US antitrust enforcement falls to slowest rate since 1970s

Criminal antitrust enforcement under Donald Trump has fallen to its slowest rate since the 1970s, according to figures compiled by the Financial Times.

Fewer than 20 new cases were publicly filed by the Department of Justice in the most recent fiscal year, a level last seen in 1972, almost five decades ago. The analysis did not include cases that may remain under seal.

The slowdown in fiscal year 2018 followed a similar drop in cases filed the previous year, suggesting a prolonged lull in new indictments of criminal cartels as long-running investigations into the auto parts industry and financial services wind down.

The trend has resulted in a parallel fall in the number of penalties and fines, which have declined to their lowest level since the early 2000s, according to the FT’s analysis.

Eric Meiring, a former acting chief of one of the antitrust division’s criminal units, said the number of new cases in 2018 was “surprisingly low”.

He attributed the decline to the conclusion of big probes that the department had pursued for years and the “general cyclical nature of antitrust investigations”.

“It takes a while to build these things back up,” said Mr Meiring, who left the justice department this year and is now a partner at Winston & Strawn. A spokesperson for the DoJ declined to comment.

The decline in criminal cases has come as progressives in the US called for tougher antitrust enforcement. Democratic lawmakers in Congress and some media commentators have taken up the argument that the policing of competition rules has been too lax.

Despite the calls for action, the justice department’s antitrust division has filed far fewer new criminal cases since Mr Trump took office than under previous presidents, both Republican and Democratic.

In fiscal year 2017, which included the final few months of Barack Obama’s presidency, 24 new cases were filed, according to a justice department annual report.

The following fiscal year, which ended in September, the department filed 13 new cases, according to the FT’s review of antitrust case filings available on the DoJ’s website. A further three cases were announced by the antitrust division but did not appear in the filings.

The justice department has not yet released its official count for fiscal year 2018.

In the first year of the Obama presidency, the department filed 72 cases. When George W Bush came into office, his administration brought 44 criminal antitrust prosecutions in the first year.

The DoJ provides annual figures going back to 1970. The last year in which the number of new criminal antitrust cases fell below 20 was 1972, when Richard Nixon was president and the antitrust division filed 15 criminal cases.

In a speech in Washington this month, Makan Delrahim, the chief of the antitrust division, said it had been “a busy year”. He highlighted recent cases brought by the DoJ, including the prosecution of three South Korean companies for fixing prices for fuel supplied to US military bases.

The companies pleaded guilty and agreed to pay $82m in criminal penalties in the first charges brought in what the DoJ said was an ongoing investigation. The case, announced in November, fell outside fiscal year 2018.

“We have been working hard on behalf of America’s consumers and taxpayers, and look forward to continuing our efforts on their behalf in the year to come,” said Mr Delrahim.

Since 2011, the DoJ has announced a steady stream of indictments and large fines from a sprawling investigation into price-fixing in the auto industry. Prosecutors have won almost $3bn in penalties and convicted nearly 80 companies and executives.

In addition, probes into Libor and foreign exchange rate-rigging resulted in several banks paying billions in dollars in fines and pleading guilty. In May, the antitrust division indicted a former JPMorgan trader for conspiring to fix forex rates.

The long-running investigations contributed to annual criminal penalties of more than $1bn for several years during the Obama administration, peaking at $3.6bn in fiscal year 2015, according to DoJ figures.

In the most recent fiscal year, total criminal penalties were a little over $110m, the FT found by reviewing the DoJ’s press releases, the lowest level since 2003, but up on the previous year. Much of that came from a $90m settlement with BNP Paribas announced in January. In 2017, total penalties were $67m.

Late last year, the justice department suffered a defeat in the first auto parts case to go to trial. It later settled a separate auto parts case that was due to go to trial and dismissed its charges against several of the indicted executives.

In October, three British traders were acquitted of charges of forex-rigging. The trio, dubbed “the Cartel”, were the first individuals put on trial as part of the antitrust division’s investigation into the FX market.