March Antitrust Bulletin

March 10, 2014

Fourteen-Year Sentence in EPA Superfund Case A New Antitrust Record

On March 3, 2014, Gordon D. McDonald was sentenced to 14 years’ imprisonment for his “central role” in bid-rigging, kickback and fraud conspiracies related to two U.S. Environmental Protection Agency Superfund sites in New Jersey. This is the longest prison sentence ever imposed for an antitrust crime, and is more than double the previous record set late last year. A jury previously found McDonald guilty on 10 counts of an indictment alleging, in part, that McDonald and his co-conspirators agreed to rig bids and allocate subcontracts for wastewater treatment supplies and services to one of the Superfund sites. According to William Baer, assistant attorney general of the DOJ’s Antitrust Division, the sentence “reflects the seriousness of the crimes committed [and] shows that if you engage in bid-rigging, fraud and kickback schemes your illegal actions will result in a longer prison sentence.”

District Court Dismisses Chocolate Antitrust Direct Purchaser Class Litigation

On Feb. 26, 2014, in In re Chocolate Confectionary Antitrust Litigation, the Pennsylvania district court that previously certified a class of direct chocolate purchasers suing Mars, Inc., Nestle USA Inc., and The Hershey Co., dismissed the class action on grounds of insufficiency of evidence. Following approximately six years of litigation, a comprehensive merits discovery during which the plaintiffs had “nearly unfettered access to defendants’ records,” and hundreds of depositions, the court concluded that the plaintiffs presented the court with “nothing more than speculation,” and the court could not find that anything scandalous or improper occurred within the United States. The court noted that the chocolate defendants had increased their prices in a parallel manner during the relevant time period. Notwithstanding this parallel conduct, the court found that the plaintiffs were unable to demonstrate that these actions resulted from something other than the heavily concentrated nature of the chocolate market.

First Charges in Ocean Shipping Services Antitrust Conspiracy

On Feb. 27, 2014, the DOJ’s Antitrust Division filed its first charges since it began its investigation into potential price fixing, bid rigging and other anticompetitive conduct in the international ocean shipping industry. The Chilean corporation Compañía Sud Americana de Vapores S.A. (CSAV), against which the charges were brought, agreed to plead guilty and pay a criminal fine of $8.9 million for its role in fixing prices, allocating customers and rigging bids of international ocean shipping services for “roll-on, roll-off cargo” — noncontainerized cargo that can be rolled onto and rolled off of an ocean-going vessel, such as cars and trucks and construction, mining and agricultural equipment. CSAV also agreed to cooperate with the DOJ’s ongoing investigation of this conspiracy.

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