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Japanese Freight Forwarder Pleads Guilty to Price-Fixing

On September 19, 2012, the Department of Justice announced that the Japanese freight forwarding company Yamato Global Logistics Japan Co. Ltd. agreed to plead guilty and pay $2.3 million in criminal fines for fixing prices for air cargo shipments from Japan to the United States. 

The company is reported to have fixed fuel surcharges and security fees from September of 2002 to November of 2007.  Apart from the criminal fine, Yamato Global Logistics Japan Co. Ltd. has already agreed to cooperate with the Department of Justice in a continuing antitrust investigation. 

Currently, the investigation has led to 14 companies to pleading guilty or agreeing to plead guilty and pay criminal fines totaling more than $100 million. 

Freight forwarders like the one in Japan engage in the delivery of domestic and international goods for customers.  The process starts by receiving, packaging, and preparing the freight.  The freight forwarder then schedules the transportation with providers such as air carriers and prepares shipping documentation. 

According to the Department of Justice, the company in Japan secretly agreed to organize and impose freight forwarding fees.  Scott D. Hammond, the Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program, states, “Consumers ultimately were forced to pay higher prices on the goods they buy every day as a result of the noncompetitive and collusive fees charged by these companies.” 

The company in Japan is charged within violating the Sherman Act.  This maximum fine for the violation of the Act is $100 million for corporations.  The maximum fine can increase if the gain was twice the loss suffered by victims. 

The charges were brought forth by the Antitrust Division’s National Criminal Enforcement Section, the Washington FBI Field Office, and the Office of the Inspector General under the Department of Commerce. 

Source: Department of Justice

eBay Entered Agreement not to Hire Intuit Employees

On November 16, 2012, the Department of Justice announced it filed a civil antitrust lawsuit against eBay Inc because it entered into an agreement that denied the recruiting or hiring of Intuit Inc employees.  The Justice Department announced the agreement decreased competition for employment opportunities and denied employees access to better jobs and salaries.  

The lawsuit was filed in the U.S. District Court for the Northern District of California in San Jose.  The lawsuit is asking eBay to disregard the agreement and keep from entering similar agreements with other companies in the future.  The Justice Department filed a similar lawsuit against Intuit earlier for the same charges.  

According to court documents, eBay’s CEO, Meg Whitman, and Intuit’s founder and executive committee chair, Scott Cook, formed and enforced the anticompetitive agreement.  Additionally, the Justice Department claims that Cook was on eBay’s board of directors while he made complaints about the recruiting of Intuit employees by eBay.  

The Justice Department declares that the illegal agreement was enforced from 2006 to at least 2009.  eBay was specifically instructed not to recruit Intuit employees and throw away resumes from Intuit employees.  

Josepha Wayland, the Acting Assistant Attorney General in charge of the Antitrust Division, stated: “eBay’s agreement with Intuit hurt employees by lowering the salaries and benefits they might have received and deprived them of better job opportunities at the other company.  The Antitrust Division has consistently taken the position that these kinds of agreements are per se unlawful under the antitrust laws.”  

The former lawsuit against Intuit included lawsuits against five other companies as well: Adobe Systems Inc, Apple Inc, Google Inc, Intel Corp, and Pixar.  The Justice Department argued all of these companies entered bilateral agreements not to hire and solicit employees.  All of the companies made agreements to discard such bilateral agreements, and the Justice Department is asking eBay to discard any agreements with Intuit as well.  

Source: Department of Justice

Amerigroup Corp’s Divestiture will Allow for Competition

On November 28, 2012, the Department of Justice ended its concerns over WellPoint Inc’s proposed acquisition of Amerigroup after Amerigroup Corp sold its subsidiary, Amerigroup Virginia Inc.  The Justice Department initially ruled that the merger would significantly decrease competition of Medicaid managed care plans in Northern Virginia since Amerigroup and WellPoint are the only Medicaid managed care plan providers in Northern Virginia.  

In order to settle concerns with the Justice Department, Amerigroup agreed to sell Amerigroup Virginia to Inova Health System Foundation.  The Justice Department closed the investigation immediately after the transaction was completed and reviewed.  

If there was no divestiture, the merger would have created a monopoly in Arlington, Culpeper, Fairfax, Fauquier, Frederick, Loudon, Prince William, Rappahannock, and Warren counties along with the cities of Alexandria, Falls Church, Fairfax and Manassas Park.  Before the merger, WellPoint and Amerigroup competed as providers to physicians, hospitals, and pharmacies.  

Congress usually requires states to provide Medicaid beneficiaries with at least two Medicaid managed companies if the state requires beneficiaries to have managed care plans.  

Acting Assistant Attorney General Renata B. Hesse with the Antitrust Division stated: “The divestiture of Amerigroup Virginia will ensure continued competition in the markets for Medicaid managed care plans in Northern Virginia.  Preserving competition in health care markets is vital to ensuring that consumers receive better and more innovative health care services.”  

Wellpoint has its headquarters in Indianapolis and is currently a licensee of the Blue Cross and Blue Shield Association.  Wellpoint and subsidiaries reported revenues of $60.7 billion 2011 and served over 65 million members.  

Amerigroup is headquartered in Virginia Beach and organizes services for individuals receiving funds from public healthcare programs.  Amerigroup reported revenues of over $6 billion in 2011 and served more than 2 million members.  

Source: Department of Justice

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