WASHINGTON — Attorney General Eric Holder today praised the decision by a judge in the United States District Court in the Eastern District of New York who found in favor of the Justice Department’s lawsuit claiming that American Express’ rules for merchants violate antitrust laws.

“Today’s decision is a triumph for fair competition and for American consumers,” said Attorney General Holder.  “By recognizing that American Express’s rules harm competition, the court vindicates the promise of robust marketplaces that is enshrined in our antitrust laws.  I salute the hardworking men and women who led the lengthy investigation and trial with uncommon skill and unwavering dedication.  With this achievement, we are sending an unambiguous message that the Department of Justice is prepared to litigate any case, no matter how complex, in its pursuit of justice and protection for the American people.”

The United States Department of Justice and 17 state attorneys general sued American Express, Visa Inc. and MasterCard International Inc., in 2010 to eliminate restrictions that the three credit card networks imposed on merchants.  Over the course of a seven week trial during the summer of 2014, the department argued that these restrictions obstruct merchants from using competition to try to keep credit card fees from increasing.  The civil case, brought under Section 1 of the Sherman Antitrust Act, sought to end the violation and to restore competition.

The trial focused on credit card “swipe fees” which generate over $50 billion annually for credit card networks.  Millions of merchants of all sizes and in scores of industries pay those fees.  Despite these large fee revenues, the Justice Department argued that price competition over merchant swipe fees has been almost non-existent and for decades the credit card networks have not competed on price.  Today’s decision was rendered by Judge Nicholas G. Garaufis.

“Merchants pay over $50 billion in credit card swipe fees each year.  The department and the attorneys general of 17 states brought this case because competition over those fees was being suppressed,” said Deputy Assistant Attorney General for the Antitrust Division Leslie C. Overton.  “The Court’s ruling establishes that the American Express anti-steering rules block merchants from using competition to keep credit card swipe fees down, which means higher costs to those merchants’ customers.  I am proud of the outstanding work done by the investigative and trial teams.  As today’s decision reaffirms, the Antitrust Division remains committed to ensuring that competition is not restricted in this important sector of the economy.”

Settlements with Visa and MasterCard were filed at the same time the case against American Express was begun; the settlements prohibit the two networks from continuing their rules and practices that had obstructed competition.  The court approved the settlements on July 20, 2011, and they applied immediately to Visa and MasterCard.  American Express was not a party to the settlements, and the litigation against American Express continued.

The department argued that the principal reason for an absence of price competition among credit card companies has been rules imposed by each of the networks that limit merchants’ ability to take advantage of a basic tool to keep prices competitive.  That tool – commonly used elsewhere in the economy – is merchants’ freedom to “steer” transactions to a network willing to lower its price.  Each network has long prohibited such steering to lower-cost cards.  Now that Visa and MasterCard have reformed their anti-steering rules, American Express rules stood as the last barrier to competition.

At trial, an array of merchants came forward to explain both the substantial costs they incur when their customers pay with credit cards and their inability to ignite competition among the networks to reduce those costs.  In fact, the rules not only prevent merchants from offering their customers lower prices or other incentives for choosing a less costly card, they even block merchants from providing consumers with truthful price information about the cost of swipe fees of different credit cards.

Examples, used as trial exhibits, of what the Amex rule prohibits can be found at http://www.justice.gov/atr/cases/amex/amex-te.html.

Closing arguments in the trial took place on Oct. 9, 2014.  Craig Conrath was the lead trial attorney for the United States.  The 17 plaintiff states were Arizona, Connecticut, Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont.  The court also entered a scheduling order instructing the parties to submit, within 30 days, a joint proposed remedial order.

3C’s: A Flurry of Activity by the CCI–India Update

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Today’s guest post by Avinash Amarnath reports on several actions by the Competition Commission  of India

India update 2015 Vol 3

Its been quite a busy fortnight for the Competition Commission of India (CCI) especially on the cartel front. The CCI has issued three substantive decisions (two infringement decisions and one decision finding no infringement after a detailed investigation) last week which I have analysed below.

Another chemist and druggist association penalised

In its ninth decision against various chemist and druggist trade associations in India, the Competition Commission of India (CCI) fined the Himachal Pradesh (a state in India) Chemist and Druggist Association 10% of its average turnover for imposing rules requiring:

  • a no-objection certificate from it before a pharmaceutical company could appoint a stockist in the state of Himachal Pradesh; and
  • requiring compulsory payment of ‘product information service’ charges by the pharmaceutical company before launching a drug in the state.

The CCI found that these rules cumulatively resulted in limiting supply in the market and restricted pharmaceutical companies’ ability to launch new drugs onto the market. The president of the trade association was fined 8% of his average income for his liability as an individual.

An interesting takeaway from this decision is the CCI’s analysis of whether pharmaceutical companies can also be found liable for forming an agreement with the trade association to deny stockistship and limit supplies for the want of a no-objection certificate from the trade association. The CCI found that agreements between pharmaceutical companies and the trade association would not qualify as horizontal agreements (falling under Section 3(3) of the Competition Act) or as vertical agreements (falling under Section 3(4) of the Competition Act) as they are neither engaged in identical or similar trade of goods or provision of services  nor operating at different stages or levels of the production chain. However, relying on a previous decision (Ramakant Kini v. Hirandandani Hospital and Ors, a discussion on which appeared in my first post on Cartel Capers), the CCI observed that such agreements could nonetheless be examined under the general prohibition on anti-competitive agreements (Section 3(1) of the Competition Act) and would be subject to a rule of reason analysis. However, in the instant case, the pharmaceutical companies were not found liable as there was no evidence to indicate an agreement between them and the trade association.

The full order of the CCI can be accessed here.

For the Rest of the CartelCapers Story, Click Here:

Seventh Circuit affirms that physician referral includes certification.

In U.S. v. Patel, the U.S. Court of Appeals for the Seventh Circuit upheld a Chicago doctor’s criminal conviction under the Anti-Kickback Statute for accepting payments from a home health agency finding that a referral includes not just a recommendation to visit a specific business but also a certification allowing that visit to be billed to the federal government.

“A narrow definition of the term would defeat the central purposes of the [statute],” the circuit panel wrote.

The appellant physician had provided his patients a wide variety of agencies to choose from and only accepted inducements from one home health care agency.  Still , the Circuit Court ruled that that conduct was still improper because it implied a quid pro quo every time Patel filled out the forms necessary for the home health care agency to receive reimbursements from the government.

“Patel argues that he … played no role in his patients’ initial selection of Grand (the health care agency) or their decision to continue using Grand,” the court said. “True, but Patel chose whether his patients could go to Grand at all, which we think is just as important.”

The panel noted that federal Stark Law, which restricts physician self-referrals, defines the term to cover “certifying or recertifying” the need for care.  Rejecting the loophole offered by the appellant physician in his appeal, the Circuit Court recognized that “the possibility of a kickback for each recertification incentivizes the physician to keep recertifying, even if further treatment is unnecessary or if treatment by a different provider would be in the patient’s best interest….”

Doctor Admits Taking Bribes In Test-Referral Scheme With NJ Clinical Lab

NEWARK, N.J. – A Middlesex County doctor with practices in Jersey City, New Jersey, today admitted accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Anthony DelPiano, 53, of Monmouth Junction, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes.

Including DelPiano, 35 people – 24 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. The investigation has to date recovered more than $10.5 million through forfeiture.

According to documents filed in this and related cases and statements made in court:

DelPiano admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $2,300 per month. DelPiano’s referrals generated at least $1,752,603.24 in lab business for BLS.

On April 9, 2013, federal agents arrested David Nicoll, 40, of Mountain Lakes, New Jersey, Scott Nicoll, 33, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother, and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme

The bribery count to which DelPiano pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2015. As part of his guilty plea, DelPiano must forfeit $204,475, representing the total bribe monies received from BLS.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Eric Welling; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; IRS– Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Joseph N. Minish, Senior Litigation Counsel Andrew Leven, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.


Doctor Indicted On Charges He Illegally Distributed Drugs (EDPA)

PHILADELPHIA – Dr. Jeffrey Bado, 59, of Philadelphia, PA, was charged today by indictment with illegally distributing pain medications from his Philadelphia and Bryn Mawr medical offices, announced United States Attorney Zane David Memeger.  Bado is charged with two counts of maintaining a drug-involved premises, 200 counts of illegally distributing oxycodone, a Schedule II controlled substance, outside the usual course of professional practice and for no legitimate medical purpose, as well as 33 counts of health care fraud and four counts of making false statements to federal agents.


According to the indictment, Bado, a doctor of Osteopathic Medicine, gave prescriptions for large numbers of oxycodone pills to “patients” who paid in cash for an “office visit” during which the “patient” would receive at most a cursory physical examination and little other medical care or treatment.  During their first visit to Bado’s practice, new patients would still get prescriptions for large amounts of oxycodone even though they provided little or no recent medical records to verify their claim of pain, or provided medical records that were not consistent with their claims of pain.


The indictment alleges that Bado’s prescribing mirrored the needs of drug addicts and drug traffickers.  Bado would allegedly comply with patient requests for pills with specific concentrations of oxycodone, and Bado would allegedly switch patients to pills with a higher street value even though there was no medical justification for the switch.  Bado allegedly continued to prescribe high amounts of oxycodone even when he knew that his patients were addicted to oxycodone, were using illegal drugs, or were not even taking the oxycodone pills as prescribed.


The indictment further alleges that Bado committed health care insurance fraud by billing Medicare and private insurers for patient visits that occurred in February 2010, when Bado was out of the office and traveling in Haiti.  Bado allegedly directed residents, nurses and other staff to see patients while he was away, and allegedly directed that they provide the patients with prescriptions that Bado had already filled out and signed.  Before departing for his trip, Bado allegedly made notations in and signed medical charts to make it appear as though he had seen the patients when in fact he was away in Haiti during their appointments.  Bado then allegedly had his office staff submit fraudulent claims to these patients’ health care insurers for the cost of the patients’ office visit as if Bado had seen these patients.  It is alleged that Bado subsequently made several materially false statements to federal agents regarding the arrangements he made before leaving for Haiti, including falsely claiming that he had not filled out in advance out any medical records for the patient appointments that occurred while he was in Haiti.


If convicted of all charges, Bado faces an estimated sentencing guideline range of at least 24 years in prison with a maximum sentence of 20 years in prison for each count of oxycodone distribution and maintaining a drug premises counts, 10 years in prison for each count of health care fraud, and five years in prison for each count of making false statement counts.  He also faces substantial fines and criminal forfeiture.


The case was investigated by the Federal Bureau of Investigation, the Department of Health and Human Services Office of the Inspector General, the Haverford Township Police Department and the Philadelphia Police Department.  It is being prosecuted by Assistant U.S. Attorneys Nancy Beam Winter and Andrew J. Schell.

An Indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.

3C’s: Why Motorola Mobility was a Good Decision for Global Cartel Enforcement

Why Motorola Mobility was a Good Decision for Global Cartel Enforcement

Back in September I wrote an article for Competition Policy International (CPI) on the FTAIA and the now vacated Motorola Mobility I decision.  That article can be read here.  I was honored to have that article quoted at length by Judge Posner in the subsequent decision:Motorola Mobility v. AU Optronics Corp, 2015 WL 137907 (7th Cir., decided Nov 26, 2015, amended January 12, 2015). In this decision, the Seventh Circuit held that purchases made by Motorola Mobility’s foreign subsidiaries of LCD panels, which the subsidiary then incorporated into products sold to the parent for sale in the U.S., did not give rise to a damage claim under the FTAIA. The Court found that the cartel victims were Motorola Mobility’s foreign subsidiaries. The key fact was Motorola Mobility’s claim that it purchased more than $5 billion worth of LCD panels from cartel members. The Court responded: “That’s a critical misstatement. All but 1 percent of the purchases were made by Motorola’s foreign subsidiaries.”

Since there is little doubt that the defendants did fix prices, the dismissal of 99% of Motorola’s claims seemed like a windfall for the cartelists, and a decision that could lead to under deterrence of global cartel enforcement. Motorola Mobility has expressed its intent to seek review in the United States Supreme Court. Because of the ambiguity of the FTAIA and the myriad fact patterns that can arise, policy consideration will play a large role in ultimately deciding the scope of the FTAIA. I thought Motorola Mobility was rightly decided and that the decision is actually pro-cartel enforcement. I explained why I thought that was so in a recent article CPI published as part of an “Motorola Mobility Redux” issue. My paper is titled: “Why the Motorola Mobility Decision Was Good For Cartel Enforcement and Deterrence” can be found here without charge.  (There are other excellent articles in the CPI issue but they require a subscription to view.). Below are excerpts of my thoughts on why I thought theMotorola Mobility decision was good for cartel enforcement.

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3C’s: CCI fines Port Owner’s Association and Individuals for Price Fixing

CCI fines Port Owner’s Association and Individuals for Price Fixing

Today’s guest post is from Avinash Amarnath.

India Update 2015 Vol. 2

Trade associations continue to be the flavor of the day in the cartel space in India.

On 21 January 2015, the Competition Commission of India (CCI) imposed a penalty on the Dumper Owner’s Association (DOA), a trade association of dumper and hywa [unloading] machinery providers for intra-port transportation of cargo at Paradip Port and its individual officers for controlling the supply of dumpers and hywas at Paradip Port and fixing supply prices. The trade association was fined 8% of its average turnover (for the last 3 years) while the individual officers were fined 5% of their average income (for the last 3 years).

The complaint was brought by Swastik Stevedores Private Limited (the Informant), a company engaged in the business of stevedoring and intra-port transportation of cargo alleging that the DOA, in connivance with the Paradip Port Trust (PPT), the government authority managing Paradip Port had been refusing to provide dumpers and hywas to it.

In particular, the CCI found that:

  1. The DOA had been entrusted with the authority to issue gate passes for dumpers and hywas at Paradip Port by the PPT which gave it a unique advantage in controlling supply at the port as no machinery could enter the port without a gate pass. Further, the members of the DOA owned a substantial number of the dumpers used at Paradip Port. The DOA used this control over the supply of dumpers and hywas to refuse supply to the Informant thereby limiting output through collective action in violation of the Competition Act, 2002 (Competition Act); and
  2. The DOA collectively fixed the rates to be charged for provision of dumpers and hywas. The members       were forced to abide by such rates and were not allowed to individually negotiate rates. This resulted in determination of sale prices through collective action in violation of the Competition Act.

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Minnesota-Based ev3 to Pay United States $1.25 Million to Settle False Claims Act Allegations

Medical device manufacturer ev3 Inc., formerly known as Fox Hollow Technologies Inc., has agreed to pay the United States $1.25 million to resolve allegations under the False Claims Act that Fox Hollow caused certain hospitals to submit false claims to Medicare for unnecessary inpatient admissions related to minimally-invasive atherectomy procedures, the Justice Department announced today.

“Today’s settlement demonstrates our commitment to ensure that the Medicare Trust Fund is used to pay for only necessary medical care,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Charging the government for higher-cost inpatient services that patients do not need wastes the country’s precious health care resources.”

“It should come as no surprise to anyone that proper health care of a patient includes more than just competence of a provider, it requires accuracy and honesty in billing Medicare for the patient’s treatment,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York.  “In this case, a medical device manufacturer allegedly induced hospitals to admit patients as inpatients for minimally-invasive procedures involving its device, even though many of those patients should have been treated as outpatients at significantly less cost.  This was done in order to collect higher Medicare reimbursements which ultimately drive up costs for all taxpayers and beneficiaries of government health programs.”

The United States alleged that Fox Hollow, which was acquired by ev3 Inc. in late 2007, knowingly caused 12 hospitals located throughout nine states to submit claims to Medicare for medically unnecessary inpatient stays for certain Medicare beneficiaries undergoing elective atherectomy procedures.  Atherectomy is a minimally-invasive surgical procedure that uses a small cutting device to remove atherosclerosis, or hardening of the arteries, from large blood vessels within the body, and it is intended to open up narrowed coronary arteries to increase blood flow and circulation.  One such device used in atherectomy procedures is the Silver Hawk Plaque Excision System sold by Fox Hollow.  The United States alleged that throughout 2006 and 2007, to increase hospital purchases of the Silver Hawk device, Fox Hollow advised hospitals that they should bill Silver Hawk atherectomy procedures as more expensive inpatient claims, as opposed to less costly outpatient claims.  As a result, certain hospitals allegedly claimed greater reimbursement than they were entitled to for treating Medicare beneficiaries who underwent Silver Hawk atherectomy procedures.

“Medical device makers that try to boost their profits by causing patients to be admitted for unnecessary and expensive inpatient hospital stays will be held accountable,” said Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG).  “Both patients and taxpayers deserve to have medical decisions made based on what is medically appropriate.”

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The lawsuit was filed by Amanda Cashi, who formerly worked as a Fox Hollow sales representative.  Cashi will receive $250,000.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with ev3 was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.

The claims resolved by this settlement are allegations only and there has been no determination of liability.

The civil lawsuit is captioned United States ex rel. Cashi v. Fox Hollow Technologies, Inc., et al. Civ. No. 09-CV-01066-S (W.D.N.Y.).

Unlicensed Detroit Doctor Convicted in $4.69 Million Medicare Fraud Scheme

A federal jury in Detroit today convicted an unlicensed physician for his participation in a nearly $4.7 million Medicare fraud scheme, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office.

Wilfred Griffith, 64, of Detroit, a graduate of a foreign medical school with no medical license, was found guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to solicit and receive health care kickbacks.  A sentencing hearing is scheduled for July 8, 2015, before U.S. District Judge Sean F. Cox of the Eastern District of Michigan.

According to evidence presented at trial, Griffith worked as an unlicensed physician at Phoenix Visiting Physicians in 2010 and 2011.  At that clinic, Griffith treated Medicare beneficiaries and used prescription pads pre-signed by Dr. Dwight Smith to prescribe medicine.

The evidence demonstrated that Griffith also referred Medicare beneficiaries to a Detroit-area home health company called Cherish Home Health Services Inc. (Cherish) in exchange for kickbacks.  In ordering the home health services, Griffith used the names and signatures of Dr. Smith and two other Detroit-area physicians to certify that the beneficiaries were homebound and needed home health services, when they did not.

Evidence showed that based on the fraudulent referrals from Griffith and others, Cherish submitted false claims to Medicare for home health services that were never provided and were not medically necessary.  Medicare beneficiaries pre-signed supporting medical paperwork that was then completed and signed by others at Cherish to falsely show that care was provided.

Between November 2009 and December 2013, Medicare paid Cherish nearly $4.7 million, which included more than $680,000 for home health services purportedly rendered to beneficiaries referred by Griffith using the names of Dr. Smith and the two other physicians.

Two other individuals have pleaded guilty for their roles in this scheme.  Zia Hassan, 48, the owner of Cherish, pleaded guilty on Jan. 16, 2015, and Nathan Miller, 53, a patient recruiter who referred beneficiaries to Hassan in exchange for cash kickbacks, pleaded guilty on Aug. 4, 2014.  On May 7, 2012, Dr. Smith also pleaded guilty to one count of conspiracy to commit health care fraud, and on June 12, 2014, U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan sentenced Dr. Smith to three years in prison.

The case was investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  The case is being prosecuted by Trial Attorney Katharine A. Wagner and Special Trial Attorney Katie R. Fink of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Patrick J. Hurford of the Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Second Ocean Shipping Executive Pleads Guilty to Price Fixing on Ocean Shipping Services For Cars and Trucks

A former executive of Japan-based Kawasaki Kisen Kaisha Ltd. (K-Line) pleaded guilty today and was sentenced to 14 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.

According to the one-count felony charge filed in U.S. District Court for the District of Maryland in Baltimore on Dec. 29, 2014, Takashi Yamaguchi, who was a general manager and executive officer in K-Line’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore.  Yamaguchi participated in the conspiracy from at least as early as July 2006 until at least April 2010.

Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and off of an ocean-going vessel.  Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.

“Today’s sentencing is another step in our efforts to hold executives accountable for raising the cost of shipping cars, trucks and other equipment to and from the United States,” said Bill Baer, Assistant Attorney General for the Antitrust Division.  “We will continue to pursue the corporations and executives whose illegal agreements have harmed American consumers.”

Pursuant to the plea agreement, which was accepted by the court today, Yamaguchi was sentenced to serve a 14-month prison term and pay a $20,000 criminal fine for his participation in the conspiracy.  In addition, Yamaguchi has agreed to assist the department in its ongoing investigation into the ocean shipping industry.

Yamaguchi was charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s sentence is the second imposed against an individual in the division’s ocean shipping investigation.  Previously, three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including Yamaguchi’s employer K-Line, which was sentenced to pay a criminal fine of $67.7 million in November 2014.  Another K-Line executive was sentenced one week ago by the court in Baltimore.

Today’s plea agreement is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Baltimore Field Office at 410-265-8080.