Antitrust Division Update _Spring 2009_

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Antitrust Division Update _Spring 2009_ Powered By Docstoc
					                                                                     and libraries, supplies and serv-        charges against four foreign manufacturers,      between six and nine months in prison and                                             of more than $1 billion have been imposed in
                                                                     ices for military troops in Iraq         one U.S. subsidiary of one of the manufac-       pay fines ranging from $20,000 to $50,000.                                            the investigation, and three executives have
                                                                     and Afghanistan, hurricane               turers, and seven foreign executives to date.    Also in February 2009, two former Chunghwa                                            been sentenced to serve jail time. Since
                                                                     remedial work, and power gen-            These price-fixing conspiracies harmed the       executives and one former LG executive                                                March 2008, Japan Airlines International Co.
                                                                     eration. At the close of fiscal          countless American consumers who use             were indicted for fixing prices of TFT-LCD                                            Ltd.; Martinair Holland N.V.; Cathay Pacific
                                                                     year 2008, the Division had 137          computers, cell phones, and other house-         panels from 2001 until December 2006.                                                 Airways Limited; SAS Cargo Group A/S;
                                                                     pending grand jury investiga-            hold electronics containing TFT-LCD panels
                                                                     tions, the greatest number of            every day. The conspiracies are among the        Cathode Ray Tubes                                                                            continued on page 2 column 1, bottom
                                                                     pending grand jury investiga-            largest and most far-reaching the Antitrust
                                                                     tions since 1992. The Division           Division has ever detected—the worldwide             The Division recently brought                                                                       Criminal Antitrust Fines
                                                                     obtained more than $700 million          market for TFT-LCD panels in 2006 was            its first charges in its ongoing
                                                                                                                                                               investigation of collusion in the                                                                                  (2000-2009)
                                                                     in fines in fiscal year 2008, then       approximately $70 billion.                                                                                                800
                                                                     the second highest amount of                                                              cathode ray tube industry. On Feb.
                                                                     fines obtained by the Division in             In December 2008, LG Display Co. Ltd.       10, 2009, a federal grand jury in
                                                                     a single year. However, the Div-         (LG) of South Korea and its California sub-      San Francisco returned a two-                                                                                                     $701
                                                                     ision surpassed that record in           sidiary LG Display America Inc. pleaded          count indictment against the for-
                                                                     just the fourth month of fiscal          guilty to fixing prices of TFT-LCD panels and    mer Chairman and Chief Executive                                                                Fines                      $630
                                                                     year 2009, and its fine total for fis-   were sentenced to pay a $400 million crimi-      Officer of Chunghwa Picture
                                                                                                                                                               Tubes Ltd. for his participation in                                      600
                                                                     cal year 2009 already exceeds            nal fine—the second largest fine in Antitrust
                                                                     $745 million. The Division main-         Division history. In January 2009, Taiwanese     global conspiracies to fix prices of
Scott D. Hammond, Acting Assistant Attorney General, moder-                                                                                                    two types of cathode ray tubes—
                                                                     tained a high average prison             manufacturer Chunghwa Picture Tubes Ltd.

                                                                                                                                                                                                          Fines in Millions (Dollars)
ating the Cartel Working Group panel at the International                                                                                                      color display tubes used in com-                                         500
                                                                     sentence of 25 months for fiscal         (Chunghwa) pleaded guilty to participating                                                                                                                           $473
Competition Network Conference in Kyoto, Japan in April 2008.                                                                                                  puter monitors and other special-
                                                                     year 2008 and achieved a record          in the same conspiracy and was sentenced
                                                        average jail sentence for foreign nationals           to pay a $65 million fine. In December 2008,     ized applications and also color
CRIMINAL ENFORCEMENT:                                   of 18 months. In November 2008, the                   Japanese manufacturer Sharp Corp. plead-         picture tubes used in television                                         400
                                                                                                                                                               sets. The worldwide market for
ANOTHER BUSY YEAR                                       Division issued revised model leniency let-           ed guilty to participating in three separate
                                                                                                                                                               cathode ray tubes, including color
                                                                                                                                                                                                                                                                       $350 $338
                                                        ters and the policy paper “Frequently Asked           conspiracies to fix prices of TFT-LCD panels
     The Division’s Criminal Enforcement                Questions (FAQs) Regarding the Antitrust              sold to Dell Inc., Apple Computer Inc., and      display tubes and color picture                                          300          $280
Program maintained a vigorous docket over               Division’s Leniency Program and Model                 Motorola Inc., and it was sentenced to pay a     tubes, in 1997, at the start of the
the last year. In fiscal year 2008, the Division        Leniency Letters” and created a leniency              $120 million fine. In March 2009, the Division   conspiracies, has been estimated
filed 54 cases against 59 individuals and 25            page on its website, containing the FAQs,             charged Japanese manufacturer Hitachi            as approximately $26 billion.                                            200
companies, the highest year-end case total              other leniency policy speeches, the corpo-            Displays Ltd. with fixing prices of TFT-LCD                                                                                     $152
since 2000. The Division prosecuted price               rate and individual leniency polices, model           panels sold to Dell for use in desktop moni-     Air Transportation
fixing, bid rigging, market and customer allo-          leniency letters, and leniency application            tors and notebook computers. Hitachi has                                                                       $75        100
cations, and other fraudulent, anticompeti-             information.                                          agreed to plead guilty and pay a $31 million          The Division continues its pro-
tive schemes in a multitude of industries                                                                     fine. In January 2009, the former Chairman       secution of price-fixing conspira-
affecting the daily lives of consumers and              Liquid Crystal Display Panels                         and CEO of Chunghwa, two other Chunghwa          cies in the air transportation indus-
taxpayers. Affected products and industries                                                                   executives, and an LG executive were             tries. A total of 12 companies and                  2000 2001 2002 2003 2004 2005                                   2006 2007 2008 2009*
include household and personal electronics,                  The Division’s ongoing investigation into        charged with fixing prices of TFT-LCD pan-       three individuals have now plead-                                       Fiscal Year
                                                                                                                                                                                                      * As of 3/13/09
air transportation, the oil industry, communi-          price fixing of thin film transistor-liquid crys-     els. In February 2009, the executives entered    ed guilty to participating in these
cations technology in disadvantaged schools             tal display (TFT-LCD) panels has resulted in          guilty pleas and were sentenced to serve         conspiracies. To date, criminal fines Source: DOJ Antitrust Division

                                                     SIGNIFICANT EVENTS 2008-2009                                                                              MEET WILLIAM D. DIL-
                                                                                                                                                               LON & DEANA L. TIM-
       Division obtains 90-month prison                      Department of Justice issues                     LG Display Co. Ltd., Sharp Corp.,                BERLAKE-WILEY,
       sentence against former consultant                    report concerning monopolization                 and Chunghwa Picture Tubes Ltd.                  ATTORNEY GENERAL
       convicted at trial for rigging bids and               entitled Competition and Monopoly:               plead guilty and are fined a total of
       defrauding federal program provid-                                                                     $585 million for role in conspiracies            AWARD RECIPIENTS
                                                             Single-Firm Conduct Under Section
       ing Internet funding for schools.                     2 of the Sherman Act. (September                 to fix prices of LCD panels. LG’s $400                William D. Dillon and Deana
       (March 2008)                                          2008)                                            million fine is the second highest               L. Timberlake-Wiley, trial attor-
                                                                                                              fine ever obtained by the Division.              neys, are two members of the
       Division sues Consolidated Multiple                   Division sues JBS S.A. and Na-                   (December 2008 & January 2009)                   outstanding and dedicated
       Listing Service of Columbia, South                                                                                                                      group of attorneys, paralegals,
                                                             tional Beef Packing Company LLC,                                                                  and administrative staff in the Div-
       Carolina, challenging rules restrict-                 challenging proposed merger of                   Division obtains 48-month sen-                   ision’s Atlanta Field Office. Dillon
       ing competition among real estate                     the nation’s third and fourth largest            tence against former executive for               joined the Division in 1988
       brokers. (May 2008)                                   beef packers. The transaction is                 role in conspiracy involving coastal             through the Department’s Honors
                                                             subsequently abandoned. (October                 water shipping between the conti-                Program. Timberlake-Wiley joined
       Division eliminates restrictions im-                  2008)                                            nental United States and Puerto                  the Division in 1997 as a lateral
       peding Internet-based real estate                                                                      Rico, marking the longest sentence               attorney from private prac-
       brokers from competing with tradi-                                                                                                                      tice. Since joining the Division,
                                                             Division obtains consent decree                  ever imposed for a single antitrust              both Dillon and Timberlake-Wiley
       tional brokers through settlement of                  requiring divestiture of assets in 22            charge. (January 2009)                           have worked on numerous high
       its action, originally filed in Sept-                 states to resolve competitive con-                                                                profile criminal investigations
       ember 2005, against the National                      cern arising from merger of Veri-                Division obtains more than $2 mil-               with outstanding results. In par-
       Association of Realtors. (May 2008)                   zon Communications Corp. and                     lion from AT&T Inc. as part of civil             ticular, Dillon led the investiga-
                                                             Alltel Corp. (October 2008)                      settlement resolving Division’s                  tion and prosecution of corpora-
       Court denies motion to dismiss,                                                                        claim that AT&T was in contempt                  tions and their executives for bid
       allowing Division suit challenging                    After Division states that it will                                                                rigging on U.S. AID-funded con- Trial attorneys William D. Dillon and Deana L. Timberlake-Wiley
                                                                                                              of a hold-separate order requiring               tracts to construct wastewater from the Atlanta Field Office.
       transactions combining the owner-                     challenge advertising agreement                  AT&T to operate businesses sepa-                 treatment plants in Cairo, Egypt.
       ship of two Charleston, West Vir-                     between Yahoo! Inc. and Google                   rately and independently before                  The investigation resulted in the government      Jack W. Swan, Director for JCESD; Clarence
       ginia newspapers to proceed. (June                    Inc., the agreement is abandoned.                their divestiture. (January 2009)                obtaining criminal fines of more than $141 mil-   R. Barber, Sewer Construction and Mainten-
       2008)                                                 (November 2008)                                                                                   lion and restitution of more than $13.7 million.  ance Supervisor for JCESD; and their associ-
                                                                                                              Retired U.S. Army Major pleads                   Timberlake-Wiley led the investigation and        ates. The bribery scheme cost the taxpayers
       Air France and KLM Royal Dutch                        Department of Justice issues report              guilty to bribery and making a false             prosecution of numerous individuals for rig-      of Jefferson County tens of millions of dollars
       Airlines (which operate under com-                                                                                                                      ging bids at real estate foreclosure auctions     in losses due to fraud, overcharges, and mis-
                                                             concerning telecommunications                    statement, marking latest plea in                in Northern Virginia and the surrounding          appropriated resources.
       mon ownership) plead guilty for role                  industry entitled Voice, Video and               Division’s ongoing investigation of              area, which resulted in significant criminal
       in conspiracy to fix prices in the air                Broadband: The Changing Compet-                  procurement fraud undermining                    penalties.                                             The team was responsible for the suc-
       transportation industry and are                       itive Landscape and Its Impact on                military efforts in Iraq and Afghan-                                                               cessful prosecution and conviction of 21
       fined $350 million, the third highest                 Consumers. (November 2008)                       istan. Through February 2009, a                       The most recent highlight of their careers   defendants—seven Jefferson County, Ala-
       fine ever obtained by the Division.                                                                    total of 21 individuals and six                  as criminal litigators involved their role in the bama officials, nine individual contractors,
       (July 2008)                                           Division issues revised model leni-                                                               investigation and prosecutions in the Div-        and five firms. Defendants were charged
                                                                                                              companies have been charged.                     ision’s Alabama Sewer Rehabilitation investi-     with multiple counts of conspiracy to commit
                                                             ency letters and Frequently Asked                (January 2009)                                                                                     bribery, bribery, honest services mail fraud,
       Division files its first charges in its                                                                                                                 gation, in which Dillon served as the lead
                                                             Questions Regarding the Antitrust                                                                 attorney. This dynamic team joined forces in      and obstruction of justice.
       ongoing investigation of fraudulent                   Division’s Leniency Program and                  Three residents of Taiwan and one                the fall of 2005, returning a 127-count indict-
       schemes involving rigging bids and                    Model Leniency Letters. (November                Korean plead guilty for role in glob-            ment to prosecute public officials and con-            Dillon and Timberlake-Wiley resolved
       defrauding the EPA by inflating                       2008)                                            al conspiracy to fix prices of LCD               tractors in a very complex and significant        cases against seven of the 21 defendants by
       invoices to cover kickbacks at two                                                                     panels, marking the first residents              public corruption case in the Northern            plea agreement, and obtained convictions
       New Jersey Superfund sites; to                        Division obtains consent decree                                                                   District of Alabama involving the Jefferson       against the other 14 defendants in five sepa-
                                                                                                              of Taiwan to agree to U.S. impris-               County, Alabama Environmental Services            rate trials over a nine-month period. The sen-
       date, eight defendants have pleaded                   requiring divestiture of 61 branch               onment for an antitrust offense.                                                                   tencings of the 21 defendants resulted in
                                                                                                                                                               Department (JCESD) and its award of sewer
       guilty. (July 2008)                                   banking offices to resolve compet-               (February 2009)                                  rehabilitation contracts for the county.          more than $45.7 million in criminal fines, a
                                                             itive concerns arising from merger                                                                Specifically, Dillon and Timberlake-Wiley         total of 16,375 jail days, and more than $2.3
       Former purchasing assistant at the                    of PNC Financial Services Group Inc.             Three more airlines plead guilty                 helped uncover evidence that sewer rehabil-       million in restitution to Jefferson County.
       New York Power Authority, a non-                      and National City Corp. (December 2008)          and are fined for role in conspiracy             itation contractors and engineering firms
       profit energy corporation providing                                                                    to fix prices in the air transporta-             sought to subvert the competitive bid process          As a result of their outstanding work on
       low-cost power to government agen-                    Division sues Microsemi Corp., chal-                                                              by making more than $1 million in bribes to       this investigation, Dillon and Timberlake-
                                                                                                              tion industry, the Division’s ongo-              corrupt Jefferson County officials responsi-      Wiley received the Assistant Attorney
       cies, municipalities, and private enti-               lenging its acquisition of Semicoa               ing investigation of which, through              ble for oversight of the county’s $3 billion      General’s Award in 2007 and the Attorney
       ties, pleads guilty to conspiring to                  Inc. assets and resulting harm to                February 2009, has resulted in                   sewer rehabilitation project in the form of       General’s Award for Distinguished Service in
       defraud the Authority in a bribery                    competition in development, manu-                guilty pleas from 12 airlines and                cash, gifts, or services to obtain contracts.     2008. In 2008, Dillon also received the
       scheme in which he accepted kick-                     facture, and sale of semiconductor               three individuals and more than                  The bribery scheme involved improprieties by      Division’s Hugh Morrison Award in recogni-
       back payments from a vendor.                          devices. (December 2008)                         $1.1 billion in fines. (February 2009)           Jewel “Chris” McNair, the Jefferson County        tion of his long-term achievement as an out-
       (August 2008)                                                                                                                                           Commissioner who had oversight of JCESD;          standing antitrust litigator.

                                                                                         devices used in military and space pro-                                                                                                                             section of industries. These industries includ-
     MERGER ENFORCEMENT                                                                  grams essential to the security of the                                                                                                                              ed, among others, real estate (where EAG is
         Hart-Scott-Rodino (HSR) filings were                                            United States. The transaction was not                                                                                                                              currently supporting litigation in Columbia,
     steady in the first six months of 2008 but                                          HSR-reportable.                                                                                                                                                     South Carolina), health insurance (where
     declined substantially during the second                                                                                                                                                                                                                EAG analysis supported remedying the com-
     half of 2008 and the first quarter of 2009.                                             In its complaint, the United States                                                                                                                             petitive effects of United HealthCare’s acqui-
     Since March 2008, the Division has filed                                            alleges that the acquisition eliminated com-                                                                                                                        sition of Sierra), the newsprint industry
     nine merger enforcement actions and the                                             petition and created a monopoly for small                                                                                                                           (where the Division succeeded in modifying
     parties restructured two additional trans-                                          signal transistors that meet stringent stan-                                                                                                                        through consent decree Abitibi’s merger with
     actions in response to Division investiga-                                          dards of the Department of Defense (DOD).                                                                                                                           Bowater), airlines (where the Division
     tions. Currently, the Division has two merg-                                        The United States also alleges that the                                                                                                                             reviewed the transaction between North-
     er cases in active litigation.                                                      acquisition reduced from three to two the                                                                                                                           west Airlines and Delta), and the beef pack-
                                                                                         number of likely competitors for ultrafast                                                                                                                          ing industry (which involved monopsony and
         The cases the Division brought illus-                                           recovery rectifier diodes that meet DOD                                                                                                                             monopoly issues arising in the context of
     trate the range of the Division’s enforce-                                          standards.                                                                                                                                                          JBS’s now-abandoned attempt to acquire
     ment decisions and their effect on impor-                                                                                                                                                                                                               National Beef Packing Co.). In addition, the
     tant areas of the United States economy.                                                Shortly after filing suit, the Division                                                                                                                         Division’s announced challenge to the agree-
                                                                                         sought preliminary relief to preserve the                                                                                                                           ment between Yahoo! and Google relied on
     JBS Proposed Acquisition of National                                                Semicoa assets pending a trial of the                                                                                                                               empirical and theoretical work by EAG econ-
     Beef Packing Co.                                                                    Division’s claims. On Dec. 24, 2008, Judge                                                                                                                          omists.
                                                                                         Anthony Trenga in the U.S. District Court in
         On Oct. 20, 2008, the United States filed                                       Alexandria, Virginia, entered an order                                                                                                                                    In the transaction between Abitibi and
     a case alleging that JBS S.A.’s proposed                                            requiring Microsemi to preserve and main-                                                                                                                           Bowater, the Division’s challenge implicated
     acquisition of National Beef Packing                                                tain the Semicoa assets pending the out-                                                                                                                            a number of subtle issues relating to strongly
     Company would likely lessen competition in                                          come of the litigation.                              The JBS/National Beef Packing Co. case team.
                                                                                                                                                                                                                                                             declining demand for newsprint, the ability of
     the purchase of fed cattle and in the sale of                                                                                                                                                                                                           the merging firms to restrict output unilateral-
     USDA-graded boxed beef to retailers.                                                Charleston Newspaper Litigation                                                                                                                                     ly as a consequence of the merger, and the
     Seventeen states joined the challenge to                                            Update                                             City Corp. had agreed to sell 61 of National      Communications Corp. to divest assets in 22                    adequacy of candidate divestitures for
     the transaction. The acquisition would have                                                                                            City’s branch banking offices in western          states to proceed with its $28 billion acqui-                  resolving competitive concerns. In response
     created the largest U.S. beef packer, with                                              On May 22, 2007, the United States filed       Pennsylvania, with deposits totaling approx-      sition of Alltel Corp. As originally proposed,                 to concerns raised during Tunney Act pro-
     an ability to slaughter more than 40,000                                            a complaint challenging the completed              imately $4.1 billion as of June 30, 2008, to      the transaction would have substantially                       ceedings about the adequacy of the pro-
     head of cattle per day (or more than one-                                           acquisition of two newspapers in Charles-          resolve competitive concerns about the            lessened competition to the detriment of                       posed relief obtained by the United States,
     third of U.S. fed cattle packing capacity)                                          ton, West Virginia. In its complaint, the          companies’ merger. In addition, the compa-        consumers of mobile wireless telecommu-                        the Division submitted and relied heavily
     and annual beef sales of more than $14 bil-                                         United States alleges that the owner of the        nies agreed to divest approximately half of       nications services and likely would result in                  upon an expert declaration prepared by
     lion. Four months after the action was filed,                                       Charleston Gazette purchased the Daily             National City’s lending and related business      higher prices, lower quality, and reduced                      EAG’s staff economist on the matter, Nicholas
     the parties announced the abandonment of                                            Mail, which had been owned by its partner          with middle market customers—generally,           network investments. The divestitures                          Hill. In November, the court entered the pro-
     the transaction.                                                                    in a joint operating agreement (JOA), with         businesses with lending needs of more than        cover the entire states of North Dakota and                    posed consent decree, agreeing with the
                                                                                         the purpose and intent to shut the Daily           $1 million—in the Pittsburgh area, and virtu-     South Dakota; large portions of the states of                  Division that the settlement was indeed in the
          In its complaint, the United States                                            Mail down and only suspended its plan              ally all National City’s middle-market busi-      Colorado, Georgia, Kansas, Montana, South                      public interest.
     alleged that JBS’s acquisition of National                                          when the Division opened an investigation          ness in the Erie area.                            Carolina, Utah, and Wyoming; and portions
     would have substantially restructured the                                           into the acquisition.                                                                                of the states of Alabama, Arizona,                                  EAG’s work regarding United Health-
     beef packing industry, eliminating a com-                                                                                                  The proposed merger was subject to            California, Idaho, Illinois, Iowa, Minnesota,                  Care’s acquisition of Sierra addressed several
     petitively significant packer, and placing                                              In July 2007, defendants moved to dis-         the final approval of the Board of                Nebraska, Nevada, New Mexico, North                            key economic issues in the increasingly
     more than 80 percent of domestic fed cattle                                         miss the complaint, arguing that the               Governors of the Federal Reserve System.          Carolina, Ohio, and Virginia.                                  important health care arena. These included
     packing capacity in the hands of three                                              Department’s claim failed to demonstrate a         The Division advised the Federal Reserve                                                                         the possibility of post-merger exercise of
     firms: JBS, Tyson Foods Inc., and Cargill                                           plausible right to relief because, among           Board that it would not challenge the merg-       ECONOMIC ANALYSIS GROUP                                        monopsony power, or exercise of market
     Inc. The transaction also would have elimi-                                         other things, the JOA had created an eco-          er provided that the agreed-upon divesti-                                                                        power, in the sale of commercial health insur-
     nated head-to-head competition between                                              nomically integrated joint venture in which        tures occurred and the parties’ commit-                This past year, the Division’s Economic                   ance to employers, as well as concern over
     JBS and National and made interdepend-                                              competition between the newspapers had             ments to the Division were included as a          Analysis Group (EAG) addressed a range of                      competition in the sale of Medicare Advan-
     ent or coordinated conduct among JBS and                                            ceased to exist and the Newspaper                  condition in the event the Federal Reserve        challenges while reviewing a number of                         tage plans to senior citizens in the Las Vegas
     the other two significant packers more like-                                        Preservation Act immunized the acquisition         Board enters an order allowing the trans-         unusually complex merger filings in a wide                     area. Regarding Medicare Advantage, EAG
     ly. The United States also alleged that the                                         from antitrust challenge. The court denied         action. Although the framework for the            variety of industries. The analyses employed                   identified significant benefits of competition
     proposed merger likely would have result-                                           the motion in June 2008. In denying the            Division’s review of bank mergers in con-         by its large staff of Ph.D. industrial organiza-               among incumbent Medicare Advantage
     ed in lower prices paid to cattle suppliers                                         motion, the court stated that genuine ques-        junction with Federal Reserve review              tion economists were critical to the Division’s                plans (notwithstanding the availability of con-
     and higher beef prices for consumers.                                               tions of fact existed as to whether all com-       allows for expedited review for transac-          evaluation and successful resolution of these                  ventional Medicare coverage) and devel-
                                                                                         petition between the newspapers had                tions involving financially troubled institu-     matters. EAG staff also engaged in a number                    oped persuasive evidence that entry would
     Microsemi                                                                           ceased under the JOA and whether                   tions, the review of the merger of PNC and        of activities in the area of competition advo-                 be unlikely to fully replace the loss in compe-
                                                                                         Newspaper Preservation Act immunity                National City did not implicate the expedit-      cacy, including engaging with and training                     tition for a considerable period of time. Other
          On Dec. 18, 2008, the Division filed a                                         extended to the acquisition.                       ed procedures.                                    staffs of numerous competition agencies from                   competitive concerns were eliminated after
     civil antitrust lawsuit against Microsemi                                                                                                                                                around the world.                                              careful examination of, among other things,
     Corp. alleging that its acquisition of                                              PNC and National City                              Verizon and Alltel                                                                                               shares of provider revenues, commercial
     Semicoa Inc. eliminated or reduced com-                                                                                                                                                       On the merger front, EAG’s talents in ana-                enrollment accounted for by the merging
     petition in the development, manufacture                                                On Dec. 11, 2008, the Division announced          In October 2008, the Division an-              lyzing competitive effects were exhibited in
     and sale of certain types of semiconductor                                          that PNC Financial Services and National           nounced that it would require Verizon             prominent investigations across a wide cross                               continued on page 3 column 1, top

                                               continued from page 1 column 5            including heavy equipment, medicine, food,         Peter Whittle, David Brammar, and Bryan           ed to his work as a contracting
                                                                                         and consumer goods, between the United                                                               officer at Camp Arifjan, Kuwait.
                                                                                                                                                                                                                                                               Percentage of Individual Defendants
                                                         Criminal Enforcement                                                               Allison, were also charged by the U.K.
                                                                                         States and Puerto Rico.                            Office of Fair Trading (OFT) under the U.K.       In December 2008, U.S. Army                                                         Sentenced to Jail
     Société Air France; KLM Royal Dutch                                                                                                    Enterprise Act for committing a cartel            Reserve Major Theresa Jeanne                                                                                87%
     Airlines; LAN Cargo S.A.; Aerolinhas                                                     In January 2009, one of the four, Peter       offense. These charges were the first cartel      Baker pleaded guilty to conspir-
     Brasileiras S.A.; El Al Israel Airlines Ltd.; and                                   Baci, was sentenced to serve 48 months in          charges brought by the OFT under the              acy and bribery charges related
     three executives of Qantas Airways Limited,                                         prison, which is the longest jail sentence         Enterprise Act. In June 2008, the Southwark       to her contracting work at Camp                    80%
     SAS, and British Airways have pleaded                                               ever imposed for a single antitrust count.         Crown Court in the United Kingdom sen-            Victory, Iraq. In August 2008,
     guilty to fixing air transportation rates.                                          The other defendants are awaiting sentenc-         tenced Whittle, Brammar, and Allison to           U.S. Army Major James Momon                                                              71%
     American businesses and consumers rely                                              ing. The Baci case represents the first time                                                                                                                          Percentage
                                                                                                                                            terms of imprisonment of 36, 30, and 36           Jr. pleaded guilty to bribery and                                                               67%
     on the air transportation industry to provide                                       that an individual has been sentenced to           months, respectively. In November 2008, the       conspiracy in connection with
     the products they buy, sell, and use every                                          more than three years for a single antitrust       U.K. Court of Appeal reduced the sentences        his contracting work at Camp                                                                                      63%
     day. Price fixing in the air transportation                                         charge since Congress raised the maximum           to the terms recommended in the plea              Arifjan. In June 2008, retired                     60%
     industry affected billions of dollars of goods                                      sentence for antitrust crimes from three           agreements the defendants had entered             U.S. Army Colonel Levonda J.
     shipped by air transportation, including pro-                                       years imprisonment to 10 years imprison-           with the Antitrust Division, 30 months for        Selph pleaded guilty to bribery                                             53%
     duce, clothing, electronics, and medicine.                                          ment in June 2004. A fifth executive has           Whittle, 20 months for Brammar, and 24            and conspiracy relating to her                                                     50%

                                                                                         been charged with, and has pleaded guilty          months for Allison.                               contracting work at Camp                                             46%
     Coastal Shipping                                                                    to, obstruction of justice in the investigation.                                                     Victory. Defense contractor
                                                                                                                                            E-Rate                                            Raman International Inc. also
          In 2008, the Division charged four ship-                                       Marine Hose                                                                                          pleaded guilty in June 2008 to                           37%
     ping executives with allocating customers,                                                                                                  The Division continues to prosecute bid      conspiracy to commit bribery
     rigging bids, and fixing prices for coastal                                               The Division’s investigation of collusion    rigging, bribery, and fraud in the federal E-     related to Camp Victory con-
     shipping services between the United                                                  in the marine hose industry continues.           Rate program. Congress created the E-Rate         tracts. Also, in June 2008, the
     States and Puerto Rico. All have pleaded                                              Marine hose is used to transfer oil between      program to help economically disadvan-            Division unsealed a plea agree-
     guilty to the charges. Sales of freight servic-                                       tankers and storage facilities and is pur-       taged schools and libraries obtain computer       ment with U.S. Army Major John
     es in the United States to Puerto Rico ship-                                          chased by Shell, Exxon, Chevron, and other       and telecommunications services. The Div-         Cockerham, a former contract-                      20%
     ping lane total hundreds of millions of dol-                                          companies that are involved in the offshore      ision has helped to uncover massive fraud         ing officer at Camp Arifjan,
     lars every year, as ocean shipping is a pri-                                          extraction and transportation of petroleum       in this program, and as a result of this inves-   under which Cockerham had
     mary way for people in Puerto Rico to                                                 products. It is also purchased and used by       tigation, a total of seven companies and 17       pleaded guilty to bribery, con-
     receive essential goods. The defendants’                                              the Department of Defense. During the            individuals have pleaded guilty or have           spiring to launder money, and
     employers shipped a variety of goods,                                                 conspiracy, the conspirators sold hun-           been convicted or entered civil settlements       conspiring to defraud the United
                                                                                                     dreds of millions of dollars worth     and have paid, agreed to pay, or been sen-        States and to commit bribery.
                                                                                                                                            tenced to pay fines and restitution totaling                                                          0%
                                                                                                     of marine hose and related prod-                                                         Cockerham’s wife also pleaded
                                                                    Incarceration Trends             ucts in the United States and          more than $43 million. More than 35 years of
                                                                                                                                                                                                                                                       1990's 2000 2001 2002
                                                                                                                                                                                                                                                                                 2003 2004    2005 2006   2007 2008
                                                                                                                                                                                              guilty to conspiring to launder                                                   Fiscal Year
                                        35                                                           elsewhere. To date, the Division       prison time have been imposed on defen-           money.
                                                                                                     has charged 12 individuals and         dants in this investigation, including a seven
                                                                                                                                                                                                                                   Source: DOJ Antitrust Division
                                                      Months                                         two companies with fixing prices,      and one-half year sentence against Judy N.
                                                                                        31                                                  Green, a former California education con-
                                                                                                     rigging bids, and allocating mar-                                                             In April 2008, the Division unsealed an                   Bagram Airfield, and Air Force Tech. Sgt.
                                        30                                                                                                  sultant, who was convicted after trial in         indictment against a Canadian night vision
                                                                                                     ket shares for sales of marine                                                                                                                          Patrick Boyd, a contracting officer at the
                                                                                                     hose. The companies charged,           September 2007; a five year sentence              goggles manufacturing firm and two of its
                                                                                                                                            against R. Clay Harris, the former president                                                                     base, were indicted for receiving tens of
                                                                                                     Dunlop Oil & Marine Ltd. and                                                             executives for a scheme to defraud the U.S.                    thousands of dollars for the award of more
                                                                                             25      Manuli Rubber Industries SpA,          and majority owner of an Atlanta communi-         Army in the supply of equipment for the
                                        25                                                                                                  cations vendor, who was convicted after                                                                          than $1 million in construction contracts to
                                                                              24                     have been sentenced to pay                                                               Iraqi Army. The indictment charged each                        two Afghanistan companies. Four DOD
      Average Jail Sentence in Months

                                                                                                                                            trial in July 2008; a two year sentence           defendant with wire fraud and conspiracy
                                                                                                     fines totaling $6.54 million. Nine                                                                                                                      contractors and the two Afghanistan con-
                                                                                                                                            against Cynthia K. Ayer, a former South           to commit wire fraud and charged the firm
                                                                                                     individuals have pleaded guilty        Carolina school technology director; and a                                                                       tracting companies were also named in the
                                        20                                                           and been sentenced to serve a                                                            and one of the executives with money laun-                     indictment.
                                                                                                                                            one and a half year sentence against              dering. Regional police in Canada arrested
                                                              18                                     total of 12.5 years in prison in       George Marchelos, a former school con-
                                                                                                     this investigation, two were                                                             the two executives in April 2008. According                         In 2008 and early 2009, the Division
                                                                                                                                            sultant and a sales representative for a          to the indictment, the defendants agreed to
                                                                                                     acquitted at trial in November         New Hampshire communications company.                                                                            charged five individuals and three corpora-
                                                         15                                                                                                                                   pay, and made an initial payment to, a com-
                                        15                                                           2008, and one individual is await-                                                                                                                      tions with participating in fraudulent
                                                                                                     ing trial. One of the individuals,                                                       petitor to withdraw from supplying a U.S.                      schemes at two New Jersey Superfund
                                                                                                                                            Procurement Fraud                                 Army unit with night vision goggles so that
                                                                         12                          Misao Hioki, was charged with the                                                                                                                       sites, the Federal Creosote site, located in
                                                                                                     Sherman Act conspiracy and also                                                          the defendants could supply the goggles at                     Manville, and the Diamond Alkali site, locat-
                                                     10                                                                                         The Division continues to play an active
                                        10                                         9                 with conspiring to make corrupt                                                          a substantially inflated price. The Army unit                  ed in Newark. The defendants were
                                                                                                                                            role on the Department’s National Procure-
                                               8                                                     payments to foreign officials to                                                         was responsible for training and equipping                     charged with rigging bids and defrauding
                                                                                                                                            ment Fraud Task Force. To date, the Division
                                                                                                     secure business for Hioki’s                                                              the Iraqi Army. The alleged scheme could                       the Environmental Protection Agency by
                                                                                                                                            has charged a total of 21 individuals and six
                                                                                                     employer and its U.S. subsidiary                                                         have resulted in an overcharge to the U.S.                     inflating invoices to cover kickbacks total-
                                                                                                                                            companies in its War Zone investigations. In
                                        5                                                            in violation of the Foreign Corrupt                                                      military of approximately $11 million.                         ing more than $1.5 million relating to at
                                                                                                                                            2008 and early 2009, the Division obtained
                                                                                                     Practices Act. Hioki pleaded guilty    guilty pleas from several army officers                                                                          least $27 million worth of sub-contracts for
                                                                                                     to the charges and was sen-                                                                  In August 2008, the Division indicted                      supplies and services at the sites. Some
                                                                                                                                            charged with various anticompetitive, brib-
                                                                                                     tenced to serve two years in                                                             two U.S. military personnel on charges of                      defendants were also charged with tax
                                        0                                                                                                   ery related schemes involving the award of
                                                                                                     prison and to pay an $80,000 fine.                                                       bribery and conspiracy relating to the                         offenses related to the kickback scheme. All
                                             1990's 2000 2001 2002 2003 2004 2005 2006 2007 2008                                            contracts in support of the Iraq war. In
                                             avg.                                                                                                                                             award of construction contracts in Afghan-                     charged defendants have pleaded guilty
                                                                 Fiscal Year                                                                January 2009, retired U.S. Army Major
                                                                                                       Three of the individual defen-                                                         istan. U.S. Army Major Christopher West,                       and have been, or are currently waiting to
                                                                                                                                            Christopher H. Murray pleaded guilty to
                                                                                                    dants charged by the Division,                                                            the former head of base operations at                          be, sentenced.
                                                                                                                                            bribery and making a false statement relat-
     Source: DOJ Antitrust Division                                                                                                                                                                                                                                      continued on page 3 column 2, top
           continued from page 2 column 5                              continued from page 2 column 5
                                                                                                                   ANTITRUST DIVISION CONTINUES
                  Economic Analysis Group                                          Criminal Enforcement
                                                                                                                   AWARD-WINNING PRO BONO                                                                          Average Prison Imposed on Foreign Defendants in
    firms, and the competitive significance                    The Division also has an active role in             PROGRAM                                                                                                                International Cartel Cases*
    of alternatives. EAG’s findings received              prosecuting procurement fraud through                                                                                                              20
    support late last year when, following                the Hurricane Katrina Fraud Task Force. In                   Antitrust Division personnel continued                                                                                                                                    18

                                                                                                                                                                           Average Jail Sentence in Months
    Tunney Act proceedings, the relief                    May 2008, a former contract employee of                  the Division’s long tradition of active pro bono
    obtained by the Division was found to                 the U.S. Army Corps of Engineers and a                   participation this last year.
    be in the public interest.                            dirt, sand, and gravel subcontractor were                                                                                                          15
                                                          indicted on charges of bribery and con-                      Particularly noteworthy were their efforts
         Finally, in the transaction between              spiracy to commit bribery in connection                  in staffing the D.C. Bar’s monthly Saturday                                                                                                                           12
    Northwest and Delta, key issues                       with a $16 million hurricane protection                  morning Pro Bono Advice & Referral Clinic.
    included whether the airlines con-                    project for the reconstruction of the Lake Cat-          Volunteers at the Advice & Referral Clinic
                                                                                                                   assist low-income individuals by assessing                                                10
    strained one another’s pricing and                    aouatche Levee, south of New Orleans.
                                                                                                                   their legal claims and giving general informa-
    whether a merger would permit the                     Trial is scheduled for early spring.
                                                                                                                   tion and advice on a wide range of civil mat-                                                                                                               6.9
    parties to achieve cognizable efficien-
    cies. As to the former, extensive cross-              New York Power Authority                                 ters. This clinic serves around 1,000 clients a                                                                                4.5                 4.6
    section empirical analysis determined                                                                          year, most of whom have nowhere else to                                                   5
    that any competitive constraints im-                      In August 2008, Edward P. Goldblatt, a               turn for legal help.                                                                               3         3       3.3                  3
    posed by one upon the other were quite                former purchasing assistant at the New
    limited and applied to only a fraction of             York Power Authority (NYPA), pleaded                          The Antitrust Division has been responsi-
    the firms’ far-flung operations. As to                guilty to conspiring to defraud the author-              ble for staffing the clinic on a quarterly basis                                          0
    efficiencies, EAG economists made                     ity in a bribery scheme in which he                      for the last 10 years. It is the only Justice                                                   2000      2001      2002      2003      2004     2005      2006      2007    2008
    use of the parties’ own internal com-                 accepted kickback payments from a ven-                   Department component to undertake this
    puter models while conducting an                      dor and caused the authority to pay over-                commitment. In addition, the Antitrust Division                                                                                      Fiscal Year
    independent assessment of the poten-                  charges that included a portion of the                   on several occasions has lent a hand to other                                                  * Includes defendants charged with 15 USC §1 and/or obstruction offenses
    tial efficiencies of the transaction, ulti-           value of the kickbacks. Goldblatt also                   federal agencies considering making such a
    mately concluding that cognizable effi-               pleaded guilty to tax evasion for not                    commitment.                                          Source: DOJ Antitrust Division
    ciencies were plausible and sufficient.               reporting the kickback payments. He was
                                                          sentenced to 37 months in jail and ordered                    There are several other pro bono clinics
         In addition to its work in the merg-             to pay, with another individual, $253,836 in             in the D.C. area that Division personnel also        Brief Advice Legal Clinic, which assists small,                                      nary. On their own time, these individuals
    er arena and as part of its increasing                restitution. The NYPA is a non-profit ener-              help to staff on their own time. One of those is     disadvantaged community entrepreneurs                                                spearheaded efforts to recruit volunteers and
    efforts in the area of competition advo-              gy corporation that provides low-cost                    the Employment Justice Center Workers’               regarding general legal questions they may                                           find appropriate pro bono opportunities in the
    cacy, EAG organized a workshop on                     power to government agencies, munici-                    Rights Clinic, which assists low-income resi-        have about their businesses. A third example                                         Chicago area for federal employees. This
    airline economics to mark the 30th                    palities, and private entities.                          dents with employment issues. Another is the         is the Domestic Violence Pro Se Clinic, a walk-                                      included recruiting, screening, and selecting
    anniversary of the Airline Deregulation                                                                        D.C. Bar Pro Bono Program’s Small Business           in clinic for pro se victims of domestic violence.                                   possible Chicago legal services organizations,
    Act. At the workshop, which was                                                                                                                                                                                                                          as well as planning and organizing the event
    attended by a number of academic                                                                                                                                         Just as importantly, Division lawyers and                                       that launched the program. Because of their
    experts and trade industry experts,                                                                                                                                 support personnel continue frequently to pro-                                        effort, federal lawyers and support personnel
    EAG staff members presented two                                                                                                                                     vide assistance, primarily through the D.C. Bar                                      in Chicago are now volunteering their time to
    papers dealing with the thorny issue of                                                                                                                             Pro Bono Case Clinic, to pro bono clients in                                         organizations such as the Cabrini Green Legal
    entry into city-pair markets by firms                                                                                                                               their individual cases. For example, a Division                                      Aid Clinic and the Constitutional Rights
    with existing operations elsewhere and                                                                                                                              lawyer recently was co-counsel for a tenant in                                       Foundation. The Public Interest Law Initiative
    the competitive effects of a capacity                                                                                                                               a pro bono landlord-tenant eviction case in                                          in Chicago recently nominated the federal
    agreement among competitors in                                                                                                                                      which the tenant had withheld rent because                                           government’s Chicago program for the ABA
    Hawaii.                                                                                                                                                             her landlord had failed to make repairs to                                           Pro Bono Award. Furthermore, at the request
                                                                                                                                                                        numerous housing code violations. Similarly, a                                       of the Office of the Deputy Attorney General, a
         EAG staff regularly make formal                                                                                                                                Division paralegal recently assisted in a pro                                        Division lawyer participates as a federal gov-
    economic presentations at government                                                                                                                                bono case in which the client was suing to                                           ernment representative on the committee
    and academic conferences and partic-                                                                                                                                redress the wrongful garnishment of her bank                                         that serves as the pro bono information
    ipate in training activities for antitrust                                                                                                                          account. Those efforts are similar to those that                                     and resources clearinghouse and liaison for
    attorneys. EAG has also been actively                                                                                                                               led to Division lawyers James Yoon and Mark                                          the Chicago area.
    involved in the growing area of interna-                                                                                                                            Pletcher winning the Washington Council of
    tional antitrust cooperation and enforce-                                                                                                                           Lawyers’ Government Pro Bono Award in 2007                                               These efforts are a continuation of the
    ment, largely in the area of training                                                                                                                               and 2006, respectively. The Council noted                                            tradition of strong commitment to pro bono
    lawyers and economists at nascent                                                                                                                                   Yoon’s “dedicated support of the DOJ Pro                                             service that led to the Division winning the
    competition agencies around the world.                                                                                                                              Bono Program” and that Pletcher “serves as                                           Attorney General’s Community Service
    Its efforts this year included presenta-                                                                                                                            an example to all government attorneys.”                                             Award in 2007. It remains true now, as it was
    tions in China and Korea on the use of                                                                                                                                                                                                                   noted then, that the Division’s commitment to
    empirical tools in antitrust enforcement,                                                                                                                               Also noteworthy this last year were the                                          pro bono legal assistance and volunteerism is
    and the holding of a three-day work-                                                                                                                                efforts of personnel in the Division’s Chicago                                       due to the efforts of all Division employees
    shop for staff members at foreign                                                                                                                                   Field Office to launch a structured pro bono                                         who give generously of their talents and own
    competition agencies on the use of                    The LCD case team from the San Francisco Field Office. (L-R): Alexandra J. Shepard, David J. Ward, Niall E.
                                                                                                                                                                        effort outside of Washington D.C. Their com-                                         time to the community.
    economics in antitrust enforcement.                   Lynch, Michael L. Scott, Heather S. Tewksbury.
                                                                                                                                                                        mitment to starting the program was extraordi-

                                                           nology component manufacturing, Internet-                a wide range of high profile cases, including       work effects created by common owner-                                                     NTES has an active competition advocacy
NETWORKS AND TECHNOLOGY                                    related businesses, financial services and               in 2008, U.S. v. Thomson, a merger of the sec-      ship of an exchange can generate effi-                                               program. In the area of the unauthorized
ENFORCEMENT SECTION:                                       the securities industry. NTES has more                   ond-and third-largest financial data providers      ciencies, but they can also make it more                                             practice of law, NTES reviews proposed
ENFORCING THE ANTITRUST                                    than 40 highly skilled and dedicated pro-                in the world; in 2004, U.S. v. Oracle, a merger     difficult for potential exchange competitors                                         legislation and state supreme court rules
LAWS IN HIGH TECH AND                                      fessionals and support staff, including five             of two of the largest providers of high-func-       to enter the market. The Division ultimately                                         that would unnecessarily limit competition
                                                           attorneys with more than 30 years of                     tion financial management and human                 determined the transaction would not                                                 between lawyers and non-lawyers by
FINANCIAL INDUSTRIES                                       enforcement experience. The NTES team                    resource management software; and in 2003,          have anticompetitive effects based, in                                               defining certain services as the practice
   The Networks and Technology Enforce-                    brings together a unique combination of                  U.S. v. First Data, a merger of two of the          part, on its conclusion that the futures                                             of law. The Division has advocated that the
ment Section (NTES) is responsible for the                 attorneys with technical and industry                    nation’s largest PIN debit networks.                products offered by CME and CBOT were                                                definition of the practice of law should be
enforcement of the antitrust laws and                      expertise with a deep knowledge of com-                                                                      not close substitutes and neither firm was                                           limited to activities for which specialized
competition advocacy in the areas of com-                  puter and financial markets. Over the                         This past year, NTES handled a variety of      likely to introduce new products to com-                                             legal knowledge and training is demon-
puter hardware and software, high tech-                    years, NTES has investigated and litigated               merger and civil non-merger investigations          pete directly with the other’s established                                           strably necessary. In areas where legal
                                                                                                                    involving cutting edge technologies, includ-        products.                                                                            knowledge and training is not necessary,
                                                                                                                    ing the services agreement between Yahoo!                                                                                                such as real estate title searches, con-
                                                                                                                    and Google. Under the agreement, Google                  In addition to merger and civil non-merger                                      sumers may benefit from competition
                              COMPETITION ADVOCACY                                                                  would have placed sponsored search and              enforcement, NTES has put significant efforts                                        between lawyers and non-lawyers. The
                                AND TRANSPARENCY                                                                    contextual ads on Yahoo! search result              into assuring Microsoft’s compliance with                                            Division recently filed comments with the
                                                                                                                    pages and on the web pages of Yahoo! syndi-         the Department’s consent decree. The con-                                            New York State Assembly, Wisconsin Sup-
                                                                                                                    cation partners in the United States and            sent decree was the result of a settlement                                           reme Court, and Supreme Court of Hawaii
       The Division acts as a strong advocate for competition, seeking to promote competition in
                                                                                                                    Canada. A fundamental debate raised by the          negotiated after the Division proved that                                            advocating against proposals that would
  sectors of the economy (including, but not limited to, such major industries as telecommunica-
                                                                                                                    agreement was whether it should be viewed           Microsoft had a monopoly position in the                                             bar non-lawyers from providing these
  tions, transportation, and energy) subject to federal, state, and local government regulation. The
                                                                                                                    as a traditional “outsourcing” agreement            IBM-based PC operating system market and                                             types of services. NTES also periodically
  Division’s role in this area is relatively simple: to promote reliance on competition wherever
                                                                                                                    similar to the kinds of agreements Google had       that Microsoft unlawfully maintained that                                            provides competition advice to the Depart-
  appropriate and to ensure that any necessary regulation is well designed to achieve its objec-
                                                                                                                    with many other web publishers, or whether          monopoly by engaging in exclusionary con-                                            ment of Commerce in its oversight of the
  tives and disrupts market forces no more than necessary. Some of our recent efforts include the
                                                                                                                    it should be viewed as a horizontal agreement       duct to thwart threats to its operating system                                       Internet Corporation for Assigned Names
                                                                                                                    between competitors that would diminish             monopoly from middleware products such as                                            and Numbers (ICANN). ICANN is respon-
                                                                                                                    competition and lead to higher prices and           Internet browsers. The decree has effectively                                        sible for technical elements of the Internet
       Telecommunications: In November 2008, the Department of Justice published Voice, Video                       reduced innovation. The evidence developed          prevented Microsoft from continuing its anti-                                        domain name system and competition for
  and Broadband: The Changing Competitive Landscape and its Impact on Consumers. The report                         during the investigation led NTES to conclude       competitive practices and has restored the                                           generic top level domain name registra-
  addresses a number of issues that may affect consumers of telecommunications services and                         that, under the agreement, Google and               ability of software vendors to develop mid-                                          tions. On Dec. 3, 2008, the Division advised
  antitrust analysis in the industry. Chapter 1 provides an overview of developments in the three                   Yahoo! would have become collaborators              dleware products that might erode the domi-                                          Commerce to encourage ICANN to man-
  industry segments addressed at the symposium: video, telephony, and broadband. Chapter 2                          rather than competi-
  summarizes the evidence presented on the competitive effects of additional entry in the three                     tors. The agreement
  industry segments. The broad consensus was that competition provides consumers with signif-                       was abandoned after
  icantly more choice today than they had in the past—more providers, greater variety in video                      the Division informed
  entertainment, and a wider selection of devices to access the Internet. Chapter 3 discusses pos-                  the parties that it would
  sible obstacles to entry. Chapter 4 discusses the Department’s future competition advocacy and                    file suit to block imple-
  enforcement activities. The report stresses the importance of taking into account changing                        mentation of the agree-
  industry dynamics, relying on evidence of market conditions, and having reliable data and sophisti-               ment. This was a multi-
  cated economic frameworks to study the competitive conditions in this dynamic industry. The                       jurisdictional investi-
  Department remains committed to monitoring the industry vigilantly, investigating alleged                         gation; NTES attor-
  antitrust violations, and enforcing the antitrust laws against anticompetitive practices harming                  neys consulted closely
  consumers. The report is available at                         with the Canadian Com-
       Airline Industry: In October 2008, the Division hosted a workshop on recent developments                     petition Bureau and
  in airline antitrust and competition research to mark the 30th anniversary of airline deregulation                Attorneys General from
  in the United States. Topics addressed at the workshop included the pricing effects of airline                    15 states.
  antitrust immunity, airline pricing during and after bankruptcy, the price effect of eliminating
  potential competition, and regulatory reform in the airline industry. Workshop materials are                          NTES attorneys in-
  available at                                    vestigating financial
                                                                                                                    markets encountered
        Health Care: In the past year, the Division continued to provide advice to states on Certificate-of-        a variety of recurring
  Need (CON) laws. In September 2008, the Division and the Federal Trade Commission urged the Illinois              legal issues including
  Task Force on Health Planning Reform to consider seriously whether Illinois’s CON law does more                   network effects, two-
  harm than good, detailing how CON laws can impede the efficient performance of health care markets.               sided markets and ver-
                                                                                                                    tical integration. Ver-   The Networks and Technology Section.
  A copy of the letter is available at In June 2008,
  the Division recommended that Michigan reject proposed CON rules for a certain cancer therapy that                tical issues and net-
  likely would permit only a single facility, run by a majority of current competitors for radiation oncology       work effects were a central part of the          nance of Microsoft’s Windows operating                                                  age the introduction of new generic top
  services, in the state. A copy of that letter is available at                Division’s analysis of the Chicago Mer-          system. NTES staff has worked construc-                                                 level domains in a manner that safeguards
  ments/234407.htm.                                                                                                 cantile Exchange’s (CME) acquisition of          tively with European Commission (EC) staff,                                             the interests of domain name customers
                                                                                                                    the Chicago Board of Trade (CBOT). CME           which has pursued its case against Micro-                                               in obtaining high quality domains at the
       Real Estate: The Division advised that proposed Montana legislation requiring real estate bro-               and CBOT were two of the largest futures         soft for violating EC competition laws, to                                              lowest possible price.
  kers to participate in all aspects of buying a home would harm consumers by denying them the                      exchanges in the United States and CME           ensure that the EC’s actions do not create
  opportunity to save money by purchasing a subset of services from fee-for-service brokers and by                  provided clearings services for its own          any undue conflict with NTES’s continuing
  insulating traditional full-service brokers from competition from fee-for-service brokers. A copy of              futures contracts and CBOT’s. The net-           enforcement efforts.
  that letter is available at

                                                                                                                                                              practices, bringing greater consistency to        Committee devoted two days to discussion
     CIVIL NON-MERGER                                                                                                                                         the merger review process across jurisdic-        of competition issues relating to the cur-
     ENFORCEMENT                                                                                                                                              tions and reducing unnecessary delay and          rent global financial situation and spon-
                                                                                                                                                              burden on merging firms.                          sored the eighth Global Forum on
        The Division’s civil non-merger enforce-                                                                                                                                                                Competition, to which senior officials from
     ment efforts this past year focused on                                                                                                                        ICN has continued to tackle some of the      more than 20 developing countries partici-
     important sectors of the economy.                                                                                                                        most difficult and timely antitrust issues        pated in roundtables covering the interac-
                                                                                                                                                              faced by the international antitrust commu-       tion of antitrust and industrial policy, the
     Internet Advertising                                                                                                                                     nity. At the April 2008 annual meeting in         impact of the informal sector, challenges
                                                                                                                                                              Kyoto, Japan, ICN members adopted impor-          facing new agencies, and the role of
          An agreement between Google and                                                                                                                     tant new Recommended Practices on sub-            antitrust enforcement during economic
     Yahoo!, whereby Yahoo! would have been                                                                                                                   stantive merger analysis and the assess-          crises.
     able to replace a significant portion of its                                                                                                             ment of unilateral conduct. The recommen-
     own Internet search results advertise-                                                                                                                   dations for merger analysis cover the legal       Agency-to-Agency Relationships
     ments with search results advertisements                                                                                                                 framework for merger analysis, the role of
     sold by Google, was abandoned after the                                                                                                                  market shares in helping to identify mergers          The Division remains committed to dev-
     Division informed the parties that it would                                                                                                              that may raise competitive concerns, and          eloping strong, productive, bilateral rela-
     file a lawsuit to block the agreement. The                                                                                                               the assessment of entry as an integral part       tionships with its foreign counterparts. The
     two firms operate search engines and                                                                                                                     of merger analysis. The Recommended               Division continues to work closely with its
     search advertising platforms. A search                                                                                                                   Practices on the assessment of substantial        Canadian and European counterparts on a
     engine allows people to search for infor-                                                                                                                market power or dominance under unilater-         wide range of cartel, merger, and civil non-
     mation on the Internet. When a person                                                                                                                    al conduct laws provide that a firm should        merger enforcement and policy matters.
     types in a query, a search engine provides                                                                                                               not be found to possess substantial market        For example, the Division and the
     the user links to Web pages relevant to the                                                                                                              power without comprehensive considera-            Canadian Competition Bureau cooperated
     query. In addition to the “natural” results of                                                                                                           tion of factors affecting competitive condi-      extensively throughout the course of their
     the search, a search advertising platform                                                                                                                tions and that market shares in themselves        respective investigations of the agreement
     also displays advertisements that are rele-                                                                                                              do not indicate the presence of substantial       between Yahoo! and Google, which was
     vant to the search query. When the user            The Consolidated Multiple Listing Service case team. Front Row (L-R): Timothy Finley, Ethan Glass,    market power. The Recommended Prac-               abandoned after the Division informed the
     clicks on an advertisement, the advertiser         David Kully; Back Row (L-R): Iden Baghdadchi, Lisa Scanlon, Nathan Sutton, Mary Beth McGee,           tices further provide that agencies should        companies that it would file an antitrust
     typically pays a fee to the operator of the        Owen Kendler, Samuel Chapple-Sokol.                                                                   use a sound analytical framework, firmly          lawsuit to block implementation of the
     search advertising platform. Search adver-                                                                                                               grounded in economic principles, in deter-        agreement. On the merger side, the
     tising companies compete to provide users        commission if they find their own buyer
     with the most relevant advertisements            and also required that listing brokers pro-
                                                                                                            DIVISION REMAINS FOCUSED                          mining whether a firm has substantial mar-        Division and the European Commission
                                                                                                                                                              ket power. Within the Cartel Working Group,       cooperated closely on their reviews of the
     through the development of their search          vide each home seller with a prescribed set           ON INTERNATIONAL                                  the Division led an effort to identify and dis-   transaction between Manitowoc and
     software. Search advertising companies           of services even if the home owners                   COOPERATION                                       cuss the key benefits and issues in design-       Enodis.
     also offer their search engines to third-        desired to perform some of these services                                                               ing and implementing effective cartel settle-
     party syndication partners that have their       on their own.                                             The Division remains focused on strength-
                                                                                                                                                              ment systems.                                         The Division has been working actively
     own websites. If a user clicks on an adver-                                                            ening international cooperation and promot-
                                                                                                                                                                                                                with China as it begins to enforce its
     tisement from the partner Web site, the               The second major development was a               ing antitrust policy convergence. With a glob-
                                                                                                                                                                  The ICN work program leading up to this       Antimonopoly Law. The Division has had
     search advertiser shares the advertising         favorable settlement of the action against the        al economy and competition regimes in more
                                                                                                                                                              June’s annual meeting in Zurich, Switzer-         many exchanges with its Chinese counter-
     revenues with the syndication partner.           National Association of Realtors (NAR) chal-          than 100 countries, the Division has made
                                                                                                                                                              land has been ambitious. The Merger               parts to help ensure that China’s proposed
                                                      lenging certain NAR rules that limited compe-         strengthening international cooperation
                                                                                                                                                              Working Group, co-chaired by the Division,        regulations and guidelines are in line with
         The Division concluded that the arrange-     tition from real estate brokers who use the           and promoting antitrust policy convergence
                                                                                                                                                              has continued its project on recommenda-          international best practices. During the past
     ment likely would have denied consumers          Internet to serve their customers. Under the          key priorities. In 2008-2009, the Division pur-
                                                                                                                                                              tions for substantive merger analysis, with       year, the Division also participated as
     the benefits of competition—lower prices,        settlement, NAR agreed to repeal its anticom-         sued these goals by continuing to work
                                                                                                                                                              an eye toward adopting new additional rec-        instructors in training workshops in China on
     better service, and greater innovation.          petitive rules and to require affiliated Multiple     closely with multinational organizations and
                                                                                                                                                              ommended practices on competitive effects         merger remedies and cartel enforcement.
     Google had a market share in excess of 70        Listing Services to do so as well—essentially,        by working to develop and maintain strong
                                                                                                                                                              analysis at the Zurich meeting. The
     percent in the markets for search engines        the same relief requested in the complaint.           bilateral relationships with enforcement
                                                                                                                                                              Unilateral Conduct Working Group has been             International cooperation is also fos-
     and search syndication, and Google and           The new NAR policy will guarantee that                agencies in other countries.
                                                                                                                                                              studying in detail ICN members’ practices         tered by the Division’s technical assis-
     Yahoo! had combined shares of more than          Internet-based brokerage companies will not                                                             on tying, bundled discounting, and loyalty        tance program, through which the Division
     90 percent. Google and Yahoo! competed           be treated differently than traditional brokers.      Multilateral Efforts                                                                                works with many new antitrust agencies
                                                                                                                                                              discounts. ICN also sponsored workshops
     with each other in many ways, particularly       Under the new policy, brokers will not be per-                                                          on specific topics to promote greater under-      around the world to help ensure that their
     through investments to improve their ability     mitted to withhold their listings from other               Two organizations stand out for their
                                                                                                                                                              standing and implementation of ICN work           systems reflect sound economics and
     to match queries with appropriate advertis-      brokers who serve their customers through             recent work in achieving consensus on
                                                                                                                                                              product. In March 2009, the Division and the      consumer welfare goals. In the past two
     ing. The Division found that the two firms       virtual office websites (VOWs). Brokers will          important issues: the International Compet-
                                                                                                                                                              Federal Trade Commission co-hosted the            decades, the Division and the Federal
     would have become collaborators rather           be able to fully use VOWs and cannot be               ition Network (ICN) and the Organization for
                                                                                                                                                              ICN’s first workshop devoted to unilateral        Trade Commission have conducted more
     than competitors for a significant portion of    excluded from Multiple Listing Service mem-           Economic Cooperation and Development
                                                                                                                                                              conduct issues, and the Division has played       than 425 missions to scores of countries
     search business and that Yahoo! would            bership based on their business model.                (OECD). The Division has participated in
                                                                                                                                                              a key role in planning workshops on cartels       on both short-term trips and multi-month
     have significantly reduced incentives to                                                               both organizations extensively.
                                                                                                                                                              and mergers.                                      advisory programs. In 2008-2009, recipi-
     invest in the aspects of its advertising busi-   Contempt Proceeding                                                                                                                                       ents of this type of training included
     ness that it would allocate or outsource to                                                                The ICN, which has grown from 15
                                                                                                                                                                   Over the last year, the OECD’s Competi-      antitrust agencies in Brazil, China, Egypt,
     Google.                                               In January 2009, the Division obtained a         founding members in 2001 into a global net-
                                                                                                                                                              tion Committee continued to serve as an           Central America, Russia, Vietnam, and
                                                      consent decree against AT&T Inc. to resolve           work of more than 100 members from more
                                                                                                                                                              important forum for discussion and con-           South Africa.
     Real Estate                                      alleged violations of the Final Judgment in           than 90 jurisdictions, has become an impor-
                                                                                                                                                              vergence among the antitrust enforcers of
                                                      United States v. AT&T, Inc. and Dobson Com-           tant forum for senior antitrust officials and
                                                                                                                                                              its 30 members and 10 observers. In the               Also in 2008, the Division hosted its
         There have been two major develop-           munications Corp., No. 1:07-CV-1952 (D.D.C.).         non-governmental advisors from developed
                                                                                                                                                              past year, the Competition Committee has          second annual training program on
     ments in the Division’s efforts to promote       In the underlying case, the Division ob-              and developing countries to share expertise
                                                                                                                                                              also completed Guidelines for Fighting Bid        antitrust and economics for both Depart-
     competitive markets in the real estate           tained divestitures addressing competitive            and promote convergence in antitrust
                                                                                                                                                              Rigging in Public Procurement, a practical        ment of Justice employees and officials of
     industry. First, the United States sued the      concerns in the market for mobile wireless            enforcement. ICN’s Recommended Prac-
                                                                                                                                                              checklist for procurement officials on            foreign antitrust agencies. Sixteen offi-
     Consolidated Multiple Listing Service            services arising from the merger of AT&T              tices for Merger Notification and Review
                                                                                                                                                              designing and operating procurement pro-          cials from 10 different foreign antitrust
     (CMLS) of Columbia, South Carolina, in           and Dobson Communications Corp. AT&T                  Procedures—developed in the Merger
                                                                                                                                                              grams so as to avoid collusion. It has held       agencies attended the program. The train-
     May 2008, challenging rules limiting com-        allegedly violated provisions requiring that          Working Group under the Division’s leader-
                                                                                                                                                              roundtables on a wide range of important          ing session addressed a variety of topics,
     petition from low-price and innovative           AT&T operate its mobile wireless businesses           ship and in close cooperation with non-gov-
                                                                                                                                                              antitrust issues, including monopsony, re-        including unilateral and coordinated effects,
     brokers, discouraging entry, and resulting       in three cellular marketing areas separately          ernmental advisors worldwide—is one of
                                                                                                                                                              sale price maintenance, cartel settle-            exclusive dealing, and remedies. It con-
     in consumers in Columbia paying inflated         and independently from its other businesses           ICN’s most heralded achievements. Many
                                                                                                                                                              ments, the construction industry, market          cluded with practical programs about the
     rates for real estate brokerage services.        and maintain them as viable competitors until         ICN member agencies have developed or
                                                                                                                                                              studies, and fidelity and bundled discounts.      common mistakes that are made in
     The CMLS, for example, banned contracts          they could be divested. AT&T paid $2.05 mil-          amended their merger review laws so that
                                                                                                                                                              At its most recent meeting in February, the       antitrust investigations.
     that allow home sellers to avoid paying a        lion to settle the alleged violations.                they will be in closer conformity to those

                                                                  Litigation III Section                           Economic Litigation Section                              San Francisco                                  PRESS RELEASES
                                                                    Chief: John Read;                                 Chief: Norm Familant;                            Chief: Phillip Warren;                   Copies of Division press releases (from
                                                             Assistant Chief: David Kully                         Assistant Chief: Oliver Richard                    Assistant Chief: Niall Lynch               1992 to the present) can be found online at:
                                                      Civil antitrust enforcement in industries                     Contact: 202-307-6323                            Contact: 415-436-6660                      http://www.usdoj. gov/atr/public/press_
                                                      such as music, movies, and publishing.                                                                                                                    releases/2009/index09.htm
                                                                                                                  Economic Regulatory Section                 National Criminal Enforcement Section
                                                              Contact: 202-307-0468                                                                                                                             Media may contact the Office of Public
                                                                                                                    Chief: Elizabeth Armington;                          Chief: Lisa Phelan;                    Affairs at:
                                                         Networks and Technology Section                         Assistant Chief: Ronald Drennan                   Assistant Chief: Mark Rosman
                                                                                                                    Contact: 202-307-6332                          Assistant Chief: John Terzaken                        Phone: 202-514-2007
                                                                 Chief: Jim Tierney;
                                                                                                                                                                     Contact: 202-307-6694                                Fax: 202-514-5331
                                                           Assistant Chief: Scott Scheele                                 FIELD OFFICES
                                                             Contact: 202-307-6640                                                                                                                              Law firms and the general public should
     ANTITRUST DIVISION SECTION                                                                             Each of the Division's field offices handles           CONTACT INFORMATION:                         contact the Antitrust Documents Group to
     CONTACTS                                             Telecommunications and Media                      criminal matters within its respective area                                                         obtain other documents.
                                                                    Section                                 and serves as the Division's liaison with
                                                                                                                                                                     U.S. Department of Justice,
           OFFICE OF OPERATIONS                               Chief: Nancy Goodman;                         U.S. Attorneys, state attorneys general, and                                                        ASSISTANT ATTORNEY GENERAL
                                                                                                                                                                Antitrust Division:                AND DIVISION STAFF
               Director: Robert Kramer;                    Assistant Chief: Laury Bobbish                   other regional law enforcement agencies.
            Deputy Director: Patricia Brink                                                                 The field offices also handle national and                                                          For contact information for the Office of
                                                             Contact: 202-514-5709                                                                                   OBTAIN DOCUMENTS
                                                                                                            international matters that arise within their                                                       the Assistant Attorney General and the
     The Office of Operations coordinates             Transportation, Energy, and Agriculture                                                                 Law firms and the general public may              Division’s sections and field offices, see
                                                                                                            territories.                                      obtain paper copies of Division docu-
     investigations and litigation policies and                       Section                                                                                                                         
     procedures affecting the Division's                                                                                        Atlanta                       ments from the Antitrust Documents
                                                             Chief: Donna Kooperstein;                                                                        Group:                                            Use the following link to obtain phone
     operations.                                                                                                       Chief: Nezida Davis;
                                                          Assistant Chief: William Stallings                                                                                                                    numbers for Division employees:
            Contact: 202-514-3544                                                                                Assistant Chief: James Kurosad                        Phone: 202-514-2481
                                                             Contact: 202-307-6349                                                                                        Fax: 202-514-3763
                                                                                                                   Contact: 404-331-7100                                                              
              EXECUTIVE OFFICE                                     Appellate Section                                                                               E-mail:                phoneworks.htm
         Executive Officer: Thomas King;                       Chief: Cathy O’Sullivan;
                                                                                                                     Chief: Marvin Price, Jr.;                             WEB LINKS                                             Comments
      Deputy Executive Officer: Vicki Ellison              Assistant Chief: Bob Nicholson;
                                                                                                                  Assistant Chief: Frank Vondrak              The following links may be used to obtain         To comment on past or ongoing investiga-
          Contact: 202-514-2421                             Assistant Chief: John Powers                                                                      Division documents online:
                                                                                                                   Contact: 312-353-7530                                                                        tions, send an e-mail to antitrust.atr@
               LEGAL SECTIONS                                Contact: 202-514-2413                                                                                                                    
                                                                                                                              Cleveland                       Public Court and Administrative Filings:
                  Litigation I Section                       Foreign Commerce Section                                                                                Report Possible Antitrust Violations
                                                               Chief: Edward Hand;                                     Chief: Scott Watson;
                Chief: Joshua Soven;                                                                                                                                                                            If you have information about a possible
                                                                                                                  Assistant Chief: Michael Wood                  Guidelines and Policy Statements:              antitrust violation or potential anticompetitive
             Assistant Chief: Joe Miller                Assistant Chief: Anne Purcell White                                                             
                                                             Contact: 202-514-2464                                  Contact: 216-687-8400                                                                       activity please contact the Division:
     Civil antitrust enforcement in industries                                                                                                                         guidelines/guidelin.htm
     such as dairy, health care, paper and                       Legal Policy Section                                           Dallas                                                                                              E-Mail:
                                                                                                                                                                          Leniency Program:                 
     insurance.                                                Chief: Robert Potter;                                  Chief: Duncan Currie;             
                                                                                                                Assistant Chief: Mitchell Chitwood                                                                         Phone: 1-888-647-3258
             Contact: 202-307-0001                           Deputy Chief: Gail Kursh;                                                                                   criminal/leniency.htm                     (toll-free in the U.S. and Canada) or
                                                        Assistant Chief: Howard Blumenthal                         Contact: 214-661-8600                                                                                          202-307-2040
                 Litigation II Section                                                                                                                                      Speeches:
                                                             Contact: 202-514-2512                                            New York                                              Fax: 202-514-1629
              Chief: Maribeth Petrizzi;                                                                                                                                                                               (Attn: Citizen Complaint Center)
         Assistant Chief: Dorothy Fountain                                                                            Chief: Ralph Giordano;                          speeches/speeches.htm
                                                             ECONOMIC SECTIONS                                  Assistant Chief: John McReynolds                                                                                     Mail:
     Civil antitrust enforcement in industries               Competition Policy Section                            Contact: 212-264-0390                              Congressional Testimony:                           U.S. Department of Justice
     such as defense, waste and banking.                                                                                                                                             Antitrust Division
                                                              Chief: W. Robert Majure;                                       Philadelphia                              testimony/testimon.htm
             Contact: 202-307-0924                          Assistant Chief: Jeffrey Wilder                                                                                                                               Citizen Complaint Center
                                                                                                                     Chief: Robert Connolly;                          Business Review Letters:                         950 Pennsylvania Avenue, NW
                                                             Contact: 202-307-6341                                Assistant Chief: Joseph Muoio                                                                                    Room 3322
                                                                                                                   Contact: 215-597-7405                                busreview/letters.htm                              Washington, DC 20530

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