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Antitrust Update for the ABA Corporate Counseling Committee. June Ann Sauntry Tel.: 404.885.3210 Nathan Muyskens Tel.: 202.274.2900 Charles P. Greenman Tel.: 212.704.6233. Part I.

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Antitrust Updatefor the ABA Corporate Counseling Committee

June Ann Sauntry

Tel.: 404.885.3210

Nathan Muyskens

Tel.: 202.274.2900

Charles P. Greenman

Tel.: 212.704.6233

part i
Part I

Mergers and Acquisitions Update

merger acquisition update
Merger & Acquisition Update

Merger Enforcement Is Alive and Well at the Department of Justice

David L. Meyer, Deputy Assistant Attorney General for Civil Enforcement, November 15, 2007

FTC Performance and Accountability Report-

Fiscal Year 2007 (“PAR 2007”)

meyer s remarks
Meyer’s Remarks*
  • Since June 2006, Antitrust Division has challenged or caused restructuring of 18 transactions and filed 15 complaints.
  • “Counting up the number of merger challenges- litigated or otherwise - that the Division has recently undertaken as compared to past years cannot provide a reliable indication of the vigor of our merger enforcement.”

*Pages 3 and 6

meyer s remarks5
Meyer’s Remarks*

Reasons for fewer challenges:

  • Antitrust Division and FTC have educated business community, and few blatantly anticompetitive mergers are proposed.
  • Mix of transactions have evolved to pose fewer competition concerns.

* Pages 6 and 7

meyer s remarks6
Meyer’s Remarks*

Review Process

“The effectiveness and efficiency of our review processes is not always completely transparent to the outside world. Because the outcome of our merger review does not hinge on HHI calculations or any other objective or readily observable benchmark, the time and effort we will need to conduct an investigation is not perfectly predictable when a transaction is proposed.”

* Pages 7 and 8

meyer s remarks7
Meyer’s Remarks*

Role of Concentration

With respect to the Whirlpool/Maytag transaction:

“There never was any question that the transaction would increase concentration in a concentrated market, but I should not have to remind anyone that merger analysis has come quite far from the days when concentration figures alone were a good predictor of anticompetitive harm. No sensible proponent of antitrust enforcement could seriously favor a return to the days when merger analysis stopped there, and mergers were routinely blocked just because they would increase concentration in a highly concentrated market.”

* Page 8

meyer s remarks8
Meyer’s Remarks*

Key Factors

  • Are the merging firms the first and second choice for any distinct group of customers?
  • Will entry or repositioning by other competitors preclude sustained price increase by merged firm?

*Page 10

recent doj merger activity
Recent DOJ Merger Activity

Vulcan Materials Acquisition of Florida Rock Industries

  • Complaint and consent decree filed November 13, 2007.
  • Market impacted - sale of coarse aggregate in parts of metro Atlanta, Columbus, Georgia, Chattanooga, Tennessee, and South Hampton Roads, Virginia.
  • Relief - divest 8 quarries that produce coarse aggregate in Georgia, Tennessee and Virginia.
other doj merger activity
Other DOJ Merger Activity

Comscope’s Acquisition of Andrew Corp.

  • Complaint and consent decree filed December 6, 2007.
  • Market impacted - development, manufacture and sale of drop cable (coaxial cable that connects cable television transmission systems to customer’s premises).
  • Relief - divest Andrew’s 30% interest in Andes Industries, Inc. one of only 3 other companies that provide drop cable to cable television companies in the U.S.
other doj merger enforcement
Other DOJ Merger Enforcement

Civil Contempt Against Cal Dive International, Inc. (November 26, 2007)

  • Violation of 2005 consent decree requiring sale of saturation diving assets
  • Delay in divestiture of saturation diving vessels and failure to divest in same condition as when acquired
  • $2 million for disgorgement of profits and payment of costs of investigation
other doj merger enforcement12
Other DOJ Merger Enforcement

Civil Contempt Against ALLTEL Corporation

(December 3, 2007)

  • Violation of 2007 consent decree and related court order to divest mobile wireless telecommunications businesses in 4 rural areas in southern Minnesota
  • Failed to adhere to plans for capital improvements, upgrades, maintenance, failed to provide information to management trustee, and provided misleading reports on progress of improvement projects
  • $1.325 million payment, $745,000 of which goes to State of Minnesota
ftc 2007 statistics
FTC 2007 Statistics*

In Matters In Which HSR Second Requests

Were Issued

  • “Positive outcome” in 31 of 31
  • 12 consent orders
  • Raising anticompetitive concerns caused

parties to withdraw 5 transactions.

  • 3 authorizations to file for preliminary injunctions
  • Closed 11 investigations without subsequent events indicating the transactions injured competition.

*PAR 2007 at 54

ftc 2007 statistics14
FTC 2007 Statistics*

“Given the agency’s scarce resources and given that the

FTC and DOJ jointly enforce the antitrust laws, the FTC

directs much of its attention and resources to certain

segments of the economy that are particularly important to

consumers and in which it has particular expertise. These

include energy, health care, pharmaceuticals, real estate,

and technology”

In FY2007, FTC challenged:

  • 3 mergers in the energy industry
  • 8 mergers in the health care products and services

and medical devices industries

*PAR 2007 at 52, 57

recent ftc merger activity
Recent FTC Merger Activity

Schering-Plough’s Acquisition of Organon BioSciences N.V.:

  • Complaint and consent order November 16, 2007
  • Market impacted – manufacture and development of 3 poultry vaccines
  • Relief- divest rights and assets to develop, manufacture, and market each vaccine to Wyeth and provide supply and transitional support services
recent ftc merger activity16
Recent FTC Merger Activity

A & P’s Acquisition of Pathmark Stores

  • Complaint and consent order November 27 2007.
  • Market impacted – supermarkets in Staten Island and Shirley, Long island, New York
  • Relief – sell 4 stores in Staten Island and 1 in Shirley by January 10, 2008
favorite quote
Favorite Quote

“When it comes to intervening in markets, increased output is not always optimal.”

Maintaining our Focus at the FTC: Recent Developments

and Future Challenges in Protecting Consumers and

Competition, FTC Chairman Deborah Platt Majoras,

November 15, 2007.

other merger issues
Other Merger Issues

Acquisition of Midwest Air Group, Inc. by private equity group TPG Capital LP

  • DOJ needed more time to review after expiration of extended waiting period.
  • Timing agreement – parties won’t close transaction until January 31, 2008, without DOJ consent.
  • Northwest Airlines is a passive minority investor in acquiring entity.
other merger issues19
Other Merger Issues

Google’s Acquisition of DoubleClick:

  • Public interest groups ask that FTC Chairwoman Deborah Platt Majoras recuse herself because her husband’s firm is representing DoubleClick in the transaction, although not before the FTC.
  • Issue came to light based on announcement on firm’s web site.
other merger issues20
Other Merger Issues

“Gun Jumping”

  • On Tuesday and Wednesday, December 11 and 12, EU and UK, Office of Fair Trading raided offices to determine if Hydro Polymers and INEOS Enterprises, Ltd. had already “closed” deal that had not been cleared by regulators and could give INEOS Too Dominant a position in the plastics industry.
  • Provision in United Health/PacifiCare Merger agreement, prohibiting PacifiCare from entering contract incurring greater than $3 million liability without United Health’s consent, led to price fixing claim that withstands motion to dismiss. Omnicare, Inc. v. United Health Group, Inc., 2007 U.S. Dist. LEXIS 74983 (N.D. Ill. Sept. 28, 2007).
developments in ftc actions against real estate groups
Developments in FTC Actions Against Real Estate Groups
  • December 12, 2007 - FTC announces settlement with Milwaukee-based MLS, under which MLS is prohibited from adopting and enforcing rules or policies that limit participants ability to enter into non-standard listing agreements.
  • FTC had previously obtained similar consent orders from realtor groups in Colorado, New Hampshire, Virginia, Northeast Wisconsin, and New Jersey.
  • December 13, 2007 – Release of ALJ December 10, dismissal of October 12, 2006 complaint against southeast Michigan realtors’ group

Chief Administrative Law Judge McGuire’s DecisionIn the Matter of Realcomp II Ltd., Docket No. 9320 (

  • FTC’s economic evidence was “unreliable due to deficiencies in methodology and/or flaws in analytic interpretation.”
  • FTC made prime facie showing of “anticompetitive nature of the alleged restraints” but failed to show actual “anticompetitive effects or actionable consumer harm.”
  • No reliable demonstration that the challenged website policy (1) limited consumer choice, (2) excluded discount listings on websites, (3) impeded ability of discount brokers to compete, or (4) forced discount brokers to exit market or deterred entry.
part ii
Part II

Criminal Enforcement Update

this month s topic stolt nielsen
This month’s topic: Stolt-Nielsen


  • What is amnesty? An overview of the DOJ’s amnesty policy.
  • What happened in the Stolt-Nielsen case?
  • What lessons can be learned from the case?
    • The DOJ’s amnesty program is not likely to change.
    • The company’s initial response to alleged misconduct is critical in determining the final outcome
    • Having an effective compliance program can save the company from potential criminal liability no matter when it is enacted and implemented.
corporate leniency
Corporate Leniency
  • A major component of the DOJ’s Antitrust Division (the “Division”) is its Leniency Policy, which was instituted in 1978 and revised in 1993.
  • Under the Leniency Policy, a corporation or individual will not be criminally charged for the antitrust law violations reported, provided the corporation or individual complies with the terms of the policy.
  • The Leniency Policy also provides relief from civil penalties -The Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (“ACPERA”) limited civil damages for qualifying leniency applicants to “actual damages sustained” – a de-trebling of damages – This protection is set to expire on June 23, 2009 (unless renewed by Congress).
  • In the period between 1997 and 2004, more than 90 percent of the total fines paid by defendants were associated with investigations assisted by leniency applicants
corporate leniency requirements
Corporate Leniency Requirements

Type A (Before an investigation has begun)

DOJ will grant leniency if a corporation comes forward before the Division has initiated an investigation and:

  • 1) The Division has not received any information from another source about the illegal activity at the time the corporation comes forward
  • 2) Upon discovery, the corporation takes prompt and effective action to end its involvement
  • 3) The corporation reports the activity completely and with candor and provides full, continuing, and complete cooperation during the investigation
  • 4) The admission is a corporate act, rather than isolated confessions of individual employees
  • 5) The corporation makes restitution, where possible
  • 6) The corporation was not the leader or originator of the activity and did not coerce another party to participate in the illegal activity
corporate leniency requirements cont
Corporate Leniency Requirements (cont.)

Type B (After an investigation has begun)

DOJ, in certain circumstances will grant leniency to a corporation, even if an investigation has already begun, if:

  • 1) The corporation is the first to come forward and to qualify for leniency
  • 2) At the time the corporation comes forward, the Division does not have evidence against the company likely to result in a sustainable conviction
  • 3) Upon discovery, the corporation took prompt and effective action to end its involvement
  • 4) The corporation reports the wrongdoing completely and with candor and provides full, continuing, and complete cooperation that advances the investigation
  • 5) The admission is a corporate act, rather than isolated confessions of individual employees
  • 6) The corporation makes restitution where possible
  • 7) The Division decides that it would not be unfair to others to grant the corporation leniency, consider the nature of the illegal activity, the confessing corporation’s role, and when it came forward
stolt nielsen


  • In 1998, SN, a world-wide shipping company, entered into a customer allocation conspiracy with two primary competitors – As part of the agreement, the co-conspirators would refrain from bidding on deep-sea trade routes allocated to the other parties
  • In early 2002, Stolt-Nielsen’s learns that the company may have been participating in an illegal antitrust conspiracy
  • Upon learning that there may be a problem, Stolt-Nielsen immediately puts in place an effective compliance program
  • In November of 2002, Stolt-Nielsen retains outside counsel to conduct an internal review and counsel on amnesty issues
  • In December 2002, the Division informally accepts Stolt-Nielsen’s application and the internal investigation commences
  • After providing a proffer to DOJ, Stolt-Nielsen receives Conditional Leniency in January 2003 and begins its cooperation
stolt nielsen cont
Stolt-Nielsen (cont.)
  • On April 8, 2003, the DOJ informs Stolt-Nielsen that it had obtained evidence that the company did not cease all illegal activities in early 2002 and the illegal conduct continued into late 2002
  • At this time, the Division, for the first and only time, voided a corporate leniency agreement
    • The Division voided their agreement with Stolt-Nielsen (“SN”) because it alleged that SN did not take “prompt and effective action to terminate its part in the anticompetitive activity being reported’
  • A condition of the Agreement was that SN must not continue to participate in the anti-competitive behavior
  • Through the Agreement, SN complied with the Division’s investigation and supplied a number of incriminating documents, which resulted in the conviction of the other two companies in the customer allocation conspiracy (without such assistance from SN, those convictions would not have occurred)
  • However, the Division claimed that SN did continue its behavior and revoked the Agreement and sought and indictment against both the company and its officers
stolt nielsen cont30
Stolt-Nielsen (cont.)
  • SN sought an injunction in federal court against the indictment in February 2004 and in January, 2005, the US District Court for the Eastern District of Pennsylvania issued the injunction
  • The Third Circuit then takes up the matter and reverses the trial court’s earlier decision instructing the trial court to consider the agreement as a defense post-indictment and to determine whether SN had lived up to its side of the agreement
  • On September 6, 2006 Stolt-Nielsen is indicted in the Eastern District of Pennsylvania along with 2 employees.
  • SN files a motion to dismiss the indictment asserting the Agreement as a defense. In compliance with the Circuit’s directive, the trial court hold an evidentiary hearing to determine whether SN had promptly terminated illegal activity
  • On November 29, 2007, the District Court dismissed the indictment against SN and its officers, stating that SN did not breach the Agreement
the trial court
The Trial Court

The Trial Court’s Ruling in Dismissing the Indictment

  • U.S. District Judge Bruce Kauffman of the Eastern District of Philadelphia agreed with the defendants and concluded that there was no proof that they had continued to participate in the antitrust conspiracy.  In the opinion, the Judge discredited the testimony of executives from the other participating companies that were part of the cartel who maintained that Stolt-Nielsen continued with the bid-rigging scheme. The Judge stated:

The [Antitrust] Division has failed to produce any credible evidence that Stolt-Nielsen’s participation in the customer allocation conspiracy continued past March 2002.  Nor has the Division proposed a conceivable personal motive for the misconduct it alleges, as there is no indication that either Cooperman or Wingfield stood to profit in any way from continued anticompetitive activity.  Indeed, it would defy logic for executives such as [individual defendants] Wingfield and Cooperman to risk their careers to continue a criminal conspiracy that had been exposed publicly and repudiated by their company’s revised Antitrust Compliance Policy.  With the exception of Jansen, who the Division ultimately attempted to treat as a hostile witness, the only testimony adduced in favor of the Division’s version of the events of March-November 2002 was the testimony of a Jo Tankers employee and a number of Odfjell employees whose accounts were fraught with contradiction and uncorroborated by documentary evidence.  Each Odfjell and Jo Tankers witness testified in return for individual or corporate cooperation agreements that promised immunity or a reduced sentence in exchange for testimony against Defendants.  Each witness thus had a strong motive to seek leniency from the Division and to retaliate against a competitor that had implicated him in a criminal conspiracy. [Italics added]

what does stolt nielsen mean for the government
What does Stolt-Nielsen mean for the government?
  • When the Third Circuit initially sent the case back to the trial court to revisit, many commentators pointed to this case as the death-knell of the Amnesty program. This does not appear to have been the case.
  • The Amnesty program still works and has resulted in new investigations into numerous industries (i.e., air cargo)
  • However, we should expect to see an increased review of the evidence provided by companies in initial proffer sessions when the DOJ is determining whether to grant Amnesty. They will likely be very interested in the company’s actions following the discovery of the misconduct.
  • Hopefully, this case will cause the DOJ to look harder at the incentives of other cooperating witnesses when evaluating credibility.
  • Overall, the Amnesty program remains a useful tool in reducing your company’s liability while remaining the Antitrust Division’s best tool for stopping illegal cartel behavior. Reports of the Amnesty Program’s demise have been greatly exaggerated.
more importantly what does stolt nielsen mean for in house counsel
More importantly, what does Stolt-Nielsen mean for in-house counsel?

There are two very important lessons to take away from this case for in-house counsel

1. Deal with potential misconduct quickly

and effectively.

2. Effective compliance is necessary to

protect the company.

dealing with allegations of illegal behavior
Dealing with Allegations of Illegal Behavior

The main issue in this case was whether and when SN effectively stopped its illegal conduct.

In the SN case, the government did not believe that SN had effectively stopped the illegal behavior. However, SN had taken corrective measures to stop the behavior and had created a strong record that it had acted properly. The trial court relied on this record in dismissing the case.

When a company becomes aware of potential illegal activity, the actions it initially takes can often play a defining role in the eventual outcome. You need to immediately come up with a plan on how to stop the illegal behavior and minimize risk for the company in the future.

- Ascertain the relevant facts as quickly as possible.

- Determine whether outside counsel is needed to launch an internal investigation

- Evaluate whether employees alleged to have violated the law may continue their employment

- Eliminate the risk of document destruction or other types of obstruction

- Determine what Sarbanes-Oxley obligations are created

Even if you are not stopping potentially illegal behavior with amnesty in mind, there are many other reason to do so.

- SOX reasons

- Private actions

AGAIN, what the company does immediately after discovering alleged misconduct is critical to the final outcome.

the importance of effective compliance programs
The Importance of Effective Compliance Programs

In the trial court’s decision dismissing the case, the court looked at SN’s compliance program as proof that it had effectively stopped the illegal behavior. The court found that the company’s compliance program did what it was supposed to do; it put an end to competitor contacts and brought vigorous competition back to the market.

While it would have been better for SN to have an effective compliance program from the outset, SN’s compliance program played an important role in saving them from criminal liability.

The SN compliance program was effective because it was thorough and focused on areas that were particularly problematic. Effective compliance program focus extra attention on areas where the greatest danger exists. The SN compliance program reflected the definition of effective compliance found in Chapter 8 of the US Sentencing Guidelines (the government’s definition of effective compliance).

At the end of the day, SN’s compliance program provided a clear benefit to the company even though it was not started until after the bad behavior had taken place. The lesson here is clear: it is never to late to start an effective compliance program.


FTC Recent Activity

1. Do Not Call Violations

A) Settlements Announced in November 2007

Craftmatic - $4.4 million

ADT - $2 million (two of ADT’s authorized dealers also paid penalties of $20,000 and $25,000)

Ameriquest - $1 million

Guardian Communications - $150,000 but $7.8 million civil penalty suspended due to inability to pay

B) Settlements in recent years

DirecTV - $5.3 million in December 2005 (largest ever)

Bookspan - $680,000 in February 2006

Flagship Resort Development - $526,000 in February 2005

Cutting Edge Marketing - $345,000 in September 2005

Columbia House - $300,000 in July 2005


FTC Recent Activity (cont.)

C) 145 million numbers on the DNC Registry

D) Safe Harbor under Telemarketing Sales Rule

Established Business Relationship – (a) Purchase within prior 18 months, or (b) inquiry within prior 3 months.

E) Exemptions

Surveys, political groups, and charities.

F) Auto-Dialers and Abandoned Calls

Call is considered abandoned if sales representative does not pick up within 2 seconds of answering.

No violation if telemarketer can assure that 3% or less of calls are abandoned. Some states (e.g. Florida) have no such safe harbor. The FTC is aware of this dichotomy.

ftc recent activity cont
FTC Recent Activity (cont.)
  • Credit – Offers of credit to sub-prime market, apart from mortgages. FTC looking into relationships between banks and appraisers, and sub-prime credit card fees and disclosures.
  • Spurious open-ended credit (key, reasonable expectation of repeated sales.)
  • Buying Clubs

5. Privacy Breaches

Choice Point

FTC examining under unfairness theory rather than deception theory.

  • Affiliate Marketing Rule

7. Testimonials

about troutman sanders llp
About Troutman Sanders LLP
  • Troutman Sanders LLP is an international law firm with over 650 attorneys and 12 offices in North America, Europe and Asia.
  • Troutman Sanders’ attorneys provide counsel and advice with virtually every aspect of civil and commercial law. With over 40 areas of legal practice, the firm is defined by its considerable knowledge base and proactive approach of addressing business and legal challenges.
  • In 2006 and 2007, BTI Consulting Group, an independent market research and management company, ranked Troutman Sanders as a “Go-To Law Firm,” “National Power Player,” and “Fortune 1000 Primary and Recommended Law Firm” based on individual interviews with corporate counsel of privately held companies and Fortune 1000 corporations.
june ann sauntry
June Ann Sauntry

June Ann has acted as litigation counsel and has provided antitrust counseling and compliance programs for companies representing a broad range of businesses including entertainment, utilities, transportation, communications, healthcare, mining, agriculture, construction, and manufacturing and has served as antitrust counsel to trade and professional groups. On behalf of numerous clients, she has dealt with the Antitrust Division of the U.S. Department of Justice, the Federal Trade Commission, and state attorneys general in connection with merger/acquisition investigations, civil antitrust investigations, and criminal antitrust grand jury investigations. She has served as Chairman of the Antitrust Section of the Georgia Bar Association and Programs and Publications Chairman of The Antitrust Section of the Federal Bar Association. June Ann maintains offices in both Atlanta and Washington, D.C.

Tel.: 404.885.3210/202.274.2941


nathan j muyskens
Nathan J. Muyskens

Nate represents corporations, financial institutions, investment firms and individuals in all

aspects of criminal investigations and litigation, both pre- and post-indictment, as well as

in complex civil litigation, including class, shareholders and whistleblower actions in

federal and state courts. Nate represents clients before the Department of Justice, the

Securities & Exchange Commission, the Federal Trade Commission, the National

Association of Securities Dealers, the Department of Defense, the United States

Congress, and other federal and state regulators. He has also conducted

numerous internal investigations, advised with respect to corporate governance issues,

and been involved in the implementation of compliance codes.

Nate has particular expertise in counseling and defending clients involved in criminal

antitrust investigations in a variety of industries, such as defense, pharmaceuticals,

energy, chemicals, home products and technology. He also represents clients in all

types of civil antitrust litigation on both the federal and state levels. Nate also dedicates a

portion of his practice to providing antitrust compliance training and advice.

Tel.: 202.274.2900


charles p greenman
Charles P. Greenman

Charles' practice is concentrated on trade regulation and commercial

litigation. He has represented numerous manufacturers, distributors, retailers, financial

institutions and service providers in investigations by federal, state and municipal

regulatory agencies. He has represented clients in proceedings brought by State

Attorneys General in more than twenty states as well as by the FTC. He is also an

experienced commercial litigator. He routinely appears in both state and federal courts. He

has defended numerous class actions relating to a wide variety of consumer and

securities issues

Charles was the Assistant Commissioner of the Department of Consumer Affairs for the

City of New York. He also served as the Consumer Advocate for the City. Mr. Greenman

has served as Chairman of the Robinson-Patman Act Subcommittee of the New York

State Bar Association and Chairman of the Committee on Consumer

Affairs of the New York County Lawyers’ Association.

Tel.:(212) 704-6233