Government seeks to go ahead with antitrust case
on Jul 24, 2006 at 4:49 pm
UPDATE Tuesday a.m. — Stolt-Nielsen S.A.on Friday renewed its plea to Justice Souter for a stay pending review of the company’s appeal challenging the Justice Department’s impendng plan to indict it on antitrust charges. Answering the Justice Department’s opposition to its stay application, the company sought to reinforce its claim that there is a conflict in the circuits, and to strengthen its claim that it faces a significant financial setback if indicted. “If any recent marketplace development sheds any light on the likely effect of an indictment, it is Stolt-Nielsen’s stock price, which has fallen 36.5 percent since the Third Circuit ruling on March 23, 2006, representing a loss in market capitalization of over $750 million. The securities market obviously perceives that an indictment portends serious consequences for the company.”
The Justice Department on Monday asked Supreme Court Justice David H. Souter to clear the way for it to seek a criminal indictment of a Norwegian-based ocean shipping company and at least one of its executives, for roles in an alleged plot to divide up business in a liquids-shipping global market. The company involved, Stolt-Nielsen S.A., is in sound financial condition, the Department argued, and will not suffer just because it is indicted. There is no chance, it suggested, that the Supreme Court would agree to hear the company’s case, and no chance the Court ultimately would bar the government from pursuing charges.
An earlier post on the case can be found here.
Stolt-Nielsen and its shipping subsidiary, Stolt-Nielsen Transportation Group LTD., have asked Justice Souter to block any indictment of the companies and executives until the Court takes final action on a new appeal. That appeal (06-97) claims that the Justice Department has broken a promise not to prosecute the company or its employees, so should be barred from seeking formal charges. The company contends that it bargained for immunity by giving up evidence of a customer-allocation plot among it and its competitors — evidence that led to successful criminal prosecution of other companies. (The stay application is 06-A-79.)
Replying on Monday, U.S. Solicitor General Paul Clement told Souter that it should be allowed to go forward with potential indictments because Stolt-Nielsen did not keep its part of the bargain. In the deal with the Justice Department Antitrust Division, Clement said, the company vowed that it had taken prompt action to stop its part in anti-competitive activity in the “parcel tanker” shipping industry. In fact, the Solicitor General said, the company continued to engage in anti-competitive action for several months after being told internally about unlawful conduct. Thus, the leniency pact was void, according to Clement.
The Third Circuit was correct, the new filing contended, in holding that separation-of-powers principles bar the courts from interfering with a Justice Department move to gain an indictment. And, it said, “it is not reasonably probable that the [Supreme] Court will grant” Stolt-Nielsen’s petition for review, since there is no real conflict among lower courts and “no court has held that a party to an agreement like the one in this case holds any entitlement to an injunction barring indictment.”
Stolt-Nielsen, he argued, has a potential remedy for its claim that the government backed out on its side of the immunity deal: if an indictment is filed, it can raise the deal as a defense at that point and seek to have the indictment dismissed.
As to the company’s claim that merely being indicted will cause significant financial and other injuries, threatening ruin, Clement said that “bearing the discomfiture and cost of a prosecution for crime even by an innocent person is one of the painful obligations of citizenship.” And, in any event, he added, Stolt-Nielsen “is profitable, its existing contracts would require customers to use [its] services for the duration of the contracts, and there is no indication that an indictment based on past conduct could irreparably ‘destroy’ [its] ability to retain and secure contracts for its services or ‘ruin’ its financial viability.”
Clement added in a footnote that the Antitrust Division does not intend to seek any indictment until the Court disposes of the stay request, so, he said, there is no need for a temporary stay while studying the matter. Justice Souter has given no indication when he would act, or whether he will pass the decision on to the full Court.
