• On March 31, the Department of Justice’s Antitrust Division filed a lawsuit against the Kentucky Real Estate Commission for limiting competition among real estate brokers in the state of Kentucky. The Kentucky Real Estate Commission’s regulations prohibit Kentucky real estate brokers and sales associates from offering cash rebates or refunds, or a free home inspection, or other inducements to attract customers. The Antitrust Division believes the regulations violate Section 1 of the Sherman Act and that the prohibitions clearly lessen competition. The Division does not believe that the state action doctrine applies because it only provides immunity from federal antitrust liability for the actions of entities like the Kentucky Real Estate Commission when there is a clearly articulated state policy to displace competition and the state actively supervises the conduct. Because Kentucky has neither articulated a policy to displace competition nor supervised the conduct at issue, the Division filed a complaint alleging a per se violation of the antitrust laws that inflicts higher prices on Kentucky consumers even though the regulations were adopted by a state-created entity like the Kentucky Real Estate Commission.
  • On March 28, Eastman Kodak Company announced that it received a second request from the Department of Justice for information concerning the company’s proposed acquisition of image-management software developer Creo Incorporated.
  • On March 21, the Antitrust Division entered into a settlement agreement with two hospitals in southern West Virginia–Bluefield Regional Medical Center, Inc. (“BRMC”) and Princeton Community Hospital Association, Inc. (“PCH”) to terminate their alleged illegal agreements that allocated cancer services to PCH and cardiac-surgery services to BRMC. According to the complaint, BRMC, PCH, and St. Luke’s Hospital, a hospital owned by PCH, are the only general acute-care hospitals in Mercer County, West Virginia. On January 30, 2003, BRMC and PCH entered into two agreements in which BRMC agreed not to offer most cancer services and PCH agreed not to offer cardiac-surgery services in six West Virginia counties and three Virginia counties. BRMC and PCH subsequently made joint filings with the state of West Virginia to request certificates of need (“CON”) for BRMC to provide cardiac-surgery services and for PCH to provide cancer services. A CON is a permit required to enter certain areas of the health care market. Generally, the applicant must demonstrate to a state authority that there is an unmet need for its services. BRMC and PCH had been head-to-head competitors in cancer services and potential competitors in cardiac-surgery services. The complaint alleges that the agreements effectively allocated markets for cancer and cardiac-surgery services and restrained competition to the detriment of consumers. The Division stated in its competitive impact statement that the state action doctrine does not apply nor does the fact that a CON was filed shield the BRMC-PCH agreements from federal antitrust review. Therefore, the consent decree annuls the agreements and prohibits BRMC and PCH from entering into any agreement that allocates any cancer or cardiac-surgery service, market, or territory.
  • On March 16, the Antitrust Division announced that it closed its money transfer services investigation, which examined whether Western Union’s exclusive contracts (i.e., they prohibit the retail agents from offering competing money transfer services during the term of the contract) with its retail agents are harming competition in either the domestic or international money transfer services markets, or in the domestic emergency bill-payment services market. To support a claim that Western Union’s practices violate the antitrust laws, it would have to be shown that Western Union’s exclusive contracts have foreclosed competitors from a substantial share of potential agents, and further that such practices have had an anticompetitive effect, such as increased prices in the money transfer market. In early 2004, the Division began collecting and analyzing information about Western Union’s contracting practices and the effects of those practices in the money transfer and emergency bill payment industries. The Division interviewed representatives of Western Union and numerous third parties, reviewed a substantial number of documents, and engaged in empirical analyses of money transfer and bill payment data obtained from Western Union and third parties. The Division’s investigation found that competition for money transfer and emergency bill payment services has increased in recent years. While the Division stated that it continues to have serious concerns regarding the lack of vigorous price competition in certain U.S. foreign country ‘corridors’ and will monitor the international money transfer services market, the Division has determined that competition in such markets is often more directly influenced by corridor-specific conditions such as market size, local regulation, and the nature of the local financial infrastructure, than by Western Union’s contracting practices. Therefore, the Division decided to close its investigation into the money transfer services industry.
  • On March 1, two Cleveland scrap metal companies (M. Weingold & Co. and Harry Rock & Associates Inc.), their owner, Jack Weingold, and an employee, Loren Margolis, pleaded guilty to conspiring to allocate suppliers and rig bids for scrap metal. All of the defendants had been indicted previously but through the plea agreement they avoided a trial and agreed to help with the ongoing investigation. The indictment charged all of the defendants with participating in two separate conspiracies in Northeast Ohio, one beginning at least as early as December 1993 and continuing at least until October 1999, and the other beginning as early as December 1993 and continuing to at least until November 1999 to allocate suppliers and rig bids for scrap metal. The plea agreement with Jack Weingold, M. Weingold & Co., and Harry Rock & Associates Inc. recommends that Jack Weingold be imprisoned for 13 months and pay a $700,000 criminal fine. M. Weingold & Co. and Harry Rock & Associates Inc. have agreed to pay criminal fines of $5.65 million each, for a total of $11.3 million. The plea agreement with Loren Margolis recommends that he pay $700,000 and serve a term of imprisonment between 10 and 12 months. All of the plea agreements are subject to court approval.

Authored by:
Andre P. Barlow