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November 04, 2022

DOJ Handed Trifecta of Victories, Advances Antitrust Enforcement Priorities

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Key Takeaways

  • The U.S. Department of Justice, Antitrust Division (DOJ) recently obtained positive outcomes in three unconventional antitrust enforcement actions.
  • Each of these cases will likely embolden DOJ to continue to pursue similar antitrust enforcement matters.
  • “Business as usual” is likely a thing of the past in both merger and anticompetitive conduct cases.

October 2022 delivered the U.S. Department of Justice, Antitrust Division (DOJ) several treats, two of them on Halloween. In contrast to recent high-profile losses, DOJ obtained positive outcomes in three unconventional antitrust enforcement actions:

  • Blocking a merger on the basis of anti-competitive effects on the labor market.
  • Obtaining a CEO's guilty plea to criminal charges under Section 2 of the Sherman Act in an attempted monopoly case.
  • Achieving a successful outcome in a criminal conspiracy matter concerning the suppression of competition for the services of nurses via no-poach agreements.

These cases reflect DOJ's commitment to increased antitrust enforcement, particularly when it comes to labor markets, and further the Biden Administration's goal of promoting competition via robust antitrust enforcement. These matters also demonstrate DOJ's ability to achieve positive outcomes by pursuing non-traditional theories of enforcement.

Potential Benefit to Consumer Not Enough to Overcome Impact on Labor Market: Penguin Random House/ Simon & Schuster Merger Blocked by DC Circuit Court

On October 31, 2022, Judge Florence Y. Pan of the United States District Court for the District of Columbia ruled in favor of DOJ in its civil lawsuit to block book publisher Penguin Random House's proposed $2.2 billion acquisition of Simon & Schuster.1 DOJ asserted that the deal would reduce competition between publishers trying to purchase the rights to works by the most well-known authors. Renowned novelist Stephen King gave key testimony at trial on the merger's potential effects on authors. The case, as we previously noted when the complaint was filed, had little in the way of precedential support. Given the outcome, the case will likely provide support for the consideration of a transaction's effects on labor markets to challenge mergers in the future.2

The court, in a brief two-page order, found that "the United States has shown that ‘the effect of [the proposed merger] may be substantially to lessen competition' in the market for the U.S. publishing rights to anticipated top-selling books." In other words, Judge Pan blocked the merger due to harm to the labor market (authors), without finding consumer harm (book purchasers).3 According to Assistant Attorney General (AAG) Jonathan Kanter of DOJ the "decision is [ ] a victory for workers more broadly," and "[i]t reaffirms that the antitrust laws protect competition for the acquisition of goods and services from workers." AAG Kanter's statements suggest that this case may give regulators a foothold in challenging mergers based on a resulting impact to the labor market. 

Penguin Random House CEO Markus Dohle stated that "the ruling is utterly wrong" and that "[w]e would have been able to sell more Simon & Schuster titles than they would have been able to sell on their own." Dohle also challenged the market definition adopted by the court, stating that the combined companies would have represented less than 20% of the overall book market, where "Amazon represents more than 50% of the retail market." Dohle's invocation of the importance of the retail market (i.e., prices to consumers) suggests that Judge Pan was not persuaded that an inability of the combined entity to raise prices on books sold to consumers outweighed the negative impact on author compensation.

Judge Pan's reasoning appears to rely on the labor market challenge (author compensation) over any traditional monopoly challenge (increased prices to consumers) and lays the foundation for future merger challenges based on negative impacts on the labor market - even where there is no evidence that consumers will be adversely impacted.

DOJ Takes the Hard Road: DOJ Pursues Criminal Attempted Monopolization

DOJ's second Halloween treat was a guilty plea to the criminal charge of attempted monopolization by the president of a small paving and asphalt contractor - the first such criminal charge in decades.4 This violation carries a maximum term of imprisonment of ten years, a $1,000,000 fine, and up to three years of supervised release.

Nathan Nephi Zito pled guilty to a scheme "to gain monopoly power in the markets for highway crack-sealing services in Montana and Wyoming," which included allegations that he "took actions that were a substantial step toward committing the crime of monopolization," and that "there was a dangerous probability that, had the defendant's conduct succeeded, the defendant's company would have gained monopoly power."5 As part of the plea, Mr. Zito agreed to a specific fine amount of $27,000 and awaits sentencing, which is scheduled for February 2023. The plea agreement also indicates that Mr. Zito will likely suffer debarment and be ineligible to contract with the government in the future.

The facts of the case read like a traditional market allocation conspiracy between competitors, with Mr. Zito proposing to a competitor that each company pursue highway crack-sealing business only in certain geographic areas in Montana and Wyoming. Notably, DOJ sought criminal attempted monopolization charges rather than a civil remedy, criminal conspiracy, or actual monopolization charges. This was echoed by AAG Jonathan Kanter when commenting on the matter: "Congress criminalized monopolization and attempted monopolization to combat criminal conduct that subverts competition… [t]he Justice Department will continue to prosecute blatant and illegitimate monopoly behavior that subjects the American public to harm."6 This case indicates that DOJ may more frequently pursue criminal claims against those attempting to establish monopolies, even if those monopolization attempts are unsuccessful.

DOJ Delivers First Criminal Enforcement Victory in Labor Antitrust Prosecutions

If at first you don't succeed, try, try again. Despite the DOJ's trial losses earlier this year in Texas7 and Colorado8 using similar claims, DOJ secured its first-ever "win" in a criminal enforcement of labor antitrust violations. On October 27, 2022, in United States v. Hee, et al., VDA OC LLC (VDA) pled guilty to a single criminal antitrust charge for its role in a conspiracy to eliminate competition for the services of nurses by agreeing to fix the wages of and to allocate nurses.9 

DOJ indicted Mr. Hee and VDA in March 2021, alleging that, in October 2016, Mr. Hee and his company entered into a conspiracy with a competitor to allocate nurses assigned to the Clark County School District and to refrain from raising wages for those nurses. This is the first victory arising out of DOJ's highly publicized campaign to criminalize agreements between or among employers not to recruit or hire each other's employees, and will surely breed confidence as DOJ moves forward with its aggressive agenda to protect labor markets from antitrust violations through criminal prosecutions. 

The plea agreement requires VDA to pay $134,000—a $62,000 criminal fine and $72,000 in restitution to nurses impacted by the agreement with its competitor. While this may seem a modest amount, it is significant to a small staffing company like VDA. A company with a larger payroll and responsible for conduct over a longer period could see substantial monetary penalties for criminal no-poach and wage-fixing agreements.

DOJ's Trifecta Takeaways

Each of these cases will likely embolden DOJ to continue to pursue similar antitrust enforcement matters. In short, "business as usual" is likely a thing of the past in both merger and anticompetitive conduct cases.

Merger Review

The Penguin Random House / Simon & Schuster decision opens the door for regulators to reject a merger on the basis of its prospective impact on the labor market alone, even where there is not sufficient evidence to show that the merger would negatively impact consumers. The FTC and state regulators could also begin to use similar theories for merger enforcement. Parties considering a transaction are advised to determine whether and to what extent they 1) operate in a concentrated industry and 2) how the merger will affect workers. Critically, companies should undertake such analysis even when the merger is not shown to adversely impact consumers.

Anticompetitive Conduct Enforcement

DOJ successfully obtained two guilty pleas from corporate executives and is likely to keep pursing criminal enforcement of anticompetitive conduct. Businesses, when assessing antitrust risk, would be wise to acknowledge that the consequences of antitrust violations may not be limited to civil fines and could result in criminal liability. The guilty pleas put small to mid-sized companies on notice that they, too, regardless of whether they dominate a market or engage in traditional price fixing, can become the target of a DOJ criminal antitrust investigation as a result of agreements (either proposed or executed) to limit, or even attempt to limit, the competitive field. Companies of all sizes should therefore consider potential criminal liability when making antitrust risk assessments - especially when considering potential transactions and agreements with competitors in the marketplace.

Buchanan's antitrust team offers guidance to help clients develop corporate compliance programs, manage government investigations, and avoid both civil and criminal antitrust liability.


  1. U.S. v. Bertelsmann SE & CO. KGAA et al, D.D.C., no. 1:21-cv-02886.
  2. The Parties, however, have indicated they plan to appeal the decision.
  3. Judge Pan is giving the parties an opportunity to redact proprietary business information prior to publication so the full Memorandum Opinion will not be available until November 4, 2022.
  4. The case was the result of the work of the Procurement Collusion Strike Force (PCSF), established in November 2019, a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government - federal, state and local. See DOJ's case press release at https://www.justice.gov/opa/pr/executive-pleads-guilty-criminal-attempted-monopolization
  5. See Plea Agreement at: https://www.justice.gov/opa/press-release/file/1543706/download.  
  6. See https://www.justice.gov/opa/pr/executive-pleads-guilty-criminal-attempted-monopolization
  7. United States v. Jindal, No. 4:20-cr-00358-ALM-KPJ (E.D. Tex. Apr. 14, 2022).
  8. United States v. DaVita Inc., et al., No. 1:21-cr-00229-RBJ (D. Colo. Apr. 15, 2022).
  9. United States v. Hee, et al., No. 2:21-cr-00098-RFB-BNW (D. Nev. Oct. 27, 2022).

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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