higher prices for, branded canned tuna. A few days later—and one day prior to the end of a four-week trial—General Electric and Electrolux walked away from a deal that risked significantly curtailing competition for oven ranges and cooktops (especially those sold to consumers seeking lower priced cooking appliances). And a few weeks ago, we secured a TRO, within 36 hours of filing our complaint, that prevented the Tribune Company (owners of the Los Angeles Times and San Diego Union Leader) from acquiring, without adequate antitrust review, its only significant newspaper rival in Orange and Riverside Counties. Just a couple days ago, United Airlines abandoned its efforts to bolster its monopoly at Newark Airport after several months of litigation.
We will continue to litigate where necessary to defend the public interest, including putting an end to anticompetitive agreements that restrict hospital marketing in Michigan. This week we challenged both ValueAct’s misuse of the HSR investment-only exemption and Halliburton’s effort to eliminate a rival and create a virtual duopoly in the supply of oilfield products and services. The Halliburton litigation puts front and center an issue I discussed in congressional testimony just last month: some deals are so fraught with antitrust risk that they should never be seriously considered; and they cannot be settled with purported remedies that place the private interests of shareholders and executives over the public’s interest in competitive markets and consumer choice.
We continue to prosecute cartel behavior. In the past 12 months, the Division brought charges in key sectors of the economy. We exposed foreign currency exchange price fixing by some of the world’s largest banks and secured parent-level guilty pleas and record-setting criminal fines. We prosecuted a price-fixing scheme involving online sales of poster art and challenged market allocations among companies that are supposed to help the heirs of people who die without a will. Those prosecutions continue to send the message that no company is too big to be charged; electronic price fixing is no less unlawful just because it happens online; and conspiracies in markets many of us have never even heard of will not evade our scrutiny. Our prosecutions benefit from steadfast support from our DOJ colleagues, the FBI, and other Federal and state law enforcement agencies.
Individual accountability is key to effective antitrust enforcement. In the seven years of the Obama Administration, we have prosecuted over 425 company officials. Those efforts continue. In late March, a jury in the District of New Jersey convicted John Bennett—the former CEO of a Canadian contractor that specialized in treating and disposing of contaminated soil—of defrauding the United States and paying more than $1 million in kickbacks. Later this year and into 2017, the Division will try charges against dozens of real estate investors across the southeastern United States and northern California who conspired to rig bids at mortgage foreclosure auctions and against owners of Puerto Rican school bus companies who rigged bids for busing provided to the commonwealth’s school districts.
The Division—and the public—benefit greatly from our collaboration with Federal and state enforcers. Together with our enforcement colleagues at the FTC, we work to clarify important issues like the relationship between intellectual property and antitrust, and to advocate for competition-enhancing policies at the Federal and state level. We partner with state attorneys general on important civil enforcement actions, and we work closely with the FCC, STB, DOT, CFTC, and other Federal agencies in regulated industries where we share responsibilities.
Cooperation with foreign competition enforcers also is essential to effective antitrust enforcement. We coordinate merger investigations to ensure that we successfully identify transactions that cause harm in the U.S. and other parts of the world. Cooperation on criminal matters—including extradition, searches, and serving indictments—helps ensure that cartelists have fewer places to hide. And multilateral efforts at organizations like OECD and ICN helps enforcers across the globe reach consensus on principles important to both the substance and process of antitrust.
As always, these achievements result from the hard work of the career attorneys, economists, paralegals, and administrative staff of the Antitrust Division. So, in addition to sharing with you the substance of our work over the last year, we are pleased to profile some of our recent hires and other members of the Division’s team, including our newest Deputy Assistant Attorney General, Sonia Pfaffenroth, and our Director of Litigation, Eric Mahr.
Thank you for your interest in the Antitrust Division’s work.