2016: A Positive Outlook for Antitrust LitigationCertificate Clearing Corporation
Mon Feb 08, 2016
Antitrust Actions to Face Strong Year of the Monkey
Last year was a boon year for the US Department of Justice, and 2016 is likely to bring more successes. The auto industry was under especial scrutiny, as were shipping and air cargo providers. This win streak for the DOJ was a continuation from 2014, which also saw companies across the board pay billions in fines resulting from antitrust violations.
That trend is also a good sign for private antitrust actions, which often piggyback on DOJ investigations. Facing stronger pitching from the DOJ has made companies more susceptible to antitrust class actions at large. Most recently to strike out were credit default swap-dealing banks, which settled a private class action for some $1.9 billion. At the plate are many of those same banks, this time for anticompetitive collusion in the foreign exchange market. And on deck once again are domestic airlines that have been getting attention recently for various offenses.
Mergers and acquisitions are facing a similarly tough regulatory year. The Staples/Office Depot deal, recently approved by the European Union, remains under sights at the DOJ and FTC. This follows a year in which multiple big-name M&As were turned down. Time Warner/Comcast and Bumble Bee/Chicken of the Sea proposals were both struck down, much to the fiscal chagrin of the companies involved.
This close oversight isn’t a result of passive fluctuations; it’s a conscious policy move on the part of the DOJ. On September 9, 2015, Deputy Attorney General Susan Yates issued a memorandum (now dubbed the “Yates Memorandum”) laying out some policy changes at the DOJ for the new year. In one of the letter’s points, Yates declares, “Both criminal and civil attorneys should focus on individual wrongdoing from the very beginning of any investigation of corporate misconduct.” (Read the memorandum here.) And they have ⎯ or were already in the process: average prison terms for corporate misconduct have increased, while 50% more people were sentenced for such crimes last year than in 2014.
That focus on individuals may appear to be taking pressure off of companies at a broader scale, but that’s unlikely. Stricter punishment for individuals should incentivize implementation of tighter compliance codes. In fact, such policies may even be more effective at curbing anticompetitive practices, as companies often bend much farther then their individual components. That’s exactly Yates’ hope.
In addition, while price-fixing may be the king of all antitrust violations, the government is looking to crack down on aggressive unilateral pricing schemes as well. This is particularly true in pharmaceuticals, after a year of being in the media hot seat brought two of the industry’s companies ⎯ Valeant and Turing ⎯ before Congress.
All in all, while things are looking down for the stock market in 2016, things are looking up for antitrust plaintiffs and investigators. Naturally, we’ll be keeping a close watch on all of it, so check back for updates as the dust – and litigations – settles.