Antitrust and Unfair Competition Law


Antitrust and Unfair Competition Law E-Brief:  March 2021 Edition


Fourth Circuit Affirms District Court Divestiture Order In Private Party Challenge To Consummated Merger

Kerry C. Klein, Farmer Brownstein Jaeger Goldstein & Klein LLP

The United States Court of Appeals for the Fourth Circuit addressed a private party’s challenge to a consummated merger years after-the-fact in Steves & Sons, Inc. v. JELD-WEN, Inc., No. 19-1397, 2021 U.S. App. LEXIS 4733 (4th Cir. Feb. 18, 2021), in a thorough opinion addressing several antitrust issues. The Antitrust Division of the Justice Department submitted an amicus brief, after twice investigating the merger and declining to act.


Molded doors used in most homes are made by placing a wood frame and a solid or hollow core between two “doorskins” that make up the front and back of the finished door. This case concerns events in the American doorskin market between 2012 and 2016.  Id. at *4.  Steves and JELD-WEN sold molded doors. JELD-WEN also made doorskins, some of which it used in its own doors, and some of which it sold to other manufacturers (“Independents”). Id. From 2001 through 2012, there were three doorskin manufacturers in the United States: JELD-WEN, Masonite, and CMI. In 2012, Masonite had 46% market share, JELD-WEN had 38%, and CMI had 16%. All three were vertically integrated, meaning that each made their own molded doors and also sold doorskins to the Independents. Id. at *4-5.  From 2003-2010, Steves and JELD-WEN had a long-term agreement that covered 90% of Steves’s doorskin purchases. This deal fell apart in 2010, but Steves signed another long-term agreement with JELD-WEN in May 2012 (the “Supply Agreement”). Under the Supply Agreement, Steves committed to purchasing at least 80% of its doorskins from JELD-WEN, with one exception: if another supplier offered a price at least 3% below JELD-WEN’s, and JELD-WEN refused to match, Stevescould purchase any quantity of doorskins from that supplier. Prices under the Supply Agreement varied annually based on JELD-WEN’s costs. Id. at *5.

In early 2012, JELD-WEN acquired CMI (which operated the Towanda plant), reducing the number of American doorskin manufacturers from three to two. Id. at *7. JELD-WEN didn’t notify the Department of Justice’s Antitrust Division of the merger until July 2012, after it entered into long-term supply contracts with Steves and two other large Independents. Id. The Justice Department opened an investigation and contacted Steves, who responded that it didn’t oppose the merger. The Department closed its investigation in September 2012, and JELD-WEN and CMI consummated the merger in October 2012.  JELD-WEN spent significant time and resources integrating the Towanda plant’s doorskin and trim-board manufacturing processes over the next few years. Id. at *7-8.

Steves had issues with JELD-WEN almost immediately after signing the Supply Agreement, including issues with the quality of products and serial price increases.  Id. at *8-11. For the next few years, the parties held contentious negotiations, which resulted in Steves triggering the dispute resolution procedures in March 2015. Id. at *12.  Despite months of negotiations, the dispute was unresolved by December 2015, when Steves asked the Justice Department to reexamine whether the JELD-WEN/CMI merger had been anti-competitive. Id. The DOJ investigated, but closed its investigation without acting. Id. Litigation soon followed.


Steves brought breach of contract claims and an antitrust claim under Section 7 of the Clayton Act against JELD-WEN. Id. at *12-13. In addition to damages, Steves sought to force JELD-WEN to unwind the merger and divest the Towanda plant. Id. at *13. JELD-WEN moved to dismiss Steves’s antitrust claim, arguing that Steves had not plausibly alleged any antitrust injury and that its claim for injunctive relief was barred by laches. Id. at *14. The district court denied the motion and JELD-WEN’s subsequent summary judgment motion repeating those arguments. Id. JELD-WEN filed trade-secrets misappropriation counterclaims against Steves.  Id. The district court severed these counterclaims for a separate trial before another jury, over JELD-WEN’s objection. Id.

The district court held a jury trial as to Steves’s damages claims first, with the understanding that, if the jury found that the merger was anticompetitive, the court would then hold separate proceedings on the equitable claims. Id. On the antitrust claim, the jury found that the merger violated § 7 of the Clayton Act; that this violation caused Steves to suffer an antitrust injury; and that Steves proved both past damages and future lost profits. With respect to past damages, the jury awarded Steves about $12.1 million, the same amount that it had awarded for the contract claims. The jury also awarded Steves $46.4 million in future lost profits on the theory that Steves would lose access to doorskins and thereby collapse after the Supply Agreement terminates in September 2021. After trebling these awards, the district court awarded Steves $36.4 million in past damages, plus $139.4 million for future lost profits, on its antitrust claim. Id. at *18-19.

Next the district court considered Steves’s claims for equitable relief, hearing three days of testimony and two days of argument on the issue. Id. at *20. The Justice Department also filed a statement of interest in the equitable proceedings, taking the position that divestiture is generally, but not always, the best remedy for an anticompetitive merger. The Justice Department stated that it considers five factors when evaluating whether a divestiture would be proper: (1) whether the divestiture assets are sufficient to create a business that will replace lost competition; (2) whether the divestiture buyer has the incentive to compete in the relevant market; (3) whether the divestiture buyer has the business acumen, experience, and financial ability to compete in the relevant market in the future; (4) whether the divestiture itself is likely to cause competitive harm; and (5) whether the asset sale is structured to enable the buyer to emerge as a viable competitor. Id. at *21. The Justice Department opined that it was difficult to assess the final four factors without knowing who would buy Towanda. Id. Further, letting Steves (who had expressed its intent to bid for Towanda) purchase the plant might not maximize competition. Id.

The district court granted the request for divesture. Id. at *22-26. After proceedings on the additional non-antitrust counterclaims, the district court: (1) awarded Steves $36.4 million in trebled past damages on its antitrust claim; (2) ordered divesture of Towana, but provided that if divesture did not go through, JELD-WEN should pay Steves $139.4 million in treble antitrust damages for future lost profits; and (3) ordered Steves to pay JELD-WEN $1.2 on the trade secrets counterclaims. Id. at *28-29.


Appeal in the Fourth Circuit followed, with JELD-WEN raising the following antitrust issues: (1) whether Steves suffered antitrust injury; (2) whether Steves was required to show “antitrust impact”; (3) whether divestiture was the proper remedy; and (4) whether Steves’s claim for future lost profits was ripe. Id. at *29-30. The Justice Department filed an amicus brief, arguing that: (1) laches doesn’t categorically bar divestiture in a private suit filed after a merger is consummated, particularly where (as here) the plaintiff cooperated with the Department’s review before suing; and (2) there’s no evidentiary significance to the Department’s choice not to challenge the underlying merger, as there are many reasons why the Department might make that choice. Id. at *29.


The Fourth Circuit stated the general rule that to bring a private antitrust suit, a plaintiff must have antitrust standing. Id. at *30. One component of antitrust standing is “antitrust injury,” which requires that the plaintiff’s loss “reflect the anticompetitive effect” of the defendant’s conduct.  Id. Antitrust injury encompasses two concepts: (1) the “causal connection” between the plaintiff’s injury and an antitrust violation, and (2) whether the plaintiff’s injury “was of a type that Congress sought to redress in providing a private remedy for violations of the antitrust laws.” Id. at *30-31. The court explained that cases that involve both contractual and antitrust claims present a unique challenge; the court must ensure that the antitrust claim isn’t “simply a contract claim masquerading as a candidate for treble damages.” Id. at *32 (internal quotation and citation omitted).

The Fourth Circuit found that a reasonable jury could have found that Steves suffered antitrust injury because: (1) had JELD-WEN breached the contract without merging with CMI, Steves could have bought doorskins from CMI; (2) the merger weakened the competitive pressures on JELD-WEN to provide good customer service; and (3) JELD-WEN intended to harm Steves in a way that the antitrust laws were meant to prevent. Id. at *33-35.


 JELD-WEN also argued that, in addition to antitrust injury, Steves had to prove “antitrust impact.” Id. at *36. To do so, according to JELD-WEN, Steves had to construct a hypothetical market in which the merger never happened and show how it would have been better off therein. Id. Stevesfailed to do that, JELD-WEN insisted, because it didn’t try to quantify the price of doorskins in this hypothetical market. Id.

The court rejected this argument, reasoning that “antitrust impact” is merely a synonym for “injury” that courts typically use in the class action context. Id. The court held that Steves wasn’t required to prove what the price of doorskins would have been absent the merger. Id. at *37-38. Rather, Steves could prove causation by demonstrating that the merger (1) kept it from buying from other suppliers, thereby exacerbating its contract damages, and (2) disincentivized JELD-WEN from offering quality products and customer service. Id. at *38.


JELD-WEN attacked the divestiture order on the grounds that the district court improperly denied its laches defense and misapplied the factors governing equitable relief. Id. at *46. As to the former, the court of appeals disagreed with JELD-WEN that a nearly four-year delay after a merger’s consummation is presumptively unreasonable. Id. Analyzing the “particular circumstances of the case,” the court determined that Steves was not aware of the threatened injury on which its divestiture claim is based until 2014, and that Steves spent 2014-2016 diligently exhausting its alternative remedies. Id. at *48-51.

JELD-WEN also argued that that the district court misapplied each of the four equitable factors that a plaintiff in a Clayton Act suit must demonstrate: (1) that it [faces a significant threat of] irreparable [antitrust] injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. at *51-52. Addressing the first two factors together, the appellate court upheld the district court’s decision that Steves’s potential collapse was an injury that could not be repaired by money damages. Id. at *52-53. The court also found that a conduct remedy would not be as effective as divestiture. Id. at *53-56.

The Fourth Circuit found that the district court acted within its discretion in balancing the hardships that divesture would cause JELD-WEN against those which Steves would suffer in its absence, finding that a “significant possibility” that Steves would go out of business in the absence of divesture carries great weight when balancing hardships. Id. at *56-57. Finally, the Fourth Circuit affirmed the district court’s finding that divesture was in the public interest because it would add a third supplier to the doorskin market, thereby promoting competition. Id. at *58. The court rejected JELD-WEN’s argument that the court cannot properly assess the public interest without knowing who the buyer of the divested asset will be, and considered the possibility that Steves may buy Towanda, and still concluded that divesture was the appropriate remedy, concluding:

But as it stands, this case is a poster child for divestiture. A merger has resulted in a duopoly. Each doorskin supplier is vertically integrated. Evidence indicates that they’ve used their market power to threaten the Independents’ survival. And it’s reasonable to expect that a third supplier—even one that’s vertically integrated—will promote competition, as CMI did before the 2012 merger. Thus, the district court acted within its discretion by ordering divestiture.

Id. at *65.


JELD-WEN challenged the district court’s $139.4 million damages award for future lost profits, which would be triggered if divesture doesn’t occur. Id. The court of appeals held that, because Steves had not yet suffered the injury on which its claim for future lost profits rests, the claim was not ripe for adjudication.  Id. In essence, Steves’s claim for future lost profits depended on a future uncertainty—whether it will have access to doorskins after September 2021. Id. at *66. This uncertainty, furthermore, is entirely within JELD-WEN’s control, because it could take a number of steps to prevent the injury on which the claim for future lost profits is premised. Id. The Fourth Circuit vacated the portion of the district court’s judgment awarding future lost profits as an alternative to divesture. Id. at *69.

Face Recognition Case Against Google LLC is Stayed Until Resolution of a Related Lawsuit Against IBM

By Anthony Leon, in-house counsel

In a recent order, the Honorable United States District Judge Beth Labson Freeman for the Northern District of California granted a stay on the proceedings intended by Steven Vance and Tim Janecyk against Google, LLC. Steven Vance, et al., v. Google LLC, Case No. 5:20-CV-04696-BLF (N.D. Cal. February 12, 2021).

This case follows a series of lawsuits intended by the Plaintiffs in various jurisdictions related to the use of private images for face recognition, alleging multiple privacy laws violations.

In 2008, Plaintiffs uploaded photos showing themselves and family members to Flickr, an image hosting platform. Subsequently, Flickr made available Plaintiffs’ and millions of other people’s photos to International Business Machines, Corporation (“IBM”), allowing them to create a dataset of “frontal-facing images of human faces.” The dataset was completed in 2019 by a “Diversity in Faces” (“DiF”) dataset. Plaintiffs allege IBM used their images to create the “Diversity in Faces” dataset, in violation of privacy laws. These datasets have then allegedly been passed from IBM to other corporations, including Google, LLC. Steven Vance at 2.

Following a first lawsuit in the Northern District of Illinois against IBM, alleging several violations of the Illinois Biometric Information Privacy Act (“BIPA”), Plaintiffs brought this lawsuit against Google, LLC in the Northern District of California, on behalf of “a class of ‘all Illinois residents’ whose faces are in or depicted in the DiF dataset.” The BIPA includes a prohibition for private entities from collecting, capturing, obtaining, disclosing, redisclosing, disseminating, or profiting from an individual’s biometric identifiers or information without providing written notice and without obtaining a written release from the impacted individual or his authorized representative. 740 Ill. Comp. Stat. § 14/15. Plaintiffs brought four causes of action against Defendants: (1) violation of BIPA § 14/15(b); (2) violation of BIPA § 14/15(c); (3) unjust enrichment; and (4) injunctive relief. Id. at 3.

On September 23, 2020, Defendants moved to stay the proceedings pending the outcome of Vance v. IBM in the United States District Court for the Northern District of Illinois. Vance v. IBM, No. 1:20-cv-00577 (N.D. Ill. 2020). Defendants generally argued that the resolution of the IBM case would “simplify the factual and legal issues in the instant litigation, avoid supplicative and cumbersome third-party discovery, and mitigate the risk of inconsistent rulings on identical issues of fact and law.” Defendant Google LLC’s Notice of Motion and Motion to Stay Case at 1 (September 23, 2020).

After taking judicial notice of a few elements, including the other court filings and matters of public records, the Court proceeded with considering whether it should stay the proceedings pending resolution of the IBM case in the Northern District of Illinois. Steven Vance at 3, 4.

A standard application of Landis.

The power to stay proceedings is discretionary to District Courts. Proceedings can be stayed when it is found “efficient for [Courts] own docket and the fairest course for the parties,” especially when there are “overlapping issues of fact or law with a case before different district courts or on appeal.” Id. at 5. This is true even if “the issues in such proceedings are [not] controlling the action before the court.” Id. at 5.

Traditionally, Courts decide on granting or refusing to stay proceedings by weighing a series of competing interests likely to affect the parties. Landis v. No. American Co., 299 U.S. 248, 254-55 (1936). Courts balance “[1] the possible damage which may result from the granting of the stay, [2] the hardship or inequity which a party must suffer in being required to go forward, and [3] the orderly course of justice measured in terms of the simplifying or complicating the issues, proof, and questions of law which could be expected to result from the stay.” Id. (brackets in original).

The balance of competing interests favors Defendant.

First and foremost, the Court considered that granting the stay is unlikely to cause damage to Plaintiffs, the non-moving party. Defendants have shown sufficient arguments, and evidence proving that the harm Plaintiffs may suffer from the stay is indeed unlikely to outweigh the other Landis factors. Steven Vance at 6. The Court reached that assumption by comparing the facts of the instant case with those from Lockyer v. Mirant Corp., where the Ninth Circuit held that the District Court abused its discretion in granting a stay in the circumstances of the case. Lockyer v. Mirant Corp. 398 F.3d 1098, 1109 (9th Cir. 2005). The defendant in Lockyer was an electric-power producer that requested a stay of the proceedings of an antitrust lawsuit in California intended by the California Attorney General—on behalf of a class of aggrieved citizens, pending resolution of a Chapter 11 bankruptcy petition in Texas that did not qualify for an automatic bankruptcy stay. Considering that the class would be “harmed by the ‘ongoing illegal concentration of market power that threatens economic harm to electricity consumers,’” the District Court granted the stay. Steven Vance at 7 (citing Lockyer at 1112). The Ninth Circuit held that granting the stay was improper when the bankruptcy proceedings were unlikely to resolve factual or legal issues to the parties’ antitrust dispute. As opposed to Lockyer, the present case would benefit from waiting for a decision on the IBM case. Both cases are sharing factual and legal issues. Additionally, the risks of unreasonable delay and evidence preservation remain low: the IBM case proceedings are moving fast, and Defendants are already on notice of the need to preserve any additional evidence they may have. Further, Defendants provide assurances of evidence preservation—which the Court reminds that failure to do so “will have significant negative effects on [Defendants] later in the litigation.” Finally, although Plaintiffs argue they act on behalf of a class, they are yet to reach the class status, and therefore a stay is unlikely to harm a putative class. All in all, Plaintiffs’ harm would likely be marginal. Id. at 8.

Second, the Court believes that Defendants would suffer from hardship without a stay. The Court agrees with Defendants that there is a significant risk of inconsistent rulings. Although the actions differ in essence, they do have substantial overlapping factual and legal questions, which need not be litigated twice, causing a burden to Defendants. The Court further recognized that “many of the overlapping legal issues pose significant constitutional questions, increasing the risk of inconsistent rulings and confusion.” Finally, a stay would cause an overlap in discovery, resulting in additional costs for both parties. Therefore, the Court considers that the potential hardship to Defendants and the benefits for this case weighs in favor of granting the stay. Id. at 9.

Finally, the Court considered that the orderly course of justices requires a stay. As reminded, “[j]udicial economy which furthers the third Landis factor, is the primary basis courts consider when ruling on motions to stay. Id. at 10 (citing Fuller v. Amerigas Propane, Inc., No. 09-2493 TEH, 2009 WL 2390358 at *2 (N.D. Cal. Aug. 3, 2009)). Based again on the overlapping factual and legal issues, the Court agreed with the Defendants that “judicial economy favors a stay because there are threshold questions across both cases.” Specifically, the presence of common constitutional questions predicates factual questions related to IBM’s acquisition of the photographs in the instant case. As the Court notes, “judicial efficiency counsels that a stay is appropriate pending the resolution of issues in the IBM action. By allowing the Illinois court to resolve some of these overlapping issues, significant efficiencies are gained because the Court avoids issuing inconsistent rulings and expending unnecessary judicial resources on mooted issues.” Id. at 10.


The Court granted the motion to stay the proceedings until February 12, 2022, or sooner if the IBM action gets resolved before that date. At the same time, the Court terminated without prejudice Defendants’ motion to dismiss that was filed simultaneously, allowing Defendants to file it again once the stay is lifted. All eyes are now on the IBM case in the Northern District of Illinois, where discovery is set to be completed in July 2021… Stay tuned!

Aluminum Antitrust Claims Melt Away in Second Circuit: In re Aluminum Warehousing Antitrust Litigation, 15 Civ. 8307 ( S.D. N.Y. February 17, 2021)

By Bob Connolly  Law Office of Robert Connolly

Plaintiffs purchased aluminum, but from almost exclusively from unrelated third parties.  Nonetheless, plaintiffs contended that they were harmed by the alleged collusion to increase the wait time for delivery of  aluminum because defendants’ anticompetitive conduct increased regional premiums (Midwest Premiums (“MWP”)) that were part of the contract prices paid by plaintiffs in primary aluminum contracts with third parties. The Court granted summary judgment in this long running case on the grounds that the plaintiffs were not “efficient enforcers” and therefore lacked standing to bring the claims. The Court’s decision did not decide the merits of plaintiffs’ collusion allegation, but whether they were the right parties to bring the lawsuit. The Court, based on a growing line of Second Circuit cases, dismissed for want of antitrust standing, plaintiffs’ claims that defendants, with who they did not directly do business with, manipulated benchmark prices.

 “[I]n the main, courts have drawn a clear line between plaintiffs who transacted directly with defendants and those who did not, holding that only the former are efficient enforcers, and often noting the risk of disproportionate liability that would exist were the latter permitted to pursue recovery from diffuse, market-wide injuries.” In re Aluminum Warehousing Antitrust Litig.,  15 Civ. 8307 at 38.

The Court noted that following the Supreme Court decision in Associated General Contractors, 459 U.S. 519, 536 (1983), the indirectness of the plaintiff’s harm can limit the right to sue under the Clayton Act. Courts have developed limiting contours to the Claytons Act’s right to sue.  One of the requirements for standing, and the requirement at issue in this case, is that plaintiffs be “efficient enforcers” of the antitrust laws.  The Second Circuit in particular has analyzed efficient enforcer requirements in a number of recent alleged benchmark setting collusion cases.  The efficient-enforcer inquiry turns on four factors: 

(1) whether the violation was a direct or remote cause of the injury; (2) whether there is     an identifiable class of other persons whose self-interest would normally lead them to sue for the violation; (3) whether the injury was speculative; and (4) whether there is a risk that other plaintiffs would be entitled to recover duplicative damages or that damages would be difficult to apportion among possible victims of the antitrust injury. Gelboim   v. Bank of Am. Corp., 823 F. 3d 759, 772 (2d Cir. 2016).

Before turning to the case at hand, the Court  reviewed recent Second Circuit benchmark decisions in LIBOR, gold, FOREX, platinum and silver. Aluminum Warehousing, at 31-39.

Law of The Case

As an aside, the Court dealt with plaintiffs’ argument that the prior district court judge who had retired had found the plaintiffs to be efficient enforcers and thus, that was the law of the case.  The Court noted that law of the case doctrine has two branches: 1) the requirement that a trial court follow an appellate court’s previous ruling on an issue in the same case; and 2) the more flexible rule that when a court has ruled on an issue, that decision should generally be adhered to by that court in subsequent stages of the same case, unless compelling reasons dictate otherwise.  Aluminum Warehousing at 39-40.  The court rejected the law of the case argument for two reasons: discovery had provided new evidence that was not available when the prior court made her ruling and 2) there had been numerous intervening Second Circuit Court of Appeals decisions.    

Efficient Enforcers Factors

The Court then turned to applying the efficient enforcer factors to the facts developed  during discovery in this case.

1. Directness of Alleged Injury

 “The first efficient-enforcer factor decisively favors defendants’ motion. The vast majority of plaintiffs’ claims—those against defendants with whom they did not transact—are indirect. And the evidence adduced in discovery, even considered in the light most favorable to plaintiffs, shows that the decision to charge, or not to charge, the MWP was ultimately made by non-conspiring smelters, not defendants, breaking the chain of causation between defendants’ allegedly collusive steps to manipulate the MWP and plaintiffs’ injuries.”  Id. at 45.

The key fact to the Court was that even if defendants had manipulated the MWP benchmark, there was no legal requirement that the smelters pass this cost on to the plaintiffs.  These were independently negotiated contracts with third parties, many of which dd not contain the benchmark alleged to have been manipulated.  Id. at 48-52.

 2.         Existence of More Direct Victims

The Court noted that more direct victims were available and, in fact, some had brought suit.  One direct purchaser was actually a plaintiff in the instant  suit–and that claim was not dismissed.  In transactions between plaintiffs and non-defendant third parties (the overwhelming majority of claims) whether to charge the benchmark component which the defendants allegedly collude to inflate was subject to negotiations between the parties. Id. at 55-57.  Not all of the contracts contained the MWP or charged it at its full premium.

 3.         Speculative Damages

The court found that that “the process of determining a plaintiffs’ damages on an aluminum purchase is rife with complications. The defendants did not directly manipulate the benchmark price but instead they allegedly conspired to elongate the queue at certain aluminum warehouses, which in turn tended to cause a benchmark component of aluminums price–the MWP to rise.” Id. at 58.  Trying to determine how much that alleged activity contributed to the MWP was a speculative exercise. There were also factors noted by the Court related to the alleged “queue” manipulation that added to the difficult of determining damages. “Accordingly, the speculative nature of plaintiffs’ damages also supports a finding that the umbrella plaintiffs in this litigation are not efficient enforcers of the Section 1 claims at issue.”  Id. at 64.

4.         Duplicative Recovery or Complex Apportionment

Defendants conceded that because there was no parallel litigation and given the long history of this litigation, there was no reason to think a competing claim would come forward, and there was little risk of duplicative recovery.  The Court concluded, “this factor does not weigh against plaintiffs’ status as efficient enforcers.” Id. at 64.

 Finding plaintiffs failed to satisfy three of the four efficient enforcer factors, “the Court dismisses, for want of antitrust standing, the MWP-manipulation claims asserted by those plaintiffs who did not transact directly with defendants.”  Id. at 65.

A Deeper Dive: Labor Market Collusion Cases and Compliance are Two “Hot” and Related topics

The December E-Briefs covered USDOJ Brings First Wage Fixing Case.

Since then the Antitrust Division has brought a criminal employee “no-poach” case, obtaining a two-count indictment charging Surgical Care Affiliates LLC and its related entity (collectively SCA), which owns and operates outpatient medical care centers across the country, for agreeing with competitors not to solicit senior-level employees (here).  SCA is alleged to have agreed with Company A,  a competitor in the recruitment of senior-level employees across the United States, to not solicit each other’s employees from at least as early as May 2010 and continuing to at least as late as October 2017.

Company A is not identified in the indictment–a possible sign that Company A, and at least some of its employees, are cooperating with the Antitrust Division in return for Corporate Leniency.  The indictment refers to specific internal emails such as one wherein Individual 2 emailed other employees of Company A, stating “I had a conversation w/[Individual 1] re people and we reached an agreement that we would not approach each other’s proactively.”  The indictment further alleges that recruiters were instructed by the company seeking to hire not to proactively solicit employees of the other company. “Please do not schedule a call w/[candidate], thanks.  She would have had to apply for the job first.  We cannot reach out to SCA folks.  Take any SCA folks off the list.” The alleged agreement apparently did not completely bar one company from hiring the other’s employees if the job candidate directly applied for a job. The alleged  agreement banned “recruiting” from each other.  The agreement was charged as a per se illegal agreement.  United States v. Socony Vacuum, 310 U.S. 150 (1940) held, “Any combination which tampers with price structures is engaged in an unlawful activity. Even though the members of the price-fixing group were in no position to control the market, to the extent that they raised, lowered, or stabilized prices they would be directly interfering with the free play of market forces.” 

To be clear, not all agreements not to hire employees from another company are criminal violations–or even illegal. Naked agreements may be treated as per se criminal violations, i.e. an agreement between two health care providers setting what wages to pay.  But, an agreement not to hire each other employees may be ancillary to a procompetitive agreement; for example a joint venture where both companies provide employees and there is an agreement (limited in a reasonable amount of time) not to hire each other’s employees lest the companies not want to put their best employees on the joint venture product] See also No More No-Poach, Division Update Spring 2018:

No-poach agreements are naked if they are not reasonably necessary to any separate, legitimate business collaboration between the employers. Naked no-poach and wage- fixing agreements are per se unlawful because they eliminate competition in the same irredeemable way as agreements to fix product prices or allocate customers.”

In a recent speech, Richard Powers Acting Assistant Attorney General for the Antitrust Division, stated that labor market antitrust investigations remain a high priority for the Antitrust Division. Powers commented that a number of continuing investigations are underway.  It is highly likely that labor market collusion cases will also be a priority for the Biden Administration, especially, but not exclusively, in the health care space.  A company in the financial services technology market recently revealed in a 10K filing that they and some of their officers had received  grand jury subpoenas relating to the companies hiring and wage practices. It’s also important to note that besides the potential for the government to bring cases, private litigants can also sue for treble damages (often in a class actions).  Finally, foreign enforcers, the EU, and member states, have said publicly that labor market collusion is a high priority for them as well.  The message should be very clear–this an area oof focus for public enforcers and private class action litigants.

Compliance is Imperative

It is always wise to have corporate compliance programs to educate employees about competition law–and the potential for severe penalties, including jail time for criminal violations  Given some of the evidence laid out in emails the SCA indictment, it’s likely that the employees involved did not have antitrust compliance training.  Once it is clear that the Antitrust Division is particularly focusing on a market segment or particular type of conduct, it is imperative to launch, even if belatedly, internal antitrust compliance programs. 

A first compliance step might be widespread distribution of the October 2016 Antitrust Division and Federal Trade Commission jointly issued “Antitrust Guidance for Human Resource Professionals.”  The guidance includes this statement, “Violations of the antitrust laws can have severe consequences. Depending on the facts of the case, the DOJ could bring a criminal prosecution against individuals, the company, or both.”  Another important Antitrust Division policy to be aware of is the Division’s Corporate Leniency program.  Many criminal antitrust investigations begin when a corporation, during an internal investigation, discovers the firm may have been engaged in illegal conduct. The SCA indictment maybe the product of a corporation seeking leniency from the Division in return for cooperation.  The Antitrust Division has a policy of according leniency to corporations reporting their illegal antitrust activity at an early stage, if they meet certain conditions. “Leniency” means not charging such a firm criminally for the activity being reported.  Current and former employees also may get protection from criminal prosecution if they meet certain conditions.  This is important for employees to know as an individuals may be reluctant to report possible criminal agreements if that person thought it would result in her prosecution. 

Having a robust compliance program is important even if it is belated–and even after a violation has occurred.  In July 2019, in a major policy reversal/improvement, the Antitrust Division announced that it would begin considering the strength of a corporate defendant’s compliance program when making charging and sentencing decisions in criminal antitrust investigations.  “Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigation.  The document “is intended to assist Division prosecutors in their evaluation of antitrust compliance programs at the charging and sentencing phases of an investigation.”  It provides guidance of what the Antitrust Division considers to be a compliance program worth some credit in the charging stage of a criminal case–from possibly offering a Deferred Prosecution Agreement or giving some credit in calculating the Sentencing Guidelines recommended fine. The Antitrust Division’s Compliance Program document identifies the Division’s view  of elements of an effective antitrust compliance program. An effective compliance program should create a culture of compliance, educate employees about conduct that violates antitrust laws and inform of the related potential penalties.

An effective compliance  program must have an effective reporting mechanism for employees to bring potential violations to the attention of a compliance or legal department. Conducting antitrust compliance in an area where the Division is  known to have an active interest can produce grate befits.  First, if illegal conduct is discovered the corporation can stop it and apply for leniency, assuming no previous leniency has been granted involving that conduct.  A corporation may decide not to seek leniency immediately if potential illegal conduct is discovered   Some companies reportedly do not seek leniency immediately because the collateral consequences of seeking leniency can be great.  Even in that situation, the company that is aware of its potential liability is in a good position to seek leniency if it learns an investigation has begun but no other company has yet come forward.  This, of course is risky business, as another company may beat that company in the door to gain the one leniency.  But, the company that knows it has potential liability, even if it does not seek/get leniency, is in position to cooperate early if its calculus about holding back changes. 

Labor market collusion seems to be an area where awareness of  the potential for liability may be low.  That may be due to the fact that until recently, these kinds of cases were not brought.  And until very recently, the Antitrust Division brought such cases as civil violations. 

In 2010, Adobe, Apple Google, Intuit and Pixar entered into settlement agreements with the Department of Justice. The Antitrust Division reached settlements with six high technology companies – Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar – that prevented them from entering into no solicitation agreements for employees. According to the civil complaint, the six companies entered into agreements that restrained competition between them for highly skilled employees. The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel prevented the companies from directly soliciting each other’s employees. An agreement between Google and Intuit prevented Google from directly soliciting Intuit employees. The investigation uncovered evidence such as an email exchange wherein Steve Jobs asked Eric Schmidt to stop Google from trying to hire one of Apple’s engineers: “I would be very pleased if your recruiting department would stop doing this,” Jobs wrote to Schmidt on March 7, 2007.  Schmidt then sent the request to his HR department, saying “I believe we have a policy of no recruiting from Apple and this is a direct inbound request. Can you get this stopped and let me know why this is happening? I will need to send a response back to Apple quickly so please let me know as soon as you can.” A civil class action case followed the government’s case (as they usually do) which the companies later settled for $415 million.  CNET, September 3, 2015,  Lance Whitney,  Apple, Google, others settle antipoaching lawsuit for $415 million. 

Many State AG’s also began civil investigations of no-poach agreements, particularly in the fast-food industry.  In a March 12, 2019 press release, California Attorney General Xavier Becerra announced that the State of California, as part of a multistate effort, had entered into agreements with four major fast food companies that prohibit those franchise corporations from continuing to employ “no-poach” policies. “Many of these anticompetitive no-poach provisions required franchise operators to contractually agree to not hire or solicit the employees of another franchise operator. As a consequence, employees, many of whom are low-wage workers, may have been unable to seek better pay and benefits by going to work for a competing franchise. Workers are often unaware of these provisions in the contracts. As a result of the settlements, Arby’s, Dunkin’, Five Guys, and Little Caesars will no longer include no-poach provisions in any of their franchise agreements in the United States.”

There is apparently a great need to educate management and human resources departments about the potential liability involved in discussion employee wages and hiring with  competitors. Compliance dollars spent in human resources departments may be money well spent.

Agency Updates

Antitrust Division, US DOJ

February 25, 2021: Louisiana Man Charged With Conspiracy to Defraud the Government and Violate the Procurement Integrity Act and Lying To Federal Agents

According to the indictment, the defendant conspired to defraud the United States by corrupting and impairing the government procurement process, by obtaining non-public pricing and cost information in order to obtain subcontract awards and payments from the U.S. Department of Energy in connection with its operation of the nation’s Strategic Petroleum Reserve. 

This case likely grew out of the Antitrust Division Procurement Fraud Strike Force.  When Antitrust Division attorneys talk to federal agents and procurement officials they often develop leads of some kind of corruption of the bidding process that may not initially involve collusion among competitors. The investigation often continues in the hope that it will expand to include evidence of collusion, but in any event the non-competitor collusion case will be brought jointly with the Antitrust Division and the local US Attorneys’ office, even in the absence of a Sherman Act charge.


February 5, 2021: FTC Announces Annual Update of Size of Transaction Thresholds for Premerger Notification Filings and Interlocking Directorates

For 2021, the size-of-transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act will adjust from $94 million to $92 million. Also, the 2021 thresholds under Section 8 of the Act that trigger prohibitions on certain interlocking memberships on corporate boards of directors are $37,382,000 for Section 8(a)(l ) and $3,738,200 for Section 8(a)(2)(A).

February 4, 2021: FTC, DOJ Temporarily Suspend Discretionary Practice of Early Termination

During the transition to the new Administration and given the unprecedented volume of HSR filings for the start of a fiscal year, the Federal Trade Commission, with support from the Antitrust Division of the U.S. Department of Justice, will be reviewing the processes and procedures used to grant early termination to filings made under the Hart-Scott-Rodino Act. For this period, the agencies will not grant early termination.

News and Notes


Here is an illustration of the “old boy network” at work and why it is bad business.  The article from ESPN “Jacksonville Jaguars’ director of sports performance Chris Doyle resigns amid backlash” recounts the hiring and quick resignation of a strength coach by new Jacksonville Jaguar head coach Urban Meyer.  Chris Doyle had been let go by the University of Iowa after being accused of making racist remarks and bullying players.  Meyer hired him (apparently after a job search of one person), stating “I vet everyone on our staff, and like I said the relationship goes back 20 years…”  Chris Doyle, the coach in question, resigned shortly after the Jaguars were criticized for the hire by the executive director Rod Graves of the Fritz Pollard Alliance:  “Urban Meyer’s statement, ‘I’ve known Chris for close to 20 years’ reflects the good ol’ boy network that is precisely the reason there is such a disparity in employment opportunities for Black coaches.”

The Fritz Pollard Alliance is a 501(c)(6) membership organization comprised of scouts, coaches, and front office personnel in the NFL as well as other sports professionals committed to equal opportunity in the industry.

Senator Klobuchar Introduces Sweeping Antitrust Reform Legislation

While this has been widely reported, here is  link to the press release from Senator Klobuchar’s office:  “Senator Klobuchar Introduces Sweeping Bill to Promote Competition and Improve Antitrust Enforcement.”  The press release outlines: 1) Increase Enforcement Resources; 2) Strengthen Prohibitions Against Anticompetitive Mergers, 3) Prevent Harmful Dominant Firm Conduct, 4) The legislation would establish a new, independent FTC division to conduct market studies and merger retrospectives, 5) Implement Additional Reforms to Enhance Antitrust Enforcement

If you have any suggestions for improving this publication, please contact me at  We cordially welcome all antitrust and UCL practitioners who are interested in contributing to the Section by writing an e-brief or helping in other areas.  Please contact me if you would like more information. 

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