Five Important Lessons From The Antitrust Division’s Record Criminal Settlement

by Michael Volkov
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fiveIn a fitting tribute to the departing Deputy Assistant Attorney General Scott Hammond, the architect of the Antitrust Division’s criminal enforcement plan, the Department of Justice last week announced a record criminal settlement in its largest criminal investigation ever – the auto parts investigation.

Nine Japanese companies and two executives agree to plead guilty and pay fines totaling more than $740 million for a price fixing conspiracy involving over 30 different products sold to US car manufacturers.  The recent settlements bring the total numbers to 20 companies and 21 executives who have been charged.  The 20 companies have paid over $1.6 billion in criminal fines.  Seventeen of the 21 executives charged have been sentenced to jail time.  The companies and the individuals have agreed to cooperate in the ongoing investigation.

The conspiracies involved price agreements, supply agreements and territorial allocations.  The participants met in remote locations to work out their illegal agreements and used a set of code names to carry out their illegal agreements.

The significance of this recent announcement is five-fold.five4

First, the agreement of all of the Japanese companies to cooperate in future investigations is likely to lead to more defendants being charged in the same auto parts industries and in closely related industries.  The Antitrust Division is very effective in rolling one investigation into a new one by developing intelligence about other active cartels.

Second, the announcement underscores (yet again) the significance of antitrust cooperation around the globe.  Unlike the anti-corruption area which is catching up, antitrust enforcement agencies around the globe have created a very effective framework in which to share information, coordinate investigations, and coordinate successful prosecutions.

The massive auto supply investigation involved the European Commission, the Japanese Fair Trade Commission, the Canadian Competition Bureau, Korean Fair Trade Commission, Mexican Federal Economic Competition Commission and Australian Competition and Consumer Commission.

Third, the Antitrust Division’s successful prosecution demonstrates the effectiveness of the corporate leniency program.  Companies which discover cartel activity have a strong incentive to cooperate as quickly as possible in an investigation to secure a reduced fine, or in the case of the first company to report a cartel, immunity.

five2Fourth, the cooperation of so many companies is likely to lead to a related FCPA corruption investigation.  Frankly, there probably is an ongoing investigation based on the cooperation of other companies which plead guilty last year.

Fifth, and most importantly, companies in related industries should immediately conduct 9f they have not already) an antitrust audit to ensure complaince and that there is no apparent cartel conduct  If there is suspicious activity, the sooner a company investigates, the better for the company.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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