The Antitrust Division’s international program worked with enforcers from around the globe in the past year to build further opportunities for case-specific cooperation and to encourage positive competition policy development.
Continuing Commitment to International Enforcement Cooperation
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The Division continued to focus on international enforcement cooperation in its cartel investigations. For example, throughout 2016, the Division worked closely with a number of international counterparts in connection with its ongoing investigation into price fixing, bid rigging, and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry. To date, eight executives have been charged in connection with the investigation, and four companies have pleaded guilty, resulting in a total of $234.9 million in criminal fines.
In March 2017, an Israeli national and former owner and executive of an Israel-based defense contractor pleaded guilty to one count of mail fraud, two counts of wire fraud, and one count of major fraud against the United States for defrauding the Foreign Military Financing (FMF) Program, which is funded by the U.S. Department of State and administered by the U.S. Department of Defense (DOD). The United States spends billions of dollars each year through the FMF Program to provide foreign governments, including Israel, with money that must be used to purchase American-made military goods and services.
The executive was charged in January 2016 and extradited from Bulgaria in October 2016. The executive and others falsified bid documents to make it appear that certain FMF contracts had been competitively bid when they had not. The executive also falsely certified to the DOD that no commissions were being paid and no non-U.S. content was used in these contracts. Finally, he arranged for these undisclosed commission payments to be made to a company that was owned by a close relative to disguise the true nature and destination of these payments. Sentencing is currently scheduled for June 5.
International Cooperation in Civil Investigations
Since the time of the Division’s last newsletter in April 2016, the Division has cooperated in 20 merger and civil conduct investigations with 14 different jurisdictions, often pursuant to waivers from parties and third parties. Many of these investigations involved cooperation with multiple jurisdictions. For example, in its investigation of the proposed merger of Baker Hughes and Halliburton, the Division worked extensively with enforcement partners from nine jurisdictions, including the European Commission, Australia, Brazil, and Mexico. The Division’s cooperation with international counterparts included over 100 separate staff-to-staff and management level calls, as well as several days of in-person meetings.
The proposed merger would have combined the largest provider of services and products to the oil and gas industry in the United States with the third-largest provider of oilfield services in the world, resulting in increased prices, decreased output, and lessened innovation in at least 23 oilfield products and services critical to the nation’s energy supply. In May 2016, Baker Hughes/Halliburton abandoned their plans to merge after the Department of Justice sued to block the deal.
Updating Guidance on International Enforcement and Cooperation
In January 2017, the Division and the Federal Trade Commission (FTC) issued revised Antitrust Guidelines for International Enforcement and Cooperation. These guidelines update the 1995 International Antitrust Guidelines and provide guidance for businesses engaged in international activities on questions that concern the agencies’ international enforcement policy, as well as the agencies’ related investigative tools and cooperation with foreign authorities.
The revised guidelines include a new chapter on international cooperation, an updated discussion on the application of U.S. antitrust law for conduct involving foreign commerce, and revised illustrative examples focused on the types of issues most commonly encountered.
Growing Bilateral and Multilateral Relationships
Over the last year, the Division has worked to maintain close bilateral relationships with many fellow competition enforcers around the world.
In April 2016, the Department of Justice and FTC participated in high-level bilateral meetings with officials from China’s three antimonopoly agencies—the National Development and Reform Commission, the Ministry of Commerce (MOFCOM), and the State Administration for Industry and Commerce.
During the meetings, designed to promote communication and cooperation between U.S. and Chinese antitrust enforcement agencies, the agencies discussed the role of competition enforcement and advocacy in promoting innovation.
This was the third high-level meeting between the agencies since 2011, when the Justice Department and FTC signed an antitrust Memorandum of Understanding with the Chinese antitrust agencies.
The Division continued to work closely with the Canadian Competition Bureau (CCB) and the Mexican Federal Competition Commission by participating in a trilateral meeting in May 2016 in Toronto, Canada. Over the course of the year, the Division also participated in a variety of meetings with the CCB, including civil and criminal bilateral meetings.
In May 2016, the Department of Justice and FTC signed an antitrust cooperation agreement with Peru’s National Institute for the Defense of Competition and the Protection of Intellectual Property (INDECOPI). The agreement will promote increased cooperation and communication among the competition agencies in both countries. The U.S. agencies and INDECOPI signed the agreement at a formal bilateral meeting in Washington D.C. in May 2016.
The United States-Japan bilateral competition consultations date back to 1976, making them the U.S. antitrust agencies’ longest-running annual consultation with any foreign antitrust agency. In July 2016, officials from the Division and FTC met with officials from Japan’s Fair Trade Commission. The discussion covered a wide range of topics, including recent enforcement developments, antitrust policy and enforcement involving intellectual property and technology, and international cooperation.
The Antitrust Division is an active leader in the International Competition Network (ICN), the competition work of the Organisation for Economic Co-operation and Development (OECD), and other multilateral organizations.
The Division, a founding member of the ICN, continued to serve on the Steering Group that guides the direction of the ICN’s work, as well as co-chair the Unilateral Conduct Working Group (UCWG). As co-chair of the UCWG, the Division worked on the Unilateral Conduct Analytic Framework chapter, which discusses questions relevant to an agency when creating its unilateral conduct enforcement policies. In addition, Division officials participated in the ICN Cartel Workshop in Madrid, Spain, which included meetings on a range of topics regarding the enhancement of cartel enforcement, and the ICN Annual Conference in Singapore, which covered these topics as wells as unilateral conduct, advocacy, and agency effectiveness. Division officials, along with FTC colleagues, also hosted the ICN Merger Workshop in Washington, D.C., where they discussed investigative tools.
Over the course of the year, in conjunction with the Division’s work with the OECD, Division employees presented at OECD training centers in Hungary and South Korea, covering topics from competition in the financial sector to information exchanges.
The Division remained involved in the work of the Competition Policy and Law Group of the Asian Pacific Economic Cooperation forum by participating in the group’s annual meetings and periodic projects throughout the year. In addition, Division personnel participated in the UNCTAD Intergovernmental Group of Experts annual meeting on competition policy, taking part in panels regarding the intersection of antitrust and intellectual property.
The Division’s Visiting International Enforcers Program, created in 2011, is designed to increase mutual understanding and enhance relations with international enforcement partners. In 2016, the Division hosted two international enforcers, one from the United Kingdom’s Competition and Markets Authority (CMA), and one from the Directorate General for Competition at the European Commission (DG Competition); in turn, the CMA hosted a Division economist, and the DG Competition hosted a Division section chief.
The Division has offered for the first time secondment to a member of the United Kingdom’s Financial Conduct Authority’s staff, integrating the staffer into the Division’s criminal enforcement program for six months. The program aims to strengthen the Division’s relationship with a counterpart in the financial services industry, a key area of criminal enforcement.
The Division continued to provide technical assistance to younger enforcement agencies around the world. The programs focused on a range of topics, from evaluating mergers to competition related challenges in the telecommunication sector. In 2016, the Division led 15 programs in countries including El Salvador, Honduras, Guatemala, Mexico, the Philippines, Ukraine, and Vietnam.