Antitrust Criminal Enforcement

by Michael Volkov

antitrustcriminalThe Antitrust Division has always had a special place in the Department of Justice.  It is a world unto itself.

Depending on the Administration, the Antitrust Division can rise or fall in the enforcement world.  The change in enforcement is most pronounced in the civil arena – mergers and civil enforcement.

Criminal enforcement is something everyone agrees on – price-fixing, territorial allocations and other agreements among horizontal competitors can cause significant harm to consumers.

The Antitrust Division has a mature criminal enforcement program and was extremely successful starting in the 1990s when it initiated its leniency program.  By offering the first company a criminal pass (and de-trebling civil damages to single damages), the Antitrust Division created huge incentives for companies to disclose cartel activity and cooperate against other members of a cartel.

In the last few years, the Antitrust Division has seen a significant rise in criminal enforcement, along with some major criminal trial victories.  Last year, the Antitrust Division recovered over $1.1 billion in criminal fines, a strong year.antitrust

More significantly, the Antitrust Division won a number of criminal trials, including a major victory against AU Optronics and two executives for its participation in a cartel involving computer and television screens.  AU Optronics defied the rule of corporate defendants going to trial and paid a big price, a $500 million fine.  The trial judge also required AU Optronics to retain a corporate monitor as part of its sentence.

The Antitrust Division has never had a stellar reputation when it comes to trials.  Last year was a different story.

Aside from these trial victories, the Antitrust Division is building the largest criminal case it has ever prosecuted.  It is investigating a massive, sprawling cartel among suppliers to the auto companies.  This investigation, which is focused on electrical wire harnesses, heater controls, radiators and other parts, began over three years ago.

Twelve Japanese individuals have been imprisoned in United States prisons.  More are expected to be charged in the next year.  Criminal fines have totaled nearly $800 million in the United States.  In addition, the industry is under investigation by the EU and the Japan Fair Trade Commission.

The cartel involved at least four companies and continued over a decade beginning in 2000.  The cartel members fixed price levels on bids for supplying parts to individual vehicle models in response to requests for quotes.

antitrust3Most of the cartel activity occurred outside the United States.  As in the case of the FCPA, the extra-territorial reach of our criminal antitrust laws is fairly well settled given the harmful impact that an international cartel can have on American consumers.

Given the clear boundaries of criminal antitrust conduct, companies need to address compliance risks in the antitrust area.  For some reason, compliance work has not been as robust in the antitrust arena.   That needs to change given the clear risks to companies from criminal enforcement and follow-on civil litigation.

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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Michael Volkov

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