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Article: June 2016: Antitrust Litigation Update

June 01, 2016
Business Litigation Reports

DOJ Antitrust Division Annual Update. On April 8, 2016, the Antitrust Division of the United States Department of Justice issued its 2016 Spring Update. The update highlights recent developments and trends in the Division’s enforcement activities, and shows that the Division has continued to take a more active enforcement approach, including through litigation and trial.

Enforcement Statistics. The Division reported its enforcement statistics. In its 2015 fiscal year, the Division filed 60 criminal cases, charged 66 individuals and 20 corporations, and obtained $3.6 billion in criminal fines and penalties. These numbers reflect a 33% increase in the filing of criminal cases and a 50% increase in the charging of individuals from the prior fiscal year. The amount of criminal fines and penalties was a new record. This increase in enforcement activity parallels the increased focus on enforcement against individuals, as directed in the memorandum issued by Deputy Attorney General Sally Yates on September 9, 2015.

Trial Activity. The Division highlighted the successful conclusion of its litigation against Apple for orchestrating a per se illegal conspiracy of five of the largest publishers to raise the price of e-books. In June 2015, the Second Circuit upheld the Division’s trial victory against Apple, and in March 2016, the Supreme Court denied Apple’s petition for writ of certiorari. The denial of Apple’s petition triggered its obligation to pay $400 million to consumers under its settlements with state attorneys general and private class plaintiffs. The publishers had elected to settle for $166 million before trial, but Apple had chosen to proceed alone. These results demonstrates the Division’s willingness and ability to pursue its enforcement activities through trial and appeal.

The Division also highlighted its successful effort through trial to prevent the merger of the appliance businesses of General Electric and Electrolux. In July 2015, the Division filed a lawsuit to block the merger, and in December 2015, four weeks after the start of the trial and one day before the close of evidence, General Electric exercised its option to abandon the merger and to pay a termination fee of $175 million. This victory followed the Division’s successful efforts to prevent other significant mergers, including the mergers of Comcast and Time Warner, Applied Materials and Tokyo Electron, and Chicken of the Sea and Bumble Bee.

Litigation Activity. The Division also highlighted other litigation successes. On March 16, 2016, Tribune Publishing, publisher of the Los Angeles Times, won the bankruptcy court auction to purchase Freedom Communications, publisher of the Orange County Register and the Riverside Press-Enterprise. The sale was to be approved by the bankruptcy court on March 21. On March 17, the Division filed a complaint, and the next day, it filed a fully briefed request for a temporary restraining order (“TRO”) blocking the purchase. The request was granted that evening. On March 19, Freedom Communications recommended an alternative purchaser, and on March 21, the bankruptcy court approved the sale to that purchaser. This result demonstrates the Division’s willingness and ability to marshal and mobilize rapidly the resources necessary to pursue a TRO.

In addition, on November 15, 2015, the Division filed a lawsuit to block United Airline’s acquisition of 24 takeoff and landing spots at Newark Liberty International Airport from Delta Air Lines. In April 2016, after several months of litigation, United Airlines abandoned the acquisition.

Cartel Enforcement. The Division continued its cartel enforcement activities in cooperation with foreign agencies around the world. In 2015, the Division continued its investigation into unlawful bid rigging and price fixing conspiracies in the ocean shipping industry. The ongoing investigation has resulted in the charging of seven individuals and three companies and $136 million in criminal fines. In cooperation with enforcement agencies in more than ten jurisdictions including Australia, Brazil, Switzerland, and the UK, the Division also continued its investigation into unlawful collusive activity targeted at manipulating the foreign currency exchange spot market. Four of the largest financial institutions have agreed to parent- level guilty pleas to felony price-fixing charges and to approximately $2.5 billion in criminal fines, including three of the highest criminal fines for a violation of the Sherman Act.

Conclusion. As shown by its 2016 Spring Update, the Division has continued to pursue a more active enforcement approach, which has resulted in litigation and trial against the Division. This approach also may result in an increase in investigations and actions by foreign and state enforcement agencies. It may also lead to class and direct actions by private plaintiffs following the Division’s investigations, and may provide additional relief to the remedies pursued by the Division. This more active enforcement approach confirms the need for the retention of counsel experienced with litigation and trial, as well as investigation, in the event of a potential antitrust violation.