Criminal Antitrust Update - May 2012



- Industry Scorecard

Publishing: Although the case is civil rather than criminal, the U.S. Justice Department’s Antitrust Division (Division) launched a significant price-fixing lawsuit against several publishers regarding alleged pricefixing related to their sales of E-books. Apple, Inc. was included among several publishers such as Simon & Schuster, HarperCollins, and Penguin Group. Three of the publishers (Hachette, HarperCollins, and Simon & Shuster) proposed to settle the Division’s claims when it announced the lawsuit. Hachette and HarperCollins were also reportedly negotiating a deal with a number of state attorneys general to settle related allegations. Under the terms of the federal settlements, the publishers will agree to terminate certain agreements with Apple related to the sale of E-books. The conditions of the settlement include prohibitions against taking any action that might limit a retailer’s ability to set pricing and discounts for E-books and against sharing sensitive information with competitors. The settling publishers are also required to implement improvements to their antitrust monitoring and compliance functions. Apple has publicly disputed the allegations in the complaint, pointing instead toward Amazon’s former “monopolistic grip” on the publishing industry, and has indicated it plans to contest the matter in court....

- Municipal Bond Bid-Rigging Jury Convictions

Three former General Electric Capital executives who were on trial for alleged bid-rigging in the municipal bond markets from 1999 through 2006 have been found guilty of conspiring to rig bids in auctions for municipal bond contracts. The government claimed that the executives paid brokers for information that was later used to submit artificially low bids for investment services being auctioned to cities and towns. In the specialized market for guaranteed investment contracts that was at the heart of the case, financial companies would agree to pay municipalities a fixed interest rate and then try to invest bond funds at a greater rate of return to make a profit, so deflated bids would arguably increase the defendants’ profit margins. The defendants were also accused of submitting “courtesy bids” designed to help co-conspirators obtain business. The defendants were convicted of conspiracy, wire fraud, and defrauding the United States....

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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