The ABA Antitrust Spring Meeting wrapped up last Friday in Washington, D.C. The program was extensive, covering all aspects of competition law as well as some consumer protection issues. I try to attend some of the non-cartel programs because I don’t get a chance to follow those issues as closely in my regular practice. A particularly interesting program—Hot Topics—covered many cutting edge issues in health care such as “pay to play,” product hopping and health care related mergers. And, of course, much of the time at the Spring meeting is catching up with old friends from around the world and meeting new ones.
Even just on the cartel front, the breadth of topics was deep and I did not attend every cartel related program. But, I did want to pass on a few items that I found interesting and thought others might as well.
- Attorney General Eric Holder spoke at the Spring Meeting.
After noting the Division’s impressive statistics during his tenure, the AG remarked: “I expect there will be more significant news on the criminal side in the next few weeks.” Bill Baer, Assistant Attorney General for the Antitrust Division, remarked: “I want to assure you that right after this meeting ends I’m going to go back to the office and call him to find out what he thinks is coming.” I’ll hazard a guess in one area: there could be criminal indictments against companies and individuals in the Forex investigation. I base this on the fact that it would be a notable achievement for Holder who has sometimes been criticized for settling cases for big $$ against the financial institutions, but not holding individuals accountable. Also, the conversations in Forex related chat rooms using names like the “cartel club” and “the bandits club” would certainly invite individual prosecutions. Finally, some of the Forex conduct under investigation took place after the Libor prosecutions had begun, another fact that could prompt ratcheting up the level of prosecutions against both individuals and recidivist corporations.
- The FTAIA Commands Attention
The FTAIA was the specific focus of one program led by Mark Rosman: “Through the Looking Glass: When ‘Direct’ Means ‘Indirect'” but the FTAIA was spoken about in several panels. There were some interesting statistics provided about the extent of international cartel prosecutions: from 1997 to 2012 the Antitrust Division imposed 123 fines of over $10 million, and of these, 107 were imposed on foreign companies. Similarly, of the $7.8 billion in fines imposed during that period foreign companies paid 97% of the fines. But, the Antitrust Division noted two facts that put these numbers in context. First, 75% of multi-national companies are non-US based and volume of commerce is main driver so its logical that largest fines come in international cartel cases. Also, Division officials emphasized that almost all of these fines involved direct commerce. The price-fixed product was shipped directly into the United States. When I was with the Division, every international cartel investigation I worked on involved direct commerce. Because of this, the FTAIA to date has had little effect on the Division’s international cartel enforcement program. Still, the Division has an intense interest in the development of case law concerning the FTAIA because it wants to preserve the option to bring a “components” based case in the right circumstances. The Division’s Appellate Section was involved in three recent FTAIA related cases. One, of course was AU Optronics, which was an Antitrust Division prosecution that involved both direct import and component (i.e. FTAIA) commerce. The Division also filed amicus briefs in Lotes in the Second Circuit and Motorola Mobility in the Seventh Circuit.
- Double Counting.
Brent Snyder, the Deputy Assistant Attorney General for Criminal Enforcement addressed the concern about double counting, a concern of defendants that they are being punished in a fast growing number of jurisdictions for the same conduct. While Snyder acknowledged “if another jurisdiction imposes a fine, we are not obliged to take that into account,” he added “the vast majority of the cases that we bring, our fines are calculated using direct U.S. imports.” Jon Pecman, Canada’s Commissioner of Competition, noted that while enforcement agencies have a high-level of “pick up the phone” cooperation on the front end of investigations; there could be better communication at the back end in determining a fine. If early jurisdiction, usually the US, impose a fine without taking into account what a corporate defendant may have to pay later, there may be a problem of not enough money to go around (or from the defendant’s point of view, too many hands seeking too much money.)
- Compliance Monitor
Brent Synder also commented on the Division’s discretion to seek a compliance monitor as a part of a corporate defendants’ sentence. Snyder has previously addressed the subject in speeches and noted that the Division may seek a monitor if circumstances indicate there is an increased risk of recidivism. These factors can include whether the company has refused to accept responsibility; whether the company has taken steps to implement an effective compliance and ethics program; and whether the company continues to employ high level executives who the Division believes were involved in a cartel but have not accepted responsibility. Any one factor, or a combination of factors may lead the Division to seek a compliance monitor.
- AU Optronics Probation Hearing
AU Optronics was convicted of participating in the LCD price-fixing cartel. As part of the company’s sentence, it was placed on probation and ordered to implement an effective compliance and ethics program. (Oh yeah, and fined $500 million too.) This was the first time the Division sought a compliance monitor for a corporate defendant. The probation officer in the case petitioned the court to hold a probation violation hearing stating “We have probable cause to believe that AUO has violated its probation.” The petition stated that as of March 19th the company had only hired part-time compliance officer. There is hearing before Judge Illston on May 1, 2015. If the company is found to have violated probation, the court could increase the length of its time on probation and increase the fine from $500 million up to a maximum of $1 billion.
- Credit for Compliance Programs
When it comes to cartels, when Brent Snyder speaks, people listen. So, I’ll also pass on his comments on whether the Division will ever give credit to a company for having an effective compliance program. Snyder has covered this topic in previous speeches. He again noted that at sentencing the Division has never moved for a 3-point culpability reduction under the Sentencing Guidelines because the reduction is not available when high-level personnel are involved in the crime. Snyder noted that price-fixing conspiracies usually involve not only high-level executives, but multiple layers of executives in the company. The DOJ is simply following the guidelines, as it must. The other way the Division could take an effective compliance program into account is at the charging stage. And, Snyder did note that perhaps the door is “open a crack” to a case where a low-level rogue employee is the sole person in a company involved in price-fixing. But Snyder noted, “the lone rogue employee is something like Big Foot—often talked about but never actually seen.”
- Navigating Tricky Waters—India
I also attended a breakfast program hosted by Amarchand Mangaldas, a leading law firm in India. The program covered all aspects of the development competition law in India; abuse of dominance, merger control and restrictive agreements/cartels. Naval Chopra spoke on cartels. He noted that at the present time, the Competition Commission of India (CCI) has been focusing on trade associations, believing, that while they serve legitimate pro-competitive purposes, they also provide a forum for competitors to cooperate on anticompetitive agreements. Mr. Chopra also noted that the CCI has brought actions against individuals who can receive substantial fines. Also, Mr. Chopra noted that the Competition Appellate Tribunal (COMPAT) and the Supreme Court of India have begun to issue opinions that are giving shape to, and in some cases limiting, the power of the CCI.
Thanks for reading. While I tried to capture the essence of the remarks at the meeting, this post is very brief compared to the depth of the programs. Also, any errors or mistakes are mine.