Federal Appeals Court Overturns Antitrust Conviction in North Carolina Contractor Case

In a significant development, a federal appeals court has overturned the antitrust conviction of Brent Brewbaker, a North Carolina contractor, for alleged price-rigging in sales to the state government. The decision marks a setback for the Justice Department’s vigorous efforts to prosecute illegal collusion between businesses, reported The Washington Post.

Brewbaker had already served an 18-month prison sentence related to the case. However, the U.S. Court of Appeals for the Fourth Circuit, in a unanimous opinion issued on December 1, asserted that he should never have been charged with an antitrust violation based on the nature of the business arrangement. The court suggested that district court judges should closely scrutinize such charges.

Judge Jay Richardson, writing for the three-judge panel, emphasized, “Despite the similarity in the criminal and civil rules, we rarely see district courts dismiss indictments for the failure to state an offense.” The ruling brings attention to the need for a more nuanced examination of antitrust allegations, potentially impacting how such cases are approached in the future.

While the decision did not overturn Brewbaker’s related fraud convictions or his company’s guilty plea, it challenges the foundation of the antitrust charge. Brewbaker, a manager at Contech, an aluminum manufacturer, collaborated with another company, Pomona Pipe Products, in securing contracts from the North Carolina Department of Transportation.

The collaboration involved both companies bidding on contracts, with the winning company hiring the other for specific services. The court record reveals that in 2009, Brewbaker began seeking not only Pomona’s labor costs but also the total bid price on contracts. Contech would then charge a slightly higher amount. According to the Justice Department, this transformed what appeared to be a legitimate partnership into an illegal price-fixing scheme.

The court’s decision suggested that the business arrangement did not inherently violate antitrust laws, raising questions about the threshold for antitrust charges in similar cases. The Justice Department is now considering an appeal to the full Fourth Circuit, highlighting in a court filing that the decision’s “ramifications” are “of exceptional importance to the criminal enforcement of the antitrust laws.”

Source: Washington Post