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i Significant casesLIBOR

The DOJ's long-running investigation of LIBOR and other interbank offered rates continued, with two significant developments in 2018. First, in June 2018, the DOJ entered into a deferred prosecution agreement with Société Générale SA, pursuant to which Société Générale admitted that, between May 2010 and at least October 2011, the company promulgated falsely deflated US dollar LIBOR submissions in order to project a false image of the bank's health. By the terms of the agreement, Société Générale paid a LIBOR-related fine of US$275 million. Second, in October 2017, a former supervisor of Deutsche Bank's Pool Trading Desk and a former derivatives trader were convicted in the Southern District of New York of conspiracy and wire fraud for their participation in a scheme to manipulate LIBOR.

Foreign exchange markets

There were also several developments in the DOJ's long-running investigation into alleged collusion with respect to foreign currency exchange (FX). In January 2018, BNP Paribas USA (BNPP USA) pleaded guilty to participating in a price-fixing conspiracy in the FX market. According to the court papers, BNPP USA conspired to fix prices in Central and Eastern European, Middle Eastern and African (CEEMA) currencies. In May 2018, a former currency trader from a US-based financial institution was indicted for allegedly conspiring to fix prices and rig bids and offers in CEEMA currencies. And in October 2018, three London-based traders, who were members of a chatroom that was at one point called the 'cartel', were acquitted after a three-week trial in New York in which they were alleged to have conspired to fix prices in the foreign exchange market.

E-commerce

The DOJ carried forward its prosecution of price-fixing conduct in the e-commerce sphere. The former director and part owner of Trod Limited had previously been indicted for conspiring to fix the prices of posters sold online. A UK resident, he remained a fugitive until his arrest in May 2018. In January 2019, he pleaded guilty, and will serve a custodial sentence of six months, with credit for the time served in Spanish custody. Also in January 2019, a federal grand jury in Houston returned an indictment against Taiwan-based G Nova corporation and its CEO for participating in a conspiracy to fix prices of Koozies, and the DOJ announced that it had filed criminal charges against Netbrands Media Corporation and two executives for their roles in a separate conspiracy to fix prices of wristbands, lanyards, temporary tattoos and buttons sold in the United States. Netbrands and the executives all agreed to plead guilty or entered guilty pleas. Speaking of these developments, Assistant Attorney General Delrahim said:

The results announced today are the latest in a series of charges against eleven defendants filed in the Division's ongoing investigation into conspiracies that corrupted the online marketplace and deprived consumers of the benefits of competition . . . Whether the conspiracy takes place in smoke-filled rooms that are real or virtual, the Department of Justice and its law enforcement partners are committed to uncovering and prosecuting collusion.
Auto parts

The now nine-year DOJ investigation into auto part prices carried on into 2018. In May 2018, Maruyasu Industries Co Ltd (Maruyasu) agreed to plead guilty and pay a US$12 million criminal fine for its role in a conspiracy to suppress and eliminate competition by agreeing to fix prices, allocate customers and rig bids for automotive steel tubes. Concurrent with the Court's imposition of the sentence against Maruyasu, the DOJ moved to dismiss the indictments against Maruyasu's US subsidiary and three Maruyasu sales executives. As of 31 May 2018, and including Maruyasu, the Antitrust Division's prosecution of collusion in the auto parts industry has resulted in more than US$2.9 billion in fines, and the convictions of 46 corporations and 32 executives.

Electrolytic capacitors

The DOJ's pursuit of charges in connection with price fixing, bid rigging and other anticompetitive conduct in the electrolytic capacitors industry continued, but slowed slightly, in 2018. Electrolytic capacitors store and regulate electrical currents in a variety of electronic products, including computers, televisions, car engine and airbag systems, home appliances and office equipment. The government resolved several cases in this investigation in 2018.

Packaged seafood

The DOJ continued its antitrust investigation in the packaged seafood industry. In May, a federal grand jury returned an indictment against the President and CEO of Bumble Bee Foods LLC, alleging that he participated in a conspiracy involving prices of packaged seafood from November 2010 to December 2013. He was the fourth individual charged in the ongoing investigation. In October 2018, StarKist Co pleaded guilty to a one-count felony charge for its role in the alleged conspiracy, exposing it to a potential criminal fine of up to US$100 million. It was the second organisation to plead guilty in connection with the DOJ's investigation.

Generic drugs

The DOJ has publicly stated that the Antitrust Division's investigation into potential collusion and market allocation in the generic pharmaceutical industry is 'ongoing'. In December 2018, an Assistant Attorney General for the State of Connecticut said that state attorneys general were also involved in an investigation of alleged price fixing in the generics industry involving 'at least 16 companies and 300 drugs'.

Bid riggingDefence fuel supply contracts

In November 2018, three South Korean-based companies – SK Energy Co Ltd, GS Caltex Corporation, and Hanjin Transportation Co Ltd – pleaded guilty to criminal charges, and agreed to collectively pay US$82 million in criminal fines for their involvement in a decade-long bid-rigging conspiracy that targeted contracts to supply fuel to the US Army, Navy, Marine Corps and Air Force bases in South Korea. In particular, the three filed felony charges allege that beginning at least in or around March 2005, and continuing into 2016, South Korean petroleum and refinery companies 'participated in a combination and conspiracy to suppress and eliminate competition during the bidding process for . . . fuel supply contracts' pertaining to the numerous US military bases throughout South Korea. The DOJ stated that the charges are part of 'an ongoing federal investigation'. The Antitrust Division also filed a civil antitrust complaint against the same defendants, and, at the same time, proposed settlement that, if approved by the court, would resolve that lawsuit. The aggregate settlements would exceed US$150 million. The litigation resulted from a whistle-blower action.

Real estate foreclosure auctions

The DOJ continued to aggressively investigate bid rigging and fraud in public foreclosure auctions, bringing charges or securing guilty pleas in 2018 against individuals in California, Mississippi and Florida.

The charges allege that the defendants conspired among themselves and with others not to bid against one another, and to designate winning bidders for properties at public real estate foreclosure auctions conducted both in-person and online. In many cases, the real estate properties bought at non-competitive prices were then awarded to the conspirators who submitted the highest bids at a second, private auction. Because the proceeds of the original real estate auctions are used to pay off the mortgage and other debt attached to a property, with the remaining proceeds being paid to the homeowner, the conspirators paid and received money that otherwise would have gone to pay off the mortgage and other debt and, in some cases, the defaulting homeowner. As of November 2018, over 100 individuals had been convicted or pleaded guilty for rigging public mortgage foreclosure auctions in six different states.

Foreclosed home repair

The DOJ continued its investigation into fraud and kickbacks relating to repair contracts in the Minneapolis area. In August 2018, a federal grand jury returned an indictment against a real estate company, and a realtor and his accountant for participating in a 'conspiracy to defraud companies, including financial institutions, in connection with foreclosed properties'. The indictment alleges that defendants devised a scheme requiring repair contractors to pay kickbacks in return for the steering of housing repair contracts to the contractors who paid the kickbacks. This is the second case involving this type of conduct.

Ocean shipping

There were no significant public developments in the DOJ's investigation into the alleged conspiracy to fix prices, allocate customers and rig bids for international ocean shipping services for roll-on, roll-off cargo such as cars, trucks and agricultural equipment to and from the United States and elsewhere. As of September 2017 a total of five companies had pleaded guilty in the investigation, resulting in criminal fines of over US$255 million. Four executives had also pleaded guilty, and an additional seven had been indicted.

Public school bus auction

In February 2018, four owners of school bus transportation companies were sentenced for participating in bid rigging and fraud conspiracies related to school bus transportation contracts in Puerto Rico. The four individuals had been convicted after trial in 2017. The convictions arose from a federal antitrust investigation being conducted by the Antitrust Division, the District of Puerto Rico US Attorney's Office, the FBI's Puerto Rico Field Office and the US Department of Education Office of Inspector General.

Freight forwarding

Two executives were arrested on and then pleaded guilty to charges that they orchestrated a nationwide conspiracy to fix prices for international freight forwarding services. According to the indictment and their guilty pleas, the conspiracy lasted from at least September 2010 to March 2015. The two individuals – the first to be convicted in the investigation – have agreed to cooperate in the ongoing investigation into price fixing in the international freight forwarding industry, which is being conducted by the Antitrust Division, the FBI's International Corruption Unit and the FBI's New Orleans Division.

Anti-poaching

In April 2018 the DOJ reached a settlement with Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec), two of the world's largest rail equipment suppliers, to resolve a civil lawsuit alleging that the companies had maintained unlawful agreements not to compete for each other's employees. The DOJ alleged that Knorr and Wabtec 'compete with each other to attract, hire, and retain various skilled employees,' and that the companies had 'reached agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees.' The settlement prohibits Knorr and Wabtec 'from entering, maintaining, or enforcing no-poach agreements with any other companies, subject to limited exceptions.'

Heir-location services firms

In 2018, litigation pertaining to the criminal heir-location services trial continued. As background, in August 2017, the United States District Court for the District of Utah dismissed bid-rigging charges against a Salt Lake City-based heir-location services provider and its co-owner. The defendants had been charged with violating Section 1 of the Sherman Act for allocating customers with another heir-location services firm. The Court ruled that the conspiracy had effectively ceased in July 2008, and that the prosecution was therefore barred by the statute of limitations. On 22 December 2017, the DOJ appealed the Court's ruling to the United States Court of Appeals for the Tenth Circuit. In October 2018, the Tenth Circuit ruled that the case did not fall outside the statute of limitations, while at the same time declining to reverse the district court's decision tying the case to a rule-of-reason standard. In January 2019, the DOJ sought reconsideration of the district court's prior ruling that the court should be evaluated as a rule of reason (rather than per se) case. The issue is significant, as DOJ policy only permits prosecutors to pursue as criminal cases those subject to the per se standard. The district court granted the DOJ's motion for reconsideration on 21 February 2019, holding that the charged conduct is indeed to be tried under the per se approach.

Water treatment chemicals

The DOJ continued its investigation into alleged collusion to circumvent competitive bidding and independent pricing for liquid aluminium sulphate contracts. In January 2018, a former executive pleaded guilty for his role in a conspiracy to eliminate competition by rigging bids, allocating customers, and fixing the price for liquid aluminium sulphate sold to municipalities and paper companies in the United States. According to court documents, the executive and his co-conspirators agreed not to pursue each other's historical customers, and submitted intentionally losing bids to effectuate those agreements. As of January 2018, two other individuals and one company had pleaded guilty to charges arising out of the federal investigation of collusion in the liquid aluminium sulphate industry.

ii Trends, developments and strategies

The new DOJ Antitrust Division leadership continued its focus on the prosecution of responsible individuals. The DOJ believes such convictions and pleas are likely to have strong deterrent effects as the average number of individuals sentenced to jail and the average length of sentences continue to increase. A number of prosecutions and guilty pleas secured in 2018 were still connected to investigations that were initiated under prior leadership, such as LIBOR, Automotive Parts, Electrolytic Capacitors and Real Estate Foreclosure. While the activity in these investigations has declined from its peak, it would not be surprising for additional charges in these investigations to be filed into 2019. Given the emphasis the DOJ has placed on large international collusion investigations in the past, it would also not be surprising to see the DOJ announce new international investigations in the coming year.

iii Outlook

The DOJ investigations and criminal antitrust prosecutions will likely continue at a high volume in 2019, particularly in areas that appear to align with the current administration's enforcement priorities. The DOJ has stated that a number of relatively new investigations (e.g., Generic Pharmaceuticals, E-commerce, Defence Fuel Supply, Freight Forwarding and Anti-Poaching) remain ongoing, suggesting that further charges may emerge out of those spheres.