Antitrust Law Blog

District Court Enforces DOJ Corporate Leniency Agreement, Dismisses Indictment Against Stolt-Nielsen And Company Executives

On November 29, 2007, a federal district court in Philadelphia dismissed an indictment charging Stolt-Nielsen, S.A., two of its subsidiaries and two of its executives with violations of Section 1 of the Sherman Act in the parcel tanker shipping industry.  See United States v. Stolt-Nielsen S.A., 2007 U.S. Dist. LEXIS 88011 (E.D. Pa. Nov. 29, 2007) (memorandum and order); id., 2007 U.S. Dist. LEXIS 88628 (findings of fact and conclusions of law).  Judge Bruce Kauffman's 79-page ruling puts to rest a long, closely watched legal struggle over the first and only instance of the Antitrust Division's revocation of an amnesty agreement under its highly successful Corporate Leniency Program.

Antitrust, Fraud And RICO Claims Are Dismissed Westerfield v. The Quizno's Franchise Company, LLC (E. D. Wis., November 5, 2007).

Quizno's operates a chain of fast food restaurants known for their toasted submarine sandwiches.  Plaintiffs, twelve Wisconsin franchisees brought an action under the Sherman Act, RICO, the Wisconsin Anti-Trust Act, and other Wisconsin consumer protection laws in the United States District Court for the Eastern District of Wisconsin, alleging, inter alia, that Quizno's "fraudulently induced plaintiffs and the Class to purchase franchises and thereafter exploited their control and economic power in order to extract exorbitant and unjustifiable payments."  The plaintiff franchisees sought class certification, preliminary and permanent injunctive relief, and statutory, compensatory and punitive damages.

On 19 December 2007, the UK's Office of Fair Trading ("OFT") announced that it had charged three UK businessmen with cartel offences under the Enterprise Act 2002.  The three individuals were charged with dishonestly participating in a cartel to allocate markets and customers, restrict supplies, fix prices and rig bids for the supply of marine hose and ancillary equipment in the UK.  If the men are found guilty of the cartel offence, they face up to five years in prison and/or an unlimited fine.  The OFT's announcement stated that its investigation related to a worldwide conspiracy between a number of company executives to rig bids, fix prices and allocate markets in the supply of marine hoses, which are used by customers in the oil and defense industries to transport oil between tankers and storage facilities.  The businessmen, together with five nationals from other countries, were originally arrested by the United States authorities in May 2007 for suspected breaches of US antitrust law. The arrests took place in Houston, Texas where they were attending an industry conference, and were timed to coincide with searches carried out by the OFT at locations in the UK, as well as on-site inspections by the European Commission.  On December 12, 2007, DoJ released a statement stating that the three UK individuals had agreed to plead guilty to participating in a conspiracy to rig bids, fix prices and allocate market shares of marine hoses sold in the US in violation of the Sherman Act. The Plea Agreements filed with the US District Court in Houston stated that each agreed to serve certain periods in jail and pay fines:  Peter Whittle, the sole proprietor of a consulting business, PW Consulting (Oil & Marine) agreed to serve 30 months in jail and to pay a fine of US$100,000; Bryan Allison, managing director of Dunlop Oil & Marine Ltd (a UK company based in Grimsby), agreed to serve 24 months in jail and to pay a fine of US$100,000; and, David Bramner, the sales and marketing director of Dunlop Oil & Marine, agreed to serve 20 months in jail and to pay a US$75,000 fine.  Although the three defendants agreed to plead guilty to the charges in the US, they also agreed to be escorted back to the UK to plead guilty to price-fixing charges under the UK's Enterprise Act, and serve jail terms in English prisons for a period no less than the time agreed in their plea agreements.  This is the first time that the OFT has announced that arrests have been made under the criminal cartel provisions of the Enterprise Act.  The case has been heralded both by the DoJ and the OFT as an example of the two authorities working together against cartel activity.  It demonstrates the increasing cooperation between competition authorities in investigating and prosecuting international cartels.  The OFT also stated that the bringing of these charges is "highly significant development in both the UK's own competition regime and in international cooperation against cartels". It considers that the case demonstrates its willingness to "act decisively and innovatively when investigating suspected cartel activity".