After scouring the auto supply chain in a five-year crackdown on price-fixing, has the U.S. Department of Justice found something else to do?
It’s probably not that simple, but some local legal experts think recent reports of a new Antitrust Division investigation into commercial airlines is another sign its automotive price-fixing prosecution may be nearly over.
Published reports earlier this month revealed the division launched a new investigation about two months ago into “possible unlawful coordination” among domestic passenger airline companies to artificially keep airfares high, including keeping a tight hold on capacity or seat-miles flown each year.
United Airlines Inc. in Chicago; American Airlines Group Inc. in Fort Worth, Texas; Southwest Airlines Co. in Dallas; and Delta Air Lines Inc. in Atlanta have confirmed receiving subpoenas.
A longtime antitrust attorney who practices in the automotive industry, and asked not to be identified, told Crain’s Detroit Business this week the airline investigation and the historical trend in prosecutions is a sign the division is shifting focus. But that’s not to say some new discoveries or straggling reviews of single companies couldn’t ramp up the automotive prosecution again, before the case is completely over.
“Auto parts is probably on the wane. I don’t think you will see many new proceedings, and you might not see any all-new parts segments or conspiracies being alleged,” he said. “There will be some cleanup to do, with companies that did not originally settle, but overall it is winding down.”
If so, that would track with the government’s historical pattern.
Justice’s largest single-industry prosecution for collusion was previously in air cargo transportation and freight companies, with about $1.9 billion in fines collected as of late 2013 -- but the auto industry prosecution that began in 2011 officially overtook it in size by early 2014. To date 35 auto suppliers and 29 executives have pleaded guilty or agreed to do so and are slated to pay more than $2.5 billion in combined criminal fines.
The automotive case is showing signs of deceleration in court, with just four new charges brought in courts nationwide against auto companies thus far in 2015, compared with 10 companies charged in 2014 and 14 in 2013.
While there’s usually some overlap in prosecutions, it’s very typical for one industry review to wind down as another antitrust case gets started, attorneys have said of the price-fixing cases. But in passenger airlines, where four companies control about 80 percent of all seats flown in the domestic market, it’s possible the new investigation won’t be as time-consuming for Justice.
“Not nearly as many people are going to be involved in this case, because you have a lot fewer companies involved and only so many ways to collude,” the antitrust expert said. “But it’ll still be a full-time job for lots of antitrust lawyers in Justice for weeks or months, if not for years."