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CONNOR SAYS ANTITRUST
DIVISION BECOMING INCREASINGLY IRRELEVANT That’s the take of John Connor, a professor of economics at Purdue University. Connor has just completed a report for the American Antitrust Institute titled The United States Department of Justice Antitrust Division’s Cartel Enforcement: Appraisal and Proposals. In an interview with Corporate Crime Reporter, Connor said that the Antitrust Division has been responsible for only 20 percent of the fines and settlements recovered by all antitrust agencies and private plaintiffs around the world since 1990.
HAMEL WANTS FEDS TO
PROBE BP FOR PETRO MARKET MANIPULATION In letters this month to Commodity Futures Trading Commission (CFTC) Chairman Walter Lukken and Federal Trade Commission (FTC) Chairman William Kovacic, Hamel claims that “since mid-2005 BP Alaska has deliberately manipulated the West Coast gas, diesel, propane, and fuel oil market.” “On behalf its own interests and as contractor for its Prudhoe Bay partners Exxon, Conoco, and Anadarko, BP consistently caused reduced Alaska crude deliveries to Puget Sound and California refineries.” “These actions succeeded in tightening the market, and required supplemental, costly crude imports from Ecuador and elsewhere, resulting in higher products prices to California, Washington State, and Oregon consumers,” Hamel wrote. “This unconscionable activity continues today. The Alaska Oil and Gas Conservation Commission records confirm that BP has consistently and deliberately reduced Prudhoe Bay crude production significantly below capacity since 2005.” BUSINESS GROUPS, DEFENSE
LAWYERS LAUNCH ATTACK ON CORPORATE CRIMINAL LIABILITY They have hired the former head of the Enron Task Force, Andrew Weissmann, to lead the assault. Weissman is a partner at Jenner & Block in New York City. And they have picked an obscure environmental crimes case as their vehicle. The case is United States v. Ionia Management SA. The company was convicted in 2007 of dumping waste oil and falsifying records and was fined $4.9 million. The conviction was appealed to the Second Circuit. And there, the Chamber of Commerce, the National Association of Manufacturers, and other business groups, jumped in. They filed an amicus brief arguing that strict liability has no place in the criminal law. That even if Ionia had the gold standard compliance program, it wouldn’t have mattered in this case because the standard jury instruction was used – that is – if even the lowest level employee acted illegally, that employee’s intent would be imputed to the corporation. And the corporation would be found guilty of the crime.
ANTITRUST GROUP WANTS
DELTA/NORTHWEST MERGER BLOCKED The group released a white paper analyzing how the proposed merger of Delta Air Lines and Northwest Airlines could harm competition and consumers. “The dismal airline industry climate does not establish a good case for haste or exception in reviewing the Delta/Northwest merger application,” said AAI president Bert Foer. “We think pressure on the airlines to downsize, when paired up with eliminating rivals through merger, does a disservice to consumers.”
ANTITRUST PROBES OF
INTEL CHIP MONOPOLY HEAT UP It’s an 80/20 market. Intel has 80 percent. Advanced Micro Devices (AMD) has 20 percent. In June 2005, AMD sued Intel alleging that Intel is pushing its major customers, such as Dell, Sony, Gateway and Hitachi, to buy Intel chips only. AMD believes that it is doing so with illegal discounts and rebates. That case is scheduled for trial in February 2010. In the meantime, antitrust authorities around the world have jumped on the case. The Japanese investigated and settled a case against Intel. The Koreans investigated and fined Intel $25 million. That case is on appeal. The European Union has opened an investigation. In the United States, the New York Attorney General has opened an investigation. And the Federal Trade Commission, after years of saying no, last month said yes and opened an investigation. In August 2007, the American Antitrust Institute wrote to then FTC chair Deborah Majoras, pleading with her to open an investigation of Intel. AMD is a funder of AAI.
GE HAS A BRAZILIAN SIZED
HEADACHE Why were up to 64 percent of the company’s annual sales being recorded as going to distributors in lightly populated area near the Amazon River? Why? Because, this manager learned, while urban Brazilian states charged a 19 percent VAT tax on bulbs, switches and fixtures, the rural states charge just seven percent. He told his superiors at GE in the United States that the suspicious invoices indicated possible tax evasion that saved GE anywhere from 12 to 19 cents on every dollar of sales. The whole sordid affair is laid out in the current issue of Tax Notes International. The article – Blame It on Rio: GE’s Brazilian Headache – was written by David Cay Johnston, who retired from the New York Times in April, taking a buyout after 13 years as a Pulitzer Prize winning business reporter there.
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Corporate Crime Reporter Interviews, 1987 to 2008
Sample Interviews Mary Jo White, Partner, Debevoise Plimpton, New York, New York
Interview with David Pitofsky, Partner, Goodwin Procter,
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