Category Archives: criminal antitrust

DOJ Antitrust Division announces criminal fines for FY 2014

Posted on by under criminal antitrust, DOJ, statistics, Uncategorized

ANTITRUST DIVISION ANNOUNCES FISCAL YEAR TOTAL IN CRIMINAL FINES COLLECTED

The Department of Justice collected $1.861 billion in criminal fines and penalties resulting from Antitrust Division prosecutions in the fiscal year that ended on Sept. 30, 2014. Contributing in part to one of the largest yearly collections for the division, five of the companies paid in full penalties that exceeded $100 million, including a $425 million criminal fine levied against Bridgestone Corp., the fourth-largest fine the Antitrust Division has ever obtained.  The second-largest fine collected was a $195 million criminal fine levied against Hitachi Automotive Systems Ltd.  The three additional companies that paid fines and penalties exceeding $100 million were Mitsubishi Electric Corp. with $190 million, Toyo Tire & Rubber Co. Ltd. with $120 million and JTEKT Corp. with $103.2 million. The collection total also includes penalties of more than $561 million received as a result of the division’s LIBOR investigation, which has been conducted in cooperation with the Justice Department’s Criminal Division. In addition, in the last fiscal year the division obtained jail terms for 21 individual defendants, with an average sentence of 26 months, the third-highest average ever.

“The size of these penalties is an unfortunate reminder of the powerful temptation to cheat the American consumer and profit from collusion,” said Assistant Attorney General Bill Baer for the Antitrust Division.  “We remain committed to ensuring that corporations and individuals who collude face serious consequences for their crimes.”

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Germany’s Andreas Mundt rejects idea of criminal sanctions for antitrust violators

Posted on by under cartels, criminal antitrust, DOJ, Germany, South Africa

Germany won’t join jurisdictions with criminal competition penalties

The head of the federal cartel office, the Bundeskartellamt’s Andreas Mundt, reportedly dismissed the idea of introducing criminal sanctions for competition-law offences.  Speaking at the GFR Society for Law and Policy’s event, he called imprisonment a “severe weapon” that had no place in the “rarely [] crystal clear matter” of cartel violations, where “the lines are often blurred.”

Among the countries that do have a criminal antitrust regime (usually only for “hard-core” offences, such as price-fixing or bid-rigging and market allocation among horizontal competitors), the most well-known is of course the United States, whose Sherman Act made cartel violations a criminal felony as far back as 1890.  Among the more recent acolytes of criminal penalties are newer competition-law jurisdictions, such as South Africa and Kenya.

International precedent-setting institutions and enforcers’ recommendations tend towards identifying the positive effect of criminal antitrust penalties:

OECD, 3rd Hard-Core Cartel Report (2005):

  • Recommends that governments consider the introduction and imposition of criminal antitrust sanctions against individuals to enhance deterrence and incentives to cooperate through leniency programmes.

U.S. Department of Justice, Tom Barnett (2008):

  • “Jail time creates the most effective, necessary deterrent.”
  • “[N]othing in our enforcement arsenal has as great a deterrent as the threat of substantial jail time in a United States prison, either as a result of a criminal trial or a guilty plea.”

Cornerstones of a successful criminal antitrust regime commonly include the following:

  • Crystal-clear demarcation of criminal vs. civil conduct
  • Highly effective leniency policy also applies to individuals
  • Standard of proof must be met beyond a reasonable doubt
  • No blanket liability for negligent directors – only actors liable
  • Plea bargaining to be used as an effective tool to reduce sentence
  • Clear pronouncements by enforcement agency to help counsel predict outcomes

Demarcation of criminal vs civil antitrust conduct in U.S.

Price-fixers beware: U.S. DOJ scores first-ever pure antitrust-based extradition from E.U.

Posted on by under cartels, criminal antitrust, DOJ, extradition

From DOJ: First-Ever Pure Antitrust Extradition

In what may well affect African and other international price-fixers going forward, the spectre of U.S. extradition for criminal antitrust charges has been reinforced by the recent successful DOJ extradition request in the “Marine Hose” cartel.  An Italian national was extradited from Germany to face bid-rigging charges.

“First-ever”?! Some readers may recall the carbon products cartel and a certain Mr. Ian Norris, the then-Morgan Crucible chief executive, who had been extradited from the U.K. to the United States back in 2010.  Yet, that was not a pure antitrust charge, but he was rather extradited on a technicality, if you will, namely the “obstruction of justice” charge, given the lack of reciprocal or dual criminality of the underlying price-fixing offense in the two countries at the time the competition offense had been committed in the early 1990s.

The Marine Hose cartel extradition is different: In this case, the DOJ succeeded, for the first time ever, in securing an extradition solely on a competition-law offense being charged.

What follows is the DOJ press release text:

WASHINGTON — Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices and allocating market shares for sales of marine hose sold in the United States and elsewhere, the Department of Justice announced today. This marks the first successfully litigated extradition on an antitrust charge.

Pisciotti, a former executive with Parker ITR Srl, a marine hose manufacturer headquartered in Veniano, Italy, was arrested in Germany on June 17, 2013. He arrived in the Southern District of Florida, in Miami, yesterday and is scheduled to make his initial appearance today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, at 11:00 a.m. EDT.

“This first of its kind extradition on an antitrust charge allows the department to bring an alleged price fixer to the United States to face charges of participating in a worldwide conspiracy,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “This marks a significant step forward in our ongoing efforts to work with our international antitrust colleagues to ensure that those who seek to subvert U.S. law are brought to justice.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to a one-count felony indictment filed under seal on Aug. 26, 2010, and ordered unsealed on Aug. 5, 2013, in U.S. District Court in the Southern District of Florida, Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies. As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. That coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy. The department said the conspiracy began at least as early as 1999 and continued until at least May 2007. Pisciotti was charged with joining and participating in the conspiracy from at least as early as 1999 until at least November 2006.

Pisciotti is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

As a result of the department’s ongoing marine hose investigation, five companies, including Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd, of the United Kingdom, and nine individuals have pleaded guilty.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation. The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter. The Criminal Division’s Office of International Affairs provided assistance.