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Source link: http://archive.mises.org/12754/help-wanted-2/

Help Wanted

May 19, 2010 by

The Justice Department is seeking a new chief for the New York office of the Antitrust Division. Since this is a “Senior Executive Service” position, applicants must demonstrate not just technical qualifications, but also “Executive Core Qualifications” defined by the Office of Personnel Management:

1) Leading Change: This core qualification involves the ability to bring about strategic change, both within and outside the organization, to meet organizational goals. Inherent to this ECQ is the ability to establish an organizational vision and to implement it in a continuously changing environment.

2) Leading People: This core qualification involves the ability to lead people toward meeting an organization’s vision, mission, and goals. Inherent to this ECQ is the ability to provide an inclusive workplace that fosters the development of others, supports employee diversity, facilitates cooperation and teamwork, and supports constructive resolution of conflicts.

3) Results Driven: This core qualification involves the ability to meet organizational goals and customer expectations. Inherent to this ECQ is the ability to make decisions that produce high-quality results by applying technical knowledge, analyzing problems, and calculating risks.

4) Business Acumen: This core qualification involves the ability to manage human, financial, and information resources strategically.

5) Building Coalitions: This core qualification involves the ability to build coalitions internally and with other Federal agencies, State and local governments, nonprofit and private sector organizations, foreign governments, or international organizations to achieve common goals.

The goal of the ECQs, according to OPM, is a “results driven, customer focused, team oriented Federal Government.” I’m skeptical. The Antitrust Division is a particularly poor showcase for all these wonderful-sounding ECQs.

The basic problem is the Antitrust Division has no “customers.” The Division’s core “product” is coerced guilty pleas in price-fixing cases. There are “revenues” in the form of criminal fines, which have been steadily increasing every year. There’s also prison sentences for individuals convicted of price-fixing, which isn’t exactly a consumer product — and taxpayers lose money on that deal since they’re forced to pay the costs of incarceration.

Turning to the particular ECQs, the first item — “Leading Change” — seems irrelevant. The Antitrust Division’s “organizational vision” is fairly simple: Increase fines and prison sentences every year. I don’t see where there’s room for “strategic change,” particularly at the level of a field office director.

The second item, “Leading People,” is interesting not so much because there’s anything remarkable here — it’s all standard MBA-speak — but because it contradicts a key tenet of the Antitrust Division’s mission. Note the ECQ states the executive “facilitates cooperation and teamwork, and supports constructive resolution of conflicts.” That’s more then a little ironic — after all, the Antitrust Division’s purpose is to create and maximize conflict, both between businesses and the government, and between businesses themselves.

The Antitrust Division’s key program is its “Corporate Leniency Policy,” which in the Division’s own words spurs a “race to the prosecutor” by firms to obtain a full pardon in exchange for implicating competitors in illegal “price fixing.” The Division uses the pardon recipient’s accusations to coerce guilty pleas from competing firms and individual executives. The Division is generating conflict for its own sake, as evidenced by one senior Division official’s recent remarks:

Over the last three decades sanctions imposed in cartel cases brought by the Antitrust Division have increased exponentially. This increase is attributable to a number of factors, including increases in maximum penalties for antitrust crimes, the Antitrust Division’s reallocation of resources to focus on international cases involving larger volumes of commerce, and the change in perception by judges as to the seriousness of antitrust crimes. These factors came together in the 1990s to produce record fines, and this trend has continued in the 21st Century.

The Antitrust Division’s sentencing statistics over the last two decades show a steady trend toward higher corporate fines for cartel offenses and longer jail sentences for individuals. For example, in Fiscal Year 1991 the average corporate fine for an antitrust offense in the United States was a little less than $320,000 and the largest corporate fine ever imposed for a single Sherman Act count was $2 million. In the mid-1990′s the amount of corporate fines began to grow steadily, with multimillion dollar fines becoming more commonplace. In 1996, corporate fines reached a new order of magnitude when the Archer Daniels Midland Company (“ADM”) paid a $100 million fine for its participation in two international antitrust conspiracies (lysine and citric acid) in the food and feed additives industry. Then-Deputy Assistant Attorney General of the Antitrust Division Gary Spratling predicted that the historic ADM fine was not an aberration, and that we would see more corporate fines in criminal antitrust cases above $100 million. This prediction quickly proved to be accurate. In April 1998, UCAR International agreed to pay a $110 million fine for its participation in the graphite electrodes conspiracy and in 1999, SGL agreed to pay a $135 million for its role in the graphite electrodes conspiracy. These record fines were quickly eclipsed in May 1999 when the worldwide vitamin cartel was exposed and pharmaceutical giant F. Hoffmann-La Roche Ltd agreed to plead guilty and pay a record $500 million criminal fine for leading the conspiracy and BASF AG agreed to pay a $225 million fine for its role.

The ADM fine truly was the tip of the iceberg for large corporate antitrust fines. The Antitrust Division’s record of cracking large international cartels affecting huge amounts of commerce and obtaining nine-figure fines has continued in the new millennium with the Antitrust Division’s prosecutions of cartels in the air transportation (more than $1.6 billion in criminal fines obtained to date), liquid crystal display (more than $860 million in criminal fines obtained to date), and dynamic random access memory (more than $730 million in criminal fines obtained to date) industries, among others. To date, the Antitrust Division has obtained 18 fines above $100 million and this trend shows no signs of decline, with the Antitrust Division obtaining just over $1 billion in fines in Fiscal Year 2009.

This is not “constructive resolution of conflicts.” It’s destructive generation of conflict that removes valuable capital from the marketplace — remember, all that fine money goes straight to the U.S. Treasury — while raising business costs as firms struggle to keep up with the Division’s exponentially increasing aggression.

Of course, I suppose this addresses the third ECQ — “Results Driven” — in that the Division is 100 percent driven by results. That said, this ECQ also says managers must “make decisions that produce high-quality results by applying technical knowledge, analyzing problems, and calculating risks.” There’s no real risk-calculation in antitrust, because there’s no consequences for failure. Sure, you might have a case go to trial and lose — it happens, albeit rarely — but no manager will be disciplined and the Division won’t face a lost of customer support because, hello, there are no customers.

As far as the Antitrust Division is concerned, “there are no false positives,” as Christine Varney, the current head of the Division, said, and thus no risk a decision will have any negative costs. Whether a department head carefully analyzes his decisions or simply throws darts at a board to pick his targets, it really doesn’t matter.

This also speaks to the fourth ECQ, “Business Acumen.” While even government offices have limited budgets and resources to manage, there’s no incentive to do so “strategically,” since there’s no possibility of failure.

The final ECQ — “Building Coalitions” — may sound innocuous but, in many respects, is the most disturbing of all. What we’re really talking about here is bureaucratic turf-building. The more domestic and foreign agencies you ally yourself with, the more insulated you become from the “customers” you claim to serve. I noted this in my earlier post on the International Competition Network, and I’ll cite another section here from the Antitrust Division speech I referred to above:

The Antitrust Division’s detection and prosecution of the worldwide vitamin cartel was important not only because it resulted in record fines, but because for the first time a foreign executive agreed to serve time in U.S. prison for his participation in an international cartel. The historic plea agreement the Antitrust Division entered into in May 1999 with a Swiss vitamin executive was the first that called for the imposition of jail time for a foreign national who had participated in an international cartel. This plea agreement marked a watershed in the Antitrust Division’s prosecution of international cartels. Before the filing of this case, foreign defendants prosecuted for their participation in international cartels, such as the lysine and citric acid cartels, had pled guilty but the Division did not seek a jail sentence in return for their admission of guilt, cooperation, and submission to U.S. jurisdiction. When the Division began prosecuting international cartels, just convincing a foreign national to submit to U.S. jurisdiction and plead guilty was a major achievement. At that time, a no-jail deal was necessary for the Division to secure access to an important foreign witness or key foreign-located documents.

However, by 1999, the Antitrust Division’s ability to successfully investigate and prosecute foreign nationals who violate U.S. antitrust laws had significantly advanced, with enhanced investigative tools and increased international cooperation. Thus, “no-jail” deals became a relic of the past. Division practice now is to insist on jail sentences for all defendants domestic and foreign. The Division will not agree to a “no-jail” sentence for any defendant, and our practice is not to remain silent at sentencing if a defendant argues for a no-jail sentence.

Since May 1999, more than 40 foreign defendants have served, or are serving, prison sentences in the United States for participating in an international cartel or for obstructing an investigation of an international cartel. Foreign nationals from France, Germany, Japan, Korea, Norway, the Netherlands, Sweden, Switzerland, Taiwan and the United Kingdom are among those defendants. The antitrust bar and business community understand that the Division is serious about its policy of insisting on jail sentences for both U.S. and foreign defendants. This realization provides further incentive for corporations to apply for leniency so that their cooperating executives will receive non-prosecution coverage. And if leniency is no longer available in an investigation, the Division’s insistence on jail terms encourages executives to come in early to cooperate to minimize their jail time and companies to come in early to minimize the number of individual carve outs who could be subject to jail sentences.

So “building coalitions” means colluding with foreign governments to help imprison more of their own citizens — in a hostile foreign country — which further increases the burden on the Antitrust Division’s “customers” to support these extended criminal prosecutions and incarcerations.

If the Antitrust Division were held to any sort of truth-in-advertising standard, it would define the qualifications for its new bureau chief more succinctly: “We seek a borderline sociopath with a law degree who enjoys prosecuting people for fun — especially foreigners.” You might actually get more applicants with that ad.

{ 3 comments }

newson May 19, 2010 at 11:55 pm

selection bias in action. only an absolute flake could stomach the recruitment process.

Guard May 24, 2010 at 7:50 am

Right on. I see a lot of wonderful job hunting advice on the internet that basically boils down to “bring your knee pads to the interview”. It seems that the only thing of primary value in our society is political pull and submission to the establishment thought police.

Kip July 27, 2010 at 3:16 am

You really have to love the whole job description core though. While focusing on this specific one is entertaining, you should get your hands on other job descriptions and see how the goals they set out compare to these. I swear most HR staff have little ambition or motivation to actually work on these things so they just copy and paste from others they find.

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