United States v. Hyundai Oilbank Co., Ltd., et al.; Proposed Final Judgments and Competitive Impact Statement
| Published date | 27 March 2019 |
| Citation | 84 FR 11555 |
| Record Number | 2019-05844 |
| Section | Notices |
| Court | Antitrust Division |
Federal Register, Volume 84 Issue 59 (Wednesday, March 27, 2019)
[Federal Register Volume 84, Number 59 (Wednesday, March 27, 2019)]
[Notices]
[Pages 11555-11572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05844]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Hyundai Oilbank Co., Ltd., et al.; Proposed
Final Judgments and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that proposed Final Judgments,
Stipulations, and a Competitive Impact Statement have been filed with
the United States District Court for the Southern District of Ohio in
United States v. Hyundai Oilbank Co., Ltd., et al., Case No. 2:19-cv-
1037. On March 20, 2019, the United States filed a Complaint alleging
that between 2005 and 2016, Hyundai Oilbank Co., Ltd. (``Hyundai
Oilbank'') and S-Oil Corporation (``S-Oil''), along with other co-
conspirators, conspired to rig bids for Posts, Camps & Stations (PC&S)
and Army and Air Force Exchange Service (AAFES) fuel supply contracts
with the U.S. military in South Korea, in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1. A proposed Final Judgment for each Defendant,
filed at the same time as the Complaint, requires Hyundai Oilbank and
S-Oil to pay the United States, respectively, $39,100,000 and
$12,980,000. In addition, each Defendant has agreed to cooperate with
further civil investigative and judicial proceedings and to institute
an antitrust compliance program.
Copies of the Complaint, proposed Final Judgments, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at http://www.justice.gov/atr and at the Office of
the Clerk of the United States District Court for the Southern District
of Ohio. Copies of these materials may be obtained from the Antitrust
Division upon request and payment of the copying fee set by Department
of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be directed to Kathleen S.
O'Neill, Chief, Transportation, Energy & Agriculture Section, Antitrust
Division, Department of Justice, 450 5th Street NW, Suite 8000,
Washington, DC 20530.
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the Southern District of Ohio Eastern
Division
UNITED STATES OF AMERICA, Plaintiff, v. HYUNDAI OILBANK CO.,
LTD, 182, Pyeongsin 2-ro, Daesan-eup, Seosan-si, Chungcheongnam-do,
South Korea, and S-OIL CORPORATION, 192, Baekbeom-ro, Mapo-gu,
Seoul, South Korea, Defendants.
CASE NO. 2:19-cv-1037
COMPLAINT: VIOLATION OF SECTION 1 OF THE SHERMAN ACT, 15 U.S.C.
Sec. 1
COMPLAINT
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil antitrust
action to obtain equitable monetary relief and recover damages
[[Page 11556]]
from Hyundai Oilbank Co., Ltd. and S-Oil Corporation for conspiring to
rig bids and fix prices, in violation of Section 1 of the Sherman Act,
15 U.S.C. Sec. 1, on the supply of fuel to the U.S. military for its
operations in South Korea.
I. INTRODUCTION
1. Since the end of the Korean War, the U.S. armed forces have
maintained a significant presence in South Korea, protecting American
interests in the region and safeguarding peace for the Korean people.
To perform this important mission, American service members depend on
fuel to power their bases and military vehicles. The U.S. military
procures this fuel from oil refiners located in South Korea through a
competitive bidding process.
2. For at least a decade, rather than engage in fair and honest
competition, Defendants and their co-conspirators defrauded the U.S.
military by fixing prices and rigging bids for the contracts to supply
this fuel. Defendants met and communicated in secret with other large
South Korean oil refiners and logistics companies, and pre-determined
which conspirator would win each contract. Defendants or their co-
conspirators then fraudulently submitted collusive bids to the U.S.
military. Through this scheme, Defendants reaped vastly higher profit
margins on the fuel they supplied to the U.S. military than on the fuel
they sold to the South Korean military and to private parties.
3. As a result of this conduct, Defendants and their co-
conspirators illegally overcharged American taxpayers by well over $100
million. This conspiracy unreasonably restrained trade and commerce, in
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.
Defendants have agreed to plead guilty to one count of a superseding
indictment charging a criminal violation of Section 1 of the Sherman
Act for this unlawful conduct, and in this civil action, the United
States seeks compensation for the injuries it incurred as a result of
this conspiracy.
II. DEFENDANTS
4. Hyundai Oilbank Co., Ltd. (``Hyundai Oilbank'') is an oil
company headquartered in Seosan, South Korea. Hyundai Oilbank refines
and supplies gasoline, diesel, kerosene, and other petroleum products
for sale internationally. During the conspiracy, Hyundai Oilbank
partnered with a logistics firm (``Company A'') to supply fuel to U.S.
military installations in South Korea, with Company A acting as the
prime contractor under the relevant contracts.
5. S-Oil Corporation (``S-Oil'') is an oil company headquartered in
Seoul, South Korea. S-Oil refines and supplies gasoline, diesel,
kerosene, and other petroleum products for sale internationally.
Beginning in 2009, S-Oil partnered with Hanjin Transportation Co., Ltd.
(``Hanjin'') to supply fuel to U.S. military installations in South
Korea, with Hanjin acting as the prime contractor under the relevant
contracts.
6. Other persons, not named as defendants in this action,
participated as co-conspirators in the offense alleged in this
Complaint and performed acts and made statements in furtherance
thereof. These co-conspirators include, among others, GS Caltex
Corporation (``GS Caltex''), Hanjin, SK Energy Co., Ltd. (``SK
Energy''), and Company A.
7. Whenever this Complaint refers to any act, deed, or transaction
of any business entity, it means that the business entity engaged in
the act, deed, or transaction by or through its officers, directors,
employees, agents, or other representatives while they were actively
engaged in the management, direction, control, or transaction of its
business or affairs.
III. JURISDICTION AND VENUE
8. The United States brings this action under Section 4 of the
Sherman Act, 15 U.S.C. Sec. 4, and Section 4A of the Clayton Act, 15
U.S.C. Sec. 15a, seeking equitable relief, including equitable
monetary remedies, and damages from Defendants' violation of Section 1
of the Sherman Act, 15 U.S.C. Sec. 1.
9. This Court has subject matter jurisdiction over this action
under 15 U.S.C. Sec. Sec. 4 and 15a and 28 U.S.C. Sec. Sec. 1331 and
1337.
10. Defendants have consented to venue and personal jurisdiction in
this district for the purpose of this Complaint.
11. Defendants or their co-conspirators entered into contracts with
the U.S. military to supply and deliver fuel to U.S. military
installations in South Korea. Under the terms of these contracts,
Defendants or their co-conspirators agreed that the laws of the United
States would govern all contractual disputes and that U.S.
administrative bodies and courts would have exclusive jurisdiction to
resolve all such disputes. To be eligible to enter into these
contracts, Defendants or their co-conspirators registered in databases
located in the United States. For certain contracts, Defendants or
their co-conspirators submitted bids to U.S. Department of Defense
offices in the United States. After being awarded these contracts,
Defendants or their co-conspirators submitted invoices to and received
payments from U.S. Department of Defense offices in Columbus, Ohio,
which included use of wires and mails located in the United States.
12. Through these contracts with the U.S. military, Defendants'
activities had a direct, substantial, and reasonably foreseeable effect
on interstate commerce, import trade or commerce, and commerce with
foreign nations. Defendants' conspiracy had a substantial and intended
effect in the United States. Defendants caused U.S. Department of
Defense agencies to pay non-competitive prices for the supply of fuel
to U.S. military installations. Defendants or their co-conspirators
also caused a U.S. Department of Defense agency located in the Southern
District of Ohio to transfer U.S. dollars to their foreign bank
accounts.
IV. BACKGROUND
13. From at least March 2005 and continuing until at least October
2016 (``the Relevant Period''), the U.S. military procured fuel for its
installations in South Korea through competitive solicitation
processes. Oil companies, either independently or in conjunction with a
logistics company, submitted bids in response to these solicitations.
14. The conduct at issue relates to two types of contracts to
supply fuel to the U.S. military for use in South Korea: Post, Camps,
and Stations (``PC&S'') contracts and Army and Air Force Exchange
Services (``AAFES'') contracts.
15. PC&S contracts are issued and administered by the Defense
Logistics Agency (``DLA''), a combat support agency in the U.S.
Department of Defense. DLA, formerly known as the Defense Energy
Support Center, is headquartered in Fort Belvoir, Virginia. The fuel
procured under PC&S contracts is used for military vehicles and to heat
U.S. military buildings. During the Relevant Period, PC&S contracts ran
for a term of three or four years. DLA issued PC&S solicitations
listing the fuel requirements for installations across South Korea,
with each delivery location identified by a separate line item. Bidders
offered a price for each line item on which they chose to bid. DLA
awarded contracts to the bidders offering the lowest price for each
line item. The Defense Finance and Accounting Service (``DFAS''), a
finance and accounting agency of the U.S. Department of Defense, wired
payments to the PC&S contract awardees from its office in Columbus,
Ohio.
16. AAFES is an agency of the Department of Defense headquartered
in
[[Page 11557]]
Dallas, Texas. AAFES operates official retail stores (known as
``exchanges'') on U.S. Army and Air Force installations worldwide,
which U.S. military personnel and their families use to purchase
everyday goods and services, including gasoline for use in their
personal vehicles. AAFES procures fuel for these stores via contracts
awarded through a competitive solicitation process. The term of AAFES
contracts is typically two years, but may be extended for additional
years. In 2008, AAFES issued a solicitation that listed the fuel
requirements for installations in South Korea. Unlike DLA, AAFES
awarded the entire 2008 contract to the bidder offering the lowest
price across all the listed locations.
V. DEFENDANTS' UNLAWFUL CONDUCT
17. From at least March 2005 and continuing until at least October
2016, Defendants and their co-conspirators engaged in a series of
meetings, telephone conversations, e-mails, and other communications to
rig bids and fix prices for the supply of fuel to U.S. military
installations in South Korea.
2006 PC&S and 2008 AAFES Contracts
18. GS Caltex, SK Energy, Hyundai Oilbank, and Company A conspired
to rig bids and fix prices on the 2006 PC&S contracts, which were
issued in response to solicitation SP0600-05-R-0063, supplemental
solicitation SP0600-05-0063-0001, and their amendments. The term of the
2006 PC&S contracts covered the supply of fuel from February 2006
through July 2009.
19. Between early 2005 and mid-2006, GS Caltex, SK Energy, Hyundai
Oilbank, and other conspirators met multiple times and exchanged phone
calls and e-mails to allocate the line items in the solicitations for
the 2006 PC&S contracts. For each line item allocated to a different
co-conspirator, the other conspirators agreed not to bid or to bid high
enough to ensure that they would not win that item. Through these
communications, these conspirators agreed to inflate their bids to
produce higher profit margins. DLA awarded the 2006 PC&S line items
according to the allocations made by the conspiracy.
20. As part of their discussions related to the 2006 PC&S
contracts, GS Caltex, Hyundai Oilbank, and other conspirators agreed
not to compete with SK Energy in bidding for the 2008 AAFES contract.
In 2008, GS Caltex, Hyundai Oilbank, and other conspirators honored
their agreement: GS Caltex bid significantly above the bid submitted by
SK Energy for the AAFES contract, while Hyundai Oilbank and Company A
declined to bid even after AAFES explicitly requested their
participation in the bidding. The initial term of the 2008 AAFES
contract ran from July 2008 to July 2010; the contract was later
extended through July 2013. As envisioned by the conspiracy, AAFES
awarded the 2008 contract to SK Energy.
2009 PC&S Contracts
21. Continuing their conspiracy, Defendants and other co-
conspirators conspired to rig bids and fix prices for the 2009 PC&S
contracts, which were issued in response to solicitation SP0600-08-R-
0233. Hanjin and S-Oil joined the conspiracy for the purpose of bidding
on the solicitation for the 2009 PC&S contracts. Hanjin and S-Oil
partnered to bid jointly on the 2009 PC&S contracts, with S-Oil
providing the fuel and Hanjin providing transportation and logistics.
The term of the 2009 PC&S contracts covered the supply of fuel from
October 2009 through August 2013.
22. Between late 2008 and mid-2009, Defendants and other co-
conspirators met multiple times and exchanged phone calls and e-mails
to allocate the line items in the solicitation for the 2009 PC&S
contracts. As in 2006, these conspirators agreed to bid high so as to
not win line items allocated to other co-conspirators. The original
conspirators agreed to allocate to Hanjin and S-Oil certain line items
that had previously been allocated to the original conspirators.
23. With one exception, DLA awarded the 2009 PC&S contracts in line
with the allocations made by the Defendants and other co-conspirators.
Hyundai Oilbank and Company A accidentally won one line item that the
conspiracy had allocated to GS Caltex. To remedy this misallocation,
Company A, Hyundai Oilbank, and GS Caltex agreed that GS Caltex, rather
than Hyundai Oilbank, would supply Company A with the fuel procured
under this line item.
2013 PC&S Contracts
24. Similar to 2006 and 2009, Defendants and other co-conspirators
conspired to rig bids and fix prices for the 2013 PC&S contracts, which
were issued in response to solicitation SP0600-12-R-0332. The term of
the 2013 PC&S Contract covered the supply of fuel from August 2013
through July 2016.
25. Defendants and other co-conspirators communicated via phone
calls and e-mails to allocate and set the price for each line item in
the solicitation for the 2013 PC&S contracts. Defendants and other co-
conspirators believed that they had an agreement as to their bidding
strategy and pricing for the 2013 PC&S contracts. As a result of this
agreement, they bid higher prices than they would have in a competitive
process.
26. However, Hanjin and S-Oil submitted bids for the 2013 PC&S
contracts below the prices set by the other co-conspirators. Although
lower than the pricing agreed upon by the conspirators, Hanjin and S-
Oil still submitted bids above a competitive, non-collusive price,
knowing that they would likely win the contracts because the other
conspirators would bid even higher prices.
27. As a result of their bidding strategy, Hanjin and S-Oil jointly
won nearly all the line items in the 2013 PC&S contracts. As in 2009,
S-Oil was to provide the fuel for these line items, and Hanjin was to
provide transportation and logistics. GS Caltex and other co-
conspirators won a few, small line items; SK Energy won none. DLA made
inflated payments under the 2013 PC&S contracts through October 2016.
28. After the award of the 2013 PC&S contracts, Hanjin, S-Oil, and
GS Caltex reached an understanding that GS Caltex, rather than S-Oil,
would supply Hanjin with fuel for certain line items. Under this side
agreement, Hanjin paid a much lower price to GS Caltex for fuel than
the price it previously had agreed to pay S-Oil to acquire fuel for
those line items. However, the price that Hanjin paid to GS Caltex
exceeded a competitive price for fuel.
VI. VIOLATIONS ALLEGED
29. The United States incorporates by reference the allegations in
paragraphs 1 through 28.
30. The conduct of Defendants and their co-conspirators
unreasonably restrained trade and harmed competition for the supply of
fuel to the U.S. military in South Korea in violation of Section 1 of
the Sherman Act, 15 U.S.C. Sec. 1.
31. The United States was injured as a result of the unlawful
conduct because it paid more for the supply of fuel than it would have
had the Defendants and their co-conspirators engaged in fair
competition.
VII. REQUEST FOR RELIEF
32. The United States requests that this Court:
(a) adjudge that Defendants' and their co-conspirators' conduct
constitutes an unreasonable restraint of interstate commerce, import
trade or commerce, and commerce with foreign nations in
[[Page 11558]]
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1;
(b) award the United States damages to which it is entitled for the
losses incurred as the result of Defendants' and their co-conspirators'
conduct;
(c) award the United States equitable disgorgement of the ill-
gotten gains obtained by Defendants;
(d) award the United States its costs of this action; and
(e) award the United States other relief that the Court deems just
and proper.
Dated: March 20, 2019
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
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Makan Delrahim
Assistant Attorney General for Antitrust
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Andrew C. Finch
Principal Deputy Assistant Attorney General
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Bernard A. Nigro Jr.
Deputy Assistant Attorney General
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Patricia A. Brink
Director of Civil Enforcement
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Kathleen S. O'Neill
Chief Transportation, Energy & Agriculture Section
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Robert A. Lepore
Assistant Chief Transportation, Energy & Agriculture Section
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J. Richard Doidge
Julie Elmer
Jeremy Evans
John A. Holler
Jonathan Silberman
Patrick M. Kuhlmann
Attorneys for the United States,
U.S. Department of Justice,
Antitrust Division, 450 5th Street, NW, Suite 8000, Washington, DC
20530, Tel: (202) 514-8944, Fax: (202) 616-2441, E-mail:
[email protected]
Dated: March 20, 2019
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA
Benjamin C. Glassman
United States Attorney
By:
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Andrew M. Malek (Ohio Bar 0061442)
Assistant United States Attorney, 303 Marconi Boulevard, Suite 200,
Columbus, Ohio 43215, Tel: (614) 469-5715, Fax: (614) 469-2769, E-
mail: [email protected]
United States District Court for the Southern District of Ohio Eastern
Division
UNITED STATES OF AMERICA, Plaintiff, v. HYUNDAI OILBANK CO.,
LTD., Defendant.
CASE NO. 2:19-cv-1037
PROPOSED FINAL JUDGMENT AS TO DEFENDANT HYUNDAI OILBANK CO., LTD.
WHEREAS Plaintiff, United States of America, filed its Complaint on
March 20, 2019, the United States and Defendant Hyundai Oilbank Co.,
Ltd. (``Hyundai Oilbank''), by their respective attorneys, have
consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law;
WHEREAS, on such date as may be determined by the Court, Hyundai
Oilbank will plead guilty pursuant to Fed. R. Crim. P. 11(c)(1)(C) (the
``Plea Agreement'') to Count One of a Superseding Indictment filed in
the Southern District of Ohio (the ``Criminal Action'') that alleges a
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, relating
to the same events giving rise to the allegations described in the
Complaint;
WHEREAS, this Final Judgment does not constitute any evidence
against or admission by any party regarding any issue of fact or law;
NOW, THEREFORE, before the taking of any testimony and without
trial or final adjudication of any issue of fact or law herein, and
upon consent of the parties hereto, it is hereby ORDERED, ADJUDGED, AND
DECREED:
I. JURISDICTION
This Court has jurisdiction of the subject matter of this action
and each of the parties consenting hereto. The Complaint states a claim
upon which relief may be granted to the United States against Hyundai
Oilbank under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.
II. APPLICABILITY
This Final Judgment applies to Hyundai Oilbank, as defined above,
and all other persons in active concert or participation with any of
them who receive actual notice of this Final Judgment by personal
service or otherwise.
III. PAYMENT
Hyundai Oilbank shall pay to the United States within ten (10)
business days of the entry of this Final Judgment the amount of thirty-
nine million, one hundred thousand dollars ($39,100,000), less the
amount paid (excluding any interest) pursuant to the settlement
agreement attached hereto as Attachment 1, to satisfy all civil
antitrust claims alleged against Hyundai Oilbank by the United States
in the Complaint. Payment of the amount ordered hereby shall be made by
wire transfer of funds or cashier's check. If the payment is made by
wire transfer, Hyundai Oilbank shall contact Janie Ingalls of the
Antitrust Division's Antitrust Documents Group at (202) 514-2481 for
instructions before making the transfer. If the payment is made by
cashier's check, the check shall be made payable to the United States
Department of Justice and delivered to: Janie Ingalls, United States
Department of Justice Antitrust Division, Antitrust Documents Group,
450 5th Street, NW, Suite 1024, Washington, D.C. 20530. In the event of
a default in payment, interest at the rate of eighteen (18) percent per
annum shall accrue thereon from the date of default to the date of
payment.
IV. COOPERATION
Hyundai Oilbank shall cooperate fully with the United States
regarding any matter about which Hyundai Oilbank has knowledge or
information relating to any ongoing civil investigation, litigation, or
other proceeding arising out of any ongoing federal investigation of
the subject matter discussed in the Complaint (hereinafter, any such
investigation, litigation, or proceeding shall be referred to as a
``Civil Federal Proceeding'').
The United States agrees that any cooperation provided in
connection with the Plea Agreement and/or pursuant to the settlement
agreement attached hereto as Attachment 1 will be considered
cooperation for purposes of this Final Judgment, and the United States
will use its reasonable best efforts, where appropriate, to coordinate
any requests for cooperation in connection with the Civil Federal
Proceeding with requests for cooperation in connection with the Plea
Agreement and the settlement agreement attached hereto as Attachment 1,
so as to avoid unnecessary duplication and expense.
Hyundai Oilbank's cooperation shall include, but not be limited to,
the following:
(a) Upon request, completely and truthfully disclosing and
producing, to the offices of the United States and at no expense to the
United States, copies of all non-privileged information, documents,
materials, and records in its possession (and for any foreign-language
information, documents, materials, or records, copies must be produced
with an English translation), regardless of their geographic location,
about which the United States may inquire in connection with any Civil
Federal Proceeding, including but not limited to all information about
activities of Hyundai Oilbank and present and
[[Page 11559]]
former officers, directors, employees, and agents of Hyundai Oilbank;
(b) Making available in the United States, at no expense to the
United States, its present officers, directors, employees, and agents
to provide information and/or testimony as requested by the United
States in connection with any Civil Federal Proceeding, including the
provision of testimony in trial and other judicial proceedings, as well
as interviews with law enforcement authorities, consistent with the
rights and privileges of those individuals;
(c) Using its best efforts to make available in the United States,
at no expense to the United States, its former officers, directors,
employees, and agents to provide information and/or testimony as
requested by the United States in connection with any Civil Federal
Proceeding, including the provision of testimony in trial and other
judicial proceedings, as well as interviews with law enforcement
authorities, consistent with the rights and privileges of those
individuals;
(d) Providing testimony or information necessary to identify or
establish the original location, authenticity, or other basis for
admission into evidence of documents or physical evidence produced by
Hyundai Oilbank in any Civil Federal Proceeding as requested by the
United States; and
(e) Completely and truthfully responding to all other inquiries of
the United States in connection with any Civil Federal Proceeding.
However, notwithstanding any provision of this Final Judgment,
Hyundai Oilbank is not required to: (1) request of its current or
former officers, directors, employees, or agents that they forgo
seeking the advice of an attorney nor that they act contrary to that
advice; (2) take any action against its officers, directors, employees,
or agents for following their attorney's advice; or (3) waive any claim
of privilege or work product protection.
The obligations of Hyundai Oilbank to cooperate fully with the
United States as described in this Section shall cease upon the
conclusion of all Civil Federal Proceedings (which may include Civil
Federal Proceedings related to the conduct of third parties), including
exhaustion of all appeals or expiration of time for all appeals of any
Court ruling in each such Civil Federal Proceeding, at which point the
United States will provide written notice to Hyundai Oilbank that its
obligations under this Section have expired.
V. ANTITRUST COMPLIANCE PROGRAM
A. Within thirty (30) days after entry of this Final Judgment,
Hyundai Oilbank shall appoint an Antitrust Compliance Officer and
identify to the United States his or her name, business address,
telephone number, and email address. Within forty-five (45) days of a
vacancy in the Antitrust Compliance Officer position, Hyundai Oilbank
shall appoint a replacement, and shall identify to the United States
the Antitrust Compliance Officer's name, business address, telephone
number, and email address. Hyundai Oilbank's initial or replacement
appointment of an Antitrust Compliance Officer is subject to the
approval of the United States, in its sole discretion.
B. The Antitrust Compliance Officer shall institute an antitrust
compliance program for the company's employees and directors with
responsibility for bidding for any contract with the United States. The
antitrust compliance program shall provide at least two hours of
training annually on the antitrust laws of the United States, such
training to be delivered by an attorney with relevant experience in the
field of United States antitrust law.
C. Each Antitrust Compliance Officer shall obtain, within six
months after entry of this Final Judgment, and on an annual basis
thereafter, on or before each anniversary of the entry of this Final
Judgment, from each person subject to Paragraph V.B of this Final
Judgment, and thereafter maintaining, a certification that each such
person has received the required two hours of annual antitrust
training.
D. Each Antitrust Compliance Officer shall communicate annually to
all employees that they may disclose to the Antitrust Compliance
Officer, without reprisal, information concerning any potential
violation of the United States antitrust laws.
E. Each Antitrust Compliance Offer shall provide to the United
States within six months after entry of this Final Judgment, and on an
annual basis thereafter, on or before each anniversary of the entry of
this Final Judgment, a written statement as to the fact and manner of
Hyundai Oilbank's compliance with Section V of this Final Judgment.
VI. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any of the parties to
this Final Judgment to apply to this Court at any time for further
orders and directions as may be necessary or appropriate to carry out
or construe this Final Judgment, to modify or terminate any of its
provisions, to enforce compliance, and to punish violations of its
provisions.
VII. ENFORCEMNT OF FINAL JUDGMENT
A. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. Hyundai Oilbank agrees that in any civil
contempt action, any motion to show cause, or any similar action
brought by the United States regarding an alleged violation of this
Final Judgment, the United States may establish a violation of the
decree and the appropriateness of any remedy therefor by a
preponderance of the evidence, and Hyundai Oilbank waives any argument
that a different standard of proof should apply.
B. The Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore all
competition the United States alleged was harmed by the challenged
conduct. Hyundai Oilbank agrees that they may be held in contempt of,
and that the Court may enforce, any provision of this Final Judgment
that, as interpreted by the Court in light of these procompetitive
principles and applying ordinary tools of interpretation, is stated
specifically and in reasonable detail, whether or not it is clear and
unambiguous on its face. In any such interpretation, the terms of this
Final Judgment should not be construed against either party as the
drafter.
C. In any enforcement proceeding in which the Court finds that
Hyundai Oilbank has violated this Final Judgment, the United States may
apply to the Court for a one-time extension of this Final Judgment,
together with such other relief as may be appropriate. In connection
with any successful effort by the United States to enforce this Final
Judgment against Hyundai Oilbank, whether litigated or resolved prior
to litigation, Hyundai Oilbank agrees to reimburse the United States
for the fees and expenses of its attorneys, as well as any other costs
including experts' fees, incurred in connection with that enforcement
effort, including in the investigation of the potential violation.
VIII. EXPIRATION OF FINAL JUDGMENT
33. Unless this Court grants an extension, this Final Judgment
shall expire seven (7) years from the date of its entry, except that
after five (5) years from the date of its entry, this Final Judgment
may be terminated upon notice by the United States to the Court
[[Page 11560]]
and Hyundai Oilbank that the continuation of the Final Judgment no
longer is necessary or in the public interest.
IX. PUBLIC INTEREST DETERMINATION
34. Entry of this Final Judgment is in the public interest. The
parties have complied with the requirements of the Antitrust Procedures
and Penalties Act, 15 U.S.C. Sec. 16, including making copies
available to the public of this Final Judgment, the Competitive Impact
Statement, and any comments thereon and the United States' responses to
comments. Based upon the record before the Court, which includes the
Competitive Impact Statement and any comments and response to comments
filed with the Court, entry of this Final Judgment is in the public
interest.
DATED:-----------------------------------------------------------------
-----------------------------------------------------------------------
United States District Judge
ATTACHMENT 1
SETTLEMENT AGREEMENT
This Settlement Agreement (``Agreement'') is entered into among the
United States of America, acting through the Civil Division of the
United States Department of Justice and the United States Attorney's
Office for the Southern District of Ohio, on behalf of the Defense
Logistics Agency (``DLA'') and the Army and Air Force Exchange Service
(``AAFES'') (collectively the ``United States''), Hyundai Oilbank Co.,
Ltd. (``Hyundai''), and Relator [REDACTED] (hereafter collectively
referred to as ``the Parties''), through their authorized
representatives.
RECITALS
A. Hyundai is a South Korea-based energy company that produces
various petroleum products that it sells to South Korean and
international customers, including the United States Department of
Defense (``DoD'').
B. On February 28, 2018, Relator, a resident and citizen of South
Korea, filed a qui tam action in the United States District Court for
the Southern District of Ohio captioned United States ex rel.
[REDACTED] v. GS Caltex, et al., Civil Action No. [REDACTED], pursuant
to the qui tam provisions of the False Claims Act, 31 U.S.C. Sec.
3730(b) (the ``Civil FCA Action''). Relator contends that Hyundai
conspired with other South Korean entities to rig bids on DoD contracts
to supply fuel to U.S. military bases throughout South Korea beginning
in 2005 and continuing until 2016, including DLA Post, Camps, and
Stations (``PC&S'') contracts executed in 2006, 2009, and 2013, and
AAFES contracts executed in 2008.
C. On such date as may be determined by the Court, Hyundai will
plead guilty pursuant to Fed. R. Crim. P. 11(c)(1)(C) (the ``Plea
Agreement'') to Count One of a Superseding Indictment filed in the
Southern District of Ohio (the ``Criminal Action'') that alleges that
Hyundai participated in a combination and conspiracy beginning at least
in or around March 2005 and continuing until at least in or around
October 2016, to suppress and eliminate competition on certain
contracts solicited by the DoD to supply fuel to numerous U.S. Army,
Navy, Marine, and Air Force installations in South Korea, including
PC&S contracts and the 2008 AAFES contract, in violation of the Sherman
Antitrust Act, 15 U.S.C. Sec. 1.
D. Hyundai will execute a Stipulation with the Antitrust Division
of the United States Department of Justice in which Hyundai will
consent to the entry of a Final Judgment to be filed in United States
v. Hyundai Oilbank Co., Ltd., Civil Action No. [to be assigned] (S.D.
Ohio) (the ``Civil Antitrust Action'') that will settle any and all
civil antitrust claims of the United States against Hyundai arising
from any act or offense committed before the date of the Stipulation
that was undertaken in furtherance of an attempted or completed
antitrust conspiracy involving PC&S and/or AAFES fuel supply contracts
with the U.S. military in South Korea during the period 2005 through
2016.
E. The United States contends that it has certain civil claims
against Hyundai arising from the conduct described in the Plea
Agreement in the Criminal Action and in the Stipulation in the Civil
Antitrust Action, as well as the conduct, actions, and claims alleged
by Relator in the Civil FCA Action. The conduct referenced in this
Paragraph is referred to below as the Covered Conduct.
F. With the exception of any admissions that are made by Hyundai in
connection with the Plea Agreement in the Criminal Action, this
Settlement Agreement is neither an admission of liability by Hyundai
nor a concession by the United States that its claims are not well
founded.
To avoid the delay, uncertainty, inconvenience, and expense of
protracted litigation of the above claims, and in consideration of the
mutual promises and obligations of this Settlement Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1.a. Hyundai agrees to pay to the United States $28,818,814 (``FCA
Settlement Amount''), of which $13,266,973 is restitution, by
electronic funds transfer no later than thirteen (13) business days
after the Effective Date of this Agreement pursuant to written
instructions to be provided by the Civil Division of the Department of
Justice. Relator claims entitlement under 31 U.S.C. Sec. 3730(d) to a
share of the proceeds of this Settlement Agreement and to Relator's
reasonable expenses, attorneys' fees and costs. The FCA Settlement
Amount does not include the Relator's fees and costs, and Hyundai
acknowledges that Relator retains all rights to recover such expenses,
attorneys' fees, and costs from Hyundai pursuant to 31 U.S.C. Sec.
3730(d).
1.b. If Hyundai's Plea Agreement in the Criminal Action is not
accepted by the Court or the Court does not enter a Final Judgment in
the Civil Antitrust Action, this Agreement shall be null and void at
the option of either the United States or Hyundai. If either the United
States or Hyundai exercises this option, which option shall be
exercised by notifying all Parties, through counsel, in writing within
five (5) business days of the Court's decision, the Parties will not
object and this Agreement will be rescinded and the FCA Settlement
Amount shall be returned to Hyundai. If this Agreement is rescinded,
Hyundai will not plead, argue or otherwise raise any defenses under the
theories of statute of limitations, laches, estoppel or similar
theories, to any civil or administrative claims, actions or proceedings
arising from the Covered Conduct that are brought by the United States
within ninety (90) calendar days of rescission, except to the extent
such defenses were available on the day on which Relator's qui tam
complaint in the Civil FCA Action was filed.
2. Subject to the exceptions in Paragraph 4 (concerning excluded
claims) below, and conditioned upon Hyundai's full payment of the FCA
Settlement Amount, the United States releases Hyundai together with its
current and former parent corporations; direct and indirect
subsidiaries; brother or sister corporations; divisions; current or
former corporate owners; and the corporate successors and assigns of
any of them from any civil or administrative monetary claim the United
States has for the Covered Conduct under the False Claims Act, 31
U.S.C. Sec. Sec. 3729-3733; the Program Fraud Civil Remedies Act, 31
U.S.C. Sec. Sec. 3801-3812; Contract Disputes Act, 41 U.S.C.
Sec. Sec. 7101-7109; or the common law theories of breach of
[[Page 11561]]
contract, payment by mistake, unjust enrichment, and fraud.
3. Except as set forth in Paragraph 1 (concerning Relator's claims
under 31 U.S.C. Sec. 3730(d)), and conditioned upon Hyundai's full
payment of the FCA Settlement Amount, Relator, for himself and for his
heirs, successors, attorneys, agents, and assigns, releases Hyundai
together with its current and former parent corporations; direct and
indirect subsidiaries; brother or sister corporations; divisions;
current or former corporate owners; the corporate successors and
assigns of any of them as well as Hyundai owners, directors, officers,
agents, employees and counsel from (a) any civil monetary claim the
Relator has or may have for the claims set forth in the Civil FCA
Action, the Civil Antitrust Action, the Criminal Action, and the
Covered Conduct under the False Claims Act, 31 U.S.C. Sec. Sec. 3729-
3733, up until the date of this Agreement; and (b) all liability,
claims, demands, actions, or causes of action whatsoever, whether known
or unknown, fixed or contingent, in law or in equity, in contract or in
tort, under any federal, state, or Korean statute, law, regulation or
doctrine, that Relator, his heirs, successors, attorneys, agents, and
assigns otherwise has brought or would have standing to bring as of the
date of this Agreement, including any liability to Relator arising from
or relating to the claims Relator asserted or could have asserted in
the Civil FCA Action, up until the date of this Agreement. Relator
represents he does not know of any conduct by Hyundai or any current or
former owners, officers, directors, trustees, shareholders, employees,
executives, agents, or affiliates that would constitute a violation of
the False Claims Act other than the claims set forth in the Civil FCA
Action and the Covered Conduct, and Relator acknowledges and agrees
that his representations are a material inducement to Hyundai's
willingness to enter into this Agreement. Relator further represents
and warrants that he and his counsel are the exclusive owner of the
rights, claims, and causes of action herein released and none of them
have previously assigned, reassigned, or transferred or purported to
assign, reassign, or transfer, through bankruptcy or by any other
means, any or any portion of any claim, demand, action, cause of
action, or other right released or discharged under this Agreement
except between themselves and their counsel.
4. Notwithstanding the releases given in paragraphs 2 and 3 of this
Agreement, or any other term of this Agreement, the following claims of
the United States are specifically reserved and are not released:
a. Any liability arising under Title 26, U.S. Code (Internal
Revenue Code);
b. Any criminal liability, except to the extent detailed in the
Plea Agreement;
c. Except as explicitly stated in this Agreement, any
administrative liability, including the suspension and debarment rights
of any federal agency;
d. Any liability to the United States (or its agencies) for any
conduct other than the Covered Conduct;
e. Any liability based upon obligations created by this Agreement;
f. Any liability of individuals;
g. Any liability for express or implied warranty claims or other
claims for defective or deficient products or services, including
quality of goods and services;
h. Any liability for failure to deliver goods or services due; and
i. Any liability for personal injury or property damage or for
other consequential damages arising from the Covered Conduct.
5. Relator and his heirs, successors, attorneys, agents, and
assigns shall not object to this Agreement but agree and confirm that
this Agreement is fair, adequate, and reasonable under all the
circumstances, pursuant to 31 U.S.C. Sec. 3730(c)(2)(B). The
determination of Relator's share, if any, of the FCA Settlement Amount
pursuant to 31 U.S.C. Sec. 3730(d) is a matter that shall be handled
separately by and between the Relator and the United States, without
any direct involvement or input from Hyundai. In connection with this
Agreement and this Civil FCA Action, Relator, on behalf of himself and
his heirs, successors, attorneys, agents, and assigns agrees that
neither this Agreement, nor any intervention by the United States in
the Civil FCA Action in order to dismiss the Civil FCA Action, nor any
dismissal of the Civil FCA Action, shall waive or otherwise affect the
ability of the United States to contend that provisions in the False
Claims Act, including 31 U.S.C. Sec. 3730(d)(3), bar Relator from
sharing in the proceeds of this Agreement, except that the United
States will not contend that Relator is barred from sharing in the
proceeds of this Agreement pursuant to 31 U.S.C. Sec. 3730(e)(4).
Moreover, the United States and Relator, on behalf of himself and his
heirs, successors, attorneys, agents, and assigns agree that they each
retain all of their rights pursuant to the False Claims Act on the
issue of the share percentage, if any, that Relator should receive of
any proceeds of the settlement of his claims, and that no agreements
concerning Relator share have been reached to date.
6. Hyundai waives and shall not assert any defenses Hyundai may
have to any criminal prosecution or administrative action relating to
the Covered Conduct that may be based in whole or in part on a
contention that, under the Double Jeopardy Clause in the Fifth
Amendment of the Constitution, or under the Excessive Fines Clause in
the Eighth Amendment of the Constitution, this Agreement bars a remedy
sought in such criminal prosecution or administrative action.
7. Hyundai fully and finally releases the United States, its
agencies, officers, agents, employees, and servants, from any claims
(including attorney's fees, costs, and expenses of every kind and
however denominated) that Hyundai has asserted, could have asserted, or
may assert in the future against the United States, its agencies,
officers, agents, employees, and servants, related to the Covered
Conduct and the United States' investigation and prosecution thereof.
8. Conditioned upon Relator's agreement herein, Hyundai fully and
finally releases Relator his heirs, successors, assigns, agents and
attorneys (the ``Relator Released Parties''), from (a) any civil
monetary claim Hyundai has or may have now or in the future against the
Relator Released Parties related to the claims set forth in the Civil
FCA Action, the Civil Antitrust Action, the Criminal Action, and the
Covered Conduct under the False Claims Act, 31 U.S.C. Sec. Sec. 3729-
3733, and the Relator's investigation and prosecution thereof,
including attorney's fees, costs, and expenses of every kind and
however denominated, up until the date of this Agreement; and (b) all
liability, claims, demands, actions, or causes of action whatsoever,
whether known or unknown, fixed or contingent, in law or in equity, in
contract or in tort, under any federal, state, or Korean statute, law,
regulation or doctrine, that Hyundai otherwise have brought or would
have standing to bring as of the date of this Agreement, including any
liability to Hyundai arising from or relating to claims Hyundai
asserted or could have asserted related to the Civil FCA Action, up
until the date of this Agreement. Hyundai further acknowledges and
agrees that these representations are a material inducement to
Relator's willingness to enter into this Agreement.
9. a. Unallowable Costs Defined: All costs (as defined in the
Federal Acquisition Regulation, 48 C.F.R. Sec. 31.205-47) incurred by
or on behalf of Hyundai, and its present or former officers, directors,
employees,
[[Page 11562]]
shareholders, and agents in connection with:
(1) the matters covered by this Agreement, any related plea
agreement, and any related civil antitrust agreement;
(2) the United States' audit(s) and civil and any criminal
investigation(s) of the matters covered by this Agreement;
(3) Hyundai's investigation, defense, and corrective actions
undertaken in response to the United States' audit(s) and civil and any
criminal investigation(s) in connection with the matters covered by
this Agreement (including attorney's fees);
(4) the negotiation and performance of this Agreement, any related
plea agreement, and any related civil antitrust agreement;
(5) the payment Hyundai makes to the United States pursuant to this
Agreement and any payments that Hyundai may make to Relator, including
costs and attorneys' fees,
are unallowable costs for government contracting purposes (hereinafter
referred to as Unallowable Costs).
b. Future Treatment of Unallowable Costs: Unallowable Costs will be
separately determined and accounted for by Hyundai, and Hyundai shall
not charge such Unallowable Costs directly or indirectly to any
contract with the United States.
c. Treatment of Unallowable Costs Previously Submitted for Payment:
Within 90 days of the Effective Date of this Agreement, Hyundai shall
identify and repay by adjustment to future claims for payment or
otherwise any Unallowable Costs included in payments previously sought
by Hyundai or any of its subsidiaries or affiliates from the United
States. Hyundai agrees that the United States, at a minimum, shall be
entitled to recoup from Hyundai any overpayment plus applicable
interest and penalties as a result of the inclusion of such Unallowable
Costs on previously-submitted requests for payment. The United States,
including the Department of Justice and/or the affected agencies,
reserves its rights to audit, examine, or re-examine Hyundai's books
and records and to disagree with any calculations submitted by Hyundai
or any of its subsidiaries or affiliates regarding any Unallowable
Costs included in payments previously sought by Hyundai, or the effect
of any such Unallowable Costs on the amount of such payments.
10. Hyundai agrees to cooperate fully and truthfully with the
United States in connection with the Civil FCA Action. The Civil
Division of the United States Department of Justice will use reasonable
best efforts, where appropriate, to coordinate any requests for
cooperation in connection with the Civil FCA Action with requests for
cooperation in connection with the Plea Agreement in the Criminal
Action and the Civil Antitrust Action, so as to avoid unnecessary
duplication and expense. Hyundai's ongoing, full, and truthful
cooperation shall include, but not be limited to:
a. upon request by the United States with reasonable notice,
producing at the offices of counsel for the United States in
Washington, D.C. and not at the expense of the United States, complete
and un-redacted copies of all non-privileged documents related to the
Covered Conduct wherever located in Hyundai's possession, custody, or
control;
b. upon request by the United States with reasonable notice, making
current Hyundai directors, officers, and employees available for
interviews, consistent with the rights and privileges of such
individuals, by counsel for the United States and/or their
investigative agents, not at the expense of the United States, in the
United States or Hong Kong, unless another place is mutually agreed
upon;
c. upon request by the United States with reasonable notice, (i)
using best efforts to assist in locating former Hyundai directors,
officers, and employees identified by attorneys and/or investigative
agents of the United States, and (ii) using best efforts to make any
such former Hyundai directors, officers, and employees available for
interviews, consistent with the rights and privileges of such
individuals, by counsel for the United States and/or their
investigative agents, not at the expense of the United States, in the
United States or Hong Kong, unless another place is mutually agreed
upon; and
d. upon request by the United States with reasonable notice, making
current Hyundai directors, officers, and employees available, and using
best efforts to make former Hyundai directors, officers, employees
available, to testify, consistent with the rights and privileges of
such individuals, fully, truthfully, and under oath, without falsely
implicating any person or withholding any information, (i) at
depositions in the United States, Hong Kong, or any other mutually
agreed upon place, (ii) at trial in the United States, and (iii) at any
other judicial proceedings wherever located related to the Civil FCA
Action.
11. This Agreement is intended to be for the benefit of the Parties
only.
12. Upon receipt of the payment of the FCA Settlement Amount
described in Paragraph 1.a. above, the Court's acceptance of Hyundai's
Plea Agreement in the Criminal Action, and the Court's entry of a Final
Judgment in the Civil Antitrust Action, the United States and Relator
shall promptly sign and file a Joint Stipulation of Dismissal, with
prejudice, of the claims filed against Hyundai in the Civil FCA Action,
pursuant to Rule 41(a)(1), which dismissal shall be conditioned on the
Court retaining jurisdiction over Relator's claims to a relator's share
and recovery of attorneys' fees and costs pursuant to 31 U.S.C.
Sec. 3730(d).
13. Except with respect to the recovery of Relator's attorneys'
fees, expenses, and costs pursuant to 31 U.S.C. Sec. 3730(d), each
Party shall bear its own legal and other costs incurred in connection
with this matter. The Parties agree that Relator and Hyundai will not
seek to recover from the United States any costs or fees related to the
preparation and performance of this Agreement.
14. Each party and signatory to this Agreement represents that it
freely and voluntarily enters in to this Agreement without any degree
of duress or compulsion.
15. This Agreement is governed by the laws of the United States.
The exclusive jurisdiction and venue for any dispute relating to this
Agreement is the United States District Court for the Southern District
of Ohio. Hyundai agrees that the United States District Court for the
Southern District of Ohio has jurisdiction over it for purposes of this
case. For purposes of construing this Agreement, this Agreement shall
be deemed to have been drafted by all Parties to this Agreement and
shall not, therefore, be construed against any Party for that reason in
any subsequent dispute.
16. This Agreement constitutes the complete agreement between the
Parties on the subject matter addressed herein. This Agreement may not
be amended except by written consent of the Parties.
17. The undersigned counsel represent and warrant that they are
fully authorized to execute this Agreement on behalf of the persons and
entities indicated below.
18. This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same
Agreement.
19. This Agreement is binding on Hyundai's successors, transferees,
heirs, and assigns.
20. This Agreement is binding on Relator's successors, transferees,
heirs, and assigns.
[[Page 11563]]
21. All parties consent to the United States' disclosure of this
Agreement, and information about this Agreement, to the public, as
permitted by order of the Court. This Agreement shall not be released
in un-redacted form until the Court unseals the entire Civil FCA
Action.
22. This Agreement is effective on the date of signature of the
last signatory to the Agreement (Effective Date of this Agreement).
Facsimiles of signatures shall constitute acceptable, binding
signatures for purposes of this Agreement.
THE UNITED STATES OF AMERICA
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Andrew A. Steinberg
Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Mark T. D'Alessandro
Civil Chief, Andrew Malek, Assistant United States Attorney, U.S.
Attorney's Office for the Southern District of Ohio
HYUNDAI OILBANK CO., LTD. - DEFENDANT
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Minsung Kim
Authorized Representative of Hyundai Oilbank Co., Ltd.
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Gejaa Gobena
Andrew J. Lee
Kathryn M. Hellings
Hogan Lovells U.S. LLP, Counsel for Hyundai Oilbank Co., Ltd.
[REDACTED]--RELATOR
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
[REDACTED]
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Eric Havian
Constantine Cannon LLP, Counsel for Relator
United States District Court for the Southern District of Ohio Eastern
Division
UNITED STATES OF AMERICA, Plaintiff v. S-OIL CORPORATION,
Defendant.
CASE NO. 2:19-cv-1037
PROPOSED FINAL JUDGMENT AS TO DEFENDANT S-OIL CORPORATION
WHEREAS Plaintiff, United States of America, filed its Complaint on
March 20, 2019, the United States and Defendant S-Oil Corporation (``S-
Oil''), by their respective attorneys, have consented to the entry of
this Final Judgment without trial or adjudication of any issue of fact
or law;
WHEREAS, on such date as may be determined by the Court, S-Oil will
plead guilty pursuant to Fed. R. Crim. P. 11(c)(1)(C) (the ``Plea
Agreement'') to Count One of a Superseding Indictment filed in the
Southern District of Ohio (the ``Criminal Action'') that alleges a
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, relating
to the same events giving rise to the allegations described in the
Complaint;
WHEREAS, this Final Judgment does not constitute any evidence
against or admission by any party regarding any issue of fact or law;
NOW, THEREFORE, before the taking of any testimony and without
trial or final adjudication of any issue of fact or law herein, and
upon consent of the parties hereto, it is hereby ORDERED, ADJUDGED, AND
DECREED:
I. JURISDICTION
This Court has jurisdiction of the subject matter of this action
and each of the parties consenting hereto. The Complaint states a claim
upon which relief may be granted to the United States against S-Oil
under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.
II. APPLICABILITY
This Final Judgment applies to S-Oil, as defined above, and all
other persons in active concert or participation with any of them who
receive actual notice of this Final Judgment by personal service or
otherwise.
III. PAYMENT
S-Oil shall pay to the United States within ten (10) business days
of the entry of this Final Judgment the amount of twelve million, nine
hundred and eighty thousand dollars ($12,980,000), less the amount paid
(excluding any interest) pursuant to the settlement agreement attached
hereto as Attachment 1, to satisfy all civil antitrust claims alleged
against S-Oil by the United States in the Complaint. Payment of the
amount ordered hereby shall be made by wire transfer of funds or
cashier's check. If the payment is made by wire transfer, S-Oil shall
contact Janie Ingalls of the Antitrust Division's Antitrust Documents
Group at (202) 514-2481 for instructions before making the transfer. If
the payment is made by cashier's check, the check shall be made payable
to the United States Department of Justice and delivered to: Janie
Ingalls, United States Department of Justice Antitrust Division,
Antitrust Documents Group, 450 5th Street, NW, Suite 1024, Washington,
D.C. 20530. In the event of a default in payment, interest at the rate
of eighteen (18) percent per annum shall accrue thereon from the date
of default to the date of payment.
IV. COOPERATION
S-Oil shall cooperate fully with the United States regarding any
matter about which S-Oil has knowledge or information relating to any
ongoing civil investigation, litigation, or other proceeding arising
out of any ongoing federal investigation of the subject matter
discussed in the Complaint (hereinafter, any such investigation,
litigation, or proceeding shall be referred to as a ``Civil Federal
Proceeding'').
The United States agrees that any cooperation provided in
connection with the Plea Agreement and/or pursuant to the settlement
agreement attached hereto as Attachment 1 will be considered
cooperation for purposes of this Final Judgment, and the United States
will use its reasonable best efforts, where appropriate, to coordinate
any requests for cooperation in connection with the Civil Federal
Proceeding with requests for cooperation in connection with the Plea
Agreement and the settlement agreement attached hereto as Attachment 1,
so as to avoid unnecessary duplication and expense.
S-Oil's cooperation shall include, but not be limited to, the
following:
(a) Upon request, completely and truthfully disclosing and
producing, to the offices of the United States and at no expense to the
United States, copies of all non-privileged information, documents,
materials, and records in its possession (and for any foreign-language
information, documents, materials, or records, copies must be produced
with an English translation), regardless of their geographic location,
about which the United States may inquire in connection with any Civil
Federal Proceeding, including but not limited to all information about
activities of S-Oil and present and former officers, directors,
employees, and agents of S-Oil;
(b) Making available in the United States, at no expense to the
United States, its present officers, directors, employees, and agents
to provide information and/or testimony as requested by the United
States in connection with any Civil Federal Proceeding, including the
provision of testimony in trial and other judicial proceedings, as well
as interviews with law enforcement authorities, consistent with the
rights and privileges of those individuals;
[[Page 11564]]
(c) Using its best efforts to make available in the United States,
at no expense to the United States, its former officers, directors,
employees, and agents to provide information and/or testimony as
requested by the United States in connection with any Civil Federal
Proceeding, including the provision of testimony in trial and other
judicial proceedings, as well as interviews with law enforcement
authorities, consistent with the rights and privileges of those
individuals;
(d) Providing testimony or information necessary to identify or
establish the original location, authenticity, or other basis for
admission into evidence of documents or physical evidence produced by
S-Oil in any Civil Federal Proceeding as requested by the United
States; and
(e) Completely and truthfully responding to all other inquiries of
the United States in connection with any Civil Federal Proceeding.
However, notwithstanding any provision of this Final Judgment, S-
Oil is not required to: (1) request of its current or former officers,
directors, employees, or agents that they forgo seeking the advice of
an attorney nor that they act contrary to that advice; (2) take any
action against its officers, directors, employees, or agents for
following their attorney's advice; or (3) waive any claim of privilege
or work product protection.
The obligations of S-Oil to cooperate fully with the United States
as described in this Section shall cease upon the conclusion of all
Civil Federal Proceedings (which may include Civil Federal Proceedings
related to the conduct of third parties), including exhaustion of all
appeals or expiration of time for all appeals of any Court ruling in
each such Civil Federal Proceeding, at which point the United States
will provide written notice to S-Oil that its obligations under this
Section have expired.
V. ANTITRUST COMPLIANCE PROGRAM
A. Within thirty (30) days after entry of this Final Judgment, S-
Oil shall appoint an Antitrust Compliance Officer and identify to the
United States his or her name, business address, telephone number, and
email address. Within forty-five (45) days of a vacancy in the
Antitrust Compliance Officer position, S-Oil shall appoint a
replacement, and shall identify to the United States the Antitrust
Compliance Officer's name, business address, telephone number, and
email address. S-Oil's initial or replacement appointment of an
Antitrust Compliance Officer is subject to the approval of the United
States, in its sole discretion.
B. The Antitrust Compliance Officer shall institute an antitrust
compliance program for the company's employees and directors with
responsibility for bidding for any contract with the United States. The
antitrust compliance program shall provide at least two hours of
training annually on the antitrust laws of the United States, such
training to be delivered by an attorney with relevant experience in the
field of United States antitrust law.
C. Each Antitrust Compliance Officer shall obtain, within six
months after entry of this Final Judgment, and on an annual basis
thereafter, on or before each anniversary of the entry of this Final
Judgment, from each person subject to Paragraph V.B of this Final
Judgment, and thereafter maintaining, a certification that each such
person has received the required two hours of annual antitrust
training.
D. Each Antitrust Compliance Officer shall communicate annually to
all employees that they may disclose to the Antitrust Compliance
Officer, without reprisal, information concerning any potential
violation of the United States antitrust laws.
E. Each Antitrust Compliance Offer shall provide to the United
States within six months after entry of this Final Judgment, and on an
annual basis thereafter, on or before each anniversary of the entry of
this Final Judgment, a written statement as to the fact and manner of
S-Oil's compliance with Section V of this Final Judgment.
V. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any of the parties to
this Final Judgment to apply to this Court at any time for further
orders and directions as may be necessary or appropriate to carry out
or construe this Final Judgment, to modify or terminate any of its
provisions, to enforce compliance, and to punish violations of its
provisions.
VI. Enforcement of final judgment
A. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. S-Oil agrees that in any civil contempt
action, any motion to show cause, or any similar action brought by the
United States regarding an alleged violation of this Final Judgment,
the United States may establish a violation of the decree and the
appropriateness of any remedy therefor by a preponderance of the
evidence, and S-Oil waives any argument that a different standard of
proof should apply.
B. The Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore all
competition the United States alleged was harmed by the challenged
conduct. S-Oil agrees that they may be held in contempt of, and that
the Court may enforce, any provision of this Final Judgment that, as
interpreted by the Court in light of these procompetitive principles
and applying ordinary tools of interpretation, is stated specifically
and in reasonable detail, whether or not it is clear and unambiguous on
its face. In any such interpretation, the terms of this Final Judgment
should not be construed against either party as the drafter.
C. In any enforcement proceeding in which the Court finds that S-
Oil has violated this Final Judgment, the United States may apply to
the Court for a one-time extension of this Final Judgment, together
with such other relief as may be appropriate. In connection with any
successful effort by the United States to enforce this Final Judgment
against S-Oil, whether litigated or resolved prior to litigation, S-Oil
agrees to reimburse the United States for the fees and expenses of its
attorneys, as well as any other costs including experts' fees, incurred
in connection with that enforcement effort, including in the
investigation of the potential violation.
VII. EXPIRATION OF FINAL JUDGMENT
Unless this Court grants an extension, this Final Judgment shall
expire seven (7) years from the date of its entry, except that after
five (5) years from the date of its entry, this Final Judgment may be
terminated upon notice by the United States to the Court and S-Oil that
the continuation of the Final Judgment no longer is necessary or in the
public interest.
VIII. PUBLIC INTEREST DETERMINATION
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16, including making copies available to
the public of this Final Judgment, the Competitive Impact Statement,
and any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
[[Page 11565]]
DATED: ________________
____________________
United States District Judge
ATTACHMENT 1
SETTLEMENT AGREEMENT
This Settlement Agreement (``Agreement'') is entered into among the
United States of America, acting through the Civil Division of the
United States Department of Justice and the United States Attorney's
Office for the Southern District of Ohio, on behalf of the Defense
Logistics Agency (``DLA'') and the Army and Air Force Exchange Service
(``AAFES'') (collectively the ``United States''), S-Oil Corporation
(``S-Oil''), and Relator [REDACTED] (hereafter collectively referred to
as ``the Parties''), through their authorized representatives.
RECITALS
A. S-Oil is a South Korea-based energy company that produces
various petroleum products that it sells to South Korean and
international customers, including the United States Department of
Defense (``DoD'').
B. On February 28, 2018, Relator, a resident and citizen of South
Korea, filed a qui tam action in the United States District Court for
the Southern District of Ohio captioned United States ex rel.
[REDACTED] v. GS Caltex, et al., Civil Action No. [REDACTED], pursuant
to the qui tam provisions of the False Claims Act, 31 U.S.C. Sec.
3730(b) (the ``Civil FCA Action''). Relator contends that S-Oil
conspired with other South Korean entities to rig bids on DoD contracts
to supply fuel to U.S. military bases throughout South Korea beginning
in 2008 and continuing until 2016, including DLA Post, Camps, and
Stations (PC&S) contracts executed in 2009 and 2013.
C. On such date as may be determined by the Court, S-Oil will plead
guilty pursuant to Fed. R. Crim. P. 11(c)(1)(C) (the ``Plea
Agreement'') to Count One of a Superseding Indictment filed in United
States v. S-Oil Corp., Criminal Action No. 2:18 Cr. 152 (S.D. Ohio)
(the ``Criminal Action'') that will allege that S-Oil participated in a
combination and conspiracy beginning at least in or around November or
December 2008 and continuing until at least in or around October 2016,
to suppress and eliminate competition on certain contracts solicited by
the DoD to supply fuel to numerous U.S. Army, Navy, Marine, and Air
Force installations in South Korea, including PC&S contracts, in
violation of the Sherman Antitrust Act, 15 U.S.C. Sec. 1.
D. S-Oil will execute a Stipulation with the Antitrust Division of
the United States Department of Justice in which S-Oil will consent to
the entry of a Final Judgment to be filed in United States v. S-Oil
Corp., Civil Action No. [to be assigned] (S.D. Ohio) (the ``Civil
Antitrust Action'') that will settle any and all civil antitrust claims
of the United States against S-Oil arising from any act or offense
committed before the date of the Stipulation that was undertaken in
furtherance of an attempted or completed antitrust conspiracy involving
PC&S and/or AAFES fuel supply contracts with the U.S. military in South
Korea during the period 2005 through 2016.
E. The United States contends that it has certain civil claims
against S-Oil arising from the conduct described in the Plea Agreement
in the Criminal Action and in the Stipulation in the Civil Antitrust
Action, as well as the conduct, actions, and claims alleged by Relator
in the Civil FCA Action. The conduct referenced in this Paragraph is
referred to below as the Covered Conduct.
F. With the exception of any admissions that are made by S-Oil in
connection with the Plea Agreement in the Criminal Action, this
Settlement Agreement is neither an admission of liability by S-Oil nor
a concession by the United States that its claims are not well founded.
To avoid the delay, uncertainty, inconvenience, and expense of
protracted litigation of the above claims, and in consideration of the
mutual promises and obligations of this Settlement Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1.a. S-Oil agrees to pay to the United States $12,980,000 (the
``FCA Settlement Amount''), of which $5,900,000 is restitution, by
electronic funds transfer no later than ten (10) business days after
the Effective Date of this Agreement pursuant to written instructions
to be provided by the Civil Division of the Department of Justice.
1.b. Relator claims entitlement under 31 U.S.C. Sec. 3730(d) to a
share of the proceeds of this Settlement Agreement and to Relator's
reasonable expenses, attorneys' fees and costs. The FCA Settlement
Amount does not include the Relator's fees and costs, and S-Oil
acknowledges that Relator retains all rights to recover such reasonable
expenses, attorneys' fees, and costs from S-Oil pursuant to 31 U.S.C.
Sec. 3730(d). Relator's claims pursuant to 31 U.S.C. Sec. 3730(d)
regarding fees and costs will be addressed pursuant to a separate
written agreement between S-Oil and Relator or, in the absence of an
agreement, as may be ordered by the Court.
1.c. If S-Oil's Plea Agreement in the Criminal Action is not
accepted by the Court or the Court does not enter a Final Judgment in
the Civil Antitrust Action, this Agreement shall be null and void at
the option of either the United States or S-Oil. If either the United
States or S-Oil exercises this option, which option shall be exercised
by notifying all Parties, through counsel, in writing within five (5)
business days of the Court's decision, the Parties will not object and
this Agreement will be rescinded and the FCA Settlement Amount shall be
returned to S-Oil. If this Agreement is rescinded, S-Oil will not
plead, argue or otherwise raise any defenses under the theories of
statute of limitations, laches, estoppel or similar theories, to any
civil or administrative claims, actions or proceedings arising from the
Covered Conduct that are brought by the United States within ninety
(90) calendar days of rescission, except to the extent such defenses
were available on the day on which Relator's qui tam complaint in the
Civil FCA Action was filed.
2. Subject to the exceptions in Paragraph 4 (concerning excluded
claims) below, and conditioned upon S-Oil's full payment of the FCA
Settlement Amount, the United States fully and finally releases S-Oil
together with its current and former parent corporations; direct and
indirect subsidiaries; brother or sister corporations; divisions;
current or former corporate owners; corporate affiliates; and the
corporate successors and assigns of any of them (the ``S-Oil Released
Parties'') from any civil or administrative monetary claim the United
States has for the Covered Conduct under the False Claims Act, 31
U.S.C. Sec. Sec. 3729-3733; the Program Fraud Civil Remedies Act, 31
U.S.C. Sec. Sec. 3801-3812; Contract Disputes Act, 41 U.S.C.
Sec. Sec. 7101-7109; or the common law theories of breach of contract,
payment by mistake, unjust enrichment, and fraud, or under any statute
creating causes of action for civil damages or civil penalties which
the Civil Division of the United States Department of Justice has
authority to assert and compromise pursuant to 28 C.F.R. Part O,
Subpart I, Sec. 0.45(d).
3. Subject to the exception set forth in Paragraph 1b, and
conditioned upon S-Oil's full payment of the FCA Settlement Amount,
Relator, for himself and for his heirs, successors, attorneys, agents,
and assigns, fully and finally releases the S-Oil Released Parties,
officers, directors, trustees, shareholders, employees, executives,
agents and the successors and assigns of
[[Page 11566]]
any of them, from (a) any civil monetary claim the Relator has or may
have for the claims set forth in the Civil FCA Action, the Civil
Antitrust Action, the Criminal Action, and the Covered Conduct under
the False Claims Act, 31 U.S.C. Sec. Sec. 3729-3733, up until the date
of this Agreement; and (b) all liability, debts, contracts, covenants,
promises, claims, demands, actions, causes of action, rights of
subrogation, contribution, indemnity, damages, loss, cost or expenses
whatsoever, whether known or unknown, fixed or contingent, in law or in
equity, in contract or in tort, under any federal, state, or Korean
statute, law, regulation or doctrine, that Relator, his heirs,
successors, attorneys, agents, and assigns otherwise has brought or
would have standing to bring as of the date of this Agreement,
including, without limitation, any liability to Relator arising from or
relating to the claims Relator has asserted, may assert or could have
asserted in the Civil FCA Action, up until the date of this Agreement.
Relator represents and warrants that he and his counsel are the
exclusive owner of the rights, claims and causes of action herein
released and none of them have previously assigned, reassigned, or
transferred or purported to assign, reassign or transfer, through
bankruptcy or by any other means, any or any portion of any claim,
demand, action, cause of action, or other right released or discharged
under this Agreement except between themselves and their counsel.
Relator further represents he does not know of any conduct by the S-Oil
Released Parties or any current or former owners, officers, directors,
trustees, shareholders, employees, executives, agents, or affiliates of
the S-Oil Released Parties that would constitute a violation of the
False Claims Act other than the claims set forth in the Civil FCA
Action and the Covered Conduct, and Relator acknowledges and agrees
that his representations are a material inducement to S-Oil's
willingness to enter into this Agreement.
4. Notwithstanding the releases given in paragraphs 2 and 3 of this
Agreement, or any other term of this Agreement, the following claims of
the United States are specifically reserved and are not released:
a. Any liability arising under Title 26, U.S. Code (Internal
Revenue Code);
b. Any criminal liability, except to the extent detailed in the
Plea Agreement;
c. Except as explicitly stated in this Agreement, any
administrative liability, including the suspension and debarment rights
of any federal agency;
d. Any liability to the United States (or its agencies) for any
conduct other than the Covered Conduct;
e. Any liability based upon obligations created by this Agreement;
f. Any liability of individuals;
g. Any liability for express or implied warranty claims or other
claims for defective or deficient products or services, including
quality of goods and services;
h. Any liability for failure to deliver goods or services due; and
i. Any liability for personal injury or property damage or for
other consequential damages arising from the Covered Conduct.
5. Relator and his heirs, successors, attorneys, agents, and
assigns shall not object to this Agreement but agree and confirm that
this Agreement is fair, adequate, and reasonable under all the
circumstances, pursuant to 31 U.S.C. Sec. 3730(c)(2)(B). The
determination of Relator's share, if any, of the FCA Settlement Amount
pursuant to 31 U.S.C. Sec. 3730(d) is a matter that shall be handled
separately by and between the Relator and the United States, without
any direct involvement or input from S-Oil. In connection with this
Agreement and the Civil FCA Action, Relator, on behalf of himself and
his heirs, successors, attorneys, agents, and assigns agrees that
neither this Agreement, nor any intervention by the United States in
the Civil FCA Action in order to dismiss the Civil FCA Action, nor any
dismissal of the Civil FCA Action, shall waive or otherwise affect the
ability of the United States to contend that provisions in the False
Claims Act, including 31 U.S.C. Sec. 3730(d)(3), bar Relator from
sharing in the proceeds of this Agreement, except that the United
States will not contend that Relator is barred from sharing in the
proceeds of this Agreement pursuant to 31 U.S.C. Sec. 3730(e)(4).
Moreover, the United States and Relator, on behalf of himself and his
heirs, successors, attorneys, agents, and assigns agree that they each
retain all of their rights pursuant to the False Claims Act on the
issue of the share percentage, if any, that Relator should receive of
any proceeds of the settlement of his claims, and that no agreements
concerning Relator share have been reached to date.
6. S-Oil waives and shall not assert any defenses S-Oil may have to
any criminal prosecution or administrative action relating to the
Covered Conduct that may be based in whole or in part on a contention
that, under the Double Jeopardy Clause in the Fifth Amendment of the
Constitution, or under the Excessive Fines Clause in the Eighth
Amendment of the Constitution, this Agreement bars a remedy sought in
such criminal prosecution or administrative action.
7. S-Oil fully and finally releases the United States, its
agencies, officers, agents, employees, and servants, from any claims
(including attorney's fees, costs, and expenses of every kind and
however denominated) that S-Oil has asserted, could have asserted, or
may assert in the future against the United States, its agencies,
officers, agents, employees, and servants, related to the Covered
Conduct and the United States' investigation and prosecution thereof.
8. Conditioned upon Relator's agreement herein, the S-Oil Released
Parties fully and finally release Relator his heirs, successors,
assigns, agents and attorneys (the ``Relator Released Parties''), from
(a) any civil monetary claim S-Oil has or may have now or in the future
against the Relator Released Parties related to the claims set forth in
the Civil FCA Action, the Civil Antitrust Action, the Criminal Action,
and the Covered Conduct under the False Claims Act, 31 U.S.C.
Sec. Sec. 3729-3733, and the Relator's investigation and prosecution
thereof, including attorney's fees, costs, and expenses of every kind
and however denominated, up until the date of this Agreement; and (b)
all liability, claims, demands, actions, or causes of action
whatsoever, whether known or unknown, fixed or contingent, in law or in
equity, in contract or in tort, under any federal, state, or Korean
statute, law, regulation or doctrine, that the S-Oil Released Parties
otherwise have brought or would have standing to bring as of the date
of this Agreement, including any liability to S-Oil arising from or
relating to claims the S-Oil Released Parties asserted or could have
asserted related to the Civil FCA Action, up until the date of this
Agreement. The S-Oil Released Parties further acknowledge and agree
that these representations are a material inducement to Relator's
willingness to enter into this Agreement.
9. a. Unallowable Costs Defined: All costs (as defined in the
Federal Acquisition Regulation, 48 C.F.R. Sec. 31.205-47) incurred by
or on behalf of S-Oil, and its present or former officers, directors,
employees, shareholders, and agents in connection with:
(1) the matters covered by this Agreement, any related plea
agreement, and any related civil antitrust agreement;
(2) the United States' audit(s) and civil and any criminal
investigation(s) of the matters covered by this Agreement;
(3) S-Oil's investigation, defense, and corrective actions
undertaken in
[[Page 11567]]
response to the United States' audit(s) and civil and any criminal
investigation(s) in connection with the matters covered by this
Agreement (including attorney's fees);
(4) the negotiation and performance of this Agreement, any related
plea agreement, and any related civil antitrust agreement;
(5) the payment S-Oil makes to the United States pursuant to this
Agreement and any payments that S-Oil may make to Relator, including
costs and attorneys' fees,
are unallowable costs for government contracting purposes (hereinafter
referred to as Unallowable Costs).
b. Future Treatment of Unallowable Costs: Unallowable Costs will be
separately determined and accounted for by S-Oil, and S-Oil shall not
charge such Unallowable Costs directly or indirectly to any contract
with the United States.
c. Treatment of Unallowable Costs Previously Submitted for Payment:
Within 90 days of the Effective Date of this Agreement, S-Oil shall
identify and repay by adjustment to future claims for payment or
otherwise any Unallowable Costs included in payments previously sought
by S-Oil or any of its subsidiaries or affiliates from the United
States. S-Oil agrees that the United States, at a minimum, shall be
entitled to recoup from S-Oil any overpayment plus applicable interest
and penalties as a result of the inclusion of such Unallowable Costs on
previously-submitted requests for payment. The United States, including
the Department of Justice and/or the affected agencies, reserves its
rights to audit, examine, or re-examine S-Oil's books and records and
to disagree with any calculations submitted by S-Oil or any of its
subsidiaries or affiliates regarding any Unallowable Costs included in
payments previously sought by S-Oil, or the effect of any such
Unallowable Costs on the amount of such payments.
10. S-Oil agrees to cooperate fully and truthfully with the United
States in connection with the Civil FCA Action. The Civil Division of
the United States Department of Justice will use reasonable best
efforts, where appropriate, to coordinate any requests for cooperation
in connection with the Civil FCA Action with requests for cooperation
in connection with the Plea Agreement in the Criminal Action and the
Civil Antitrust Action, so as to avoid unnecessary duplication and
expense. S-Oil's ongoing, full, and truthful cooperation shall include,
but not be limited to:
a. upon request by the United States with reasonable notice,
producing at the offices of counsel for the United States in
Washington, D.C. and not at the expense of the United States, complete
and un-redacted copies of all non-privileged documents related to the
Covered Conduct wherever located in S-Oil's possession, custody, or
control, including but not limited to, reports, memoranda of
interviews, and records concerning any investigation of the Covered
Conduct that S-Oil has undertaken, or that has been performed by
another on S-Oil's behalf;
b. upon request by the United States with reasonable notice, making
current S-Oil directors, officers, and employees available for
interviews, consistent with the rights and privileges of such
individuals, by counsel for the United States and/or their
investigative agents, not at the expense of the United States, in the
United States or Hong Kong, unless another place is mutually agreed
upon;
c. upon request by the United States with reasonable notice, (i)
using best efforts to assist in locating former S-Oil directors,
officers, and employees identified by attorneys and/or investigative
agents of the United States, and (ii) using best efforts to make any
such former S-Oil directors, officers, and employees available for
interviews, consistent with the rights and privileges of such
individuals, by counsel for the United States and/or their
investigative agents, not at the expense of the United States, in the
United States or Hong Kong, unless another place is mutually agreed
upon; and
d. upon request by the United States with reasonable notice, making
current S-Oil directors, officers, and employees available, and using
best efforts to make former S-Oil directors, officers, employees
available, to testify, consistent with the rights and privileges of
such individuals, fully, truthfully, and under oath, without falsely
implicating any person or withholding any information, (i) at
depositions in the United States, Hong Kong, or any other mutually
agreed upon place, (ii) at trial in the United States, and (iii) at any
other judicial proceedings wherever located related to the Civil FCA
Action.
11. This Agreement is intended to be for the benefit of the Parties
only.
12. Upon receipt of the payment of the FCA Settlement Amount
described in Paragraph 1.a. above, the Court's acceptance of S-Oil's
Plea Agreement in the Criminal Action, and the Court's entry of a Final
Judgment in the Civil Antitrust Action, the United States and Relator
shall promptly sign and file a Joint Stipulation of Dismissal, with
prejudice, of the claims filed against S-Oil in the Civil FCA Action,
pursuant to Rule 41(a)(1), which dismissal shall be conditioned on the
Court retaining jurisdiction over Relator's claims to a relator's share
and against S-Oil for recovery of attorneys' fees and costs pursuant to
31 U.S.C. Sec. 3730(d).
13. Except with respect to the recovery of Relator's attorneys'
fees, expenses, and costs pursuant to 31 U.S.C. Sec. 3730(d) as
provided for in Paragraph 1.b., each Party shall bear its own legal and
other costs incurred in connection with this matter. The Parties agree
that Relator and S-Oil will not seek to recover from the United States
any costs or fees related to the preparation and performance of this
Agreement.
14. Each party and signatory to this Agreement represents that it
freely and voluntarily enters in to this Agreement without any degree
of duress or compulsion.
15. This Agreement is governed by the laws of the United States.
The exclusive jurisdiction and venue for any dispute relating to this
Agreement is the United States District Court for the Southern District
of Ohio. S-Oil agrees that the United States District Court for the
Southern District of Ohio has jurisdiction over it for purposes of this
case. For purposes of construing this Agreement, this Agreement shall
be deemed to have been drafted by all Parties to this Agreement and
shall not, therefore, be construed against any Party for that reason in
any subsequent dispute.
16. This Agreement constitutes the complete agreement between the
Parties on the subject matter addressed herein. This Agreement may not
be amended except by written consent of the Parties.
17. The undersigned counsel represent and warrant that they are
fully authorized to execute this Agreement on behalf of the persons and
entities indicated below.
18. This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same
Agreement.
19. This Agreement is binding on S-Oil's successors, transferees,
heirs, and assigns.
20. This Agreement is binding on Relator's successors, transferees,
heirs, and assigns.
21. All parties consent to the United States', S-Oil's and
Relator's disclosure of this Agreement, and information about this
Agreement, to the public, as permitted by order of the Court. This
Agreement shall not be released in un-redacted form until the Court
unseals the entire Civil FCA Action.
22. This Agreement is effective on the date of signature of the
last signatory to
[[Page 11568]]
the Agreement (Effective Date of this Agreement). Facsimiles of
signatures shall constitute acceptable, binding signatures for purposes
of this Agreement.
THE UNITED STATES OF AMERICA
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Andrew A. Steinberg
Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Mark T. D'Alessandro
Civil Chief
Andrew Malek
Assistant United States Attorney,
U.S. Attorney's Office for the Southern District of Ohio
S-OIL CORPORATION--DEFENDANT
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Sung-Woo Park
Authorized Representative of S-Oil Corporation
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Sonia K. Pfaffenroth
William J. Baer
James W. Cooper
Wrede H. Smith III
Andy T. Wang
Arnold & Porter Kaye Scholer LLP, Counsel for S-Oil Corporation
[REDACTED]--RELATOR
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
REDACTED
DATED:-----------------------------------------------------------------
BY:--------------------------------------------------------------------
Eric Havian
Constantine Cannon LLP, Counsel for Relator
United States District Court for the Southern District of Ohio Eastern
Division
UNITED STATES OF AMERICA, Plaintiff, v. HYUNDAI OILBANK CO.,
LTD. and S-OIL CORPORATION, Defendants.
CASE NO. 2:19-cv-1037
COMPETITIVE IMPACT STATEMENT
Plaintiff United States of America, pursuant to Section 2(b) of the
Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 15
U.S.C. Sec. 16(b)-(h), files this Competitive Impact Statement
relating to the proposed Final Judgments submitted for entry in this
civil antitrust proceeding.
I. NATURE AND PURPOSE OF THE PROCEEDING
On March 20, 2019, the United States filed a civil antitrust
complaint against Defendants Hyundai Oilbank Co., Ltd. (``Hyundai
Oilbank'') and S-Oil Corporation (``S-Oil'') alleging that Defendants
violated Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. From at least
March 2005 and continuing until at least October 2016 (``the Relevant
Period''), Defendants and their co-conspirators conspired to fix prices
and rig bids for the supply of fuel to the U.S. military for its
operations in South Korea. As a result of this illegal conduct,
Defendants and their co-conspirators overcharged American taxpayers by
well over $100 million. Defendants have agreed to plead guilty to one
count of a superseding indictment charging a criminal violation of
Section 1 of the Sherman Act for this unlawful conduct; in this
parallel civil action, the United States seeks compensation for the
injury it incurred as a result of the conspiracy.
At the same time the Complaint was filed, the United States also
filed agreed-upon proposed Final Judgments that would remedy
Defendants' violation by having Hyundai Oilbank and S-Oil pay
$39,100,000 and $12,980,000, respectively, to the United States. These
payments resolve all civil claims of the United States against
Defendants related to the conduct described in the Complaint. The
United States and Defendants have stipulated that the proposed Final
Judgments may be entered after compliance with the APPA. Entry of the
proposed Final Judgments would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgments and to punish violations
thereof.
II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION
A. Defendants
Hyundai Oilbank is an oil company headquartered in Seosan, South
Korea. Hyundai Oilbank refines and supplies gasoline, diesel, kerosene,
and other petroleum products for sale internationally. During the
conspiracy, Hyundai Oilbank partnered with a logistics firm (``Company
A'') to supply fuel to U.S. military installations in South Korea, with
Company A acting as the prime contractor under the relevant contracts.
S-Oil is an oil company headquartered in Seoul, South Korea. S-Oil
refines and supplies gasoline, diesel, kerosene, and other petroleum
products for sale internationally. Beginning in 2009, S-Oil partnered
with Hanjin Transportation Co., Ltd. (``Hanjin'') to supply fuel to
U.S. military installations in South Korea, with Hanjin acting as the
prime contractor under the relevant contracts.
Other persons, not named as defendants in this action, participated
as co-conspirators in the violation alleged in the Complaint and
performed acts and made statements in furtherance thereof. These co-
conspirators included, among others, GS Caltex Corporation (``GS
Caltex''), Hanjin, SK Energy Co., Ltd. (``SK Energy''), and Company A.
On December 12, 2018, GS Caltex, Hanjin and SK Energy pleaded
guilty to an information charging a criminal violation of Section 1 of
the Sherman Act for this unlawful conduct. See United States v. GS
Caltex Corporation, No. 2:18-cr-240 (S.D. Ohio, filed November 14,
2018); United States v. Hanjin Transportation Co., Ltd., No. 2:18-cr-
241 (S.D. Ohio, filed November 14, 2018); United States v. SK Energy
Company, No. 2:18-cr-239 (S.D. Ohio, filed November 14, 2018). GS
Caltex, Hanjin, and SK Energy have also settled civil claims brought by
the United States in a separately filed civil action relating to the
same conduct. See United States v. GS Caltex Corp. et al., No. 2:18-cv-
1456 (S.D. Ohio, filed November 14, 2018).
B. PC&S and AAFES Contracts
The United States military procures fuel for its installations in
South Korea through competitive solicitation processes. Oil companies,
either independently or with a transportation company, submitted bids
in response to these solicitations.
The conduct at issue in this action relates to two types of
contracts to supply fuel to the U.S. military in South Korea: Post,
Camps, and Stations (``PC&S'') contracts and Army and Air Force
Exchange Services (``AAFES'') contracts.
PC&S contracts are issued and administered by the Defense Logistics
Agency (``DLA''), a combat support agency of the U.S. Department of
Defense. The fuel procured under PC&S contracts is used to power
military vehicles and heat U.S. military buildings. During the Relevant
Period, DLA issued PC&S solicitations listing the fuel requirements for
installations across South Korea, with each delivery location
identified by a separate line item. Bidders submitted initial bids,
offering a price for each line item on which they chose to bid. After
DLA reviewed the initial bids, bidders were allowed to submit revised
final bids. DLA reviewed the bids and awarded contracts to the bidders
offering the lowest price for each line item. Payments under the PC&S
contracts were wired to the awardees by a finance
[[Page 11569]]
and accounting agency of the U.S. Department of Defense from its office
in Columbus, Ohio.
AAFES is an agency of the Department of Defense headquartered in
Dallas, Texas. AAFES operates official retail stores (known as
``exchanges'') on U.S. Army and Air Force installations worldwide,
which U.S. military personnel and their families use to purchase
everyday goods and services, including gasoline for use in their
personal vehicles. AAFES procures fuel for these stores via contracts
awarded through a competitive solicitation process.
In 2008, AAFES issued a solicitation that listed the fuel
requirements for installations in South Korea. Bidders submitted bids
offering a price for each line item in the solicitation. Unlike DLA,
AAFES awarded the entire 2008 contract to the bidder offering the
lowest price across all the listed locations.
C. The Alleged Violation
The Complaint alleges that Defendants and their co-conspirators
engaged in a series of meetings, telephone conversations, e-mails, and
other communications to rig bids and fix prices for the supply of fuel
to U.S. military installations in South Korea under several PC&S and
AAFES contracts.
First, the Complaint alleges that GS Caltex, SK Energy, Hyundai
Oilbank, and Company A conspired to rig bids and fix prices on the
contracts issued in response to DLA solicitations SP0600-05-R-0063 and
SP0600-05-R-0063-0001 (``2006 PC&S contracts''). The term of the 2006
PC&S contracts covered the supply of fuel from February 2006 through
July 2009.
The Complaint alleges that between early 2005 and mid-2006, GS
Caltex, SK Energy, Hyundai Oilbank, and other conspirators met multiple
times and exchanged phone calls and e-mails to allocate the line items
in the solicitations for the 2006 PC&S contracts. Through such
communications, these conspirators agreed to inflate their bids to
produce larger profit margins. For each line item allocated to a
different co-conspirator, the other conspirators agreed not to bid or
to bid high enough to ensure that they would not win that item. DLA
awarded the 2006 PC&S line items according to the allocations made by
the conspiracy.
Second, the Complaint alleges that, as part of their discussions
related to the 2006 PC&S contracts, GS Caltex, Hyundai Oilbank, and
other co-conspirators agreed not to compete with SK Energy in bidding
for the June 2008 AAFES solicitation (``2008 AAFES contract''). The
initial term of the 2008 AAFES contract ran from July 2008 to July
2010; the contract was later extended through July 2013.
Third, the Complaint alleges that Defendants and other co-
conspirators conspired to rig bids and fix prices for the contracts
issued in response to DLA solicitation SP0600-08-R-0233 (``2009 PC&S
contracts''). Hanjin and S-Oil joined the conspiracy for the purpose of
bidding on SP0600-08-R-0233. The term of the 2009 PC&S contracts
covered the supply of fuel from October 2009 through August 2013.
The Complaint explains that between late 2008 and mid-2009,
Defendants and other co-conspirators met multiple times and exchanged
phone calls and e-mails to allocate the line items in the solicitation
for the 2009 PC&S contracts. As in 2006, these conspirators agreed to
bid high so as to not win line items allocated to other co-
conspirators. The original conspirators agreed to allocate to Hanjin
and S-Oil certain line items that had previously been allocated to the
original conspirators.
Finally, the Complaint alleges that Defendants and other co-
conspirators once again conspired to rig bids and fix prices for the
contracts issued in response to DLA solicitation SP0600-12-R-0332
(``2013 PC&S contracts''). The term of the 2013 PC&S contracts covered
the supply of fuel from August 2013 through July 2016.
The Complaint explains that Defendants and other co-conspirators
communicated via phone calls and e-mails to allocate and set the price
for each line item in the solicitation for the 2013 PC&S contracts.
Defendants and other co-conspirators believed that they had an
agreement as to their bidding strategy and pricing for the 2013 PC&S
contracts. As a result of this agreement, they submitted bids with
pricing above what they would have offered absent collusion.
Hanjin and S-Oil submitted bids for the 2013 PC&S contracts below
the prices set by the other co-conspirators, however. Although lower
than the pricing agreed upon by the conspirators, Hanjin and S-Oil
still submitted bids above a competitive, non-collusive price, knowing
that they would likely win the contracts because the other conspirators
would bid even higher prices.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENTS
For violations of Section 1 of the Sherman Act, the United States
may seek damages, 15 U.S.C. Sec. 15a, and equitable relief, 15 U.S.C.
Sec. 4, including equitable monetary remedies. See United States v.
KeySpan Corp., 763 F. Supp. 2d 633, 638-641 (S.D.N.Y. 2011).
This action is related to two civil actions based on the same facts
alleged in the Complaint, both filed in the United States District
Court for the Southern District of Ohio: (1) United States v. GS Caltex
Corp., et al., No. 2:18-cv-1456, which seeks recovery from a different
set of co-conspirators; and (2) a qui tam action currently filed under
seal, alleging a violation of the False Claims Act, 31 U.S.C. Sec.
3730.
A. Payment and Cooperation
The proposed Final Judgments require Hyundai Oilbank and S-Oil
respectively to pay $39,100,000 and $12,980,000 to the United States
within 10 business days of entry of the Final Judgment. These payments
will satisfy all civil claims arising from the events described in
Section II supra that the United States has against Defendants under
Section 1 of the Sherman Act and under the False Claims Act. The
resolution of the United States' claims under the False Claims Act is
set forth in separate agreements reached between Defendants, the U.S.
Attorney's Office for the Southern District of Ohio, and the U.S.
Department of Justice's Civil Division. See Attachment 1 to each of the
proposed Final Judgments.
As a result of the unlawful agreements in restraint of trade
between Defendants and their co-conspirators, the United States paid
more for the supply of fuel to U.S. military installations in South
Korea than it would have if the companies had engaged in fair and
honest competition. Defendants' payments under the proposed Final
Judgments fully compensate the United States for losses it suffered and
deprive Defendants of the illegitimate profits they gained as a result
of the collusive bidding. In addition to the payment of damages, the
proposed Final Judgments also require Defendants to cooperate with the
United States regarding any ongoing civil investigation, trial, or
other proceeding related to the conduct described in the Complaint. To
assist with these proceedings, Defendants are required to provide all
non-privileged information in their possession, make available their
present employees, and use best efforts to make available their former
employees, for interviews or testimony, as requested by the United
States.
Under Section 4A of the Clayton Act, the United States is entitled
to treble damages for injuries it has suffered as a result of
violations of the Sherman Act. Under the proposed Final Judgments,
[[Page 11570]]
each Defendant will pay an amount that exceeds the overcharge but that
reflects the value of the cooperation commitments Defendants have made
as a condition of settlement and the cost savings realized by avoiding
extended litigation. However, because Defendants agreed to settle and
cooperate with the United States later than GS Caltex, Hanjin, and SK
Energy, Defendants' payments reflect a higher multiple of the
overcharge than the settlement payments made by those co-conspirators.
The proposed Final Judgments also require Hyundai Oilbank and S-Oil
to appoint an Antitrust Compliance Officer and to institute an
antitrust compliance program. Under the antitrust compliance program,
employees and directors of Defendants with responsibility for bidding
on contracts with the United States must undergo training and all
employees must be informed that there will no reprisal for disclosing
to the Antitrust Compliance Officer any potential violations of the
United States antitrust laws. The Antitrust Compliance Officer is
required annually to certify that the Defendant is in compliance with
this requirement.
B. Enforcement of Final Judgments
The proposed Final Judgments contain provisions designed to promote
compliance and make the enforcement of Division consent decrees as
effective as possible. Paragraph VII(A) provides that the United States
retains and reserves all rights to enforce the provisions of the
proposed Final Judgments, including its rights to seek an order of
contempt from the Court. Defendants have agreed that in any civil
contempt action, any motion to show cause, or any similar action
brought by the United States regarding an alleged violation of the
Final Judgments, the United States may establish the violation and the
appropriateness of any remedy by a preponderance of the evidence and
that Defendants have waived any argument that a different standard of
proof should apply. This provision aligns the standard for compliance
obligations with the standard of proof that applies to the underlying
offense that the compliance commitments address.
Paragraph VII(B) provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgments. The
proposed Final Judgments were drafted to restore all competition the
United States alleged was harmed by Defendants' challenged conduct.
Defendants agree that they will abide by the proposed Final Judgments,
and that they may be held in contempt of this Court for failing to
comply with any provision of the proposed Final Judgments that is
stated specifically and in reasonable detail, as interpreted in light
of this procompetitive purpose.
Paragraph VII(C) further provides that should the Court find in an
enforcement proceeding that a Defendant has violated the Final
Judgment, the United States may apply to the Court for a one-time
extension of the Final Judgment, together with such other relief as may
be appropriate. In addition, in order to compensate American taxpayers
for any costs associated with the investigation and enforcement of
violations of a proposed Final Judgment, Paragraph VII(C) provides that
in any successful effort by the United States to enforce a Final
Judgment against a Defendant, whether litigated or resolved before
litigation, Defendants agree to reimburse the United States for any
attorneys' fees, experts' fees, or costs incurred in connection with
any enforcement effort, including the investigation of the potential
violation.
Finally, Section VIII of the proposed Final Judgments provide that
each Final Judgment shall expire seven years from the date of its
entry, except that after five years from the date of its entry, a Final
Judgment may be terminated upon notice by the United States to the
Court and the Defendant that the continuation of that Final Judgment is
no longer necessary or in the public interest.
IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
Entry of the proposed Final Judgments will neither impair nor
assist the bringing of any private antitrust damages action. Under the
provisions of Section 5(a) of the Clayton Act, 15 U.S.C. Sec. 16(a),
the proposed Final Judgments have no prima facie effect in any
subsequent lawsuit that may be brought against Defendants.
V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL
JUDGMENTS
The United States and Defendants have stipulated that the proposed
Final Judgments may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgments are in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgments within which any
person may submit to the United States written comments regarding a
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register, or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States, which remains free to withdraw
its consent to a proposed Final Judgment at any time prior to the
Court's entry of judgment. The comments and the response of the United
States will be filed with the Court. In addition, comments will be
posted on the Antitrust Division's internet website and, in certain
circumstances, published in the Federal Register.
Written comments should be submitted by mail to:
Kathleen S. O'Neill, Chief, Transportation, Energy & Agriculture
Section, Antitrust Division, United States Department of Justice, 450
5th Street, NW, Suite 8000, Washington, DC 20530.
The proposed Final Judgments provide that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any necessary or appropriate modification, interpretation, or
enforcement of a Final Judgment.
VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENTS
The United States considered, as an alternative to the proposed
Final Judgments, a full trial on the merits against Defendants. The
United States is satisfied, however, that the relief in the proposed
Final Judgments remedies the violation of the Sherman Act alleged in
the Complaint. The proposed Final Judgments represent substantial
monetary relief while avoiding the time, expense, and uncertainty of a
full trial on the merits. Further, Defendants' agreements to cooperate
with the civil investigation and any potential litigation will enhance
the ability of the United States to obtain relief from the remaining
conspirators.
VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENTS
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a 60-day comment period, after which the court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. Sec. 16(e)(1). In making that
determination, the court, in
[[Page 11571]]
accordance with the statute as amended in 2004, is required to
consider:
(A) the competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. Sec. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act); United
States v. Hillsdale Cmty. Health Ctr., 2015 U.S. Dist. LEXIS 162505, at
*3 (E.D. Mich. 2015) (explaining that the ``Court's review is limited''
in Tunney Act settlements); United States v. InBev N.V./S.A., No. 08-
1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009)
(noting that the court's review of a consent judgment is limited and
only inquires ``into whether the government's determination that the
proposed remedies will cure the antitrust violations alleged in the
complaint was reasonable, and whether the mechanism to enforce the
final judgment are clear and manageable'').
Under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations in
the government's complaint, whether the decree is sufficiently clear,
whether its enforcement mechanisms are sufficient, and whether the
decree may positively harm third parties. See Microsoft, 56 F.3d at
1458-62; United States v. Medical Mut. of Ohio, 1998 U.S. Dist. LEXIS
21508, at *2-3 (N.D. Ohio 1998). With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Instead:
[t]he balancing of competing social and political interests affected by
a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's role
in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to the
decree. The court is required to determine not whether a particular
decree is the one that will best serve society, but whether the
settlement is ``within the reaches of the public interest.'' More
elaborate requirements might undermine the effectiveness of antitrust
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\1\
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\1\ See also BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass'').
---------------------------------------------------------------------------
In determining whether a proposed settlement is in the public
interest, a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also United States v. U.S. Airways
Group, Inc., 38 F. Supp. 3d 69, 74 (D.D.C. 2014) (noting that a court
should not reject the proposed remedies because it believes others are
preferable and that room must be made for the government to grant
concessions in the negotiation process for settlements); United States
v. Dairy Farmers of Am., Inc., 2007 U.S. Dist. LEXIS 33230, at *3 (E.D.
Ky. 2007) (citing United States v. Microsoft, 231 F. Supp. 2d 144, 152
(D.D.C. 2002)) (noting that a court ``must accord deference to the
government's predictions as to the effect of the proposed remedies'');
United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6
(D.D.C. 2003) (noting that the court should grant ``due respect to the
government's prediction as to the effect of proposed remedies, its
perception of the market structure, and its views of the nature of the
case''). The ultimate question is whether ``the remedies [obtained in
the decree are] so inconsonant with the allegations charged as to fall
outside of the `reaches of the public interest.' '' Microsoft, 56 F.3d
at 1461 (quoting United States v. Western Elec. Co., 900 F.2d 283, 309
(D.C. Cir. 1990)). To meet this standard, the United States ``need only
provide a factual basis for concluding that the settlements are
reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 489
F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public
interest' is not to be measured by comparing the violations alleged in
the complaint against those the court believes could have, or even
should have, been alleged.''). Because the ``court's authority to
review the decree depends entirely on the government's exercising its
prosecutorial discretion by bringing a case in the first place,'' it
follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60; see also Dairy Farmers, 2007 U.S. Dist. LEXIS 33230 at
*3 (citing Microsoft favorably).
In its 2004 amendments,\2\ Congress made clear its intent to
preserve the practical benefits of utilizing consent decrees in
antitrust enforcement, adding the unambiguous instruction that
``[n]othing in this section shall be construed to require the court to
conduct an evidentiary hearing or to require the court to permit anyone
to intervene.'' 15 U.S.C. Sec. 16(e)(2); see also U.S. Airways, 38 F.
Supp. 3d at 76 (indicating that a court is not required to hold an
evidentiary hearing or to permit intervenors as part of its review
under the Tunney Act). This language
[[Page 11572]]
explicitly wrote into the statute what Congress intended when it first
enacted the Tunney Act in 1974. As Senator Tunney explained: ``[t]he
court is nowhere compelled to go to trial or to engage in extended
proceedings which might have the effect of vitiating the benefits of
prompt and less costly settlement through the consent decree process.''
119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). Rather, the
procedure for the public interest determination is left to the
discretion of the court, with the recognition that the court's ``scope
of review remains sharply proscribed by precedent and the nature of
Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d at 11. A court
can make its public interest determination based on the competitive
impact statement and response to public comments alone. U.S. Airways,
38 F. Supp. 3d at 76. See also United States v. Enova Corp., 107 F.
Supp. 2d 10, 17 (D.D.C. 2000) (noting that the ``Tunney Act expressly
allows the court to make its public interest determination on the basis
of the competitive impact statement and response to comments alone'');
S. Rep. No. 93-298 93d Cong., 1st Sess., at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.'').
---------------------------------------------------------------------------
\2\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for a court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
Sec. 16(e) (2004), with 15 U.S.C. Sec. 16(e)(1) (2006); see also
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
VIII. DETERMINATIVE DOCUMENTS
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgments.
Dated: March 20, 2019
Respectfully submitted,
Benjamin C. Glassman
United States Attorney
/s/ Andrew M. Malek
Andrew M. Malek (Ohio Bar 0061442)
Assistant United States Attorney, 303 Marconi Boulevard, Suite 200,
Columbus, Ohio 43215, Tel: (614) 469-5715, Fax: (614) 469-2769, E-
mail: [email protected]
/s/ J. Richard Doidge
Richard Doidge Attorney, U.S. Department of Justice, Antitrust
Division, 450 5th Street NW, Suite 8000, Washington, DC 20530, Tel:
(202) 514-8944, Fax: (202) 616-2441, E-mail: [email protected]
[FR Doc. 2019-05844 Filed 3-26-19; 8:45 am]
BILLING CODE 4410-11-P
