Supreme Court Declines Review of Fourth Circuit Ruling in U.S. v. Contech and Brewbaker

According to an article by the Baker McKenzie firm, The US Supreme Court has declined to review the Fourth Circuit’s reversal of the Department of Justice’s (DOJ) criminal conviction of a Contech executive under the Sherman Act in U.S. v. Contech and Brewbaker leaving a key ruling intact that limits the per se antitrust rule in cases involving hybrid vertical and horizontal relationships.

In 2020, Contech and its executive were indicted for allegedly rigging bids on North Carolina Department of Transportation (NCDOT) contracts. Though Contech and Pomona Pipe were competitors, they also had a supplier-distributor relationship. 

The DOJ argued the arrangement was purely horizontal and applied the per se rule, which deems certain conduct—like bid-rigging—automatically illegal. The district court convicted the executive, but the Fourth Circuit reversed, holding that the hybrid relationship required a “rule of reason” analysis, which assesses both anticompetitive and procompetitive effects. Economic evidence suggested the coordination might have increased competition among other manufacturers, undermining the DOJ’s case.

The Supreme Court’s denial leaves the Fourth Circuit’s ruling in place, narrowing the per se rule’s applicability. Prosecutors must now evaluate the vertical aspects of dual distribution relationships before pursuing criminal charges. This shift forces the DOJ to reconsider its approach, as hybrid relationships can no longer be presumed illegal without deeper economic scrutiny.

For in-house counsel, the ruling underscores the need to structure supply and distribution agreements to withstand antitrust scrutiny. Agreements should clearly delineate vertical elements that may offer pro-competitive benefits. Counsel should also prepare for the DOJ’s potential shift toward fraud-based prosecutions in bid-rigging cases and monitor developments that may lead to circuit splits or further Supreme Court review.