Civil Investigations

• Pages: 45-60

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CHAPTER III

CIVIL INVESTIGATIONS

A. Initiating a Preliminary Investigation

There are a variety of catalysts for the Antitrust Division’s initiation

of a preliminary investigation, including complaints from citizens and

businesses, analysis and evaluations of merger filings made pursuant to

the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), and

general monitoring by the Division of industry and legal trends,

including the monitoring of private antitrust litigation.1 In determining

whether grounds exist to conduct a preliminary investigation, Division

staff will make use of the Division’s prior investigative and pleading

files, as well as information publicly available through sources such as

the press, online databases, and filings made with the Securities and

Exchange Commission.2

If Division staff believes there is a sufficient basis to investigate a

matter, the attorney will prepare a memorandum describing the nature

and scope of that activity, including basic information concerning the

proposed investigation (such as the parties being investigated, the

industry, the violations alleged, and the geographic area).3 For matters

reported under the HSR Act, staff is instructed to submit such a

memorandum no more than five days after the HSR filing (with shorter

deadlines for cash tender offers and bankruptcy filings).4 A Division

economist also is to be consulted at this stage, and if the impetus for the

preliminary investigation is an HSR filing, the economist already

assigned to the matter will provide input.5

1. See U.S. DEP’T OF JUSTICE,ANTITRUST DIV.MANUAL III-6 (Dec. 2008)

[hereinafter ANTITRUST DIV.MANUAL], available at http://www.justice.

gov/atr/public/divisionmanual/atrdivman.pdf.

2. See ANTITRUST DIV.MANUAL,supra note 1, at VI-18-22.

3. See id. at III-8, VI-11.

4. See id. at VII-6.

5. See id. at III-38, VI-22.

46 DOJ Civil Antitrust Practice and Procedure Manual

That memorandum will then be provided to the Director of

Enforcement to determine whether to authorize the preliminary

investigation, and to the Premerger Notification Unit at the Division

(which provides a copy to all chiefs and assistant chiefs in the Division)

for “clearance” with the Federal Trade Commission (FTC).6

In determining whether to authorize a preliminary investigation, the

Director of Enforcement is to consider (a) whether there appears to be

sufficient evidence of an antitrust violation; (b) whether the amount of

commerce affected is “substantial;” (c) whether the investigation will be

duplicative or interfere with other investigations; and (d) whether the

necessary resources are available. The Division Manual advises that the

Director of Enforcement will also at this time assess whether to pursue

the preliminary investigation as a civil or criminal matter. If the Director

of Enforcement authorizes the preliminary investigation and the matter is

cleared with the FTC, the preliminary investigation commences.7

B. Clearance with the FTC

Because the FTC and the Antitrust Division share concurrent

jurisdiction over enforcement of some of principal antitrust laws, the

agencies coordinate allocation of their enforcement responsibilities.

Coordination ensures both that the government’s resources are allocated

efficiently and that the subjects of investigations do not face multiple or

conflicting demands from two agencies.

As a matter of course, the FTC has traditionally referred all potential

criminal violations of any antitrust statute to the Division,9 and the

Division has traditionally referred all potential civil Robinson-Patman

Act violations to the FTC.10 For the allocation of all other matters over

which they share concurrent jurisdiction, the FTC and the Antitrust

Division have developed a process referred to as “clearance” for

allocating investigations to one agency or the other.11 Clearance is where

“(1) either [agency] proposes to investigate a possible violation of the

6. See id. at III-10.

7. Id. at III-7.

8. See id. at VII-4.

9. See id. at VII-8.

10. See id. at VII-4.

11. ABA SECTION OF ANTITRUST LAW,THE MERGER REVIEW PROCESS:A

STEP-BY-STEP GUIDE TO FEDERAL MERGER REVIEW 134 (3d. ed. 2006)

[hereinafter ABA MERGER REVIEW PROCESS].