Developments In US Antitrust Criminal Enforcement'2021 Year In Review

• Published date: 14 February 2022
• Subject Matter: Anti-trust/Competition Law, Criminal Law, Antitrust, EU Competition , White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Arnold & Porter
• Author: Mr James Cooper, Andre Geverola, Wilson D. Mudge and Leah J. Harrell

Introduction

The Department of Justice (DOJ) Antitrust Division has been active in criminal enforcement over the last year, bringing criminal charges relating to alleged conspiracies in labor markets, pursuing cases to target collusive activity in government contracting, and entering into three Deferred Prosecution Agreements (DPAs). The Division also has a record number of criminal cases scheduled for trial. In this Advisory, we review the highlights of US criminal antitrust enforcement activity during 2021 and key recent developments in early 2022, and offer insights into what to expect later this year in criminal antitrust prosecutions and litigation.

Recent Trends and Areas of Focus

No-Poach Agreements and Labor Markets

The most prominent recent trend in criminal antitrust enforcement has been a growing focus on alleged collusion in labor markets, specifically so-called "no-poach" agreements between employers not to solicit or hire each other's employees, as well as wage-fixing agreements. The most prominent new antitrust criminal prosecutions in 2021 have involved labor markets.

While "no-poach" agreements first attracted attention from DOJ in 2010 when a number of the largest Silicon Valley technology companies entered into civil consent agreements with DOJ relating to a series of alleged "no cold call" agreements, scrutiny of agreements between employers affecting labor markets has increased in recent years. During the Trump administration, DOJ Antitrust Division officials had emphasized their focus on non-solicit and wage-fixing agreements, repeatedly suggesting that investigations were underway and criminal charges were likely. In the meantime, civil investigations and at least one civil settlement¹ continued. DOJ explained that it was exercising its prosecutorial discretion not to pursue criminal charges for conduct that ceased before DOJ and Federal Trade Commission (FTC) released their joint Antitrust Guidance for Human Resource Professionals in October 2016.² At the very end of the administration, DOJ filed the first wage-fixing and no-poach indictments in United States v. Jindal in December 2020³ and United States v. Surgical Care Affiliates, LLC in January 2021.⁴

The emphasis on antitrust in labor markets has only expanded during the Biden Administration, including not only continued pursuit of criminal charges, but also in the civil and regulatory context. For example, in July 2021 the administration implemented an "Executive Order on Promoting Competition in the American Economy," which includes 72 initiatives to be implemented by 14 federal agencies, including an initiative by the FTC to consider rulemaking to curtail non-compete clauses, unfair occupational licensing, improper data collection and surveillance.⁵ In December 2021, DOJ and FTC partnered to hold a Workshop titled "Making Competition Work: Promoting Competition in Labor Markets," which included a panel on "contractual restraints that can impede worker mobility."⁶

Labor Markets: Healthcare

Physical Therapists. On December 9, 2020, DOJ issued its first criminal antitrust indictment targeting labor markets, charging the former owner of a therapist staffing company, Neeraj Jindal, with criminal wage fixing along with obstructing an FTC investigation into the conduct.⁷ DOJ later indicted John Rodgers, the clinical director of the company, in April 2021. DOJ accused the defendants of violating Section 1 of the Sherman Act by engaging in a scheme to fix the wage rates paid to physical therapists (PTs) and physical therapy assistants (PTAs) in the Dallas-Fort Worth area in 2017. The indictment alleges that Jindal and Rodgers texted the owners of several therapist staffing companies to recruit competitors to join a conspiracy to lower the rates paid to PTs and PTAs.

Defendants moved to dismiss the wage-fixing charge and raised three primary arguments. First, they claimed that DOJ had failed to properly state a criminal offense because it did not allege a per se Sherman Act violation. They argued that because DOJ policy is to charge criminal cases only for per se violations of the Sherman Act and wage fixing is not a per se violation of the Sherman Act, the government failed to state a criminal offense. In making this argument, defendants attempted to distinguish wage fixing from price fixing, arguing that the latter involves the "price of a commodity," and wages fall outside of that definition. Second, defendants argued that they did not have "fair warning" that their acts could lead to criminal charges in violation of their Fifth Amendment rights. Defendants' Fifth Amendment argument relied largely on the fact that no court had previously found wage fixing to be a criminal violation, and that neither the Supreme Court nor any appellate court had found wage fixing specifically to be a per se Sherman Act violation. Third, defendants argued that applying the per se standard to the alleged conduct violated their Sixth Amendment rights because it would unconstitutionally take away from the jury the question of defendants' intent.

On November 29, 2021, the court denied defendants' motion to dismiss, rejecting each of their arguments.⁸ The court rejected defendants' "narrow" view of what constitutes price fixing, noting that price fixing takes many forms and the Supreme Court has made clear the Sherman Act applies equally to buyer-side and supplier-side collusion. The court found that wage fixing is a form of price fixing and held that DOJ had properly alleged a per se violation of the Sherman Act. Second, the court determined that defendants' Constitutional rights were not violated by a prosecution, as defendants' "unlucky status" as the first two individuals criminally indicted for wage fixing did not mean they lacked fair notice. Even if it accepted the claim that wage fixing was not literally price fixing, the court found that defendants still had notice that their conduct was at least "perilously close" to a line that could lead to criminal indictment. Finally, the court rejected the defendants' Sixth Amendment argument on the basis that an intent to fix prices (wages) equates to an intent to restrain competition, providing the necessary criminal intent required under the Constitution.⁹

Outpatient Healthcare Employees. On January 5, 2021, DOJ indicted a subsidiary of UnitedHealth Group, Surgical Care Affiliates (SCA), which owns and operates outpatient surgery centers, for allegedly participating in a conspiracy with competing employers not to solicit each other's senior-level employees.¹⁰ According to the indictment, SCA also monitored compliance with the agreements by requiring senior-level employees to provide notice when applying to work for alleged conspirator companies, even taking steps to remedy violations of the agreement. In its motion to dismiss, currently pending in the Northern District of Texas, SCA argues that the indictment fails to state an antitrust violation because no court has previously found that non-solicitation agreements are per se illegal.¹¹ SCA also argues it did not have fair notice that its conduct was criminal because no court had found that non-solicitation agreements are per se illegal, violating its Due Process rights.

On July 14, 2021, DOJ indicted...