High Court Will Not Review Federal Court’s Authority to Block Antitrust Indictment

This post was written by Jeffrey May, editor of CCH Trade Regulation Reporter.

Applicants for amnesty under the Justice Department Antitrust Division’s Corporate Leniency Policy should be advised that the government may withdraw its grant of conditional leniency and file charges if it decides the applicants are not holding up their end of the bargain. The applicants are not necessarily entitled to a pre-indictment hearing on whether they are in material breach of the agreement.

The U.S. Supreme Court on October 30 decided not to weigh in on whether a federal district court had the power to block the Department of Justice from filing an antitrust indictment against a company that had been granted conditional amnesty under the Corporate Leniency Policy. Now that company, Stolt-Nielsen, S.A., will have to challenge the indictment in federal district court. Stolt-Nielsen issued a statement on October 30 that it planned to file its motion to dismiss the indictment on November 22.

In September, a federal grand jury in Philadelphia indicted London-based Stolt-Nielsen S.A., two of its subsidiaries (Stolt-Nielsen Transportation Group Ltd. of Liberia and Stolt-Nielsen Transportation Group Ltd. of Bermuda), and two company executives for conspiring to restrain trade in the parcel tanker shipping industry.

In announcing the indictment, the Justice Department said that the Antitrust Division revoked the conditional leniency after it learned that top executives “had continued to meet with competitors and participate in the conspiracy for months after the scheme's discovery by Stolt-Nielsen's then-general counsel, and that Stolt had both withheld [information] and provided false and misleading information about the true extent of the conspiracy." According to the government, "Stolt-Nielsen's conditional leniency was predicated on a number of representations made by the company, including a promise that the company 'took prompt and effective action to terminate its part in the anticompetitive activity being reported upon discovery of the activity.'"

The High Court declined to consider Stolt-Nielsen’s petition to review a decision of the U.S. Court of Appeals in Philadelphia (2006-1 Trade Cases ¶75,172) that the district court lacked the power to enjoin the filing of the indictment. The appellate court decided that the limited authority of federal courts to enjoin criminal prosecutions was inapplicable in this situation. Generally, the executive branch had the exclusive authority and absolute discretion to decide whether to prosecute a case.

The Third Circuit had reversed a decision of the federal district court in Philadelphia (2005-1 Trade Cases ¶74,669), holding that the government could not prosecute the provider of transportation services for bulk liquids because the company did not breach the amnesty agreement. The lower court explained that resolving the issue of whether the applicant was in material breach of the agreement and whether the Justice Department was bound by the agreement at the pre-indictment stage ensured that the applicant was afforded the requisite due process without imposing an undue burden on the government.