Author: Christopher H. Casey

Seeking to revive a criminal antitrust conviction, the DOJ last week filed its reply brief in support of a petition for certiorari asking the Supreme Court to hear its appeal of a Fourth Circuit decision overturning a 2022 bid-rigging conviction.  In the brief, the DOJ argued that the Fourth Circuit erred when it ruled that only purely horizontal agreements qualify as per se violations of the antitrust laws.   

The defendant, Brent Brewbaker, was an executive of an aluminum parts supplier, Contech.  The government alleged that Brewbaker submitted losing bids to the North Carolina Department of Transportation in an effort to help a downstream customer of Contech, Pomona Pipe Products, win the bid.  Brewbaker was convicted of bid-rigging, in violation of Section 1 of the Sherman Act, and fraud.  The Fourth Circuit upheld the fraud conviction but overturned the Sherman Act one, ruling that because it was not purely horizontal, the agreement between Contech and Pomona should have been reviewed under the rule of reason rather than the per se rule. 

The DOJ argued that the indictment alleged that Contech and Pomona were direct competitors in that they had submitted competing bids for aluminum structure projects, and the fact that the agreement also had a vertical component did not mean that per se treatment was unavailable.  The DOJ argued further that the Fourth Circuit’s decision conflicted with two Supreme Court cases, United States v. Socony-Vacuum Oil Co. and Palmer v. BRG of Georgia, where the Court held that agreements among competitors were per se unlawful even though those competitors also had vertical relationships. 

Speaking at the American Bar Association Antitrust Section’s annual Spring Meeting on Friday, April 12, Henry Liu, Director of the Bureau of Competition at the Federal Trade Commission, said that parties that are under an antitrust investigation by the FTC should assume that the agency is looking not only at whether the conduct being investigated violates the Sherman Act, but also whether the conduct may fall into a “gray zone” and thus be subject to the FTC’s authority to police “unfair methods of competition” under Section 5 of the FTC Act.

Liu described this “gray zone” as encompassing conduct where, for technical reasons, the existing case law shows that the Sherman Act is a less attractive theory for the agency.  Nonetheless, if the FTC determines that the conduct “harms the competitive process” through nefarious means such as deception or coercive tactics, bringing a Section 5 claim is a viable option.  Enforcement of “gray zone” conduct under Section 5 is consistent with the FTC’s 2022 Policy Statement expanding the scope of what the FTC considers unfair methods of competition.

A potential example he cited is an invitation to collude, where there is not yet a reduction in competition.  For cases involving such conduct that is “adjacent” to violations of Sections 1 and 2 of the Sherman Act, Liu said that the FTC will not hesitate to bring “standalone” cases under Section 5; however, such standalone enforcement actions remain rare.

California Assistant Attorney General Paula Blizzard announced that California intends to start prosecuting criminal antitrust cases under the Cartwright Act, which makes it illegal to restrict commerce, prevent competition, or enter agreements to lessen competition. Speaking at the American Bar Association’s National Institute on White Collar Crime, California AAG Blizard noted that California has not brought a case in 25 years, but that the office intends to reinvigorate criminal antitrust prosecutions of its statute, which is more expansive than the federal Sherman Act. Individual violators of the Cartwright Act could face fines up to $250,000, or two times the loss from the anti-competitive conduct, and up to three years in county prison. Corporate violators could face a fine up to $1 million. In addition to familiarity with the federal antitrust laws, corporate counsel should be aware of applicable state antitrust statutes.

The Federal Trade Commission, Department of Justice’s Antitrust Division, and U.S. Department of Health and Human Services jointly issued a Request for Information requesting public comment on transactions in the healthcare space.  According to the agencies, there is increasing concern that private equity firms and other corporate owners are increasingly involved in healthcare transactions leading to greater consolidation, poorer quality of care, and less access to affordable healthcare. Continue reading “FTC, DOJ and HHS Launch Cross-Government Investigation Into Healthcare Competition”