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United States: 12 Individuals Indicted with Criminal Monopolization Charges

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In brief

On 6 December 2022, the US Department of Justice (“DOJ”) announced the unsealing of an 11-count indictment filed in the US District Court for the Southern District of Texas charging twelve individuals from Texas and Mexico in a violent conspiracy to monopolize the transmigrante industry in Texas.

The charges against the individuals resulted from an investigation by the Federal Bureau of Investigation (“FBI”) and Homeland Security Investigations (“HSI”), the principal investigative arm of the US Department of Homeland Security. The DOJ Antitrust Division is partnering with the DOJ Criminal Division’s Organized Crime and Gang Section (“OCGS”) and the US Attorney’s Office for the Southern District of Texas (“USAO-SDTX”) in prosecuting the case.

Contents

  1. Key Takeaways
  2. Background
  3. Indictment
  4. Agency Collaboration
  5. Recommended Actions

Key Takeaways

  • DOJ has signaled that it intends to revitalize monopolization enforcement and has recently started bringing criminal monopolization charges for the first time in decades.
  • The partnership among the investigating and prosecuting agencies in this case illustrates a broader commitment across federal agencies to work together to investigate and prosecute antitrust violations.

Companies should consider reviewing their antitrust risk and implementing appropriate safeguards, including annual assessments of any such risk.

Background

On 9 July 2021, President Joe Biden issued an Executive Order (“EO“) announcing his administration’s commitment to increasing vigorous antitrust enforcement. The EO recognizes that a “whole-of-government” approach is necessary to address monopolization and other anticompetitive practices. In response, many federal agencies have strengthened their partnerships to carry out the EO’s initiatives.

Indictment

The indictment alleges that eight individuals conspired to monopolize the transmigrante services market in violation of Section 2 of the Sherman Act. Transmigrantes are individuals who transport goods, often used vehicles, from the United States through Mexico for resale in Central America. Transmigrante forwarding agencies are businesses that provide services to transmigrante clients, such as assistance in completing customs paperwork and paying fees as required by the Mexican government.

According to the indictment, from about 2013 to November 2022, the defendants knowingly entered into and engaged in a combination and conspiracy to monopolize, and specifically intended to monopolize, the market for transmigrante agency services in Texas. The defendants’ transmigrante forwarding agencies operated as a single entity referred to as the “empresa” to acquire, maintain, and exercise monopoly power. The defendants carried out the charged conspiracy to monopolize through various anticompetitive acts, including restraints that are per se unlawful under the Sherman Act, as well as threats and acts of violence aimed at deterring market participants from undermining the conspiracy.

The indictment also alleges that the defendants conspired to fix prices and allocate the transmigrante services market in violation of Section 1 of the Sherman Act. According to the indictment, the defendants entered into price-fixing agreements and collected and divided revenues among the conspirators through an arrangement referred to as the “Pool.” When transmigrante industry participants refused to charge the fixed prices, pay into the Pool, or pay an extortion fee referred to as a “piso,” the charged individuals used threats, intimidation, and violence against the industry participants, their families, and their business associates.

The indictment also alleges that six individuals conspired to interfere with commerce by extortion and charges three of these individuals with one count of interference with commerce by extortion. The indictment also charges six individuals with money laundering related to the underlying scheme

Agency Collaboration

The partnership among the Antitrust Division, OCGS, USAO-SDTX, HSI, and FBI in this prosecution is part of a broader effort across federal agencies to collaborate and strengthen their partnerships to maximize antitrust enforcement. Illustrating the EO’s whole-of-government approach to competition policy, the partnership in this prosecution demonstrates the agencies’ commitment to work together to investigate and prosecute antitrust violations. Indeed, after the announcement of the unsealing of the indictment, agency leaders commented on the importance of their partnership in investigating and prosecuting the alleged conspiracy. “Together with our partners, we are committed to dismantling violent enterprises that victimize individuals simply trying to earn an honest living,” said Assistant Attorney General Kenneth A. Polite, Jr. of the DOJ’s Criminal Division. “Working with our partners across the government, we will continue to investigate and prosecute violent criminals who prey on our communities,” said U.S. Attorney Jennifer Lowery of USAO-SDTX. “HSI and its law enforcement partners are committed to dismantling organized crime by eliminating their corrupt influence in our communities and protecting our nation’s borders,” said Acting Special Agent in Charge Craig Larrabee of HSI San Antonio. “Today’s actions are the result of the FBI’s continued collaborative efforts with our law enforcement partners in this important investigation,” said Special Agent in Charge Oliver E. Rich Jr. of the FBI San Antonio Division.

Recommended Actions

The charges against the individuals illustrate that the DOJ is continuing to pursue vigorous antitrust enforcement, including criminal monopolization enforcement, and is partnering with other agencies to achieve its enforcement goals. Companies should expect greater collaboration between agencies and scrutiny of anticompetitive conduct, even where the antitrust laws might not have been consistently considered by law enforcement previously. For this reason, companies should consider taking steps to mitigate antitrust liability. In particular:

  • Companies should ensure that their antitrust compliance programs include training on appropriate contacts with competitors.
  • Companies should develop controls around communications with competitors.
  • Companies should analyze the markets in which they operate to assess the level of antitrust risk associated with certain business decisions.

Companies that have not conducted an annual antitrust risk assessment and compliance review should consider doing so as soon as possible.

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Author

Jeff Martino brings an in-depth understanding of a wide variety of white collar and fraud related matters to his antitrust litigation and investigations practice. Jeff is co-lead of the Firm's Global Cartel Task Force and represents multinational corporations and their boards and executives in high-stakes criminal and civil investigations by the US Department of Justice (DOJ) and other federal and state agencies Prior to joining Baker McKenzie, Jeff spent nearly two decades at the DOJ and his last 7 years as a senior leader in two different DOJ components. He has extensive experience as “first chair” on trials and investigations in the most complex areas of criminal antitrust. Jeff's work at the DOJ included providing technical assistance to competition agencies in Asia, Africa, the Americas and Europe and overseeing matters that included international corruption and antitrust cartel offenses that entangled the largest global banks and their key executives.

Author

Ashley Eickhof is a senior associate in the Firm's North America Antitrust & Competition Practice Group. Ashley is an experienced litigator and has tried criminal cases in federal court. Prior to joining Baker McKenzie, Ashley worked at another large international law firm in the Antitrust and Competition Practice Group. Before that, Ashley began her career as a federal prosecutor for the Antitrust Division of the US Department of Justice.

Author

Audrey van Duyn is an associate in Baker McKenzie's Antitrust & Competition Practice Group in New York. She advises clients on all aspects of antitrust law before the Department of Justice and Federal Trade Commission. Prior to joining the Firm, Audrey was a litigation associate at a large national law firm where she assisted with a variety of civil, criminal, and regulatory matters. During law school, Audrey interned for Judge Nicholas G. Garaufis of the US District Court for the Eastern District of New York and for Judge Paul G. Gardephe of the US District Court for the Southern District of New York. She worked as a research assistant for Professor Daniel J. Capra and focused on evidence and criminal procedure. She was also a member of the Fordham Moot Court and the Fordham Urban Law Journal.

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