Timothy A. Westrick
April 7, 2017
Criminal antitrust enforcement may appear to have dropped off in fiscal year 2016, if fines assessed on companies and executives are any measure. However, a deeper look into the numbers and caseloads at the U.S. Department of Justice’s Antitrust Division provides a more accurate picture. In fact, the stage could be set for total fines to again surpass $1 billion in FY2017.
In the United States, criminal enforcement of antitrust laws and the prosecution of their violation, typically involving price-fixing and bid-rigging, are primarily the responsibility of the Antitrust Division — specifically its criminal offices and sections.
The last fiscal year saw a considerable drop in fines collected by the Antitrust Division from companies and individuals, as well as a slight decline in total criminal cases filed. In fact, tallies available from the division show some of the lowest numbers in total criminal fines and penalties in the last 10 years. From 2012 through 2015, the division has assessed fines and penalties over $1 billion each year, with a high of $3.6 billion in 2015. That number dropped drastically to $399 million in FY2016. While this is not necessarily a direct reflection or indication of a slowing of criminal enforcement by the division — in fact, the number of corporations, individuals charged and criminal cases brought have been fairly consistent over the last five years — it is of note and worthy of analysis.
Currently, there is some measure of uncertainty within the Antitrust Division regarding the leadership. With the change in the White House this year, there has been a delay in the usual transition of the front office at the Division. Since January, the assistant attorney general position for the division has been held in an acting capacity by Deputy Assistant Attorney General for Criminal Enforcement Brent Snyder. It wasn’t until recently that President Donald Trump nominated White House deputy counsel Makan Delrahim for AAG for antitrust, a position that requires confirmation by the Senate.
Despite the state of the division’s leadership, and the new administration in general, the consensus from the division’s directors and observers is that enforcement should proceed in a business-as-usual manner. In fact, there is likely to be a considerable rise in totals for FY2017, due in large part to actions brought against financial institutions related to the manipulation of London interbank offered rates and cases involving foreign currency exchange. Still, it may be enlightening to analyze the FY2016 reduction in fines and penalties and speculate on potential causes of these results. As described below, these include a realignment in the division, increased enforcement by other jurisdictions and a focus on civil enforcement.
Criminal enforcement of violations of the Sherman Antitrust Act have historically been the responsibility of the Antitrust Division’s criminal enforcement field offices and sections. These field offices are typically staffed by career trial attorneys and their support staff, who both generate cases through preliminary inquiries and grand jury investigations, as well as through referrals by law enforcement agencies. Trial attorneys in the field offices tend to be more heavily involved at the investigation stage of a matter than their counterparts in U.S. attorney offices, and so are more integral in case generation.
In early 2013, the administration and senior division leadership realigned the field offices, which practically speaking involved the closing of a number of these offices and the attendant reduction in headcount as some career trial attorneys left the division. In addition to the logical reduction in capacity to pursue investigations and cases because of fewer criminal enforcement trial attorneys, the division also arguably lost the connections and relationships these prosecutors had with other sources of cases — contacts in domestic law enforcement, international competition enforcement and the civil antitrust bar. As the life cycle of division matters and cases typically extends over multiple years, the 2016 time period may have been the tail end of efforts begun when these shuttered offices were still open.
Increase in Enforcement by Other Jurisdictions
Over the last several years, the criminalization of anti-competitive activity has greatly increased, as has the development of enforcement regimes in foreign jurisdictions. In large part, the Antitrust Division and U.S. enforcement efforts have paved the way and encouraged this global expansion, including many other jurisdictions modeling leniency programs after the division’s.
For cases involving cross-jurisdictional conspiracies, such as international cartel price-fixing activity, it has been deemed appropriate at times that the division defer to authorities in these other jurisdictions. The DOJ and the Antitrust Division’s “sister agency,” the Federal Trade Commission, which is involved in civil enforcement efforts in the antitrust space, have issued the Antitrust Enforcement Guidelines for International Operations, which speaks to the comity, cooperation and consideration given to foreign enforcement.
An investigation or enforcement action by a foreign authority will not preclude an investigation or enforcement action by either the Department or the Commission. Rather, the Agency will determine whether, in light of actions by the foreign authority, investigation or enforcement is warranted to address harm or threatened harm to U.S. commerce and consumers from anticompetitive conduct. In cases in which an Agency opens an investigation or brings an enforcement action concerning conduct under investigation by a foreign authority, it may coordinate with that authority.
As cooperation, and at times, coordination, increases between the Antitrust Division and other global antitrust enforcement authorities, so too are there likely to be deferrals one way or the other if the criminal activity is adequately addressed by any one authority.
Focus on Civil Enforcement
A large portion of the Antitrust Division is responsible for civil antitrust enforcement, with those responsibilities being spread across a number of sections including Litigation I, II, III, the Networks and Technology Enforcement Section, Telecommunications and Media Enforcement Section, and Transportation, Energy, and Agriculture Section. Recently, much of the division’s activities have focused on civil enforcement.
In March, at the American Bar Association’s 2017 Antitrust Spring Meeting, directors of the various Antitrust Division sections provided updates on their efforts — emphasizing the civil enforcement activities of the past year. These efforts included two simultaneous civil merger trials involving health insurers, matters involving the potential merger of two large oilfield services companies, as well as pursuit of violations of the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Antitrust Division directors noted that some of these matters, such as the two merger trials occurring at the same time, required “all hands on deck,” drawing resources from every section of the division, including criminal enforcement resources. Logically, criminal enforcement may wane while those resources are working in the civil enforcement arena.
Focus on Holding Individuals Accountable
At the ABA Spring Meeting, Division Director of Criminal Enforcement Marvin N. Price Jr. said the DOJ has been increasingly focusing on holding individuals accountable for criminal antitrust activity. Potentially, if more individuals are being pursued versus the deeper-pocket corporate defendants, the total aggregate of fines may decrease.
“The mission of the Antitrust Division is to promote economic competition through enforcing and providing guidance on antitrust laws and principles,” not to be a profit center. However, the tally of collected fines does provide a thumbnail sketch of efforts or an attempt to quantify criminal enforcement. The division has had a number of recent “blockbuster” years of criminal antitrust enforcement in the past decade, totaling billions of dollars in fines and penalties. This only highlights the drop reported for FY2016 and encourages at a minimum an academic analysis of potential causes.
Nevertheless, by looking at criminal enforcement so far this year and the upward trend of total annual fines above $1 billion in prior years, large fines are likely to continue/resume — both individually and collectively. In retrospect, the totals of FY2016 could be viewed only as an anomaly.
 15 U.S.C. § 18a