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Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008.

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Presentation on theme: "Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008."— Presentation transcript:

1 Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008

2 Sec. 1 Sherman Act Every contract, combination... or conspiracy in restraint of trade or commerce... is a felony. MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

3 Criminal Penalties for Violations Fines of up to $100 million for corporations Fines of up to $10 million for individuals, or up to 10 years in prison, or both In certain cases, penalty of 2x gain or injury MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

4 Criminal charges for officers or employees include indictments, possible arrest, booking, fingerprinting, and mug shots You may endure great personal and family strain from grand jury investigation, criminal trial, sentencing, and incarceration MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

5 Civil Lawsuits Private individuals may also enforce the antitrust laws in civil suits. Successful plaintiffs may recover treble damages plus costs and attorneys fees MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

6 How did we get here? STB decisionno more immunity from antitrust laws for motor carrier industry AMSAs response to STB decision Effect of antitrust laws on pricing decisions, other activities MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

7 STB Decision May 4, 2007 Ended antitrust immunity for 11 motor carrier rate bureaus, including HGCBC, effective January 1, 2008 No more immunity for agreements on collective rates, classifications, mileage guides, rules, and rate adjustments for general application based on industry average carrier costs MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

8 AMSAs Response Dissolved HGCBC effective 1/1/08 Petitioned STB for clarification on continued use of 400-N tariff as the basis for individual carrier tariffs Developed antitrust guidelines Got out of the business of tariff publishing MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

9 STB Denied Petition for Clarification The time has come to complete this final step of making the motor carrier industry fully competitive. Sanctioning the use of existing tariffs as the basis for individual tariffs could create a partial shield over behavior that... should be fully subject to the antitrust laws. MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

10 STB Denied Petition for Clarification But the STB also said, Our denial of the HGCBCs petition should not be seen as a suggestion... that the [use of 400-N as the basis for an individual tariff] would in fact violate the Sherman Act. STB left that determination to the Justice Department and the courts MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

11 Carriers Must Now Have Individual Tariffs Tariffs must be published -- they must be available on request from shippers and from the STB There is no particular form for tariffs, but they must include the FMCSA consumer protection rules and the STB requirements for levels of liability, and meet statutory requirements on estimates, collection of charges, and rating of shipments MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

12 Pricing Under the Sherman Act Price fixing is a per se violation of the Act, an agreement in restraint of trade; it includes agreements with competitors concerning prices, terms of sale, levels of service, price changes, discounts, rebates, credit terms, pricing methods, sales periods, and other matters relating to or affecting price or an element of price. MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

13 Per Se Violations Generally, DOJ and courts look to nature of the restraint on competition, and extent of any injury, under a rule of reason in determining if Sherman Act is violated But some acts are so egregious that they are considered violations as soon as the facts of the agreement are establishedthese are per se violations, such as price fixing MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

14 Division of Territories or Customers is also Per Se Illegal Competitors may not agree to divide up customers, markets, or territory that they will each servethis is also a per se violation of the Sherman Act MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

15 Pricing Decisions Must be Unilateral Carrier must determine their own rates, discounts and terms of service without any agreement, oral or in writing, with competitors Carriers may match competitors rates, discounts or termsbut if there is any discussion of rates, then match looks like an agreement to fix prices (conscious paralellism vs. establishment of conspiracy) MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

16 Individual Tariff Decisions STB would not approve use of 400-N as basis for individual tariff, but did not say that it automatically violates antitrust laws The greater your tariff varies from 400-N as it existed on 12/31/07, the less likely that you will be held in violation of antitrust laws Need to revise rates and other competitive terms to make your tariff customized MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

17 AMSA Antitrust Guidelines Trade association meetings are breeding grounds for antitrust violationsyou meet with competitors for several days and talk about your businesses AMSA has developed guidelines for all AMSA meetings to avoids violating the law MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

18 AMSA Antitrust Guidelines All meetings shall have agendas and minutes, and participants must agree to avoid sensitive topics; when in doubt, talk to your counsel, and/or leave the room Topics to avoid include rates, rate adjustments, surcharges, discounts, rebates, credit terms, claims payment terms, insurance rates, terms of contracts, costs (including wage and salary rates or owner-operator compensation) or profits MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

19 AMSA Antitrust Guidelines Other topics to avoid include service volume or capacity, future sales strategies, new service plans, or customer or supplier lists Cannot discuss not competing for customers, or dividing up customers or territory, or refusing to deal with certain customers, suppliers or competitors, or requiring customers to purchase additional products or services to get a desired product or service (illegal tie-in) MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

20 AMSA Antitrust Guidelines These rules apply during the entire AMSA meeting, at the committee meetings, during the general sessions, at social events and receptions and on the golf course In addition, these guidelines should direct your business behavior at all times after you leave the AMSA meeting MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

21 Industry Data Collection Collection of industry data on sensitive subjects and distribution among competitors may facilitate conspiracies to fix prices or otherwise violate antitrust laws DOJ has developed guidelines for data collection that creates a safety zone for industries and associations MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

22 Data CollectionDOJ Safety Zone Must be collected by third party, such as an association Data must be at least 3 months old when distributed Each data point must be aggregated, have at least 5 participants contributing input, and no participant may have more than 25% market share for that market MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

23 DOJ Antitrust Investigations Criminal enforcement through a federal grand jury investigation (per se violations) Civil enforcement (for other than per se violations) may be handled with Civil Investigative Demandrequests for document production, interrogatories, personal interviewsmay result in injunction of illegal conduct MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

24 Private Enforcement Actions Conviction or guilty plea in criminal case is prima facie (on its face) evidence of violation in private antitrust action Private suits alleging agreements to fix prices or other violations will involve discovery of shipping records, customer reports, phone records, meetings, s, and industry data to establish evidence of agreement MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

25 Private Enforcement Actions Conviction or guilty plea in criminal case is prima facie (on its face) evidence of violation in private antitrust action Private suits alleging agreements to fix prices or other violations will involve discovery of shipping records, customer reports, phone records, meetings, s, and industry data to establish evidence of agreement MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

26 Beach/Moad Cases Private antitrust suits alleging price fixing among 6 carriers and AMSA based on fuel surcharge methodology; motion to dismiss denied by Judge Houck on March 31 Case now going into discovery phase; potential for additional defendants to be named MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008

27 Questions and Answers Richard P. Schweitzer, PLLC 1776 K Street, N.W. Ste. 800 Washington, D.C (202) MOVING TODAY TRANSFORMING TOMORROWORLANDO, FL APRIL 1 – 5, 2008


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