 ANTITRUST DIVISION MANUAL CHAPTER VII |
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ANTITRUST DIVISION RELATIONSHIPS WITH OTHER AGENCIES AND WITH THE PUBLIC This Chapter provides a brief guide to the Division's relationships with other agencies of the federal government and with the state governments, as well as relationships with the press and the public. Generally, the Division speaks to other agencies and to the public through its officially designated representatives. See Division Directive ATR-3000.1, "Communications with Outside Parties on Investigations and Cases." On occasion, and with prior approval, staff attorneys and economists may represent the Division in public or interagency forums, as described in this Chapter. This Chapter also discusses the Division's working relationships with other law enforcement agencies, such as the Federal Trade Commission, U.S. Attorneys and state attorneys general; with foreign governments and international organizations; with members of Congress, congressional committees and staffs; with client agencies of the Department; and with the public, through press relations, responses to citizen requests, and procedures employed with respect to Freedom of Information Act requests. If an attorney, economist or paralegal within the Division has specific questions about any of these relationships, he or she should contact the designated person or office that can provide information or advice. A. Liaison with the Federal Trade Commission The Antitrust Division and the FTC have concurrent statutory authority to enforce Sections 2, 3, 7, and 8 of the Clayton Act. Judicial interpretation of Section 5 of the FTC Act permits the FTC to challenge conduct that also may constitute a Sherman Act violation, and thus, there is an overlap with the Division in this area as well. This overlapping antitrust enforcement authority necessitates coordination between the two agencies to ensure both efficient use of limited resources and fairness to subjects of antitrust investigations. Traditionally, duplication of investigations has been avoided in two areas. First, pursuant to a liaison agreement, the Department has referred all civil Robinson-Patman Act matters to the FTC for action, and, second, the FTC routinely refers possible criminal violations of the antitrust laws, such as price fixing, to the Division. (The procedure to be followed on criminal referrals is discussed below.) The two agencies enforce the balance of the antitrust laws--particularly merger investigations (section 7 of the Clayton Act) and civil non-merger investigations (sections 1 and 2 of the Sherman Act)--concurrently.
Coordination is accomplished through the "clearance procedure." This procedure was established pursuant to an interagency agreement to determine, as each case arises, which agency would be the more appropriate one to handle the matter. The first interagency agreement was informally instituted in 1938 and, since 1948, it has been modified and formalized by several exchanges of correspondence between the Assistant Attorney General for Antitrust and the Chairman of the FTC. On December 2, 1993, the FTC and DOJ jointly issued "Clearance Procedures for Investigations." These procedures, among other things, state the criteria for resolving "contested matters"--matters on which both agencies have sought clearance. On March 23, 1995, the FTC and DOJ jointly announced "Hart-Scott-Rodino Premerger Program Improvements"; these improvements included a commitment by each agency to resolve clearance on matters where an HSR filing was made within, at most, nine business days of filing. The agencies have agreed to seek clearance from each other in the following instances: (1) where either proposes to investigate a possible violation of the law; and (2) where either receives a request for a statement of agency enforcement intentions, i.e., the Division's Business Review or the FTC's Advisory Opinion procedures. Clearance must be obtained for all preliminary inquiries ("PIs"), business reviews, grand jury requests that have not stemmed from an existing PI, and any expansion of a previously cleared matter (to include, for instance, new parties or different conduct). Neither agency may begin an investigation until clearance is granted, although publicly available information may be collected and government sources consulted prior to obtaining clearance. Outside private parties--except for complainants who approach an agency on their own initiative--cannot be contacted until clearance is obtained. Also, complainants should be advised that clearance is unresolved before they invest substantial time and effort in making a presentation, although some will wish to proceed anyway. (In the event that an investigation is expanded to examine different parties or conduct, clearance should be obtained before proceeding with the expanded investigation.) In the Antitrust Division, clearance of proposed investigations is principally handled by the senior Special Assistant to the Directors--who is designated as the FTC Liaison Officer--and by the Premerger Notification Unit/FTC Liaison Office (often referred to as the Premerger Office). The clearance procedure operates as follows: When the FTC wishes to investigate a particular matter, it requests, through its liaison officer, the Division's clearance for the proposed investigation. This request is made through a clearance request form entered into an electronic database to which the Division's Premerger Notification Unit/FTC Liaison Office, as well as the FTC, have access. For a typical investigation, the clearance request specifies the firms to be investigated, the product line involved, the potential offenses, the geographic area, and the source of the allegation. The Division's Premerger Notification Unit/FTC Liaison Office circulates the FTC's request for clearance by e-mail to the section, task force, and field office Chiefs who are most likely to have an interest in the proposed investigation. Each section Chief may object to clearing the investigation, "contest" clearance by e-mailing a PI Request Memo to the PI Request mailbox (cc-ed to the Special Assistant responsible for the section) seeking to investigate the same conduct, agree to clear the matter, agree to clear it with a caveat (i.e., a criminal caveat), or seek additional information about the FTC's proposed investigation. Requests for additional information should be made to the Division's FTC Liaison Officer, who will either obtain additional information from the FTC or refer the Chief to the FTC attorney requesting clearance. Chiefs notified concerning an FTC clearance request should indicate their decision no later than the return date indicated on the e-mail (usually within three working days). If no Chief objects and the appropriate Director of Enforcement approves, clearance is granted to the FTC. A clearance request that generates no objections or conflicts should be processed within a few days, which is why it is important to adhere to the return date indicated on the e-mail.
Similarly, clearance with the FTC of proposed Division investigations is also the responsibility of the Division's Premerger Notification Unit/FTC Liaison Office and FTC Liaison Officer. The clearance function is one aspect of the responsibility of the Directors of Enforcement to approve and supervise investigations undertaken by the Division. Once a PI Request Memo is submitted to the PI Request mailbox (and cc-ed to the Special Assistant assigned to that office), the Division's clearance request is submitted to the FTC so that the clearance process can begin. For HSR matters, a PI Request Memo should be e-mailed to the PI Request mailbox no later than five days after the HSR filing (three days if the matter is a cash tender offer or 15-day bankruptcy matter, or two days for a 10-day bankruptcy matter). In the case of a Grand Jury, clearance is requested as soon as the Assistant Attorney General has approved the empaneling of a grand jury. Clearance requests submitted to the FTC are processed in roughly the same manner as the Division processes FTC requests. Routine clearances generally take a few days, and non-HSR matters typically take a few days longer than HSR-matters. Matters which are subject to time pressure can receive expedited treatment. If expedited treatment is needed, that fact (and the reasons for it) should be indicated in the e-mail accompanying the PI Request Memo, and should also be communicated by phone to the FTC Liaison Officer. Except in extraordinary circumstances, clearance requests will not be relayed to the FTC until a PI Request Memo has been submitted by e-mailing it to the "PI Requests" mailbox. Once clearance has been granted and a preliminary investigation has been authorized, the Premerger Notification Unit/FTC Liaison Office will notify the appropriate Chief by e-mail. (In the case of a grand jury, once authorization has been granted and clearance has been obtained, the appropriate Chief will receive notification via e-mail from the Office of the Deputy Assistant Attorney General for criminal enforcement.
Because the FTC clearance procedure also applies to matters as to which a Hart-Scott-Rodino filing has been made, inquiries may not be made to filing parties, even if just for "clarification" of the filing, before clearance has been obtained. Should a question arise regarding the sufficiency of an initial HSR filing before clearance has been granted, inquiry to the filing party will be made by the FTC Bureau of Competition's Premerger Office. That office has responsibility for administering the Premerger Reporting Program and historically has supervised the determination of the sufficiency of initial filings. Division attorneys should channel such inquiries through their Chiefs to the FTC's Premerger Office. Other than contact with a filing party through the FTC's Premerger Office for this limited purpose, no attorney of either agency should contact any filing party or any other private person or firm in connection with a premerger filing without having first obtained clearance. Should a party initiate contact with either agency, the preclearance contacts policy requires that the other agency be given an opportunity to participate in any meetings or phone conversations. Accordingly, should a party contact the Division prior to clearance being granted, a meeting or phone call may be set up, but the FTC Liaison Officer should immediately be notified so that the FTC can be invited to participate. Similarly, Chiefs may occasionally be contacted by the FTC Liaison Officer to determine whether the Division is interested in participating in a meeting or phone call arranged by the FTC. Should a party submit documentary material prior to clearance being granted, the party should be encouraged to also make that material available to the FTC.
Objections to clearance typically arise when both agencies have requested clearance to investigate the same matter. Sometimes both agencies request clearance simultaneously, but more often in a contested case an agency requests clearance only after learning that the other agency has sought clearance. Matters on which both agencies have requested clearance are generally known as "contested matters" and are resolved as discussed below. On rare occasions, an agency may refuse to grant clearance without seeking to investigate the matter itself. This may occur if, for instance, the agency denying clearance has an ongoing investigation or litigation with which the proposed investigation might interfere, or if the agency denying clearance has already examined the conduct in question and found no significant evidence of illegal activity. In such cases, the FTC Liaison Officer will typically discuss the matter with the staff, the Chief, the appropriate Director of Enforcement, and the relevant individuals at the FTC in an attempt to resolve the matter. Typically, either the requesting agency will withdraw its clearance request, clearance will be granted, or the agency denying the initial clearance request will ask to investigate the matter itself.
Once a matter is contested, the staff should prepare a "Contested Matter Claim Form." The Contested Matter Claim Form describes the conduct or merger sought to be investigated, and describes the relevant expertise the Division has with the product in question. See infra Section A.1.d (discussing criteria used to resolve contested clearances). Examples of Contested Matter Claim Forms are available from the FTC Liaison Officer. Staff should work closely with the FTC Liaison Officer in the preparation of the Claim Form. Claim Forms should be completed within a day after a matter is contested. Claim forms are simultaneously exchanged between the Division and the FTC, and the respective liaison officers discuss the merits of each agency's claim. In a majority of cases, the liaison officers are able to resolve the dispute and the matter is either cleared to the Division or (after approval by the appropriate Director of Enforcement) cleared to the FTC. If the liaison officers are unable to resolve clearance, it is "escalated" to the appropriate Division Director and his or her counterpart at the FTC. If the matter remains unresolved following a discussion at this level, the matter is "escalated" to the relevant Deputy Assistant Attorney General and the FTC's Director of the Bureau of Competition. In the very rare instance where a matter is still unresolved after discussion at this level, the Assistant Attorney General will enter into negotiations with the FTC Chairman and resolve the matter. After a contested matter has been resolved, the section will be notified by e-mail by the Premerger Notification Unit/FTC Liaison Office. Should an attorney at any time want to know the status of a clearance request, he or she should contact the FTC Liaison Officer by phone or e-mail, or the Premerger Notification Unit/FTC Liaison Office by phone.
The criteria for resolving contested merger matters are spelled out in some detail in the 1993 "Clearance Procedures for Investigations." The principal ground for clearance is expertise in the product in question gained through a "substantial investigation" of the product within the last five years--or if neither agency has a substantial investigation within five years, ten years. "Substantial investigation" means any civil investigation where compulsory process was issued (i.e., CIDs or Second Requests), and documents were received and reviewed. Expertise in the "product" is obtained when the product involved in the prior, cited substantial investigation was the same product as that involved in the contested investigation, a substitute, a major input or output, or one produced using the same manufacturing process (in decreasing order of significance). Should both agencies have at least one substantial investigation of the same category (i.e., same product), the order of priority is as follows (in decreasing order of significance): litigated case; filed case; announced challenge or "fix-it-first"; ordinary Second Request merger investigation; and civil conduct investigation. Only if neither agency has a relevant substantial investigation, will non-substantial (including criminal investigations) typically be considered. The process is somewhat flexible, and if either agency has an ongoing investigation or an existing decree with which the proposed investigation may conflict, the matter will often be cleared so as to avoid conflicts. The criteria for resolving civil non-merger contested matters are not as formal, but are similar to those used for merger matters. While rewarding expertise, they also give more weight towards initiative: in the absence of overwhelming expertise in an area, the matter generally will be awarded to the agency that first identified the potential competitive problem and developed the proposed investigation.
When a matter is before the Federal Trade Commission and the Commission determines that the facts may warrant criminal action against the parties involved, the Commission will send a written notice to the Antitrust Division and make available to the Division the files of the investigation following an appropriate access request. See infra Section A.3. The Director of Criminal Enforcement, through the Premerger Notification Unit/FTC Liasion Office, will refer the matter to the appropriate section, task force, or field office for review of the materials and for determination as to whether the matter should be presented to a grand jury. Determination should be made by the section or field office within 30 days of the referral, so that the Division can inform the Commission of its position in timely fashion. If the Division determines that a matter should be referred to a grand jury, it will request that the Federal Trade Commission transfer the matter. If, on the other hand, the Division decides not to pursue the matter with a grand jury, then the Commission may proceed with its own investigation.
The liaison procedure between the Division and the FTC also provides for the exchange of information and evidence between the agencies to the extent permitted by law and internal policies. If the FTC has conducted an investigation which involved materials that could be useful in an investigation being conducted by the Division, the section or field office Chief should contact the Division's FTC Liaison Officer, who will make arrangements for the Division to obtain access to the appropriate files. If, upon examination, it is determined that copies of any of the materials would be of assistance to the staff, arrangements for copying should also be made through the Liaison Officer. Requests by the FTC for access to materials in the Division's possession are processed through the Division's Premerger Notification Unit/FTC Liaison Office. If an attorney or economist receives a direct request for access to, or copies of, Division files, such materials should not be made available until the matter is cleared through the Division's Liaison Officer. B. Relationships With U.S. Attorneys Relationships between the Antitrust Division and U.S. Attorneys are controlled by policies of the Department of Justice and the Division. For example, Department of Justice policy provides that U.S. Attorneys' offices should watch for manifestations of price-fixing, bid-rigging, or other types of collusive conduct among competitors that would constitute criminal violations of Section 1 of the Sherman Act. A U.S. Attorney with evidence of a possible antitrust violation should consult with either the Chief of the Antitrust Division's closest field office or the office of the Deputy Assistant Attorney General for criminal enforcement in Washington, D.C., to determine who should investigate and prosecute the matter. Most criminal antitrust investigations are conducted by the Antitrust Division's field offices and litigating sections because of their specific expertise in particular industries and markets. In some cases, however, it may be more advantageous for the U.S. Attorney's office to investigate and prosecute a matter, either on its own or in a joint investigation with the Antitrust Division. The Antitrust Division, through the office of the Deputy Assistant Attorney General for criminal enforcement, may refer antitrust investigations to U.S. Attorneys, particularly those involving localized price-fixing or bid-rigging conspiracies. According to an Attorney General's Policy Statement, published at United States Attorney's Manual § 7-1.200, U.S. Attorneys are assigned the responsibility of enforcing Section 1 of the Sherman Act against offenses which are "essentially of local character, and which involve price-fixing, collusive bidding, or similar conduct. U.S. Attorneys shall handle such investigations and proceedings as the Assistant Attorney General in charge of the Antitrust Division may specifically authorize them to conduct." Once a U.S. Attorney's office accepts a referral, it will be primarily responsible for the investigation and prosecution of that matter. All antitrust investigations conducted by a U.S. Attorney's office, whether initiated by that office or referred from the Antitrust Division, are subject to supervision by the Assistant Attorney General in charge of the Antitrust Division. See 28 C.F.R. § 0.40. Accordingly, the Division's approval is required at various stages of the investigation, such as empaneling a grand jury, recommending an indictment, or closing the matter. These procedures are described at United States Attorney's Manual § 7-2.000. It is the policy of the Antitrust Division to create and maintain good working relationships with all U.S. Attorneys. The Chiefs of the Division's field offices should maintain contact with all of the U.S. Attorneys within their geographic areas of responsibility. This liaison provides the U.S. Attorneys with a convenient contact to whom to refer complaints or other evidence of antitrust violations, and from whom to obtain information about antitrust matters and Division procedures. Additionally, close liaison provides the Division field offices with a ready source of information and support in complying with local court rules, procedures, and practices when Division attorneys are conducting investigations and litigating cases within the U.S. Attorney's jurisdiction. The relationship also is valuable when Division attorneys need the approval of the U.S. Attorney to apply to the local district court for immunity orders, or otherwise need local assistance. In order to develop and continue good relationships with U.S. Attorneys, it is necessary that all Division attorneys keep U.S. Attorneys apprised of all significant Division activities occurring within their districts. It is, for example, normal practice to present and explain to U.S. Attorneys, indictments, informations, and plea agreements. Division attorneys who have particular questions or problems about dealing with U.S. Attorneys should consult with their field office or section Chiefs, or, where appropriate, with the Director of Criminal Enforcement or the Deputy Assistant Attorney General for criminal enforcement. C. Relationships with State Attorneys General The Antitrust Division is committed to cooperating with state Attorneys General. Effective cooperative between the Division and the states benefits the public through the efficient use of antitrust enforcement resources. Cooperation with the states gives the Division the benefit of "local counsel" who know the local markets well. It also promotes consistent enforcement and conserves resources at all levels of government involved. The Division and state antitrust enforcers have cooperated frequently in the recent past. In 1994, the Division and state Attorneys General filed several joint civil actions and consent decrees. This represented a significant achievement, made possible by goodwill and effective coordination between the Division and the states. The purpose of this section is to provide information and guidance regarding cooperation and interaction with state enforcers. It is most important to remember that although it is the policy of the Division to cooperate whenever possible with state Attorneys General, there is no formula or checklist for cooperation. The nature and level of cooperation are decided on a case-by-case basis, keeping in mind that conducting an effective and efficient investigation is our first priority. For example, investigations affecting primarily local markets within a state are more suitable for joint enforcement efforts. Other factors include the experience, interests and resources of a particular state Attorney General's office.
The functions and organization of offices of state Attorneys General are similar to those of the Department of Justice. A state Attorney General is the chief legal officer of his or her state. They typically bring civil suits on behalf of their states; represent their states and state agencies in civil suits; handle criminal appeals; and enforce antitrust, consumer protection and environmental statutes. The vast majority of resources in a state Attorney General's office are devoted to defending the state in civil litigation and criminal appeals. State Attorneys General are authorized to bring civil federal injunction actions under Section 4 of the Clayton Act on behalf of the economies and citizens of their states. See Hawaii v. Standard Oil Co., 405 U.S. 251 (1972). Further, Section 4C of the Clayton Act authorizes state Attorneys General to bring damage actions, as parens patriae, on behalf of natural persons residing within their states. See 15 U.S.C. § 15c. With the exceptions of Pennsylvania and Georgia, every state has enacted a civil antitrust statute that, at a minimum, includes a provision that parallels Section 1 of the Sherman Act. These statutes typically authorize the state Attorney General to seek treble damages on behalf of natural persons residing within the state, state agencies, institutions and political subdivisions; civil penalties; injunctive relief; and attorneys' fees and costs. See, e.g., Va. Code Ann. § 59.1-.15. These statutes also typically authorize the state Attorney General to issue Civil Investigative Demands compelling oral testimony, the production of documents and responses to written interrogatories to individuals and corporations in connection with antitrust investigations. State antitrust statutes also usually expressly require that they be interpreted in conformity with comparable federal antitrust statutes. See, e.g., Mass. Gen. Laws ch. 93, § 1; see also ABA Antitrust Law Section, State Antitrust Practice and Statutes (1990). It is the practice of most state Attorneys General to file cases in federal court with pendent state antitrust claims. Most states are reluctant to bring actions in state court because most state court judges have little or no experience with antitrust cases. Few state Attorneys General's offices have significant experience prosecuting criminal antitrust violations. Many state antitrust statutes do not have general criminal provisions. Every state, however, has criminal bid rigging and governmental fraud statutes. The level of antitrust enforcement varies from state to state. Most state antitrust trial attorneys are responsible for consumer protection as well as antitrust enforcement. Most state antitrust units are financed through direct appropriations from their state legislatures. Several states, however, finance their antitrust units, at least in part, through revolving funds that are funded by attorneys' fees and costs paid to the state in connection with settlements and judgments. State Attorneys General, under the auspices of the National Association of Attorneys General ("NAAG"), often form working groups and ad hoc committees to coordinate investigations and litigation involving several states. Recent examples of multi-state litigation are State of New York v. Keds Corp., 1994-1 Trade Cas. (CCH) ¶70,549 (S.D.N.Y. 1994) (50 states and the District of Columbia) and Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993) (19 states). The states participating in multi-state investigations usually execute cost sharing agreements apportioning their costs based on population. Multi-state investigations and litigation are also supported by a fund established by NAAG for expert witness fees and expenses.
Comprised of the Attorneys General of the fifty states and the chief legal officers of the District of Columbia (Corporation Counsel), the Commonwealths of Puerto Rico (Secretary of Justice) and the Northern Mariana Islands, and the territories of American Samoa, Guam, and the Virgin Islands, NAAG facilitates interstate cooperation among state Attorneys General on legal and law enforcement issues and conducts policy research and analysis of issues. The U.S. Attorney General is an honorary member. The Attorney General is popularly elected in 43 states and appointed by the governor in five states (Alaska, Hawaii, New Hampshire, New Jersey, and Wyoming). In Maine, the legislature elects the Attorney General, and in Tennessee, the state Supreme Court appoints the Attorney General. In the District of Columbia, the Mayor appoints the Corporation Counsel, whose duties are similar to those of Attorneys General of the states. NAAG has a full-time staff, headed by the Executive Director and General Counsel. Reporting to these officials are counsels who are responsible for specific projects and subject areas, including antitrust. The Antitrust Committee, a standing committee of the organization, is responsible for all matters relating to antitrust enforcement (i.e., adoption of guidelines and resolutions). The president of NAAG appoints the chairperson, who serves a two year term.
The NAAG Antitrust Task Force is comprised of state staff attorneys responsible for antitrust enforcement in their states. The Task Force, among other things, recommends policy and other matters for consideration by the Antitrust Committee, organizes the annual NAAG Antitrust Training Seminar and Conference and coordinates multi-state investigations and litigation. The Chairperson of the Task Force, who is appointed to a two-year term by the Chairperson of the Antitrust Committee, is the principal spokesperson for the states on antitrust enforcement.
State Attorneys General's offices can often assist the Division. The Division often seeks information in the possession of state officials and agencies. Division attorneys should consult with the Division attorney designated as the state liaison about contacting the state Attorney General's office whenever the need arises to contact an employee of a state agency. State Attorneys General, as the chief legal officers of their states, can be of tremendous assistance in obtaining information from state officials and agencies.
Pursuant to Section 4F of the Clayton Act, added by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the Division has the statutory responsibility to provide state Attorneys General with information, to the extent permitted by law, that may assist them in determining whether to bring a damage suit based upon violation of the federal antitrust laws. The Division has adopted the following procedures to implement 4F consistently.
Under Section 4F(a), 15 U.S.C. § 15f(a), the Antitrust Division notifies state Attorneys General when it believes the state may be entitled to recover damages as a result of the violation alleged in a civil or criminal antitrust prosecution filed by the United States. In making its judgment in such instances, the Division considers, among other relevant factors, the factual circumstances of the alleged violation, and the posture of the state as a potential damage claimant under existing law, and the likely effect of the alleged violation on cognizable state interests. This notification procedure is not, under the statute, to be equated with routine public announcement of antitrust actions filed by the Division. Rather, this procedure will be used when, in the Division's judgment, a state damage action may lie based on the substantially same allegations made in a federal antitrust prosecution. This notification should be recommended by the investigative staff and assessed by the Chief of the Freedom of Information Act ("FOIA") Unit. The Chief of the FOIA Unit will make all notifications to the affected states under Section 4F(a). Even without specific notification pursuant to Section 4F(a), state Attorneys General remain free to explore a potential Clayton Act damages action arising from any federal civil or criminal antitrust prosecution and to request, under Section 4F(b), investigative files and other materials of the Antitrust Division relevant to that actual or potential cause of action. This data will be made available to state Attorneys General under the standards for Section 4F(b) disclosure. Section 4F(b), 15 U.S.C. § 4f(b), requires disclosure to the state Attorneys General "to the extent permitted by law" of any investigative files or other materials that may be relevant or material to an actual or potential state cause of action for damages under the Clayton Act. The Antitrust Division will disclose materials from its files to assist state Attorneys General to the maximum extent appropriate in fulfilling their state antitrust enforcement responsibilities. Thus, as a general practice, a liberal rule will apply to disclosures under Section 4F(b). There are, however, certain instances where, because of statute, case law or other constraints, non-disclosure, or a least protective limitations upon the disclosure made, may be necessary. The Antitrust Division retains discretion to determine the proper scope of Section 4F(b) disclosures. This discretion will be exercised to further the overall policies embodied in the antitrust laws and the Hart-Scott-Rodino Antitrust Improvements Act of 1976. These policies favor vigorous federal and state enforcement of the antitrust laws, but occasionally a balance must be struck between immediate disclosure of investigative files and federal enforcement priorities and necessities. While it is the Division's policy to cooperate fully and liberally with state Attorneys General, in some instances disclosures may be delayed or limited to preserve the integrity of Antitrust Division prosecutions or investigations or its deliberations.
Requests for access to investigative files or other materials of the Antitrust Division, pursuant to Section 4F(b), should be made to the Chief of the FOIA unit, who is responsible for responding to such requests. A request from a state Attorney General may be made by the Attorney General or his or her designee, who shall be an official of the state government, e.g., an assistant attorney general in charge of antitrust enforcement in the state Attorney General's office. Requests on behalf of a state should not be made, and will not be honored, if they come from private counsel, even though the state may retain such counsel for the purpose of considering and filing an antitrust damage action on the state's behalf. See 15 U.S.C. § 15g(1). The response from the Chief of the FOIA Unit to a request made under Section 4F(b) will indicate the general nature of the proposed disclosure and any conditions that may be imposed, such as protective arrangements or limitations, on further disclosure. Generally, the Chief of the FOIA Unit sends the state Attorney General relevant material such as the indictment or complaint in the case and copies of readily available memoranda, such as requests for preliminary inquiry or grand jury authority. The letter also informs the state Attorney General of the Division's intention to disclose relevant non-grand jury material that the state may request, the Division's position regarding disclosure of grand jury materials, and the name, address and telephone number of the section, task force, or field office Chief supervising the case whom the state antitrust attorneys may contact for further information regarding the case. The FOIA Unit will handle the arrangements for the disclosure of investigative files or other material.
In response to a Section 4F(b) request, the Antitrust Division will make all relevant files and materials available to state Attorneys General with certain exceptions and limitations. These exceptions and limitations are not exhaustive, and peculiar circumstances may require modification or extension of these standards. Any such modification that affects the interests of the state Attorneys General under Section 4F(b) will be made known to them promptly.
When the Division's investigative files requested by a state Attorney General contain grand jury materials or other data referring to grand jury materials, disclosure of such materials is prohibited without a court order. Section 4F(b) does not create an exception to Rule 6(e). See Illinois v. Abbott & Assocs., Inc., 460 U.S. 557 (1983). Moreover, the state Attorney General must demonstrate "particularized need" before the district court may issue a disclosure order. See id.; see also Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211 (1979). Nonetheless, the district court should consider the congressional intent reflected in Section 4F(b) in weighing the public interest served by disclosure to a governmental body to determine if the particularized need standard has been met. Notwithstanding this interpretation of Rule 6(e), if the grand jury investigation and any resulting litigation have been terminated, the Division usually will not oppose an application by the state Attorney General under Rule 6(e) for disclosure pursuant to Section 4F(b) if the state is contemplating or has initiated suit. There may be, however, some circumstances where particular factors may compel the Division to seek limitations on the disclosure of grand jury materials, even though the underlying prosecution has been terminated. These instances may involve specific hardships upon individual grand jury witnesses or other similar factors. These will be considered on a case-by-case basis, and the Division's position will be explained fully to the states in such instances. In circumstances where a grand jury investigation is completed, but a resulting prosecution is still pending, the Division ordinarily will resist disclosure of investigative materials under Section 4F(b) until the prosecution is completed at the district court level. In addition to secrecy considerations, the Division must preserve its litigation posture and, in some instances, disclosure could compromise an effective conclusion of the Division's action. Under some circumstances, the Division may not oppose a 6(e) request by a state even though its prosecution is still pending, if appropriate limitations on use and further disclosure are provided for and are embodied in the court's disclosure order. For example, because of the pendency of a criminal trial, disclosure may be made to the state Attorney General and his or her immediate staff solely for their use in preparing a damage action. In such situations, the Division will insist that these materials not be disclosed to any other parties to the litigation or otherwise be used until the termination of the federal prosecution. These instances will be dealt with on a case-by-case basis, but generally the Division will not oppose limited disclosure--as ordered by the court under Rule 6(e)--if (a) no harm to the Government's prosecution will result, and (b) acceptable limitations on subsequent disclosure can be achieved.
Where the Division has an open investigation, disclosure of investigative files pursuant to Section 4F(b) generally will be denied. The timing of the release of files under Section 4F(b), as distinguished from the ultimate release of such files, is left to the discretion of the Antitrust Division. The effectiveness of the investigation is potentially compromised by making investigative files available during its pendency. As a matter of practice, the Division will deny disclosure of investigative files in all pending grand jury investigations. If a state moves for disclosure of grand jury materials while the investigation is continuing, the Division will oppose such motions.
Materials obtained by Civil Investigative Demand will not be disclosed under Section 4F(b). There is no provision in the law for disclosure of such data, except where the party from whom the materials are obtained consents to the disclosure. See 15 U.S.C. § 1313(c)(3).
The identity of confidential sources will not be disclosed pursuant to Section 4F(b). This is necessary to ensure the future cooperation of these and other sources, especially since they often rely on a promise that their identities will not be revealed.
Confidential business information is protected from disclosure by federal law. Accordingly, where such information is part of investigative files, that data will not be disclosed to state Attorneys General under Section 4F(b).
All files or materials obtained by the Antitrust Division under the premerger notification provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 are protected by law from disclosure. Accordingly, such data will not be disclosed to state Attorneys General under Section 4F(b). This includes the fact that a filing has been made and its date.
Files or materials obtained from the Internal Revenue Service or other federal investigative agencies frequently are protected by law from disclosure outside the Department of Justice. Federal investigative agencies, as a matter of practice, frequently require the Division to limit disclosure of files or materials generated by those agencies. Therefore, access by state Attorneys General to investigative files and material generated outside of the Antitrust Division will be denied unless the agency in question permits release and disclosure is not otherwise prohibited by law. Certain FBI files and materials may or may not be disclosable. Frequently, the FBI conducts or assists in conducting federal criminal antitrust investigations. Information derived from its efforts may be incorporated in Antitrust Division files and, as such, revealed under Section 4F(b). However, raw FBI investigative reports will not be disclosed, as a matter of course, under Section 4F(b) unless the FBI allows disclosure. Recourse to the FBI or other investigative agencies for such data usually may be made by the state Attorneys General by direct request or under the Freedom of Information Act.
The Antitrust Division ordinarily will limit the disclosure of its work product analyses and other deliberative memoranda to state Attorneys General under Section 4F(b). This is necessary to protect the candor and effectiveness of communications within the Division and to preserve and foster the integrity of its enforcement programs and the recommendations and analyses of its staff. Ordinarily, these limitations do not result in complete denial of access to investigative files or materials; rather, only particular memoranda or portions of such memoranda are withheld. Such refusals often limit the timing and extent of such disclosure rather than preventing disclosure altogether. Finally, Division staff may be able orally to discuss issues relating to the investigation in a way that substantially assists the state attorneys without jeopardizing or unduly exposing internal Division deliberations.
Except as described above, the Division usually will not seek to impose additional restrictions on the use by state Attorneys General of investigative data disclosed pursuant to Section 4F(b). Under special circumstances, the Division may set other restrictions on investigative data if there is a need for continued secrecy.
The Supreme Court added subdivision 6(e)(3)(C)(iv) to Fed. R. Crim. P. 6(e) in an amendment effective August 1, 1985. Its purpose, as stated in the Advisory Committee notes, was to eliminate "an unreasonable barrier to the effective enforcement of our two-tiered system of criminal laws . . . [by allowing] a court to permit disclosure to a state or local official for the purpose of enforcing state law when an attorney for the government so requests and makes the requisite showing." The subdivision reads as follows: (C) Disclosure otherwise prohibited by this rule of matters occurring before the grand jury may also be made . . . It is thus clear that the decision to release or withhold such information may have significant effects upon relations between federal prosecutors and their state and local counterparts, and that disclosure may raise issues that go to the heart of the federal grand jury process. In this respect, the Assistant Attorney General in charge of the Criminal Division (who is a member of the Advisory Committee) promised the Advisory Committee that prior to any request to a court for permission to disclose such grand jury information, authorization would be required from the Assistant Attorney General in charge of the Division having jurisdiction over the matters that were presented to the grand jury.(2) It is the policy of the Department that such prior authorization be requested in writing in all cases. A copy of such requests shall be sent to all federal investigating agencies involved in the grand jury investigation. To ensure that grand jury secrecy requirements are not violated in the submission of such requests, the following legend should be placed at the top and bottom of each page of the request:
Disclosure restricted by Rule 6(e), Federal Rules of Criminal Procedure In addition, the entire packet should be covered with a plain white sheet having the word "SENSITIVE" stamped or typed at the top left and bottom right corners. Division attorneys seeking permission to apply for a disclosure order for materials obtained in an antitrust investigation must submit a memorandum to the Deputy Assistant Attorney General for Criminal Enforcement so that the approval of the Assistant Attorney General may be sought. The memorandum should provide the following information:
In making a determination on whether to authorize obtaining permission to disclose, the Assistant Attorney General must consider all relevant factors including whether:
All attorneys should be aware that there is no requirement that a "particularized need" be established for the disclosure under Rule 6(e)(3)(C)(iv), but there should be substantial need. The need to prosecute or to investigate ongoing or completed state or local felony offenses will generally be deemed substantial. If the request is authorized, the staff attorney who seeks permission to disclose shall include in the proposed order a provision that further disclosures by the state officials involved shall be limited to those required in the enforcement of state criminal laws. A copy of any order denying a request for permission to disclose should be sent to the office of the Deputy Assistant Attorney General for criminal enforcement.
The overwhelming majority of state Attorney General requests for assistance and information are informal. State Attorneys General's offices have limited antitrust resources and on occasion will request assistance from the Division. State attorneys find consulting informally with Division attorneys and economists to be very helpful. It is the policy of the Division to comply with informal requests for information and assistance by state Attorneys General whenever possible. Sharing thoughts and ideas with state enforcers is critical to enhancing state antitrust enforcement.
The Division actively encourages state Attorneys General to refer to the Division significant criminal and civil matters. Regular contact with state antitrust officials is therefore important. Whenever a state refers a matter to the Division, the state should be advised generally of the status of any subsequent investigation. Providing the state with information will encourage future referrals. If a referral results in an enforcement action, the state Attorney General's referral of the matter to the Division should be publicly acknowledged. It is Division policy to refer criminal and civil matters whose possible effects are predominantly local to state Attorneys General for possible investigation. When referring a matter to a state Attorney General, as much information as practical regarding the matter should be communicated to the state official responsible for antitrust enforcement.
State Attorneys General have become increasingly active in merger enforcement. They are more likely to have an interest in transactions involving goods or services purchased directly by consumers or state and local governments and that primarily affect local markets. It is the policy of the Antitrust Division to cooperate with state Attorneys General on mergers that affect local markets when practical. Division attorneys reviewing such transactions should give serious consideration to contacting the offices of the state Attorneys General whose states the transaction may affect to discuss possible cooperation. The state Attorneys General may have an interest in the transaction and may be contemplating opening an investigation. Early coordination with state Attorneys General benefits the Division, the states and the parties. It is not uncommon for the parties to desire the Division and the state Attorneys General to coordinate their respective investigations. Close coordination allows the parties to avoid the additional costs of responding to duplicative investigations. Moreover, close cooperation between the Division and the states facilitates the consistent application of the antitrust laws, making it less likely that a state Attorney General and the Division will arrive at different conclusions concerning a merger. State Attorneys General are free to challenge and seek divestiture in transactions that a federal agency declines to challenge. See California v. American Stores, 495 U.S. 271 (1990). The likelihood of such a challenge is reduced when there is significant coordination and cooperation.
The HSR and Antitrust Civil Process Acts restrict significantly the ability of the Division to share information with state enforcement officials. It is Division policy to treat the fact of a filing of HSR forms, the date the resulting waiting periods end and the issuance of Second Requests as confidential information under the HSR statute. The ACPA prohibits the disclosure of answers to CIDs. The Division also maintains the confidentiality of its work product. In response to two Court of Appeals decisions prohibiting disclosure of HSR materials to state Attorneys General, NAAG in 1988 adopted the Voluntary Pre-Merger Compact (NAAG Compact). See Lieberman v. FTC, 771 F.2d 32 (2d Cir. 1985); Mattox v. FTC, 751 F.2d 116 (5th Cir. 1985). The NAAG Compact allows parties to an HSR merger to file with a designated state liaison copies of the initial HSR filing, any Second Request, and Second Request filing. The states agree to keep all information they receive pursuant to the Compact confidential, except in connection with a state challenge of the transaction. In exchange for providing the information to the state, the state agrees not to issue compulsory process during the waiting period. Under a 1994 amendment to the NAAG Compact, the states reserve the right to issue compulsory process if the parties decline to produce voluntarily any information requested by a state that is not produced pursuant to a Second Request. In 1997, the Division, FTC, and NAAG reached agreement on a protocol (found at Appendix B of this chapter) to facilitate coordination of parallel state and federal merger investigation as much as possible within statutory constraints. Prior to any disclosure of materials to a state Attorney General, the protocol requires the parties to submit a letter to the Division (1) agreeing to provide the liaison state with all information submitted to the Division and (2) waiving the HSR and CID confidentiality provisions to the extent necessary to allow discussions of protected materials between the Division and state Attorneys General. Once the waiver letter from the parties is received, the Division will provide the liaison state with the Second Request and CID schedules of the parties and third parties and the HSR waiting period expiration date. In absence of a waiver, cooperation with a state is restricted. The state may, however, be provided with non-HSR and CID information and directed to public sources. The Division may also provide the states with CID schedules, with confidential information redacted. The identities of CID recipients should not be redacted.
At the outset of any cooperative effort with state enforcers, it is imperative that Division attorneys discuss with state attorneys the level and nature of possible cooperation. Early discussions will help to avoid misunderstandings between the state and the Division that could prove harmful not only to the investigation but also to the Division's relationships with state Attorneys General. Division attorneys should determine in the initial discussions with state staff the level of the state's interest in the transaction. In the event the state wishes to take an active role in the investigation, issues that should be discussed include possible joint interviews of witnesses, coordination of CID depositions and review of documents.
There may be several advantages to conducting interviews with state enforcers. Conducting interviews with state staff conserves state and Division resources by avoiding duplicative interviews. Many witnesses desire to be interviewed jointly by the state and the Division in order to avoid the time and expense of separate interviews. Joint interviews can only be done with the advance consent of the witness. In some cases, however, joint interviews may not be practical or feasible. The needs of the investigation and the enforcement interests will generally dictate the best approach. Division and state staffs should establish ground rules for interviews. The state, for instance, may wish only to participate in interviews of certain witnesses. On the other hand, the state may wish to be given notice, when possible, of all interviews and the opportunity to participate. Similarly, the Division staff may wish to obtain a commitment from the state to give Division staff notice of and the opportunity to participate in witness interviews conducted by state staff. Agreement should be reached in advance as to who will be the primary questioner in the interview, and whether an opportunity will be provided to other participants to ask their own questions either during the body of the interview or after the primary questioner has completed his or her questions.
With the oral or written consent of the witness, state staff attorneys have been permitted to attend CID depositions. The state's attendance at CID depositions avoids possible duplicative depositions under state CID statutes. On the other hand, having additional attorneys present may tend to make the witness more circumspect. Before inviting state staff attorneys to participate in CID depositions, staff should consult with the appropriate Director of Enforcement and consider alternatives such as reviewing questions with the state in advance and providing a copy of the transcript to the state, which may be done with the written consent of the witness. Participation by Division staff in state CID depositions may be an alternative when a witness declines to consent to the participation of the state attorneys in CIDs under the ACPA. Most state Attorneys General interpret their state CID statutes to allow the participation of Division attorneys without the consent of the witness. Division attorneys may participate in state CID depositions as long as it is clear that the depositions can be used in any subsequent Division challenge of the transaction regardless of whether the state is a party to the litigation. Finally, in past cooperative efforts, the Division and the state have divided the taking of depositions, with the state deposing certain witnesses under a state CID statute and the Division deposing the remaining witnesses under the ACPA. Assigning certain witnesses to be deposed by the state staff may, in appropriate circumstances, allow for more efficient use of Division and state resources. It may also result in a somewhat more informative deposition if the witness is confronted with fewer attorneys. Division staff must be certain that the state CID depositions may be used in any challenge by the Division.
The parties may wish to pursue a settlement with the Division and the states simultaneously. Division and state Attorney General staff should in those instances reach an understanding in advance concerning the state's participation in settlement discussions with the parties.
Civil enforcement is the "bread and butter" of the typical state Attorney General's antitrust enforcement program. As with merger investigations, the appropriate level of cooperation with a state Attorney General is determined on a case-by-case basis depending upon the Division's need for additional personnel, the state's parallel need for support, the benefit to the parties of governmental coordination, the cost of any delay the coordination would entail, and the complexities of coordination. Discussions with the state staff in the early stages of the investigation are crucial. Just as with merger investigations, Division attorneys should discuss with their state counterparts such issues as joint interviews, CIDs and document review, as well as the timing of phases of the investigation. An additional issue that should be discussed early in the investigation is whether the state intends to seek damages. The state's pursuit of damages may make joint settlement negotiations difficult. Because the Division usually seeks injunctive relief, the parties may wish to reach agreement on a decree and then negotiate separately with the state concerning damages. Similarly, most state statutes have civil penalty and attorneys' fees provisions. Subjects of an investigation may resist paying civil penalties or attorneys' fees to the state, possibly making joint settlement negotiations with the state difficult even if there is no separate state claim for damages. Accordingly, it should also be determined whether the state intends to seek penalties and/or attorneys' fees.
As stated above, most state Attorneys General are primarily concerned with recovering civil damages on behalf of natural persons residing within their states, and state agencies, institutions and political subdivisions harmed by unlawful conduct. An increasing number of state Attorneys General, however, have recently established active criminal antitrust enforcement programs.
In 1984, as part of the Division's efforts to strengthen cooperation with state Attorneys General in the prosecution of criminal antitrust matters, the Division instituted the Cross-Designation Program. The program allows the Division to stretch enforcement resources through the appointment of state prosecutors to assist the Division on grand jury investigations. As with civil investigations, state prosecutors often have special knowledge of local markets that may prove helpful in a grand jury investigation. The program also provides state prosecutors opportunities to gain experience in criminal antitrust enforcement, experience that hopefully will result in increased criminal antitrust enforcement by state Attorneys General. Every attorney selected for the program will be appointed as a Special Assistant to the United States Attorney General, pursuant to 28 U.S.C. § 515(a), and will be detailed to the Antitrust Division. Section 515(a) authorizes Special Assistants, when specifically directed by the Attorney General, to conduct any kind of criminal legal proceeding, including grand jury proceedings, which United States Attorneys are authorized by law to conduct. Special Assistants initially will be appointed for six months, on the basis of a name and fingerprint check, pending completion of a full-field background investigation by the Federal Bureau of Investigation. The appointment may be extended upon satisfactory completion of the background investigation. Special Assistants will serve without compensation other than that which they receive through their existing employment with the state. A Special Assistant will report to and act under the direction of the Chief of the field office, task force, or section conducting the investigation or prosecution or such other attorney or attorneys in the Antitrust Division as the Chief may designate. A Special Assistant may be terminated at any time and without cause or notice. Each Special Assistant must take an oath of office and must agree to abide by all restrictions applicable to attorneys employed by the Department of Justice against the disclosure to unauthorized persons of information obtained in the course of service as a Special Assistant, including the restrictions of Rule 6(e) of the Federal Rules of Criminal Procedure regarding the disclosure of grand jury materials.
Requests to participate as a cross-designee for a particular investigation should be made to the office of the Deputy Assistant Attorney General for criminal enforcement, who will arrange with the Personnel Unit for the appropriate forms to be sent to the state Attorney General. Upon the return of the completed forms to the Division, including three fingerprint cards, the Personnel Unit will arrange for a name and fingerprint check by the FBI. Once this has been completed, the applicant will be notified of his/her six-month appointment pending completion of the FBI's full-field background investigation. The Special Assistant must sign the appointment letter and oath of office and return them to the Division. Thereafter, the section, task force, or field office Chief is notified of the appointment and is sent a copy of the appointment letter and oath. These should be filed with the clerk of court in the district where the investigation is being conducted. The section, task force, or field office Chief should also request a grand jury letter of authority for the Special Assistant, which may also be filed with the clerk. Upon completion of the full-field investigation, the Special Assistant's term of appointment may be extended to one year from the original appointment date.
NAAG and the Division in 1994 agreed upon a protocol concerning the cross designation of state attorneys. (A copy of the protocol is found in Appendix A to the chapter.) The purpose of this protocol is to address several of the issues that may arise in connection with the cross designation of state attorneys, particularly when the state has potential civil treble damage claims involving the same subject matter as the grand jury investigation. The simultaneous participation by a Special Assistant in the grand jury investigation and a civil action brought by the state Attorney General involving the same subject matter presents potentially significant Rule 6(e) problems. The state commits under the protocol to delay the filing of any damage action involving the subject matter of the grand jury investigation until the completion of all prosecutions at the district court level. There is an exception when the state faces the possible expiration of the statute of limitations of its civil claims. Simultaneous civil and criminal proceedings may be unavoidable in many circumstances because the Clayton Act and most state antitrust statutes impose a four year statute of limitations on civil treble damage antitrust actions. See 15 U.S.C. § 15b.(3) By contrast, there is a five year statute of limitations for criminal antitrust actions. See 18 U.S.C. § 3282. Whenever the state Attorney General files a civil action during the pendency of a grand jury investigation to preserve a civil claim, the protocol requires the state Attorney General to assign separate staff to handle the civil action and to ensure that the civil staff and any person supervising the civil staff be screened from any information obtained in connection with the grand jury investigation. Simultaneous criminal and civil proceedings provide opportunities for defense counsel to use civil discovery to depose government witnesses. The commitment under the protocol to delay the filing of civil damage actions significantly benefits the Division because it prevents this potential misuse of civil discovery. It is crucial to the success of any joint effort that Division and state attorneys discuss at the outset the issues covered by the protocol. Division staff should obtain a commitment from the official in the state Attorney General's Office responsible for antitrust enforcement that the state will adhere to the protocol.
It is not uncommon for a state Attorney General to conduct a civil investigation at the same time the Division is conducting a grand jury investigation of the same conduct. It is in the interests of the Division and the state Attorney General to coordinate their respective investigations to the extent practical. For the reasons stated in the previous section, the Division may request that the state Attorney General defer filing a civil action involving the subject matter of a grand jury investigation during the pendency of the investigation if it appears that a state civil action may interfere with an ongoing Division prosecution. The Division will not make such a request if the state is faced with the possible expiration of the statute of limitations. The state has significant incentives to ensure that a state civil action does not interfere with possible criminal prosecutions by the Division. Guilty pleas and convictions constitute prima facie evidence of liability in Sherman Act civil actions. See 15 U.S.C. § 16(a). Division staff should also determine whether the state is contemplating taking CID depositions of possible targets and government witnesses. Since most state CID statutes authorize the state Attorney General to grant immunity to and compel the testimony of witnesses, state CID depositions of possible targets of a grand jury investigation could present significant Kastigar problems for the Division in any subsequent prosecution of a state CID witness. See Kastigar v. United States, 406 U.S. 441 (1972). Testimony compelled under a state grant of immunity cannot be used against the witness in a federal criminal prosecution. Murphy v. Waterfront Comm'n, 378 U.S. 52 (1964) (constitutional privilege against self-incrimination protects a state witness against incrimination under federal as well as state law and a federal witness against incrimination under state as well as federal law). Accordingly, when a defendant in a federal criminal trial has previously testified pursuant to a state grant of immunity, the Division has the burden of establishing that the immunized testimony has not tainted its evidence. See Murphy, 378 U.S. at 79. Division attorneys should ensure that they are not exposed to the immunized CID testimony of a potential target. The state should be requested not to disclose to the Division the CID deposition testimony of any witness. Since most state CID statutes contain strict confidentiality provisions, there should be little likelihood of public disclosure of the testimony, except for use in a state proceeding. In most instances, the federal criminal proceeding will be concluded prior to any state proceeding in which the CID deposition testimony might be disclosed. Insulating Division staff from exposure to immunized testimony does not end the inquiries concerning the use of the testimony against a defendant. North v. United States, 920 F.2d 940 (D.C. Cir. 1990). The Court in North found that Kastigar is instead violated whenever the prosecutor puts on a witness whose testimony is shaped, directly or indirectly, by compelled testimony, regardless of how or by whom he was exposed to that compelled testimony. See North, 920 F.2d at 942. The state's use of a defendant's immunized testimony in interviews or depositions of individuals who subsequently testify in a criminal trial raises Kastigar issues similar to those in North. In the course of questioning witnesses, a state prosecutor might disclose portions of the defendant's immunized testimony, which the witnesses could then arguably use to shape their testimony in the subsequent federal criminal trial. Demonstrating that witnesses questioned by state prosecutors under these circumstances did not shape their testimony could be difficult and time-consuming. Accordingly, the Division may request that the state, in the spirit of cooperation, refrain from immunizing possible targets of Division grand jury investigations. State CID depositions of cooperating witnesses may also present problems. Because state CID deposition transcripts may be discoverable, transcripts of testimony of cooperating witnesses are sources of possible impeachment. As an alternative, the state could interview the cooperating witnesses without recording or transcribing the interview. The state prosecutor's notes should be protected from discovery under the work product doctrine. If government witnesses are willing to cooperate with the state, Division staff should consider requesting that the state refrain from taking the witness' CID depositions until the completion of the criminal trial. This type of request has been made of state Attorneys General in the past with good results for all involved.
One area of concern for state Attorneys General is the situation in which the Division accepts a plea from a defendant requiring the payment of a substantial fine that renders the defendant unable to pay civil damages to the state. Where the state has potential civil claims arising out of conduct that is the subject of a Division criminal enforcement action and the defendant may be experiencing financial difficulties, there are two options that Division staff should explore with state staff. Division staff could attempt to negotiate a plea agreement that requires the defendant to pay restitution to the state. The state should be consulted concerning the amount of restitution. The other option is a global settlement that includes a plea agreement with the Division and a civil settlement with the state. The Division and the state would determine the maximum amount of criminal fines and civil damages the defendant could pay and remain viable, and then decide on the amounts to be paid as criminal fines and civil damages. The Division has successfully negotiated plea agreement restitution provisions and global settlements with state Attorneys General in the past. D. Relationships with Foreign Governments, International Organizations and Executive Branch Agencies with International Responsibilities
Because of the increasing globalization of trade and commerce, the Division's work frequently requires contact with foreign governments, companies and individuals. Contact with foreign individuals and entities is subject to the requirements of various international agreements to which the United States is a party. In addition, direct contact by Division attorneys with foreign nationals and entities may raise sovereignty concerns in foreign countries and, in some instances, constitute a violation of the foreign country's laws. Matters with international aspects, therefore, often raise issues of special concern and should always be brought to the attention of the Foreign Commerce Section. In addition to imposing obligations on the Department, many of the international agreements to which the United States is a party and the international relationships which the Department maintains also present opportunities both for obtaining assistance in specific investigations and enhancing overall cooperation efforts in international antitrust enforcement. It is the responsibility of the Foreign Commerce Section to maintain these relationships with foreign governments and international organizations, as well as to work with the Department of State and other Executive Branch agencies with international responsibilities in order to ensure that the Department fulfills its responsibilities under its international agreements. Among the international agreements likely to be of interest to Division attorneys are the bilateral mutual legal assistance treaties ("MLATs"), pursuant to which the United States and a foreign country agree to assist one another in criminal law enforcement matters. MLATs create a routine channel for obtaining a broad range of legal assistance in foreign countries, including taking testimony or statements from witnesses, providing documents and other physical evidence in a form that would be admissible at trial, and executing searches and seizures. The U.S. currently has MLATs in force with approximately 20 countries; many others have been signed but are not yet in force. The Criminal Division's Office of International Affairs ("OIA") acts as liaison for the Department with regard to incoming and outgoing assistance requests under the MLATs. OIA also maintains relationships for the purpose of obtaining legal assistance in criminal law enforcement matters with many other countries. Assistance requests from countries with which the United States does not have an MLAT usually take the form of letters rogatory--requests from a U.S. court to a foreign court--although some such countries may accept a less formal MLAT-like request. The Foreign Commerce Section works closely with OIA on matters relating to foreign discovery requests, and is responsible for assisting Division attorneys who desire to obtain foreign-located information. Foreign Commerce should be consulted prior to the transmission of any assistance request to OIA. As indicated above, various countries, including some of our important trading partners, have domestic laws or policies which may impact efforts by the Division to obtain information from foreign nationals or corporations. Because of the varying requirements that foreign governments impose, it is important that the Foreign Commerce Section be apprised of any actions which Division attorneys plan to undertake which may raise international issues. The United States is also party to a number of bilateral and multilateral international agreements which require the notification of foreign governments about proposed actions to be taken by the Division which may affect their interests. Many foreign governments consider their interests to be affected by Division actions in a wide range of circumstances: such as when the Division seeks information or documents located in their countries; when we investigate or otherwise have dealings with their firms or citizens; or when conduct which we are investigating occurred in whole or in part in their countries. These agreements include our bilateral cooperation agreements with Australia, Canada, the European Communities, and Germany, and the OECD's Revised Recommendation of the Council Concerning Cooperation Between Member Countries on Anticompetitive Practices Affecting International Trade (1995). Notification of contemplated Division investigative or enforcement action that may affect another country's interests is intended to avoid misunderstandings that may affect our future ability to enforce the antitrust laws. It is the responsibility of the Foreign Commerce Section to carry out the Department's notification obligations under these agreements. In accordance with Division Directive ATR 3300.2, "Notification of Antitrust Activities Involving Foreign Companies, Individuals or Governments," any section or field office Chief responsible for a matter potentially relating to foreign commerce should keep the Foreign Commerce Section fully apprised so that section can perform its various responsibilities. Proposed actions as to which the Foreign Commerce Section must receive advance notification are set forth more fully in Directive 3300.2. In essence, Foreign Commerce must be informed:
The notifications described above are generally transmitted to the relevant foreign governments through the Department of State. Notifications are sent by the Antitrust Division to the State Department's Office of Multilateral Trade Affairs, for transmission through diplomatic channels. That Office also routes these notifications to State Department desk officers responsible for the countries to which the notifications are addressed. This allows the State Department to consider whether the actions or proposed actions described in the notifications have any foreign policy implications, and to consult with the Division on any issues raised by the notification. The Foreign Commerce Section is charged with the responsibility to act as liaison with the State Department with regard to these notifications.
As the number of Division investigations involving potential foreign subjects and/or witnesses increases, the Division has, with increasing frequency, requested the Immigration and Naturalization Service to establish border watches to check for the entry into the United States of relevant foreign nationals. Criteria for the implementation of a border watch and sample border watch requests can be obtained from the appropriate Special Assistant or the office of the Director of Criminal Enforcement.(5) Such requests are coordinated through the office of the Director and must be signed by the Assistant Attorney General. If a border watch is implemented, as soon as the need for the watch passes, a letter should be sent to INS--through the office of the Director--requesting that the border watch be lifted.(6) The increase in the Division's international enforcement effort has also resulted in an increase in the number of foreign individuals charged in the Division's criminal cases. For many of these defendants, an important inducement to submit to U.S. jurisdiction is the ability to resume travel for business activities in the United States. Since, however, the INS considers criminal violations of the Sherman Act to constitute "crimes involving moral turpitude," see 8 U.S.C. § 1182 (a)(2)(A)(i)(I), foreign nationals convicted of such crimes may be subject to exclusion or deportation from the United States. The Division has therefore entered into a Memorandum of Understanding ("MOU") with the INS pursuant to which each component agrees to cooperate with the other in their respective enforcement obligations. The MOU, signed in 1996 by the Assistant Attorney General and the Commissioner of the INS, establishes a protocol whereby the Antitrust Division may petition the INS to preadjudicate the immigration status of a cooperating alien before the alien enters into a plea agreement or pleads to a crime. Division attorneys who wish to consider whether the MOU might be applicable in their matters should consult with the Director of Criminal Enforcement or the Deputy Assistant Attorney General for criminal enforcement before entering into discussions with counsel.
In order to further the Division's goal of promoting the cooperation of foreign governments in our antitrust enforcement efforts, the Foreign Commerce section is responsible for seeking and maintaining bilateral understandings with antitrust enforcement agencies in other countries. The Division over the past several years has developed close bilateral relationships with antitrust officials of numerous countries. In certain instances, understandings have been reached on the obligations of governments as to notification, consultation, and cooperation in antitrust matters. Formal bilateral antitrust cooperation agreements exist with Australia, Canada, the European Communities and the Federal Republic of Germany. In addition to setting out notification and consultation obligations, these agreements contemplate the exchange of information between the parties on matters relating to each other's enforcement interests. These agreements, however, do not override domestic laws of either country, including confidentiality laws. Regular consultations are held with antitrust officials of Canada, the European Union and Japan; similar consultations are held on an ad hoc basis with other countries. Close informal ties are maintained with antitrust authorities in other countries. Relationships with foreign antitrust authorities, whether or not they have resulted in the execution of formal agreements, are often helpful in facilitating the execution of law enforcement assistance requests. In 1994, Congress passed and the President signed the International Antitrust Enforcement Assistance Act (the "IAEAA"). The IAEAA gives the Department and the Federal Trade Commission the authority to enter into bilateral agreements with foreign antitrust authorities which would, among other things, allow the exchange of otherwise confidential information. The Division is engaged in discussions about such agreements with competition officials of several countries.
The Division, along with the FTC and State Department, represent the United States in the Organization for Economic Cooperation and Development ("OECD") Committee on Competition Law and Policy. This Committee and its working groups normally meet three times a year at the OECD headquarters in Paris to consider issues of common concern to the 28 member countries of the OECD, including cooperation in antitrust enforcement, regulatory reform and the sharing of experience in particular substantive areas. The Division also participates, along with the Office of the United States Trade Representative, FTC, and State and Commerce Departments, in the OECD's Joint Committee on Trade and Competition.
The Antitrust Division participates in international conferences of the United Nations. These include meetings of Experts on Competition Law and Policy, held under the auspices of the United Nations Conference on Trade and Development (UNCTAD), to monitor a voluntary international antitrust code of conduct adopted in 1980 by the U.N. General Assembly, and to discuss competition law and policy generally. This work is coordinated with the Department of State and other U.S. government agencies. This work is currently supervised in the Division by the Foreign Commerce Section, with the cooperation of other sections when needed.
The Antitrust Division participates in a number of negotiations and working groups related to regional trade agreements. The Division chairs the U.S. delegation to a working group on trade and competition under chapter 15 of the North American Free Trade Agreement, and participates with other U.S. government agencies in competition policy working groups associated with the Free Trade Area of the Americas and Asia-Pacific Economic Cooperation. The Division will also play an important role in the working group to be established in 1997 by the World Trade Organization to study issues relating to the interaction between trade and competition policy.
The Division, through the Foreign Commerce Section, represents the Attorney General at the staff level in several interagency committees involved in the formulation and implementation of U.S. international trade and investment policies. In addition to regular participation in interagency deliberations, the Division from time to time participates in U.S. Government delegations negotiating agreements with other governments. These activities usually are coordinated by the Office of the United States Trade Representative ("USTR") and/or other parts of the Executive Office of the President. USTR conducts considerable interagency work through the Trade Policy Review Group, a body on which the Division represents the Department of Justice. The Division is a principal advocate of competition as the cornerstone of American international economic policy. In addition, the Division actively seeks to provide advice in trade negotiations on the antitrust implications of proposed trade agreements. Finally, the Division advises USTR or other agencies on the antitrust implications of various trade policy options, in order to ensure consistency with the antitrust laws.
The Division, through the Foreign Commerce Section, represents the Attorney General at the staff level on the Committee on Foreign Investment in the United State ("CFIUS"). CFIUS, which is chaired by the Secretary of the Treasury, reviews and advises the President concerning certain international transactions pursuant to section VII of Title VII of the Defense Production Act of 1950, 50 U.S.C. app. 2071, commonly referred to as the Exon-Florio provision. This statute authorizes the President to suspend or prohibit any merger, acquisition, or takeover, by or with a foreign person, of a person engaged in interstate commerce in the United States when, in the President's view, such foreign person might take action that threatens to impair the national security. E. Relationships With Federal Agencies That May Be the Victim of Anticompetitive Conduct In some instances, federal agencies may be the victim of conduct that violates the antitrust laws. Agencies involved in procurement--such as the Department of Defense, the Department of Housing and Urban Development, the Environmental Protection Agency, etc.--may be victimized by bid-rigging or other criminal conspiracies. Similarly, federal agencies can also be adversely affected by civil antitrust violations: in particular, mergers in industries like defense can have their greatest impact on federal government procurement.
With the exception of the mergers involving the Department of Defense (discussed below), no special procedures are required to contact personnel at other federal agencies who may have knowledge relevant to civil or criminal antitrust violations. Generally, when information is required from other federal agencies, it is obtained relatively informally on a consensual basis. In the event that a federal agency is reluctant to provide information voluntarily, staff should consult with the appropriate Director of Enforcement or Deputy Assistant Attorney General. In addition, if an investigation involves procurement by a federal |