“Comprehensive and Innovative” Antitrust Compliance Policy Results in Reduced Fine

On November 2, 2015, the U.S. District Court for the Southern District of Ohio entered judgment against Kayaba Industry Co., Ltd. d/b/a KYB Corporation (KYB), a Japanese manufacturer of shock absorbers, in connection with the company’s plea of guilty to a long-running antitrust conspiracy involving price-fixing, bid-rigging, and market allocation. Although the U.S. Sentencing Guidelines’ formula for calculating Kayaba’s criminal fine yielded a recommended range of $103 million to $207 million, the U.S. Department of Justice Antitrust Division (DOJ) and Kayaba jointly recommended a substantially lower fine of $62 million, with no restitution or term of probation. In justifying this downward departure, DOJ’s sentencing memorandum detailed Kayaba’s prompt implementation of “a comprehensive and innovative compliance policy” that “sought to change the culture of the company to prevent recurrence of the offense,” and emphasized that “[s]enior management’s efforts set the tone at the top and made compliance with the antitrust laws a true corporate priority.” The court accepted the parties’ joint recommendations in imposing its judgment, making the DOJ’s sentencing memorandum a key roadmap for devising, implementing and evaluating corporate antitrust compliance programs.

First Charges in DOJ Investigation of Heir Location Services Industry

On December 23, 2015, DOJ filed the first criminal charges in its ongoing investigation of antitrust violations in the heir location services industry. Heir location firms identify potential heirs to estates of people who died without wills, and help secure such inheritances on a contingency-fee basis. DOJ simultaneously announced that the California-based defendants have agreed to plead guilty to a nearly decade-long customer-allocation arrangement with another firm, and to cooperate with the ongoing investigation. Pursuant to the agreement, the corporate defendant will pay an $890,000 fine, and the court will decide the appropriate criminal sentence for the individual defendant.

On January 14, DOJ announced the filing of similar customer-allocation charges against the owner of a Massachusetts-based heir location firm. The defendant in that case also has agreed to plead guilty and cooperate with the ongoing investigation. Both cases currently are pending in the U.S. District Court for the Northern District of Illinois.

FTC and Trade Association File Dueling Amicus Briefs in Seventh Circuit Robinson-Patman Dispute

On November 2, 2015, the Federal Trade Commission (FTC) filed an amicus curiae brief in the U.S. Court of Appeals for the Seventh Circuit, urging reversal of a February 2015 district court decision in a dispute between Wisconsin-based grocery chain Woodman’s Food Market, Inc., and household products manufacturer Clorox. The district court’s decision allowed Woodman’s to proceed on its claim that Clorox violated the Robinson-Patman Act by discontinuing sales of “large pack” sizes of certain products to Woodman’s while continuing to sell those sizes to warehouse club retailers. As detailed in a November 5 announcement, FTC’s brief argues that the decades-old administrative decisions on which the district court’s opinion relied are “no longer good law because they are out-of-step with more recent FTC and federal court cases that interpret the Robinson-Patman Act narrowly and consistently with other antitrust laws.” On December 2, 2015, the National Grocers Association filed its own amicus brief, arguing that the district court’s decision was correct. The appeal is currently pending oral argument before the Seventh Circuit, and the district court litigation is stayed pending the outcome of the appeal.