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Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008

Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008. Sec. 1 Sherman Act “Every contract, combination . . . or conspiracy in restraint of trade or commerce . . . is a felony.”. MOVING TODAY TRANSFORMING TOMORROW. ORLANDO, FL APRIL 1 – 5, 2008.

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Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008

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  1. Working in an Antitrust Environment Rick Schweitzer AMSA General Counsel April 3, 2008

  2. Sec. 1 Sherman Act“Every contract, combination . . . or conspiracy in restraint of trade or commerce . . . is a felony.” MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  3. Criminal Penalties for ViolationsFines of up to $100 million for corporationsFines of up to $10 million for individuals, or up to 10 years in prison, or bothIn certain cases, penalty of 2x gain or injury MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  4. Criminal charges for officers or employees include indictments, possible arrest, booking, fingerprinting, and mug shotsYou may endure great personal and family strain from grand jury investigation, criminal trial, sentencing, and incarceration MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  5. Civil LawsuitsPrivate individuals may also enforce the antitrust laws in civil suits. Successful plaintiffs may recover treble damages plus costs and attorney’s fees MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  6. How did we get here?STB decision—no more immunity from antitrust laws for motor carrier industryAMSA’s response to STB decisionEffect of antitrust laws on pricing decisions, other activities MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  7. STB Decision May 4, 2007Ended antitrust immunity for 11 motor carrier rate bureaus, including HGCBC, effective January 1, 2008No more immunity for agreements on collective rates, classifications, mileage guides, rules, and rate adjustments for general application based on industry average carrier costs MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  8. AMSA’s ResponseDissolved HGCBC effective 1/1/08Petitioned STB for clarification on continued use of 400-N tariff as the basis for individual carrier tariffs Developed antitrust guidelinesGot out of the business of tariff publishing MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  9. STB Denied Petition for Clarification“The time has come to complete this final step of making the motor carrier industry fully competitive.”Sanctioning the use of existing tariffs as the basis for individual tariffs could create a “partial shield over behavior that . . . should be fully subject to the antitrust laws.” MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  10. STB Denied Petition for ClarificationBut the STB also said, “Our denial of the HGCBC’s petition should not be seen as a suggestion . . . that the [use of 400-N as the basis for an individual tariff] would in fact violate the Sherman Act.”STB left that determination to the Justice Department and the courts MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  11. Carriers Must Now Have Individual TariffsTariffs must be published -- they must be available on request from shippers and from the STBThere is no particular form for tariffs, but they must include the FMCSA consumer protection rules and the STB requirements for levels of liability, and meet statutory requirements on estimates, collection of charges, and rating of shipments MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  12. Pricing Under the Sherman ActPrice fixing is a per se violation of the Act, an agreement in restraint of trade; it includes agreements with competitors concerning prices, terms of sale, levels of service, price changes, discounts, rebates, credit terms, pricing methods, sales periods, and other matters relating to or affecting price or an element of price. MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  13. Per Se ViolationsGenerally, DOJ and courts look to nature of the restraint on competition, and extent of any injury, under a rule of reason in determining if Sherman Act is violatedBut some acts are so egregious that they are considered violations as soon as the facts of the agreement are established—these are per se violations, such as price fixing MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  14. Division of Territories or Customers is also Per Se IllegalCompetitors may not agree to divide up customers, markets, or territory that they will each serve—this is also a per se violation of the Sherman Act MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  15. Pricing Decisions Must be UnilateralCarrier must determine their own rates, discounts and terms of service without any agreement, oral or in writing, with competitorsCarriers may match competitors’ rates, discounts or terms—but if there is any discussion of rates, then match looks like an agreement to fix prices (conscious paralellism vs. establishment of conspiracy) MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  16. Individual Tariff DecisionsSTB would not approve use of 400-N as basis for individual tariff, but did not say that it automatically violates antitrust lawsThe greater your tariff varies from 400-N as it existed on 12/31/07, the less likely that you will be held in violation of antitrust lawsNeed to revise rates and other competitive terms to make your tariff customized MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  17. AMSA Antitrust GuidelinesTrade association meetings are breeding grounds for antitrust violations—you meet with competitors for several days and talk about your businessesAMSA has developed guidelines for all AMSA meetings to avoids violating the law MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  18. AMSA Antitrust GuidelinesAll meetings shall have agendas and minutes, and participants must agree to avoid sensitive topics; when in doubt, talk to your counsel, and/or leave the roomTopics to avoid include rates, rate adjustments, surcharges, discounts, rebates, credit terms, claims payment terms, insurance rates, terms of contracts, costs (including wage and salary rates or owner-operator compensation) or profits MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  19. AMSA Antitrust GuidelinesOther topics to avoid include service volume or capacity, future sales strategies, new service plans, or customer or supplier listsCannot discuss not competing for customers, or dividing up customers or territory, or refusing to deal with certain customers, suppliers or competitors, or requiring customers to purchase additional products or services to get a desired product or service (illegal tie-in) MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  20. AMSA Antitrust GuidelinesThese rules apply during the entire AMSA meeting, at the committee meetings, during the general sessions, at social events and receptions and on the golf courseIn addition, these guidelines should direct your business behavior at all times after you leave the AMSA meeting MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  21. Industry Data CollectionCollection of industry data on sensitive subjects and distribution among competitors may facilitate conspiracies to fix prices or otherwise violate antitrust lawsDOJ has developed guidelines for data collection that creates a safety zone for industries and associations MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  22. Data Collection—DOJ Safety ZoneMust be collected by third party, such as an associationData must be at least 3 months old when distributedEach data point must be aggregated, have at least 5 participants contributing input, and no participant may have more than 25% market share for that market MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  23. DOJ Antitrust InvestigationsCriminal enforcement through a federal grand jury investigation (per se violations)Civil enforcement (for other than per se violations) may be handled with Civil Investigative Demand—requests for document production, interrogatories, personal interviews—may result in injunction of illegal conduct MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  24. Private Enforcement ActionsConviction or guilty plea in criminal case is prima facie (on its face) evidence of violation in private antitrust actionPrivate suits alleging agreements to fix prices or other violations will involve discovery of shipping records, customer reports, phone records, meetings, emails, and industry data to establish evidence of agreement MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  25. Private Enforcement ActionsConviction or guilty plea in criminal case is prima facie (on its face) evidence of violation in private antitrust actionPrivate suits alleging agreements to fix prices or other violations will involve discovery of shipping records, customer reports, phone records, meetings, emails, and industry data to establish evidence of agreement MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  26. Beach/Moad CasesPrivate antitrust suits alleging price fixing among 6 carriers and AMSA based on fuel surcharge methodology; motion to dismiss denied by Judge Houck on March 31Case now going into discovery phase; potential for additional defendants to be named MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

  27. Questions and AnswersRichard P. Schweitzer, PLLC1776 K Street, N.W. Ste. 800Washington, D.C. 20006(202) 223-3040rpschweitzer@rpslegal.com MOVING TODAY TRANSFORMING TOMORROW ORLANDO, FL APRIL 1 – 5, 2008

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