Allen Grunes to Testify Before House Judiciary Committee, Subcommittee on Regulatory Reform, Commercial and Antitrust Law: Oversight Hearing on “Competition in the Video and Broadband Markets: The Proposed Merger of Comcast and Time Warner Cable.”
Hearing date: May 8, 2014 9:30 am
Link to live hearing: http://judiciary.house.gov/index.cfm/live-video-feed
More information here: http://judiciary.house.gov/index.cfm/hearings?ID=301C520F-5B9E-4E43-B2B5-B131B3B88951
Settlement Preserves Competition for High Tech Employees
The Department of Justice announced today that it has reached a settlement with eBay Inc. that prevents the company from entering into or maintaining agreements with other companies restraining employee recruitment and hiring. The department’s Antitrust Division filed the proposed settlement in the U.S. District Court for the Northern District of California in San Jose. If approved by the court, the settlement would resolve the department’s competitive concerns and the original lawsuit filed on Nov. 16, 2012.
In its lawsuit, the department alleged that senior executives and directors of eBay and Intuit entered into an agreement, beginning no later than 2006, that prevented each firm from recruiting employees from the other and that prohibited eBay from hiring Intuit employees that approached eBay.
In the high technology sector, employees with advanced or specialized skills are highly valued and sought after. Companies often heavily recruit and hire experienced and capable employees of other technology firms, offering significantly better job opportunities or pay. The agreement between eBay and Intuit diminished important competition between the firms to attract highly skilled technical and other employees to the detriment of affected employees who had less access to better job opportunities and higher pay.
“eBay’s agreement with Intuit served no purpose but to limit competition between the two firms for employees, distorting the labor market and causing employees to lose opportunities for better jobs and higher pay,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed settlement resolves the department’s antitrust concerns and ensures that eBay will not engage in similar conduct in the future.”
Previously, in denying eBay’s motion to dismiss the case, the district court found that the agreement alleged by the department, if proven, would constitute a naked horizontal market allocation agreement that was manifestly anticompetitive and lacking in any redeeming virtue, and thus could be found per se unlawful.
The proposed settlement would prohibit eBay from entering or maintaining anticompetitive agreements relating to employee hiring and retention for five years. It would broadly prohibit eBay from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, hiring or otherwise competing for employees. eBay will also implement compliance measures tailored to these practices. Intuit is already subject to a similar consent decree, and for that reason was not a defendant in this case.
Today, the California Attorney General’s Office also filed a settlement in its related case, The People of the State of California v. eBay Inc., based on the same facts alleged in the department’s complaint.
This case and the proposed settlement arose out of a series of Antitrust Division investigations into employee recruitment practices at a number of high tech companies. In September 2010, the Antitrust Division filed a civil antitrust lawsuit against six high tech firms– Adobe Systems Inc., Apple Inc., Google Inc., Intel Corporation, Intuit Inc. and Pixar–for antitrust violations arising from “no cold call” agreements. In December 2010, the Antitrust Division filed a civil antitrust lawsuit against Lucasfilm Ltd. alleging antitrust violations involving similar activities restraining competition for employees. In both cases, settlements were filed at the same time the lawsuits were filed resolving the department’s competitive concerns. Today’s proposed settlement with eBay is substantially the same as the court-approved settlements in the two prior cases.
eBay Inc. is a Delaware corporation with its principal place of business in San Jose, Calif.
The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to James J. Tierney, Chief, Networks & Technology Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 7100, Washington D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
“Antitrust and white-collar boutique Geyer Gorey has added another former federal prosecutor to its partnership, poaching antitrust division alumnus Robert E Connolly from DLA Piper.”
(Brad Geyer: “This is a Georgia housing auction case that is the first instance I have seen where a former Atlanta Field Office legacy case makes reference to the Washington Criminal II Section in a press release. This is further indication that the Antitrust Division has completed its reorganization and is now approaching full integration. Achieving full integration is important for agency productivity because it ushers in a greater mix and quantity of investigations and prosecutions. Attorneys needed to complete their moves between duty stations, new attorneys take time to find mentors and build confidence, and everyone gets established in their new settings with new combinations of stakeholders and managers. As I have said previously, with strong White House emphasis means housing auction fraud will continue to be an Antitrust Division enforcement priority. This also means the FBI is fully engaged and this focus is likely to continue through at least the first year of the next administration and new leads will be run down and on-going investigations will continue to be worked hard at least through early 2016. The question is what the posture will be in opening new investigations in other areas? Recent indications suggest the pipeline is opening and the threshold has been lowered somewhat in terms of the quantity and quality of evidence that must be established by line attorneys to justify investigative authority. This has a disproportionate effect on enforcement because when the Antitrust Division is solicitous of new cases outside the Title 15 allegation of first impression, agencies know they have another place to go with marginal cases after a US Attorney’s office declines a case. This spurs investigations of marginal matters and increases quantity, mix and duration of investigations. This stimulates investigative activities across the investigative agency platform).
WASHINGTON — A Georgia real estate investor pleaded guilty today for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.
Felony charges were filed on March 25, 2014, in the U.S. District Court for the Northern District of Georgia in Atlanta, against Mohamed Hanif Omar. According to court documents, from at least as early as Sept. 1, 2009, until at least March 7, 2012, Omar conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Gwinnett County, Ga. Omar was also charged with conspiring to commit mail fraud by fraudulently acquiring title to selected Gwinnett County properties sold at public auctions. Additionally, he was charged with making and receiving payoffs and diverting money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.
“Today’s guilty plea is the fourth in the Antitrust Division’s ongoing investigation into anticompetitive conduct at public real estate foreclosure auctions in Georgia,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division remains committed to working with its law enforcement partners to investigate and prosecute local cartels that harm distressed homeowners and lenders.”
The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Gwinnett County public foreclosure auctions at non-competitive prices. When real estate properties are sold at the auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, the conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
“Today’s plea should further serve as an example for those who would consider exploiting the processes in place regarding public foreclosures,” said J. Britt Johnson, Special Agent in Charge of the FBI Atlanta Field Office. “The intent of the Sherman Act was to provide a level and competitive field within commerce and the FBI intends to enforce these types of violations.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime.
The investigation is being conducted by the Antitrust Division’s new Washington Criminal II Section and the FBI’s Atlanta Division, with the assistance of the Atlanta Field Office of the Housing and Urban Development Office of Inspector General and the U.S. Attorney’s Office for the Northern District of Georgia. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact the Antitrust Division at 404-331-7113, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
“Last week, the Senate Judiciary Committee held the first hearing to examine the merger of the nation’s top two cable operators, Comcast and Time Warner Cable. But the merger no longer has the air of inevitability it once did. What happened?
People who are studying this merger do not like what they see for many reasons. Here are three: less innovation, greater market power over high-speed broadband and higher prices and poorer service for consumers. Companies confronted with Comcast’s bargaining power, like Netflix, are speaking out. And, unusually for an antitrust case, the public is taking notice: 52 percent of Americans in a recent Reuters poll believed that this deal would reduce competition and be bad for consumers….”
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GeyerGorey LLP announced today that Robert E. Connolly has joined the firm’s Washington, D.C. office as a partner. Connolly spent most of his career as a prosecutor with the Middle Atlantic Field Office of the Antitrust Division, Department of Justice. Connolly joined that office in 1980 and was Chief from 1994 until early 2013. More recently, Robert E. Connolly has been with DLA Piper in Philadelphia. Connolly will lead GeyerGorey’s corporate internal investigations practice. Founding partner Brad Geyer said “Bob is a natural fit for our culture, which requires constant disciplined teamwork and focus on client solutions that spring from the firm’s’ deep prosecutorial experience”
Connolly said: “I am excited to join my former DOJ colleagues. Collectively we have worked on many of the Division’s most significant criminal and civil matters. We have unique insights and experience to offer clients. The firm’s unique approach and rapid growth further strengthens our ability to serve clients faced with government investigations.”
“We expect Bob will be involved in much of the firm’s current portfolio of work, in addition to leading the corporate internal investigation practice,” said founding partner Hays Gorey. “Bob has a notable reputation for his representation in high-stakes matters. He will strengthen our ability to represent multinational clients in complex litigation, as well as in high-profile regulatory and enforcement agency investigations.” Connolly will be also be part of GeyerGorey’s compliance team, which blends its experience in enforcement, in-house counseling, criminal and civil defense, and qui tam litigation, to help companies efficiently identify, address, and mitigate litigation risks from the onset and develop an organizational culture that encourages ethical conduct and a commitment to comply with the law.
In his career with the Division, Connolly led major national and international white-collar crime investigations in the areas of antitrust, fraud and obstruction of justice. He is known for innovative investigative and trial strategy and a command presence in the courtroom. He left the government with one of the, if not the most successful, trial records in Antitrust Division history. Connolly was known for his building and leading effective teams that had an extraordinary commitment to successfully completing the mission.
Notably, Connolly led the international graphite electrodes cartel grand jury investigation, which resulted in seven corporate and three individual convictions and approximately $437 million in fines, including what was then the largest post-trial criminal fine in Antitrust Division history. The investigation was capped by charging, trying and convicting a foreign corporation of aiding and abetting the cartel. Connolly, as lead trial attorney, along with GeyerGorey’s Wendy Norman, received the DOJ’s highest litigation honor, the John Marshall Award for Outstanding Legal Achievement for Trial Litigation. More recently, Connolly’s office led the historic effort to extradite Ian Norris to the United States from Britain to stand trial on obstruction of justice charges, of which Norris was later convicted.
In addition to his prosecutorial experience, Connolly was the Victor Kramer Fellow at Yale University in 1989-1990. He has served as an adjunct professor of antitrust law at Rutgers-Camden Law School and later Drexel School of Law. He currently serves on the Advisory Board for the ABA Cartel and Criminal Practice committee and since leaving the Antitrust Division in 2013, has authored more than a dozen articles on U.S. and international competition law practice.
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GeyerGorey LLP’s Allen Grunes regarding Comcast Merger on Bloomberg TV
New York Times
“The economic argument over broadband is going to be crucial in this case,” said Allen P. Grunes, a partner at the law firm GeyerGorey in Washington and the co-author of two recent papers examining the merger.
University of Tennessee College of Law
March 26, 2014
Competition Policy International, April 2014, Forthcoming
We argue that notwithstanding Comcast’s and TWC’s assertions, combining two monopolies does not yield better service, lower retail prices, more innovation, and greater choices for consumers. Nor should the DOJ and FCC simply extend the prior behavioral remedies to this merger. Behavioral remedies are a poor substitute for market competition. Comcast and TWC have not overcome the presumption of illegality for this merger and are unlikely to do so. As was the case with AT&T/T-Mobile, DOJ should just say no.