March Antitrust Bulletin

March 2, 2016

FTC Urges U.S. Supreme Court to Reject McWane Appeal

On February 5, 2016, the Federal Trade Commission opposed McWane Inc.’s petition to the U.S. Supreme Court to review the 11th U.S. Circuit Court of Appeals’ affirmation of a November 2015 FTC opinion that McWane unlawfully maintained monopoly power through a rebate program for U.S.-made iron pipe fittings, thus denying any competitive justification for the exclusive dealing arrangement.  In its opposition brief, the FTC argued that its finding that McWane possessed monopoly power was supported by both direct and indirect evidence, and that “further review is not warranted.”  The FTC refuted McWane’s argument on appeal that it lacked monopoly power as a matter of law because a rival had “successfully and substantially entered” the market, reasoning that the rival’s entry into the market was not successful from an antitrust perspective because it had no constraining effect on McWane’s monopoly prices.  Further, in arguing that an alleged monopolist may not be liable for exclusionary conduct that is justified by any normal business purpose, the FTC argued that McWane conflated two distinct theories of antitrust liability and failed to provide any persuasive pro-competitive business justifications. 

Construction Company to Pay Nearly $1.8 Million for Federal Contracts Conspiracy

MCC Construction Company has agreed to pay nearly $1.8 million in criminal penalties and forfeiture for conspiring with two companies that were eligible to receive federal government contracts meant for small, disadvantaged businesses, to obtain such government contracts with the understanding that MCC would, illegally, perform all of the work.  Under the illegal agreement, the companies that were awarded these government contracts kept 3 percent of the value of the contracts for allowing MCC to use the companies’ small business status to win the contracts.  MCC waived the requirement of being charged by way of federal indictment, agreed to the filing of the information, and accepted responsibility for its criminal conduct.  The plea agreement − announced in a Feb. 2, 2016, press release by the Department of Justice − is subject to the court’s approval at a sentencing hearing scheduled for March 15, 2016. 

Pipe Company Owner Receives 32-Month Sentence for Fraud and Bribery Conspiracy

On February 2, 2016, the Department of Justice announced that American Pipe Bending and Fabrication Company Inc. and its owner were sentenced for committing fraud and paying bribes to a purchasing manager at Consolidated Edison of New York in exchange for the manager’s efforts to steer contracts to the company.   The manager steered the contracts to American Pipe by secretly providing its owner confidential competitor bid information, causing Con Ed to pay higher, noncompetitive prices for materials.  Con Ed was further defrauded as American Pipe requested a 14 percent price increase based on a fake email that purported to document a “Steel Mill” price increase that American Pipe was passing on to Con Ed − resulting in approximately $1.4 million in actual losses to Con Ed.  After pleading guilty to committing wire fraud and conspiring to defraud, American Pipe’s owner was sentenced to 32 months and a day in prison, while the company and its owner were sentenced to pay over $1.7 million in fines and restitution to Con Ed.  

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