Trends In International Litigation : International Business Lawyer & Attorney : Ed Joffe : Joffe & Joffe Law Firm : Miami, Florida Global Customs & Trade Issues

Earlier this week the European Commission publicly annouced that it had decided to initiate formal antitrust investigations against IBM Corporation in two separate cases of alleged infringements of EU antitrust rules related to the abuse of a dominant market position (Article 102 TFEU).

Both cases are related to IBM's conduct on the market for mainframe computers. The first case follows complaints by emulator software vendors T3 and Turbo Hercules, and focuses on IBM's alleged tying of mainframe hardware to its mainframe operating system. The second is an investigation begun on the Commission's own initiative of IBM's alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.

The EU estimates that in  2009 approximately € 8.5 billion worldwide and € 3 billion in the European Economic Area were spent on new mainframe hardware and operating systems.

IBM is alleged to have engaged in illegal tying of its mainframe hardware products to its dominant mainframe operating system. The complaints contend that the tying shuts out providers of emulation technology which could enable the users to run critical applications on non-IBM hardware.

In addition, the Commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services (i.e. keeping potential competitors out of the market), in particular by restricting or delaying access to spare parts for which IBM is the only source.

The initiation of proceedings does not imply that the Commission has proof of infringements. It only signifies that the Commission will further investigate the cases as a matter of priority.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On July 12, 2010, Judge Daniel R. Dominguezgranted certification of the settlement class and granted preliminary approval to the settlement agreements with the Crowley  and Horizon Defendants in the Puerto Rican Cabotage Antitrust Litigation, MDL Docket No. 3:08 md-1960(DRD).  The final fairness hearing is set for October 26, 2010. The only remaining defendants are the Sea Star Defendants.  

Counsel for the Plaintiffs' Class is Hollis L. Salzman of Labaton Sucharow.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Air France, KLM and Martinair have entered into an agreement to settle damage claims brought against them in the United States alleging violations of the antitrust laws in connection with air cargo shipping services.

Under the terms of the settlement agreement, which is subject to court approval, the carriers will pay a total of $87 million in exchange for a release from all claims by direct purchasers of air cargo shipping services to and from the United States between 2000 and 2006. This amount will be deducted from the provision posted in 2008.

The civil actions, which have been brought as class actions and consolidated in the United States District Court for the Eastern District of New York, were initially filed in 2006 after the U.S. Department of Justice and the European Commission initiated investigations of the air cargo industry.

In 2008, the three carriers entered into plea agreements in the United States to resolve that investigation. The investigation by the EU Commission remains pending.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 An Italian subsidiary of  Parker  has agreed to plead guilty and to pay a $2.29 million criminal fine for participating in a conspiracy to rig bids, fix prices and allocate market shares of marine hose sold in the United States and elsewhere, the Department of Justice announced today.

A one-count felony charge was filed today in U.S. District Court in Houston, against Parker ITR S.r.l., a manufacturer of marine hose, headquartered in Veniano, Italy. Under the terms of the plea agreement, which is subject to court approval, Parker ITR has agreed to pay a criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation. Parker ITR is the fourth company to be charged in the investigation. To date, nine individuals have been convicted for their involvement in the marine hose conspiracy.

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. The victims of this conspiracy included companies involved in the off-shore extraction and/or transportation of petroleum products, as well as the U.S. Department of Defense. During the conspiracy, the cartel affected prices for hundreds of millions of dollars worth of marine hose and related products sold worldwide.

Parker ITR is charged with participating in the conspiracy from as early as 1999 until as late as May 2, 2007. According to the charge, Parker ITR and its co-conspirators agreed to allocate shares of the marine hose market and to use a price list for marine hose in order to implement the conspiracy. Parker ITR and its co-conspirators agreed not to compete for one another’s customers either by not submitting prices or bids, or by submitting intentionally high prices or bids, to certain customers. As part of the conspiracy, Parker ITR and its co-conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. Parker ITR received marine hose prices for customers in the United States and elsewhere from the coordinator of the conspiracy and then sold the marine hose to those customers at collusive and noncompetitive prices and then concealed the conspiracy through various means, including code names, private email accounts and telephone numbers.

Parker ITR is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. 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 charge is an example of the department’s commitment to protect U.S. taxpayers from public procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 This past Friday, February 5, 2010, plaintiffs filed a motion seeking approval of a settlement reached between the Class Action Representatives and the Crowley Companies ( Crowley Maritime Corporation and Crowley Liner Services, Inc.)   Under the proposed settlement $ 13.5 million would be paid into the settlement fund. Any class member who is a party to a Transportation Service Agreement with Horizon would have the option to elect, in lieu of receiving a cash payment, a freeze of the then existing contract base rates for two years.

Last summer the Horizon Line Companies also reached a proposed settlement under similar terms which includes a $ 20 million payment.

The litigation is continuing against the other defendants.  However, this settlement puts additional pressure against them and we believe that a global settlement will be concluded shortly.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Will Waters of International Freighting Weekly ( IFW) has reported that twenty freight forwarding companies and national forwarding association Fedespedi are being investigated by Italy’s competition commission over allegations of colluding on road freight pricing.They are accused of exchanging sensitive information "and co-ordination of business strategies" from at least the end of 2002 until September 2007.

The commission alleged that illicit agreements had taken place place during "numerous and regular encounters" at Fedespedi - in particular its overland shippers section - covering road freight services to and from Italy.It claimed the aim had been to "agree the realisation of price increases for services rendered to customers", particularly over fuel surcharges, road tolls and administrative costs.

The companies standing accused are: Agility, Albinos & Pitigliani, Brigl, Cargo North, DHL, Ferrari, Francisco Parisi, Gefco, Geodis, I-Dika, Italmondo, Italsempione, ITK, ITX Cargo, Rhenus, Saima, Schenker, Sittam, Transervice and Villanova.

Fedespedi told IFW it was "intensively co-operating with the authority" in order to clarify whether any of the actions or agreements by the association or any of its members were liable to punishment.DHL confirmed that the competition authority had opened investigations into two of its offices in Milan, and said it was also co-operating fully with the investigating authorities.
DB Schenker said it was giving its full support to the authorities "in order to clarify the matter as soon as possible", adding: "Such investigations do not mean that the companies are guilty of anti-competitive behavior; nor do they prejudge the outcome of the investigation itself."
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Purchasers of marine products may have claims have antitrust violations. Earlier this year two subsidiaries of the Swedish company Trelleborg AB, one based in Virginia and the other in France, agreed to plead guilty and pay a total of $11 million in criminal fines for their participation in separate conspiracies affecting the sales of marine products sold in the United States and elsewhere.
A two-count felony charge was filed in U.S. District Court in Norfolk, Va., against Virginia Harbor Services Inc., formerly known as Trelleborg Engineered Products Inc. (VHS/TEPI), a manufacturer of foam-filled marine fenders, buoys and plastic marine pilings headquartered in Clearbrook, Va.
According to the charges, VHS/TEPI participated in a conspiracy between December 2002 and August 2005 to allocate customers and rig bids for contracts to sell foam-filled marine fenders and buoys, and also participated in a separate conspiracy between December 2002 and May 2003 to allocate customers and rig bids for contracts to sell plastic marine pilings. Under the terms of the plea agreement, which is subject to court approval, VHS/TEPI has agreed to pay a $7.5 million criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation.

Foam-filled marine fenders are used as a cushion between ships and either fixed structures, such as docks or piers, or floating structures, such as other ships. Foam-filled buoys are used in a variety of applications, including as channel markers and navigational aids. Plastic marine pilings are substitutes for traditional wood timber pilings and are often used in port and pier construction projects in conjunction with foam-filled fenders.
 

In addition, a one-count felony charge was filed earlier this year against Trelleborg Industrie S.A.S. (TISAS), a manufacturer of marine hose headquartered in Clermont-Ferrand, France. TISAS is charged with participating in a conspiracy from at least as early as 1999 and continuing until as late as May 2, 2007, to allocate market shares, fix prices and rig bids for contracts to sell marine hose to purchasers in the United States and elsewhere. Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. Under the terms of the plea agreement, TISAS agreed to pay a $3.5 million criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation.
“Price fixing and bid rigging are serious crimes that drain resources from the Department of Defense and the American taxpayer. The Defense Criminal Investigative Service takes very seriously all violations of U.S. antitrust laws that affect products and services procured for our soldiers, sailors, airmen and Marines. DCIS aggressively investigates those who seek to cheat the DOD and the public by conspiring to suppress competition,” said Sharon Woods, Director, DCIS. 
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Shippers, freight forwarders and transportation Intermediaries shipping by ocean between the continental U.S. and Puerto Rico may be recovering part of their shipping costs paid in a partial settlement of an antitrust case involving Jones Act carriers.

Why?

The carriage of goods by sea to or from the continental United States, its non contiguous states, territories or possessions, including Puerto Rico, is governed by the Jones Act, 46 U.S.C. § 55102. Accordingly, only vessels wholly owned by citizens of the United States may provide any part of the transportation of merchandise by water, between Puerto Rico and the continental United States. Beginning in 2002, ocean transportation of cargo between Puerto Rico and the continental United States  was provided only by four companies, Horizon Lines, LLC, Sea Star Line, LLC, Crowley Maritime Corporation and Trailer Bridge,Inc.

A grand jury sitting in Jacksonville, Florida, convened around February 2008, to investigate possible federal antitrust violations in connection with transportation of goods by sea between the continental United States and Puerto Rico. On or about April 17, 2008, the F.B.I. executed search warrants on the premises of Horizon LLC, Sea Star, Crowley Liner and Trailer Bridge.

On Oct. 20, 2008, Peter Baci of Jacksonville, Florida, pleaded guilty, in the U.S. District Court for his role in a conspiracy to suppress and eliminate competition in the coastal water freight transportation services between the continental United States and Puerto Rico by agreeing to allocate customers, agreeing to rig bids submitted to government and commercial buyers, and agreeing to fix the prices of rates, surcharges, and other fees charged to customers. Three months later, Baci was sentenced to serve 48 months in jail and to pay a $20,000 criminal fine. This is the longest jail sentence ever imposed for a single antitrust charge. Related antitrust charges remain pending  against three other shipping executives: R. Kevin Gill and Gregory Glova, of Charlotte, North Carolina; and Gabriel Serra, of San Juan, Puerto Rico. A related obstruction of justice charge is also pending against a fifth shipping executive, Alexander Chisholm, of Jacksonville.

A number of civil class action suits alleging a conspiracy to violate Section 1 of the Sherman Act were filed against:

• Horizon Lines, Inc.
• Horizon Lines of Puerto Rico, Inc.
• Horizon Lines, LLC
• Sea Star Line, LLC
• Crowley Maritime Corporation
• Crowley Liner Services, Inc.
• Trailer Bridge, Inc.

These cases were consolidated in the United States District Court for the District of Puerto Rico, where the litigation is pending. In Re: Perto Rican Cabotage Antitrust Litigaiton MDL 1960. 

On July 8, 2009 (PDF), plaintiffs filed a motion seeking preliminary approval of a settlement reached between the Class Action Representatives and the Horizon Line Companies. Under the proposed settlement $ 20 million would be paid into the settlement fund. Any class member who is a party to a Transportation Service Agreement with Horizon would have  the option to elect, in lieu of receiving a cash payment, a freeze of the then existing contract base rates for two years.

The other defendants have objected and the judge, who must approve this settlement, has now scheduled a settlement mediation between plaintiffs and the other defendants for later this fall. Counsel for the Class Members are Hollis L. Salzman and Kellie Lerner  of Labaton Sucharow LLP. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link