Spotlight on Litigation

In the face of the unique challenges posed by the pandemic, the Antitrust Division has remained undeterred in challenging violations of the antitrust laws. The Division has numerous upcoming criminal trials. In addition, an upcoming civil trial against Google—scheduled for 2023—has attracted widespread public attention.

Criminal Litigation

The Division’s prosecutors are preparing for 13 trials against 24 individuals and six companies in jurisdictions across the country—including nine cases charged since the COVID-19 declaration of emergency in March 2020. If all 13 trials proceed this year, it will mark the largest number of trials in the modern era of criminal antitrust enforcement, since the advent of the modern leniency policy in 1993. The Division’s litigation efforts demonstrate its commitment to protecting competition in critical markets, including food, healthcare, labor markets, and financial services.

Food

The Division is committed to ensuring that companies and executives that conspire to fix prices for household staples are held accountable, and that American consumers benefit from competition when purchasing the most basic necessity, food.

In the packaged seafood industry, the former CEO and president of Bumble Bee Foods, LLC, was convicted following a four-week trial in San Francisco. In June 2020, he was sentenced to serve 40 months in prison and to pay a $100,000 fine for his leadership role in a conspiracy to fix prices of canned tuna in the United States. This conviction followed the guilty pleas of three tuna-industry executives and two major packaged seafood companies, Bumble Bee and Starkist, which were sentenced to pay $25 million and $100 million in criminal fines, respectively.

In the broiler chicken industry, one of the country’s largest broiler chicken providers, Pilgrim’s Pride Corp. (PPC), pleaded guilty to its part in a conspiracy to fix prices and rig bids in the sale of broiler chicken products. In February 2021, PPC was sentenced to pay approximately $107 million as a criminal fine. PPC’s conviction followed the indictment of ten individuals, including two former CEOs of PPC, for their roles in the conspiracy. The case against the individuals is pending in Denver, Colorado.

Healthcare

Amid the pandemic, the Division has redoubled its efforts to prosecute illegal conduct that corrupts vital healthcare markets.

In August 2020, a federal grand jury returned a superseding indictment against two generic pharmaceutical companies, Teva Pharmaceuticals USA, Inc. and Glenmark Pharmaceuticals Inc., USA, for their participation in conspiracies to fix prices, rig bids, and allocate customers for generic drugs. The Teva-Glenmark indictment follows the February 2020 indictment of a former senior executive in the generic-pharmaceutical industry, for his role in conspiracies to fix prices, rig bids, and allocate customers for generic drugs, and for making a false statement to federal agents who were investigating those conspiracies. The cases are pending in Philadelphia, Pennsylvania.

In September 2020, a federal grand jury indicted the founder and former president of Florida Cancer Specialists & Research Institute LLC (FCS) for his participation in a conspiracy to allocate medical and radiation oncology treatments for patients in Southwest Florida. The indictment charges him with conspiring with a competing oncology group to suppress competition relating to cancer treatments offered by the companies in southwest Florida. The conspiracy limited the choices available to cancer patients for integrated care and enabled FCS and the competing oncology group to operate in the region with minimal competition. FCS was charged by information in April 2020, and entered a deferred prosecution agreement where it agreed to pay a $100 million criminal penalty. The case is pending in Fort Myers, Florida.

Labor Market

The Division remains focused on protecting the American worker by ensuring labor markets are free from collusion, particularly in critical sectors like the healthcare industry. In the past year, the Division filed two indictments involving healthcare labor markets—one charging an individual with his role in a wage-fixing conspiracy, and one charging a company for its role in an employee allocation (or “no-poach”) conspiracy. As explained in the Antitrust Guidance for Human Resource Professionals issued in 2016, agreements among employers to refuse to solicit or hire each other’s employees (so-called “no-poach” agreements), or to fix rates or wages, eliminate competition in the same irredeemable way as agreements to allocate customers or fix product prices. These conspiracies can harm workers in a variety of ways, including depriving them of competitive wages, mobility, and the ability to bargain for better terms of employment or job opportunities.

In December 2020, a federal grand jury indicted the former owner of a Texas-based in-home physical therapy company for participating in a conspiracy to fix prices by lowering the rates paid to healthcare workers by his company, and for obstructing the Federal Trade Commission’s earlier, separate investigation into his conduct. The indictment charges that he conspired to pay lower rates to certain physical therapists and physical therapist assistants in North Texas. The case is pending in Sherman, Texas.

In January 2021, a federal grand jury indicted Surgical Care Affiliates, LLC (SCA) and its related entity for participating in conspiracies not to solicit senior-level employees from its competitors. SCA owns and operates outpatient medical-care centers across the country. The indictment charges SCA with entering into and engaging in two separate bilateral conspiracies with other healthcare companies to suppress competition between them for the services of senior-level employees. The case is pending in Dallas, Texas.

Financial Services

The Division also continued its prosecution of collusive conduct that undermined financial markets worldwide.

In September 2020, a former currency trader at a major multinational bank was sentenced to serve eight months in prison and to pay a $150,000 fine, for his participation in a conspiracy to manipulate prices for emerging-market currencies in the global foreign-currency-exchange market. He was convicted after a three-week trial in New York in late 2019. This conviction followed the guilty pleas of two former currency traders. Several major financial institutions pleaded guilty as a result of investigations into the financial sector, and they were collectively sentenced to pay over $2.5 billion in criminal fines.

United States v. Google

On October 20, 2020, the Division filed a civil lawsuit against Google alleging that Google has used a range of anticompetitive tactics to maintain and extend monopolies in markets for search and search advertising, to the detriment of American consumers and advertisers.

As the complaint alleges, for many years Google has had a monopoly in general search, which includes search engines that can handle queries of all types. Google’s overall market share in general search is now over 85%; its share is even higher on mobile devices, at nearly 95%. Google monetizes its search monopoly by selling ads on the search results pages. The complaint alleges that two search advertising markets have been affected by Google’s conduct and that Google also has a monopoly in each of those markets.

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As in many markets, to become a successful search engine a company must be able to effectively distribute its product to consumers. Google has used its monopoly power to exclude rivals from the search distribution channels they would need to achieve sufficient scale to challenge Google’s monopolies. About 80% of searches are covered by the combination of Google’s exclusionary contracts and Google’s own properties, leaving only a small fraction potentially available for competitors. Google has described some of its exclusionary agreements as “[i]nsurance polic[ies] that preserve our search and assistant usage.”

For search engines, some of the most important distribution channels are the preset default positions on various search access points on computers and mobile devices. Defaults are sticky and exert a strong influence over users’ choice of search engine; the fact that users can generally change the default search engine does not resolve the matter when, as one Google executive bluntly put it, “most users just use what comes on the device.”

Google’s exclusionary agreements fall into four main buckets. First, Google uses an interlocking set of contracts with Android device manufacturers and carriers to “[o]wn the ecosystem” and ensure that it is the dominant search provider on Android devices. These contracts force Android manufacturers to preinstall a bundle of Google apps chosen by Google and secure premium placement of Google search access points. Second, Google enters into agreements that require Android distributors to make Google the preset default general search provider across all preinstalled search access points on an Android device. In return, Android distributors receive a share of search advertising revenue from those devices. Third, Google has exclusionary agreements with Apple. Apple’s mobile devices account for 60% of mobile device usage in the United States. Google pays billions of dollars to Apple each year to be the exclusive preset default general search engine for Apple’s primary search access points. Fourth, Google uses revenue-sharing agreements to control search distribution on other browsers, including those used on desktops.

Following well-established antitrust law, such as the D.C. Circuit’s United States v. Microsoft (2001) decision, the Division alleges Google violated Section 2 of the Sherman Act by entering into these anticompetitive and exclusionary distribution agreements.

A bipartisan group of 14 states are co-plaintiffs with the Division. An additional 38 states and territories, led by Colorado and Nebraska, filed suit against Google on December 17, 2020, incorporating the Division’s allegations and adding certain additional claims. The two complaints have been consolidated for pretrial proceedings in federal court in Washington, D.C. Discovery is ongoing and trial is scheduled for September 2023.