Executive Order Addresses DOJ’s Fight Against Hoarding Activity

On the afternoon of March 23, 2020, United States Attorney General William Barr participated in the Coronavirus Task Force press briefing. Attorney General Barr revealed that, on March 23, President Trump issued an executive order allowing prosecution of hoarding that threatens the supply of necessary medical and health resources.[1] Once specific materials are designated as scarce by the Secretary of Health and Human Services (HHS), individuals are prohibited from accumulating these items in excess of reasonable personal or business needs or for the purpose of selling these items in excess of prevailing market prices. As a result of this executive order, it is a crime to engage in this prohibited activity.

This is the second executive order addressing the allocation of health and medical resources. On March 18, 2020, President Trump signed an executive order under the Defense Production Act (the Act) of 1950, as amended (50 U.S.C. 4501 et seq.), and section 301 of title 3, United States Code permitting the Secretary of Health and Human Services to use the authority under section 101 of the Act, in consultation with the Secretary of Commerce and other executive department and agency leaders, to control the distribution of materials needed to respond to the pandemic – including personal protective equipment and ventilators. Continue Reading

Protection of Consumers and the Public in Response to the COVID-19 Pandemic

Federal and state authorities are working to protect consumers and the public during the current COVID-19 pandemic. The Department of Justice (DOJ) issued a cautionary press release announcing its “intention to hold accountable anyone who violates the antitrust laws of the United States in connection with the manufacturing, distribution, or sale of public health products such as face masks, respirators, and diagnostics.”[1] On March 17, the DOJ announced civil process changes including merger investigation processes, electronic filing and virtual meetings under a mass telework directive.[2]

While the federal government has no official law on the books that prohibits price gouging, in times of emergency such as these, the DOJ along with the individual states will help fill in the gaps in order to avoid untoward behavior by bad actors. Recent disaster declarations by President Donald Trump and numerous states can trigger laws related to collusive pricing practices.[3] Because states are usually the first movers when it comes to stopping price gouging during times of crisis, it is imperative to understand individual state laws related to consumer protection and price gouging. Continue Reading

The Need for Special Masters in Complex Antitrust Cases

The ABA resolution advises the bench and bar that utilization of special masters has evolved over the last 50 years from the rare exception to a commonplace tool to manage complex litigation, including antitrust cases.

In 2019, the American Bar Association issued a resolution “urging” state and federal courts “to make greater and more systematic use of special masters to assist in civil litigation” “to aid in the just, speedy and inexpensive determination” of cases, as mandated by the federal rules of civil procedure. The ABA resolution advises the bench and bar that utilization of special masters has evolved over the last 50 years from the rare exception to a commonplace tool to manage complex litigation, including antitrust cases.

Still, courts and parties are occasionally reticent to use masters, perhaps due to inexperience with the concept, misconceptions about the benefits or unfounded concerns about the costs. This article intends to discuss the law governing special masters, detail the various ways special masters can benefit the courts and litigants, and provide some best practices concerning their engagement.

What Rules Govern Special Masters Engagements?

In 1957, the U.S. Supreme Court in La Buy v. Howes Leather, an antitrust case, held that the appointment of a special master by a district judge was not justified by docket congestion, issue
complexity and the substantial time commitment demanded by the case; rather, “exceptional circumstances” were necessary. By 2003, however, the law had shifted as Federal Rule of Civil Procedure 53 was amended due to swelling federal dockets to expressly authorize appointment of special masters where pretrial or post-trial matters “cannot be effectively and timely addressed by an available district judge or magistrate judge of the district.” The advisory committee notes recognize: “The appointment of masters to participate in pretrial proceedings has developed extensively over the last two decades as some district courts have felt the need for additional help in managing complex litigation.”

Recognizing this shifting legal landscape, the U.S. Court of Appeals for the Third Circuit in Glover v. Wells Fargo Home Mortgage, a 2015 consumer protection case involving mortgage foreclosures, affirmed the appointment of a special master, over the objection of the plaintiff, to assist the district judge and the assigned magistrate judge with escalating discovery disputes. Judge Patty Shwartz of the U.S. Court of Appeals for the Third Circuit, writing for the court, explained: “While the 1957 La Buy court viewed docket congestion, issue complexity, and the time-consuming nature of a case as not justifying the appointment of a special master, the 2003 version of Rule 53 reflects the changing practices in using special masters. As the advisory committee specifically recognized, the appointment of masters to participate in pretrial proceedings has developed extensively over the last two decades to aid district courts in managing complex litigation.” Continue Reading

Should Antitrust Laws Tackle Privacy Issues? DOJ and State AGs Continue Google Investigations in Response to Privacy Concerns

Months have passed since it was first revealed in July 2019 that the Department of Justice (DOJ), in response to various stakeholders’ concerns, was conducting a review into certain “market-leading online platforms” and whether they engaged in antitrust violations.[1] U.S. Attorney General William Barr reiterated that the government was “taking a closer look at the leading online platforms and the competitiveness of digital markets.”[2] He emphasized the bipartisan effort to review the practices of both Google and Facebook, noting that a similar coalition was formed approximately 20 years ago. Notably absent from the Google inquiry is antitrust chief Assistant Attorney General Makan Delrahim, who recused himself because he had represented the company while he was in private practice.

Almost all state attorneys general are also conducting a parallel investigation into Google. Led by Ken Paxton of Texas, the attorneys general are looking at “Google’s overarching control of online advertising markets and search traffic that may have led into anticompetitive behavior that harms consumers.”[3] Reaching beyond antitrust concerns, the state AGs have also raised other issues, most notably whether the FTC should be investigating Big Tech’s possession of consumer data and whether that raises privacy concerns.[4]

Earlier this month, officials from the DOJ met with various state AGs to discuss their respective findings from their investigations. At this time it is unclear whether the dual inquiries will ever merge into one cohesive effort; however, it is clear that the probes are very much active. Recently, the state AGs reached an agreement with Google regarding consultants retained to assist with their probe as the investigation proceeds.[5] The focus of the inquiry is to determine whether Google “undermined consumer choice, stifled innovation, violated users’ privacy, and put Google in control of the flow and dissemination of online information.”[6] Continue Reading

Can ‘Hijacking’ a Single Cryptocurrency Network Violate Antitrust Laws?

On Jan. 28, a federal judge in Florida dismissed without prejudice the nation’s first antitrust suit involving cryptocurrency. The plaintiff, United American Corporation Inc., (UAC), alleged that five entities and six individuals conspired to hijack and centralize the Bitcoin Cash network by combining their efforts during a crucial software upgrade vote, causing the diminution in value of UAC’s cryptocurrency mining operation. The court’s decision to permit UAC to amend its complaint leaves open the potential applicability of antitrust laws in this already legally opaque industry.

Bitcoin Cash and Blockchain

Bitcoin Cash is a form of cryptocurrency. Cryptocurrencies are peer-to-peer versions of electronic cash. Since there is no central financial intermediary, a decentralized “blockchain” network of ledgers verifies and records the currency’s transactions. Blockchain networks depend upon cryptocurrency “miners” to verify and record new transactions. Miners compete by solving complex mathematical equations and are compensated for their efforts with newly minted currency. UAC and the defendants are participants in the community of software developers, miners and exchanges that supports Bitcoin Cash.

Background of the Case

In 2018, Bitcoin Cash was preparing for a software upgrade, which led to what is known in the industry as a “fork.” Forks allow individual miners to “vote” on the proposed changes in the rules governing aspects of the operation of the blockchain. Miners vote by implementing the relevant upgrade of their choice and then using that upgrade to “mine” the currency – voting by doing, as it were. Disagreements among miners can lead to “hard forks,” where a single currency and corresponding blockchain split into new currencies and new corresponding blockchains governed by their own respective rules.

According to UAC, there were two competing potential upgrades, known as Bitcoin ABC and Bitcoin SV. UAC was a proponent of the Bitcoin SV upgrade. Apparently, some of the defendants were proponents of the Bitcoin ABC upgrade and allegedly rallied others to their cause, similar to how a shareholder might wage a proxy war to install a new director.

In the end, the Bitcoin ABC upgrade won the vote. However, although Bitcoin ABC received more votes than Bitcoin SV, both systems survived the fork and now compete in the market for users and miners. After the vote and subsequent split, some of the defendants associated with Bitcoin ABC installed checkpoints in the software to prevent miners from reversing the software upgrade, in essence locking in the upgrade and irreversibly splitting the two systems. Continue Reading

When Routine Merger Review Opened More Than a Can of Tuna

The shelf-stable tuna industry has been decidedly unstable behind the shelves. In 2014, two of the “big three” industry leaders – Bumble Bee Foods and Chicken of the Sea – announced a proposed merger that would have swamped the then-industry leader StarKist.

The shelf-stable tuna industry has been decidedly unstable behind the shelves. In 2014, two of the “big three” industry leaders—Bumble Bee Foods and Chicken of the Sea—announced a proposed merger that would have swamped the then-industry leader StarKist. Routine HSR (Hart-ScottRodino Antitrust Improvements Act), antitrust scrutiny and the eventual rejection of the $1.5 billion merger by the Department of Justice turned out to be the least of the companies’ problems.

The tuna merger approval process, which traditionally includes turning over both deal and relevant market documents to the Department of Justice or Federal Trade Commission, uncovered a price-fixing scheme that erupted into a subsequent criminal investigation, costly civil lawsuits, crushing criminal fines, a bankruptcy filing and potential lengthy jail time for criminally charged executives. The landscape of the canned tuna industry has now been shaken in ways not predicted when the potential three-to-two merger was announced. Merging companies should pay attention to this tuna tale and go into merger reviews with their eyes wide open.

The proposed merger between Thai Union Group P.C.L., owner of Chicken of the Sea, with Bumble Bee would have combined the second and third largest sellers of shelf-stable tuna in the United States. The parties agreed to drop their plans to merge after the Department of Justice informed them that it had serious concerns that the proposed transaction could substantially harm competition. The DOJ made clear, however, that this was not a standard merger blocked due to potentially negative competitive effects. Assistant Attorney General Bill Baer of the department’s antitrust division said at the time, “our investigation convinced us— and the parties knew or should have known from the get-go—that the market is not functioning competitively today, and further consolidation would only make things worse.” Continue Reading

Antitrust Agency Turf War Over Big Tech Investigations

The Federal Trade Commission and the Department of Justice have found themselves under the microscope as calls for antitrust investigations into “Big Tech” companies escalate.

The Federal Trade Commission and the Department of Justice have found themselves under the microscope as calls for antitrust investigations into “Big Tech” companies escalate. The agencies, which share civil antitrust enforcement authority, are reportedly engaged in a turf war over investigations of companies operating in the social media, online retail, search engine and app store space. In September, FTC Chairman Joseph Simons reportedly sent a letter to Assistant Attorney General Makan Delrahim expressing concern about the agencies’ interactions. Meanwhile, they both appear to be investigating the same Big Tech companies, contrary to a clearance agreement penned by the agencies in 2002 and, reportedly, a more recent agreement concerning Big Tech. What is causing this largely uncharacteristic dispute and what effect will it have on enforcement? Continue Reading

Does Section 2 of the Sherman Antitrust Act Need More Bite?

Last month, two members of Congress introduced the Monopolization Deterrence Act, which would allow the Justice Department and the Federal Trade Commission to seek civil penalties for monopolization offenses under U.S. antitrust law.

After almost 120 years, does the Sherman Antitrust Act need statutory tweaking? Sens. Amy Klobuchar and Richard Blumenthal seem to think so. Last month, they introduced the Monopolization Deterrence Act, which would allow the Justice Department and the Federal Trade Commission to seek civil penalties for monopolization offenses under U.S. antitrust law. The bill would create two versions of a penalty for antitrust violations under Section 2, either 15% of a company’s total U.S. revenue of the previous calendar year or 30% of the company’s total U.S. revenue related to the unlawful conduct during the time it took place – whichever amount is greater. Section 2237 names no particular offenders or recent events as its impetus. Whether such massive civil fines would end up in the hands of the injured or just thrown into the public treasury remains unclear under the language of the bill.

The Sherman Antitrust Act already carries hefty civil penalties in terms of automatic treble damages, injunctive relief and related lengthy consent decrees, reasonable attorney fees and costs and possible disbarment from government contracts. Moreover, criminal penalties are also available for conspiratorial conduct under Section 1, but also arguably for predatory monopoly conduct under Section 2, with fines not to exceed $100 million for a corporation, or $1 million for an individual, and a prison term of up to 10 years. Continue Reading

Private Antitrust Litigation and State Action Immunity in the U.S. since 2015

An article written by Partners Carl Hittinger and Danyll Foix and Counsel William DeVinney was published Sept. 20, 2019, by Global Competition Review. The article, “United States: Private Antitrust Litigation,” reviews private antitrust litigation developments in the five years since the U.S. Supreme Court’s 2015 ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission, which limited application of state action immunity.

Read the article.

CLE Webinar Series: Antitrust and White-Collar Investigations – What You Should Know

We invite you to join us for one, two or all three of our upcoming high-level webinars offering vital insights into antitrust issues and white-collar investigations. These CLE webinars will be led by our knowledgeable and experienced attorneys, many of whom are former prosecutors and investigators who worked for the Department of Justice (DOJ) and the Federal Trade Commission (FTC). They will discuss the new FTC, the revamped Trump DOJ and State Attorneys General Offices, the top priorities of those government organizations and best practices for dealing with investigatory agencies at the state and federal levels.

Register now for one or all of the webinars in this series:

 1 hour of CLE credit is approved for CA, NY, TX, PA and available via reciprocity in NJ for each session.

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