• Criminal Fines Issued in Packaged-Ice Price-Fixing Conspiracy
  • March 29, 2010 | Authors: Howard Feller; J. Brent Justus; Amy B. Manning; Richard J. Rappaport; James H. Walsh
  • Law Firms: McGuireWoods LLP - Richmond Office ; McGuireWoods LLP - Chicago Office ; McGuireWoods LLP - Richmond Office
  • In February and March 2010, two more companies were sentenced in connection with their participation in a conspiracy to suppress and eliminate competition by allocating packaged-ice customers and territories in the Detroit metropolitan area and southeastern Michigan. Arctic Glacier International Inc. and Home City Ice Company each pleaded guilty to one count of criminal conspiracy to restrain trade, and each was fined $9 million.

    Each company is still facing putative class actions by direct and indirect purchasers, as well as actions by several states’ attorneys general.

    EU Developments

    The European Commission makes regular use of its “commitments” procedure under Article 9 of EC Regulation 1/2003 in order to settle competition law investigations. When adopted, the procedure was not expected to be used regularly. However, its flexibility, relative speed, and the fact that no infringement decision is made (upon which third-party actions can be based) or fine imposed has resulted in it becoming a key tool for the Commission outside the cartel sphere. The most recent case involving Microsoft (concerning alleged tying of Internet Explorer to Windows) was settled using commitments.

    The Commission is currently market testing proposed commitments received from Italian natural gas supplier ENI and members of the Oneworld airline alliance. The ENI case was launched in the wake of the Commission’s energy sector inquiry, following concerns that ENI’s behavior was blocking competitors’ access to the transport infrastructure needed to import gas into Italy to the detriment of consumers.

    The Commission was concerned that, in doing so, ENI could be in breach of EU rules regarding abuse of a dominant market position. ENI has proposed structural remedies that effectively mean the full divestiture of all of ENI’s shares in all gas transport pipelines in relation to which the Commission has competition concerns.

    In April 2009, the Commission opened proceedings in relation to its concerns under Article 101 TFEU (the EU prohibition on anti-competitive agreements) about agreements between British Airways, American Airlines, and Iberia. Pursuant to these agreements, the parties intend to jointly manage schedules, capacity, and pricing, as well as share revenues on transatlantic routes between North America and Europe. They have now offered commitments in order to alleviate the Commission’s concerns.

    In particular, they have offered to make available landing and take-off slots at London Heathrow or London Gatwick airports on routes to Boston, New York, Dallas and Miami. There are also related proposals concerning operating authorizations at New York’s JFK airport, access to the frequent flyer programs on the relevant routes, and arrangements enabling competitors to offer tickets on the parties’ flights and facilitate access to connecting traffic.