was wondering which system he was going to ... gg eeeee t ss ... cause ... he thinks ... what he owns energy capture devices ... you know ... it isnt the grid ... no no it isnt where all kinds of energy capture devices ... with companies who own title to this and that ... use when they input their energy ... into the grid ... some need the grid ... like nuke energy ... some want the additional sales ... like coal energy and coal fired plants ... some like usopec ... can make fuel from your home or backyard ... or also be attached to the grid ... where gov has some regulatory function ... but not on the energy capture device ... invention wise ... no sir ... he cant get squat ... but for theft and murder ... unless ... you know ... contracts in decent legal fashion ... which to date hasnt happened ... over from any invention of mine ... date time stamped and ... apparent! yup ... that said ... you know does he want the space system ... or the networked system or the stand alone system ... to make liquid fuel out of sunlight ... maybe he wants it to power the sucking straw algae growing and processing ... system ... but you know that ... well algea was growing and blah blah blah ... well before I was around to invent ... yeah ... royal flush ... dis ... date and time stamped ... in oh so many ways ... deliver sun energy ... from ... fusion reactor ... yup ... indeed ... as for the world bank ... reference ... discussions began at the y ... with witnesses ... from using an expansion gas ... heated by the sun ... with parabolic mirror ... not that complicated ... you know ... all ... ready for ... hmm ... c om ... and get it ... um that would be ... good faith and the commercial code ... or a jury ... yup ... cause I got ss me ... sum Sherman for the wrong ... t ra-cks ... Additionally the two PhD s above have both also verbally stated that the USOPEC energy systems work- Dr. Orr stated that the Optical Platform Energy Concentrator was more effective (30% energy conversion) than the current solar cell systems on the market (circa 18% to 25% energy conversion). Further physics for the USOPEC system can be verified by reading Popular Science Magazine article found in February 2005 issue viz. A similar system principle simply using a different solar powered engine (resulting in a lesser engineered configuration so lesser capability in the Boeing Stirling system – i.e. Not built for both hydrogen separation and electric current generation; but simply electric current generation.) ------- EXHIBIT Also interested in the USOPEC system is the World Bank see e-mail from the Energy Help Desk – sent 8/19/04 at 10:09 AM Eastern Daylight Time – from energy – CC: , , Quote: Dear Mr. Sebastian: Your e-mail to Mr. Eleodora Alba was forwarded to the Energy Help Desk for action. ... As you may know, the World Bank finances commercial products ... Also, the Banks lending programs are designed on a country-by-country basis through dialog with country governments.... If there are specific countries where you believe that your product may be especially suitable, it would be useful for you to be in a dialogued ... Kind regards, Energy Help Desk Team I sent an e-mail with the USOPEC particulars upon request by the in-person conversation with Mr. Eleodora Alba who works at the World Bank at the Oil Natural Gas and Energy Desk. He said that the World Bank views the first world as the best place to implement the system. Though other countries would also be interested. ------- XVIIII. EXHIBIT State of Maryland – Department of Assessments and Taxation – Date 4/08/2003 Letter of Confirmation – Partial Quote This letter is to confirm acceptance of the following filing: Entity Name: Hometel Corporation Type of Request: Articles of Incorporation Date Filed: 4/08/2003 Filing Number: 1000361988221945 Recording Fee: $20.00 ------- Copywrite Law In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include: 1.the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 2.the nature of the copywrited work; 3.the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and; 4.the effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors. -- EXHIBIT Project(s) USOPEC Systems 1, 2, 3, - Intellectual Property, Copyrighted, Christopher Sebastian There are several energy producing systems that can meet part or all, if done correctly (depending on investment and production), of the U.S. and/or global energy needs. The future is solar, that future is now possible. Simply it is a matter of common sense and political will. Since there are many who have invested/vested interests in other energy producing methods (other than solar), there are huge interests in avoiding this delicate topic. However if one looks at the root element of political reality, survival,one must come to the conclusion, at some point, that alternative solutions are deadly to the environment, and, the people within that environment; and the planet in terms of a habitable place for life. Already we see over 40,000 people a year dying because of air pollution, mostly these are the very young and the elderly; those who are asmatic and are susceptible to the polluting hydrocarbons we are pumping into the atmosphere (air) in the hundreds of thousands of tons. Mercury from coal fired plants are so prevalent in our water, rivers, oceans, that it is no longer safe to eat large quantities of fish. People are being poisoned. The mercury already in the silt of our oceans and rivers if stirred up can/will have devastating effect. Global warming and melting poles threaten the large cities on the coast (think Boston, New York, Quebec – think the state of Florida ... under 30 feet of water). The current growing costs for the many do not balance out politically, socially, economically, or environmentally. The 300,000,000 (million) Americans and the billions of people globally deserve better and, when viewed, looked at by the interests of the very few - who are threatening their own children as well as everyone elses – sooner or later they, as will the majority, deal with, must deal with, the truth. We are at a critical stage, i.e. there is no later at this rate. We must go with clean energy now! There is good news however and that is, that clean energy is abundant. Further, it is a very bankable, new and exciting market. It is a market that can employ hundreds of thousands of people, if not millions! It is a sure market one that can generate cash, business; generate energy, and, protect the environment! It can, in absolute terms, give life on this planet a real future. The sun, thanks God, that gives all life on the planet as we know it, is again the key. Harvesting sun light, and concentrating it, and directing its energy is what we must do. This to survive literally. The good news is, were we able to harvest all the sun light that strikes the earth in only one hour, we could meet the planets (human need) for a year. The sun is the big life bank and always has been. Though gathering all light around our planet is not possible; what is possible, and currently achievable is the following: USOPEC Systems. The system physics are known and proven. Welcome to the USOPEC system one, system two & system three. USOPEC stand for United States Optical Platform Energy Concentrator and it is a system that harvests light turning that energy into usable form by gathering light energy (photons) concentrating it, converting it mechanically into a form, electricity, that can be put into our electrical grid (power lines). With a larger scale configuration (using satellites or a global power source net) the USOPEC system can also produce a solar sun spot/fireball on a 24 hour continuous cycle. In effect one can achieve, multiple spots on the planet where this sunlight (concentrated) literally never sets. In physics, in effect this means we have plugged into .... the sun. The following below is how, and the result is the only clean, efficient method known to manufacture (not only electricity) but hydrogen Fuel on an industrial scale. Welcome to the clean burning hydrogen future ... The hydrogen economy! To reiterate, the simple USOPEC system can provide electricity to homes, high rises, businesses and appliances; but/and with the bells and whistles, the USOPEC system (i.e. with satellite or global networking can produce high temperature hydrogen separation heat (*** economically, i.e. you get more energy out than gets, cost wise, put in, *** this impossible with gas, oil, or nuclear) to separate the hydrogen atom from the oxygen atoms of water (H2O). That fuel can then power non stationary systems like hydrogen cars, other hydrogen engines/machines (imagine the plow that sows the seed, and at the same time as it passes the furrow, with its exhaust (recombined H2O) provides the seed with its first water). In other words the USOPEC system depending upon its configuration can supply electricity (clean) and hydrogen fuel (clean). The technology is here – The physics proven – Today! Simply needed is the political will, the investment, and infrastructure. Once the will is manifest by people who are aware and understand the benefits, the comprehensive benefits not only in ecological terms but economic terms; our future, environmentally friendly future, should be secure. Indeed if looked at seriously, closely then we find the following. To shift into the/this hydrogen future should be painless for those investing. Indeed the bank ability, profitability is unlike any other investment. It is guaranteed! This is quite a claim but factual. Guaranteed returns! Further still, the opening of this market (and this is wild) can be, in a sense, achieved at no cost; giving jobs, opening markets globally on rock solid futures by beginning with bonds (think stem cell bonds – put on the market in California -with risk, and then think USOPEC bonds without risk – gold plated! But for the price of printing ... bonds! The former (stem cell) billions invested with risk – the latter trillions invested without risk! Hmm! Welcome to clean, clear risk free, investing! USOPEC – System 1– copywrited – The Components (waiting for Court & manufacturing contracts and production) 1.Parabolic mirror: reflects sunlight to a focal point – (think magnifying glass, with sunlight and paper – when focused the light burns the paper) 2.Boiler: at focal point (water H2O has kinetic energy – think about a pressure cooker with top sealed, on low heat – after a time the pressure cooker explodes – even on low heat the water pressure (steam) increases until the steel shreds – One gallon of water/stream has an equivalent kinetic energy of a stick of dynamite (i.e. shredded steal pressure cooker). 3.Steam engine or Steam turbine: Attach a steam engine (or turbine) – see Internet for inexpensive cost – and see Internet - how stuff works. Because the sunlight/heat which is concentrated by the mirror, and focused on the boiler, turns the water to steam, the steam engine runs; like a steam locomotive runs on ... steam. 4.Alternator: Attach an alternator to the steam engine (like an alternator is attached to a car gasoline engine (see alternator – how stuff works – Internet) and what you get is a generator (see generator - how stuff works – Internet). Generators (alternator with engine) produce electricity. 5.Condenser: Attach a condenser also to the steam engine and the steam exhaust (H2O), out of the steam engine, condenses and is caught for recycling to the boiler. That recycled water again gets heated, again turns to steam, again runs the engine/turbine, again producing via the alternator ongoing electricity (a closed system). 6.Attach a slow moving motor: to the mirror platform (think windshield wiper motor on very very slow – modified) and the mirror slow tracks the sun from dawn (east) to dusk (west). 7.Light sensor: Attach a light sensor (see highway day night light system trigger – Internet) that turns on and off resetting the mirror sun tracking motor, for, reset from dusk to dawn position – once the sun has set (see #6, and #7). 8.Take the electricity produced by USOPEC and put it back up the power line(s) for dollars (payment allowed by law). Voila, automated electricity (also the closest thing to a perpetual motion machine viz galactic physical principles). For the same concept but more expensive see February 05 Popular Science Magazine pg 31. and the Boeing/Stirling solar energy system (manufactured) with picture (at a much more expensive cost of $250,000.00 dollars) My writing viz this Boeing system predates many of their component patents (see patent office – Internet) though their system is different in that it does not use water but another element for expansion to run the engine (Stirling engine) etc. USOPEC - System 2 (and/or Boeing/Stirling System) with Interactive Global Net (offers advantages of clean electricity – System 1 + Industrial Hydrogen Separation Capability – using 24hr. Sunspot fireball). 1.If you take system 1 (i.e. parabolic mirror, boiler, steam turbine or engine, alternator, condenser, sun tracking motor, light sensor and network this system to other similar systems (see Popular Science Magazine, and previous Sebastian writing(s) – previous by several years to the 05 Popular Science issue – and you do this network over 10,000 sq. miles of desert (like the former Soviet Union massif projects were done for economies of scale) you can produce enough electricity to meet the needs of the entire country (U.S. - Note: The U.S. uses more electricity than any other nation on earth). 2.Since the United States is by far the greatest energy consumer in the globe, if you do the same, 10,000 sq. mile network in 5 to 6 other deserts (Sahara, North Africa – Gobi, Mongolia – Outback, Australia – etc.) you can meet the electrical needs of the globe. 3.If you then network the networks (i.e.) the deserts USOPEC systems, to each, other, deserts USOPEC systems, with cable (trans-oceanic and underground cable) – think telephone and Internet trans-oceanic cabling as examples already achieved/done – then you achieve the 24 hour sun spot, fireball. As the sun sets over one desert (as the globe turns – because the sun never truly sets – simply the globe turns), when one desert goes dark (no energy harvesting) another desert lights up (harvesting sunlight). See Internet – the French have a fleet of over 40 deep-water cable laying ships available and, they manufacture the oceanic cabling as well. 4.Since photons travel at the speed of light, in effect, with this system, what lights the light bulbs in the night is/could be tomorrows light! Tomorrows light ... tonight! This may seem incredible until you think about old, ancient light (think oil from greasy plants that died thousands of years ago – plants that grew, from gathered photosynthesis, light – i.e. oil, drilled out of little holes in the ground (out of oil domes/oil bearing rock), and then you realize that you have substituted ancient fossil fuel light with direct sun light – no middle man (I mean middle plant), thus no hydrocarbons (plants and all earth life are made out of carbons). Simply we have replaced Fuel Fossils (think bush) and their fossil fuels with modern – clean – direct to sun light/energy ... with no hydrocarbons or ... therefore pollution. Since, in physics, you keep the heat on 24/7, wherever you choose to, you can raise the temperature, in theory, to that of the sun. This enables the necessary, achievable, industrial hydrogen separation heat, with solar energy power; that until now, has been impossible to do cost effectively with oil, gas, or nuclear fuels. All because of the benefits found, by a sun that never sets, and, the travel speed of photons (converted to wired electrons) navigating/negating the speed at which the earth turns. Tomorrows light, tonight! Imagine getting Australias light in the U.S. tonight and vice-versa, their getting our excess light. Light energy converted to electrical energy using a networked global USOPEC system. No more oil wars ... of a sudden! Greater oil reserves, because of less consumption (oil still needed for many many products, plastics, lubrication, ad infinitum). Clean air ... of a sudden. No more acid rain of a sudden! No more mercury pollution ... of a sudden! A globally US led world ordered market (no more hostage to oil producing countries – having to protect/propping up undemocratic systems – as in the former Sha of Iran, Saddam of Iraq, Saudi Princes etc. i.e. better State Department policy leverage and greater national security), a world order market led by the U.S. Providing clean energy, warm fuzzy light; protecting a cleaner global environment ... of a sudden! A global cooperative bankable environment and effort that brings people(s) and cultures together united in a common goal – all led by the United States – a leader in technology, innovation. Global power politics ... in a whole new light ! All of the above, all possible, and needed for global survival in a global ecosphere. All the above imperatively needed, economically needed, socially needed, and strategically needed in our ever increasing interdependent world – All the above allowing for global growth, diminishing global inequalities, preventing poverty and so terrorism. Empowering our country, denying claims that we are in the middle east for oil alone as an economic imperialist power. Etc ad infinitum! Healing an ecosphere that is at critical point of being irreparably damaged! Irreparably damaged viz, water, air, desertification (cutting of trees for fuel in 3rd world countries – Amazon, Congo basin) due to loss of timber, oceans and fish and corrals all dying because we are not husbanding our resources – all the above can be reversed, with help from the USOPEC system(s). This done if we are wise, and done also ... with profit; profit in clear and simple dollar and market terms. Oil has been good, is good, got us to this point, but as whale blubber oil and olive oil, was replaced by a better, more viable, more marketable drilling of oil, so now we have the opportunity to grow once again, by building on the strong bones of the former energy market system the new bones and structures of the now needed, and possible shift to the new hydrogen economy. The needs and benefits of a hydrogen economy has been talked about for many years. We have the means, now with the USOPEC technology available. Never before in history has an economy grown so viably, feeding so many. The combination of oil technology in tandem with democratic market LAWS and PRINCIPLES combined to make more humans better off than ever before – now the critical mass and growth has reached a point where that growth is no longer possible and the repercussions of such huge quantities of pollution are getting diminishing returns on quality of life in economic and environmental terms – cheap oil is gone, pollution is unsustainable – the cost benefit analysis has diminished to the point of devastation, should we continue on our current path – yes there is oil in tar sands in Canada, yes it costs more to harvest and is more polluting – yes, it is further damage to our ecosphere – yes it is destructive now – destructive to the very planet we all must live on (SEE POPULAR SCIENCE MAGAZINE Aug 05 titled – Saving a Scorched Earth). See the problems – there is No adequate solution to greenhouse pollution – no clean-up, unless the cause, is first negated. There is a better way, USOPEC System 2, and it is a must, for survival – literally! Let the oil companies – buy in! Nothing wrong with that – but to let them, an oily few, rampantly destroy all that we as a people have built, generations, upon generations of struggle; of growth and wisdom, effort, history; learned history of evolution, growth of markets and growth of law and good governance ... wisdom! Not wisdom, to destroy us all, for hidden oligarchy, for profit, of a few, at the expense of the body/politic ... and their laws – that, is lunacy! Let the innovation and the life giving market, demands, prevail – in the open, democratically, with courts venues and juries and law available; available for such markets and body politic, individuals, and public scrutiny; with and under the color of LAW – Under the Red White and Blue! Our flag! Our flag does not stand for the few, already well to do, but for the many, invincible, indivisible, with justice and liberty – legal, economic, environmental – and, life for all! Democratic Capitalism – The way of the Red White and Blue – A Country of Laws – Laws ... already ON THE BOOKS ... Amen! USOPEC System Three – (Electricity and Hydrogen separation capable). Uses system One and a Satellite, in geosynchronous orbit with solar reflector, beaming sunlight to the ground side, of system one, for 24 sunspot/fireball – ground network not required but the system is good for experimental purposes and not viable for industrial hydrogen separation, the needed capacity, without extraordinary cost(s) for quantity and size of space reflectors – (See Sebastian 2002 copywrited material). For System 2 using electrolysis (or an element such as a stove element with water upon it and a hydrogen sweeper) the electric current (via 24 hr. sun spot) can do the hydrogen separation. For System 3 the 24 hour sunspot directly can do the job. Antitrust Enforcement and the Consumer Many consumers have never heard of antitrust laws, but when these laws are effectively and responsibly enforced, they can save consumers millions and even billions of dollars a year in illegal overcharges. Most states have antitrust laws, and so does the federal government. Essentially, these laws prohibit business practices that unreasonably deprive consumers of the benefits of competition, resulting in higher prices for inferior products and services. This pamphlet was prepared to alert consumers to the existence and importance of antitrust laws and to explain what you can do for antitrust enforcement and for yourself. 1. What Do the Antitrust Laws Do for the Consumer? Antitrust laws protect competition. Free and open competition benefits consumers by ensuring lower prices and new and better products. In a freely competitive market, each competing business generally will try to attract consumers by cutting its prices and increasing the quality of its products or services. Competition and the profit opportunities it brings also stimulate businesses to find new, innovative and more efficient methods of production. Consumers benefit from competition through lower prices and better products and services. Companies that fail to understand or react to consumer needs may soon find themselves losing out in the competitive battle. When competitors agree to fix prices, rig bids or allocate (divide up) customers, consumers lose the benefits of competition. The prices that result when competitors agree in these ways are artificially high; such prices do not accurately reflect cost and therefore distort the allocation of societys resources. The result is a loss not only to U.S. consumers and taxpayers, but also the U.S. economy. When the competitive system is operating effectively, there is no need for government intrusion. The law recognizes that certain arrangements between firms--such as competitors cooperating to perform joint research and development projects--may benefit consumers by allowing the firms that have reached the agreement to compete more effectively against other firms. The law does not condemn all agreements between companies, only those that threaten to raise prices to consumers or to deprive them of new and better products. But when competing firms get together to fix prices, to rig bids, to divide business between themselves or to make other anticompetitive arrangements that provide no benefits to consumers, the government will act promptly to protect the interests of American consumers. 2. What Are the Federal Antitrust Laws, and What Do They Prohibit? There are three major federal antitrust laws: the Sherman Antitrust Act, the Clayton Act and the Federal Trade Commission Act. The Sherman Antitrust Act has stood since 1890 as the principal law expressing our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers. Congress felt so strongly about this commitment that there was only one vote against the Act. The Sherman Act outlaws all contracts, combinations and conspiracies that unreasonably restrain interstate and foreign trade. This includes agreements among competitors to fix prices, rig bids and allocate customers. The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct. The Act is not violated simply when one firms vigorous competition and lower prices take sales from its less efficient competitors--that is competition working properly. Sherman Act violations involving agreements between competitors usually are punished as criminal felonies. The Department of Justice alone is empowered to bring criminal prosecutions under the Sherman Act. For offenses committed before June 22, 2004, individual violators can be fined up to $350,000 and sentenced to up to 3 years in federal prison for each offense, and corporations can be fined up to $10 million for each offense. For offenses committed on or after June 22, 2004, individual violators can be fined up to $1 million and sentenced to up to 10 years in federal prison for each offense, and corporations can be fined up to $100 million for each offense. Under some circumstances, the maximum fines can go even higher than the Sherman Act maximums to twice the gain or loss involved. The Clayton Act is a civil statute (carrying no criminal penalties) that was passed in 1914 and significantly amended in 1950. The Clayton Act prohibits mergers or acquisitions that are likely to lessen competition. Under the Act, the government challenges those mergers that a careful economic analysis shows are likely to increase prices to consumers. All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission. The Act also prohibits other business practices that under certain circumstances may harm competition. The Federal Trade Commission Act prohibits unfair methods of competition in interstate commerce, but carries no criminal penalties. It also created the Federal Trade Commission to police violations of the Act. The Department of Justice also often uses other laws to fight illegal activities, including laws that prohibit false statements to federal agencies, perjury, obstruction of justice, conspiracies to defraud the United States and mail and wire fraud. Each of these crimes carries its own fines and imprisonment terms which may be added to the fines and imprisonment terms for antitrust law violations. 3. How Are Antitrust Laws Enforced? There are three main ways in which the federal antitrust laws are enforced: criminal and civil enforcement actions brought by the Antitrust Division of the Department of Justice, civil enforcement actions brought by the Federal Trade Commission and lawsuits brought by private parties asserting damage claims. The Department of Justice uses a number of tools in investigating and prosecuting criminal antitrust violations. Department of Justice attorneys often work with agents of the Federal Bureau of Investigation (FBI) or other investigative agencies to obtain evidence. In some cases, the Department may use court authorized searches of businesses and secret recordings by informants of telephone calls and meetings. The Department may grant immunity from prosecution to individuals or corporations who provide timely information that is needed to prosecute others for antitrust violations, such as bid rigging or price fixing. A provision in the Clayton Act also permits private parties injured by an antitrust violation to sue in federal court for three times their actual damages plus court costs and attorneys fees. State attorneys general may bring civil suits under the Clayton Act on behalf of injured consumers in their states, and groups of consumers often bring suits on their own. Such civil suits following criminal enforcement actions can be a very effective additional deterrent to criminal activity. Most states also have antitrust laws closely paralleling the federal antitrust laws. The state laws generally apply to violations that occur wholly in one state. These laws typically are enforced through the offices of state attorneys general. 4. How Do Antitrust Violators Cheat the Consumer? The worst antitrust offenses are cartel violations, such as price fixing, bid rigging and customer allocation. Price fixing occurs when two or more competing sellers agree on what prices to charge, such as by agreeing that they will increase prices a certain amount or that they wont sell below a certain price. Bid rigging most commonly occurs when two or more firms agree to bid in such a way that a designated firm submits the winning bid, typically for local, state or federal government contracts. Customer-allocation agreements involve some arrangement between competitors to split up customers, such as by geographic area, to reduce or eliminate competition. Such price-fixing, bid-rigging and customer-allocation agreements, unlike joint research agreements for example, provide no plausible offsetting benefits to consumers. Also, these agreements are generally secret, and the participants mislead and defraud customers by continuing to hold themselves out as competitors despite their agreement not to compete. There can be no doubt that price fixing, bid rigging and customer allocation harm consumers and taxpayers by causing them to pay more for products and services and by depriving them of other byproducts of true competition. Nor is there usually any question in the minds of violators that their conduct is unlawful. It has been estimated that such practices can raise the price of a product or service by more than 10 percent, sometimes much more, and that American consumers and taxpayers pour billions of dollars each year into the pockets of cartel members. People who take consumer and taxpayer money this way are thieves. 5. What Kinds of Cases Has the Justice Department Brought? Because of the harm that cartel violations cause, the Justice Departments number one antitrust priority is criminal prosecution of those activities. The Department has obtained price-fixing, bid-rigging or customer-allocation convictions in the soft drink, vitamins, trash hauling, road building and electrical contracting industries, among others, involving billions of dollars in commerce. And in recent years, grand juries throughout the country have investigated possible violations with respect to fax paper, display materials, explosives, plumbing supplies, doors, aluminum extrusions, carpet, bread, and many more products and services. The Department also investigates and prosecutes bid rigging in connection with government procurement. Consider one important example of successful antitrust enforcement--the Antitrust Divisions criminal cases against vitamins producers. The Division began an investigation in the late 1990s into a worldwide vitamins cartel affecting over $5 billion in U.S. commerce. The evidence showed that the cartel members had reached agreements on everything from how much product each company would produce, to how much they would charge, to which customers they would supply. The victims who purchased directly from the cartel members included companies with household names such as General Mills, Kellogg, Coca-Cola, Tyson Foods, and Procter & Gamble. However, these companies were just the first to feel the effects of this conspiracy. In the end, for nearly a decade, every American consumer--anyone who took a vitamin, drank a glass of milk or had a bowl of cereal--ended up paying more so that the conspirators could reap hundreds of millions of dollars in additional revenues. The vitamins investigation led to the conviction of U.S., Swiss, German, Canadian and Japanese firms, among others, and a number of top executives went to jail. In fiscal year 1999 alone, over $850 million in fines was imposed on members of the vitamins cartel, including a record $500 million fine imposed on F. Hoffmann-La Roche, Ltd. and a $225 million fine imposed on BASF AG. The imposition of unprecedented fines against foreign firms and jail sentences against foreign nationals residing outside of this country sends a powerful deterrent message that the United States is committed to vigorous antitrust enforcement against cartels that impact U.S. commerce, no matter where the participants may be found. 6. What Can You Do for Antitrust Enforcement and for Yourself? Because they are by their nature secret, price-fixing, bid-rigging and customer-allocation conspiracies are difficult to detect and prove. For that reason, law enforcement officials rely on complaints and information from consumers and competitors. A large percentage of all federal antitrust investigations results from complaints received from consumers or people in business by phone or mail or in person. On the federal level, you can contact the Antitrust Division at its Washington office or any of its seven field offices, in major metropolitan areas around the country. (Addresses and telephone numbers are provided at the end of this pamphlet.) The Antitrust Divisions headquarters offices are in the Main Justice Building at 10th Street and Pennsylvania Avenue, NW in Washington, DC. You can also reach the Antitrust Division through any of the offices of the United States Attorneys, which are found in most large cities throughout the United States. 7. How Can You Know if the Antitrust Laws Are Being Violated? If any person knows or suspects that competitors, suppliers or even an employer are violating the antitrust laws, that person should alert the antitrust authorities so that they can determine whether to investigate. Price-fixing, bid-rigging and customer-allocation conspiracies are most likely to occur where there are relatively few sellers who have to get together to agree. The larger the group of sellers, the more difficult it is to come to an agreement and enforce it. Keep an eye out for telltale signs, including, for example: any evidence that two or more competing sellers of similar products have agreed to price their products a certain way, to sell only a certain amount of their product or to sell only in certain areas or to certain customers; large price changes involving more than one seller of very similar products of different brands, particularly if the price changes are of an equal amount and occur at about the same time; suspicious statements from a seller suggesting that only one firm can sell to a particular customer or type of customer; fewer competitors than normal submit bids on a project; competitors submit identical bids; the same company repeatedly has been the low bidder on contracts for a certain product or service or in a particular area; bidders seem to win bids on a fixed rotation; there is an unusual and unexplainable large dollar difference between the winning bid and all other bids; or the same bidder bids substantially higher on some bids than on others, and there is no logical cost reason to explain the difference. These signs are by no means conclusive evidence of antitrust violations. More investigation by trained lawyers and investigators would be required to determine that. But they may be an indication of collusion, and the people who enforce the antitrust laws want to hear about them. 8. What Is the Publics Role in Antitrust Enforcement? Effective antitrust enforcement requires public support. Public ignorance and apathy can weaken antitrust enforcement more than anything else. Whether you are a businessperson or a consumer, if you encounter business behavior that appears to violate the antitrust laws, do not hesitate to inform the enforcement authorities of your suspicions. That is often the only way violations can be uncovered, and failing to uncover and punish antitrust violations not only penalizes consumers and taxpayers but also the vast majority of honest businesspeople who scrupulously observe the antitrust laws. If you detect an antitrust violation, you can perform a triple public service: (1) you can help put an end to unlawful conduct that may be costing consumers millions or even billions of dollars; (2) you can put money in the form of criminal penalties into the federal treasury; and (3) you can help recover other unlawful charges, because the government or affected consumers may bring an antitrust action to collect damages. You can write or call the Antitrust Division of the Department of Justice at any of the following locations: Division Headquarters Office of Deputy Assistant Attorney General for Criminal Enforcement Antitrust Division, U.S. Dept. of Justice 950 Pennsylvania Ave., NW., Suite 3218 Washington, DC 20530 202-514-3543 Citizen Complaint Center Antitrust Division, U.S. Dept. of Justice 950 Pennsylvania Ave., NW., Suite 3322 Washington, DC 20530 1-888-647-3258 (toll free in U.S. and Canada) 202-307-2040 Field Offices Atlanta Field Office Antitrust Division, U.S. Dept. of Justice Richard B. Russell Building 75 Spring Street, SW, Suite 1176 Atlanta, GA 30303-3308 404-331-7100 Chicago Field Office Antitrust Division, U.S. Dept. of Justice Rookery Building 209 South LaSalle Street, Suite 600 Chicago, IL 60604-1204 312-353-7530 Cleveland Field Office Antitrust Division, U.S. Dept. of Justice Carl B. Stokes United States Court House 801 W. Superior Avenue, 14th Floor Cleveland, OH 44113-1857 (216) 687-8400 Dallas Field Office Antitrust Division, U.S. Dept. of Justice 1700 Pacific Avenue, Suite 3000 Dallas, TX 75201 214-661-8600 National Criminal Enforcement Section Antitrust Division, U.S. Dept. of Justice 1401 H Street, NW, Suite 3700 Washington, DC 20530 202-307-6694 New York Field Office Antitrust Division, U.S. Dept. of Justice 26 Federal Plaza, Room 3630 New York, NY 10278-0140 212-264-0390 Philadelphia Field Office Antitrust Division, U.S. Dept. of Justice 170 S. Independence Mall West Curtis Center, Suite 650 West Philadelphia, PA 19106 215-597-7405 San Francisco Field Office Antitrust Division, U.S. Dept. of Justice 450 Golden Gate Avenue, Room 10-0101 Box 36046 San Francisco, CA 94102-3478 415-436-6660 This document is available in two formats: this web page (for browsing content) and PDF (comparable to original document formatting). To view the PDF you will need Acrobat Reader, which may be downloaded from the Adobe site. For an official signed copy, please contact the Antitrust Documents Group. Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look For An Antitrust Primer This primer briefly describes the most common antitrust violations and outlines those conditions and events that indicate anticompetitive collusion. Introduction(1) American consumers have the right to expect the benefits of free and open competition — the best goods and services at the lowest prices. Public and private organizations often rely on a competitive bidding process to achieve that end. The competitive process only works, however, when competitors set prices honestly and independently. When competitors collude, prices are inflated and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution by the Antitrust Division of the United States Department of Justice. In recent years, the Antitrust Division has successfully prosecuted regional, national, and international conspiracies affecting construction, agricultural products, manufacturing, service industries, consumer products, and many other sectors of our economy. Many of these prosecutions resulted from information uncovered by members of the general public who reported the information to the Antitrust Division. Working together, we can continue the effort to protect and promote free and open competition in the marketplaces of America. This primer contains an overview of the federal antitrust laws and the penalties that may be imposed for their violation. It briefly describes the most common antitrust violations and outlines those conditions and events that indicate anticompetitive collusion so that you might better identify and report suspicious activity. Federal Antitrust Enforcement Enacted in 1890, the Sherman Act is among our countrys most important and enduring pieces of economic legislation. The Sherman Act prohibits any agreement among competitors to fix prices, rig bids, or engage in other anticompetitive activity. Criminal prosecution of Sherman Act violations is the responsibility of the Antitrust Division of the United States Department of Justice. Violation of the Sherman Act is a felony punishable by a fine of up to $10 million for corporations, and a fine of up to $350,000 or 3 years imprisonment (or both) for individuals, if the offense was committed before June 22, 2004. If the offense was committed on or after June 22, 2004, the maximum Sherman Act fine is $100 million for corporations and $1 million for individuals, and the maximum Sherman Act jail sentence is 10 years. Under some circumstances, the maximum potential fine may be increased above the Sherman Act maximums to twice the gain or loss involved. In addition, collusion among competitors may constitute violations of the mail or wire fraud statute, the false statements statute, or other federal felony statutes, all of which the Antitrust Division prosecutes. In addition to receiving a criminal sentence, a corporation or individual convicted of a Sherman Act violation may be ordered to make restitution to the victims for all overcharges. Victims of bid-rigging and price-fixing conspiracies also may seek civil recovery of up to three times the amount of damages suffered. Forms of Collusion Most criminal antitrust prosecutions involve price fixing, bid rigging, or market division or allocation schemes. Each of these forms of collusion may be prosecuted criminally if they occurred, at least in part, within the past five years. Proving such a crime does not require us to show that the conspirators entered into a formal written or express agreement. Price fixing, bid rigging, and other collusive agreements can be established either by direct evidence, such as the testimony of a participant, or by circumstantial evidence, such as suspicious bid patterns, travel and expense reports, telephone records, and business diary entries. Under the law, price-fixing and bid-rigging schemes are per se violations of the Sherman Act. This means that where such a collusive scheme has been established, it cannot be justified under the law by arguments or evidence that, for example, the agreed-upon prices were reasonable, the agreement was necessary to prevent or eliminate price cutting or ruinous competition, or the conspirators were merely trying to make sure that each got a fair share of the market. Price Fixing Price fixing is an agreement among competitors to raise, fix, or otherwise maintain the price at which their goods or services are sold. It is not necessary that the competitors agree to charge exactly the same price, or that every competitor in a given industry join the conspiracy. Price fixing can take many forms, and any agreement that restricts price competition violates the law. Other examples of price-fixing agreements include those to: Establish or adhere to price discounts. Hold prices firm. Eliminate or reduce discounts. Adopt a standard formula for computing prices. Maintain certain price differentials between different types, sizes, or quantities of products. Adhere to a minimum fee or price schedule. Fix credit terms. Not advertise prices. In many cases, participants in a price-fixing conspiracy also establish some type of policing mechanism to make sure that everyone adheres to the agreement. Bid Rigging Bid rigging is the way that conspiring competitors effectively raise prices where purchasers — often federal, state, or local governments — acquire goods or services by soliciting competing bids. Essentially, competitors agree in advance who will submit the winning bid on a contract being let through the competitive bidding process. As with price fixing, it is not necessary that all bidders participate in the conspiracy. Bid rigging also takes many forms, but bid-rigging conspiracies usually fall into one or more of the following categories: Bid Suppression: In bid suppression schemes, one or more competitors who otherwise would be expected to bid, or who have previously bid, agree to refrain from bidding or withdraw a previously submitted bid so that the designated winning competitors bid will be accepted. Complementary Bidding: Complementary bidding (also known as cover or courtesy bidding) occurs when some competitors agree to submit bids that either are too high to be accepted or contain special terms that will not be acceptable to the buyer. Such bids are not intended to secure the buyers acceptance, but are merely designed to give the appearance of genuine competitive bidding. Complementary bidding schemes are the most frequently occurring forms of bid rigging, and they defraud purchasers by creating the appearance of competition to conceal secretly inflated prices. Bid Rotation: In bid rotation schemes, all conspirators submit bids but take turns being the low bidder. The terms of the rotation may vary; for example, competitors may take turns on contracts according to the size of the contract, allocating equal amounts to each conspirator or allocating volumes that correspond to the size of each conspirator company. A strict bid rotation pattern defies the law of chance and suggests collusion is taking place. Subcontracting: Subcontracting arrangements are often part of a bid-rigging scheme. Competitors who agree not to bid or to submit a losing bid frequently receive subcontracts or supply contracts in exchange from the successful low bidder. In some schemes, a low bidder will agree to withdraw its bid in favor of the next low bidder in exchange for a lucrative subcontract that divides the illegally obtained higher price between them. Almost all forms of bid-rigging schemes have one thing in common: an agreement among some or all of the bidders which predetermines the winning bidder and limits or eliminates competition among the conspiring vendors. Market Division Market division or allocation schemes are agreements in which competitors divide markets among themselves. In such schemes, competing firms allocate specific customers or types of customers, products, or territories among themselves. For example, one competitor will be allowed to sell to, or bid on contracts let by, certain customers or types of customers. In return, he or she will not sell to, or bid on contracts let by, customers allocated to the other competitors. In other schemes, competitors agree to sell only to customers in certain geographic areas and refuse to sell to, or quote intentionally high prices to, customers in geographic areas allocated to conspirator companies. Detecting Bid Rigging, Price Fixing, And Other Types Of Collusion Bid rigging, price fixing, and other collusion can be very difficult to detect. Collusive agreements are usually reached in secret, with only the participants having knowledge of the scheme. However, suspicions may be aroused by unusual bidding or pricing patterns or something a vendor says or does. Bid or Price Patterns Certain patterns of bidding or pricing conduct seem at odds with a competitive market and suggest the possibility of collusion: Bids The same company always wins a particular procurement. This may be more suspicious if one or more companies continually submit unsuccessful bids. The same suppliers submit bids and each company seems to take a turn being the successful bidder. Some bids are much higher than published price lists, previous bids by the same firms, or engineering cost estimates. Fewer than the normal number of competitors submit bids. A company appears to be bidding substantially higher on some bids than on other bids, with no apparent cost differences to account for the disparity. Bid prices drop whenever a new or infrequent bidder submits a bid. A successful bidder subcontracts work to competitors that submitted unsuccessful bids on the same project. A company withdraws its successful bid and subsequently is subcontracted work by the new winning contractor. Prices Identical prices may indicate a price-fixing conspiracy, especially when: Prices stay identical for long periods of time. Prices previously were different. Price increases do not appear to be supported by increased costs. Discounts are eliminated, especially in a market where discounts historically were given. Vendors are charging higher prices to local customers than to distant customers. This may indicate local prices are fixed. Suspicious Statements or Behavior While vendors who collude try to keep their arrangements secret, occasional slips or carelessness may be a tip-off to collusion. In addition, certain patterns of conduct or statements by bidders or their employees suggest the possibility of collusion. Be alert for the following situations, each of which has triggered a successful criminal antitrust prosecution: The proposals or bid forms submitted by different vendors contain irregularities (such as identical calculations or spelling errors) or similar handwriting, typeface, or stationery. This may indicate that the designated low bidder may have prepared some or all of the losing vendors bid. Bid or price documents contain white-outs or other physical alterations indicating last-minute price changes. A company requests a bid package for itself and a competitor or submits both its and anothers bids. A company submits a bid when it is incapable of successfully performing the contract (likely a complementary bid). A company brings multiple bids to a bid opening and submits its bid only after determining (or trying to determine) who else is bidding. A bidder or salesperson makes: Any reference to industry-wide or association price schedules. Any statement indicating advance (non-public) knowledge of competitors pricing. Statements to the effect that a particular customer or contract belongs to a certain vendor. Statements that a bid was a courtesy, complementary, token, or cover bid. Any statement indicating that vendors have discussed prices among themselves or have reached an understanding about prices. A Caution About Indicators of Collusion While these indicators may arouse suspicion of collusion, they are not proof of collusion. For example, bids that come in well above the estimate may indicate collusion or simply an incorrect estimate. Also, a bidder can lawfully submit an intentionally high bid that it does not think will be successful for its own independent business reasons, such as being too busy to handle the work but wanting to stay on the bidders list. Only when a company submits an intentionally high bid because of an agreement with a competitor does an antitrust violation exist. Thus, indicators of collusion merely call for further investigation to determine whether collusion exists or whether there is an innocent explanation for the events in question. Conditions Favorable To Collusion While collusion can occur in almost any industry, it is more likely to occur in some industries than in others. An indicator of collusion may be more meaningful when industry conditions are already favorable to collusion. Collusion is more likely to occur if there are few sellers. The fewer the number of sellers, the easier it is for them to get together and agree on prices, bids, customers, or territories. Collusion may also occur when the number of firms is fairly large, but there is a small group of major sellers and the rest are fringe sellers who control only a small fraction of the market. The probability of collusion increases if other products cannot easily be substituted for the product in question or if there are restrictive specifications for the product being procured. The more standardized a product is, the easier it is for competing firms to reach agreement on a common price structure. It is much harder to agree on other forms of competition, such as design, features, quality, or service. Repetitive purchases may increase the chance of collusion, as the vendors may become familiar with other bidders and future contracts provide the opportunity for competitors to share the work. Collusion is more likely if the competitors know each other well through social connections, trade associations, legitimate business contacts, or shifting employment from one company to another. Bidders who congregate in the same building or town to submit their bids have an easy opportunity for last-minute communications. What You Can Do Antitrust violations are serious crimes that can cost a company hundreds of millions of dollars in fines and can send an executive to jail for up to ten years. These conspiracies are by their nature secret and difficult to detect. The Antitrust Division needs your help in uncovering them and bringing them to our attention. If you think you have a possible violation or just want more information about what we do, contact the Citizen Complaint Center of the Antitrust Division: E-mail: [email protected] Phone: 1-888-647-3258 (toll-free in the U.S. and Canada) or 1-202-307-2040 Address: Citizen Complaint Center Antitrust Division, U.S. Dept. of Justice 950 Pennsylvania Ave. NW, Suite 3322 Washington, DC 20530 FOOTNOTES 1. This Primer provides only internal Department of Justice guidance. It is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any matter civil or criminal. No limitations are hereby placed on otherwise lawful investigative and litigation prerogatives of the Department of Justice. ---- and here we have comey ... t vice ... yup ... how about some admissions ... from the records ...
Posted on: Wed, 21 Jan 2015 22:45:25 +0000
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