UK Libor Defendant Defends on Basis of No Compliance Training

June 2, 2015 by Robert Connolly

I recently wrote about compliance issues in the FOREX investigation (here), where 5 banks just agreed to pay nearly $6 billion for fixing the price of foreign exchange rates. But, the earlier Libor investigation is also still in the news. Tom Hayes, a former UBS and Citigroup trader, is one of the few individual defendants (so far) to be charged for his alleged role in the vast financial price fixing cases. Hayes has been charged in the UK with being the “ringleader” of the Libor rate rigging scheme. He is currently on trial. Hayes claimed that the rate rigging was industry wide. He also claimed he was “confused about everything,” including what rules may have been broken. He added: “As far as I was concerned, any rules I’d broke were retrospectively being applied. And I wasn’t sure … Libor wasn’t a regulated product. We had no compliance training. No rules were outlined to us.” Hayes didn’t deny he knew he was engaging in “dodgy” activity but pleaded “I knew I was operating in a grey area. I knew that I probably shouldn’t do it but like I said I was participating in an industry wide practice at UBS that pre-dated my arrival and post-dated my departure. The full story is here in The Telegraph.

Hayes initially agreed to plead guilty and cooperate in return for a lighter sentence. He gave a full confession to Britain’s Serious Fraud Office. He later changed his mind and apparently decided to appeal to a jury that: a) he is being singled out for an industry wide practice; and b) he had no training on the rules.

This will be an interesting trial. Hayes “confessed” but is still hoping a jury will acquit him for lack of intent (or simply jury nullification.) The public rightly clamors for individuals to be held accountable, yet this is no easy task. And, if prosecutors were to try to go to levels above traders like Hays, the going gets even tougher. The general public is sure the higher-ups “knew what was going on.” But when an individual is chosen on a jury she generally take the oath of “proof beyond a doubt” very seriously. And there is a wide gap (often referred to as acquittal) between “they must have known what was going on” and “proof beyond a reasonable doubt.” I often wonder if the government wouldn’t be better off going after some higher-ups on a civil case for damages and other remedies. It is not the deterrent that a criminal case would be, but a”more likely than not” standard of guilt is more likely than not to produce some deterrence. It is better than no prosecution at all. Otherwise, nothing seems to change. Sadly, the Libor investigation predated the Forex investigation. So, while governments around the world were investigating and prosecuting the banks for rate rigging on Libor, colleagues were still busy in chat rooms labeled “The Cartel” fixing foreign exchange rates.

Thanks for reading.

Some Thoughts On Compliance and Other Issues Raised by the Forex Guilty Pleas

May 28, 2015 by Robert Connolly

It’s been almost two weeks since the Department of Justice announced its plea agreements in the Forex investigation. To recap the highlights, in his remarks announcing the case filings, Bill Baer Assistant Attorney General for the Antitrust Division said (here):

Today’s guilty pleas to criminal charges represent major developments in our investigation into collusion affecting foreign exchange markets, particularly the spot market for trading U.S. dollars and euros. The antitrust guilty pleas announced today involving four major international financial institutions – Citicorp, JPMorgan Chase, The Royal Bank of Scotland and Barclays – are without precedent. In light of the seriousness of the crimes and the unjustified benefit to the bottom lines of these banks, we demanded parent-level guilty pleas, secured record fines of more than $2.5 billion and insisted upon three years of court-supervised probation.

In addition, UBS agreed to plead guilty to a violation in the Libor market. UBS had previously received non-prosecution protection in the Libor investigation, but that protection was withdrawn in light of UBS’s participation in the Forex cartel.

Since the news of the case filings first broke, I’ve had some additional thoughts on the matter. First, I want to give a big pat on the back to my former colleague, Joe Muoio, who signed the pleadings on behalf of the Antitrust Division. Joe and I worked together for many years in the now closed Philadelphia Field office. Joe was the Assistant Chief and transferred to the New York Field office when the Philadelphia office was closed in 2013. The Forex investigation was a team effort (a large international team, no doubt) and there could not have a better team leader than Joe. Congratulations to Joe and the rest of the team. [Read more…]

DOJ Files Brief Opposing Cert in AU Optronics

May 26, 2015 by Robert Connolly

On May 15th, the Department of Justice filed a brief (here) in the United States Supreme Court opposing the AU Optronics defendants’ request for the Court to grant cert. The DOJ argued that the Ninth Circuit decision upholding the conviction of AU Optronics and two of its executives was without error and that the decision was in harmony with the Seventh Circuit decision in Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (2015), petition for cert. pending, No. 14-1122 (filed Mar. 16, 2015) (Motorola).

Summary of DOJ Brief

AU Optronics raised three points in seeking Supreme Court review. The defendants’ contended their convictions could not be sustained because: (1) the LCD price-fixing conspiracy did not involve U.S. import commerce; (2) the cartel did not directly affect U.S. commerce within the meaning of the FTAIA; and (3) any agreement should have been judged under a rule of reason standard, not the per se rule, because the agreement involved foreign conduct.

Import Commerce–Price-fixed TFT-LCD panels reached the United States as imports shipped from the conspiring manufacturers to purchasing companies in the United States. There was evidence in the case that AU Optronics directly imported TFT-LCD panels into the United States. AU Optronics disputed that evidence. But the DOJ replied that the evidence was overwhelming that some conspirators directly imported panels into the U.S. “At trial, the government’s expert economist testified that 2.6 million of the conspirators’ price-fixed raw panels—priced at more than $638 million—were shipped into the United States between 2001 and 2006.” The DOJ noted that AU Optronics was responsible for the acts of all of its co-conspirators.

But there was no need to consider separately the import sales by individual conspirators, or to parse out the percentage of sales undertaken by petitioners. The Sherman Act applies to “conduct involving * * * import trade or import commerce.” 15 U.S.C. 6a. The term “conduct” refers to activity that might violate the Sherman Act—in this case, a single antitrust conspiracy among AUO and other manufacturers to fix the price of TFT-LCD panels. Accordingly, whether the charged conspiracy involved import commerce turns not on the acts of any particular defendant, but on whether the price-fixing agreement and acts of any conspirator furthering that agreement involved import commerce.

The DOJ also noted uphold AU Optronics condition on the basis of import commerce was consistent with dicta in Motorola: “[h]ad the defendants conspired to sell LCD panels to Motorola in the United States at inflated prices, they would be subject to the Sherman Act because of the exception in the [FTAIA] for importing.” [Sometimes lost in the discussion of Motorola is that the Seventh Circuit let stand Motorola’s damage action based on LCD screens actually bought by Motorola in the U.S. (i.e., imports outside the scope of the FTAIA.)

FTAIA–Price-fixed panels also were incorporated abroad into finished products—such as notebook computers and desktop monitors—that were later imported into the United States. The FTAIA provides that conduct involving non-import foreign commerce is subject to the Sherman Act if it has a “direct, substantial, and reasonably foreseeable effect” on U.S. commerce. The Ninth Circuit found that the FTAIA standard was satisfied. Some of the relevant facts cited by the DOJ and relied on by the Ninth Circuit:

“TFT-LCD panels are the single largest cost component of those finished products….”
“Witnesses from Dell and HP testified that increased panel prices led to increased prices for monitors and notebook computers sold in import commerce. As one conspirator put it: “[I]f the panel price goes up, then it will directly impact the monitor set price.”
“The conspiracy was very successful. The conspirators increased their margins an average of $53 per panel—on an average panel price of $205—through the group Crystal Meetings.
“The economist also testified that price-fixed panels, sold for $23.5 billion, entered the United States as components in notebook computers and desktop monitors.’

Again the DOJ brief noted the Ninth Circuit was in accord with the Seventh Circuit, which “assume[d] that the requirement of a direct, substantial, and reasonably foreseeable effect on domestic commerce has been satisfied.”

Application of the Per Se Rule

The AU Optronics defendants argued that the rule of reason, not per se rule, should apply because of a prior Ninth Circuit case that held that the per se rule did not apply to foreign conduct. Putting aside that there was a great deal of conspiratorial conduct in the United States, the DOJ wrote:

Moreover, the Ninth Circuit here construed its prior decision in Metro Industries, Inc. v. Sammi Corp., 82 F.3d 839, cert. denied, 519 U.S. 868 (1996), in a manner contrary to petitioners’ reading, making clear that Metro Industries “was not a price-fixing case” and that the rule-of-reason analysis it applied does not extend to “a horizontal price-fixing scheme * * * where both part of the conduct and the effects of that conduct occurred in the United States.

AU Optronics Consistent with Motorola

The AU Optronics defendants (and others) have tried to paint the Ninth Circuit and Seventh Circuit as being in conflict with each other because in AU Optronics the defendants were convicted of fixing the price of LCD panels but in Motorola, certain civil damage claims against the LCD defendants were dismissed. But, any conflict between the Ninth and Seventh Circuit is superficial. The DOJ brief explained the difference between a government enforcement action (AU Optronics) and a private damage action (Motorola).

The Motorola court’s analysis casts no doubt on the validity of petitioners’ criminal convictions. Unlike a private antitrust suit, which arises only when the private plaintiff is “injured in his business or property by reason of” the Sherman Act violation, 15 U.S.C. 15, government enforcement actions—whether a criminal prosecution or “proceedings in equity to prevent and restrain [Sherman Act] violations,” 15 U.S.C. 4—do not require any private injury. Instead, the government sues in its sovereign capacity to redress a violation of its laws. See Empagran, 542 U.S. at 170. The enforcement provision that can be invoked by the United States even when no plaintiff has suffered an injury.”), cert. dismissed, 539 U.S. 978 (2003), abrogated on other grounds, 542 U.S. 155 (2004). As the Motorola court itself explained, “[i]f price-fixing by the component manufacturers had the requisite statutory effect on cellphone prices in the United States, the Act would not block the Department of Justice from seeking criminal or injunctive remedies.

Comments

I’ve written earlier (here) that I did not think the Supreme Court would grant cert. in AU Optronics (or Motorola). The LCD “cartel ended when the FBI raided AU Optronics America office in Houston, Texas.” This does not sound like a good fact from which to launch an argument that the cartel was outside the scope of the Sherman Act.

There will, however, be future, more difficult cases for the courts, and eventually the Supreme Court, to consider. Both AU Optronics and Motorola recognize that, depending on the facts, fixing the price of goods sold abroad but used as components in products bound for the United States can have a “direct, substantial and reasonably foreseeable” effect on U.S. commerce within the meaning of FTAIA. But, those facts will not always be as simple as here where the LCD screens represented the largest component cost of finished product. And, $23.5 billion in component commerce passes any test of “substantial.” Also, the supply chain here was reasonably “direct.” A price fixed LCD screen went into the component that was then shipped into the finished product.

But, what if the price-fixed product was a raw material used to make the screen? And sold by a manufacture to distributors? Then, fabricators chemically treated the raw material and other fabricators added some other value enhancing process[es] before the raw material became a TFT-LCD screen? A myriad of fact patterns will test the courts ability to set the contours of what constitutes a “direct, substantial and reasonably foreseeable” effect on US commerce. In these “closer calls” the view of government enforcement agencies and private plaintiffs will sometimes (often?) diverge. International comity plays a role in defining the reach of the Sherman Act. As I have written about before (here) and (here), (and cited by Judge Posner in Motorola), enforcement agencies have “skin in the game” of respecting international comity and developing cooperation with foreign competition enforcement agencies. Private plaintiffs, on the other hand, are charged with advocating for the interest of their clients who may have a claim under the Sherman Act for price-fixing. Foreign governments who have filed amicus briefs asking courts to respect foreign comity interests in deciding the extraterritorial scope of the Sherman Act are principally concerned with having foreign companies hauled into U.S. courts and be subjected to the U.S. treble damage class action regime. This is going to a continuing area of judicial development. Eventually the reach of the Sherman Act in component price-fixing cases will have to be addressed by the Supreme Court. I just don’t believe that either AU Optronics or Motorola will be that case.

Thanks for reading.

My Antitrust Spring Meeting Interview with Capitol Forum

May 21, 2015 by Robert Connolly

During the ABA Antitrust Spring Meeting, I had the good fortune to be interviewed by David Blotner, Senior Editor of the Capitol Forum. The Capitol Forum is an in-depth news and analysis service dedicated to informing policymakers, investors, and industry stakeholders on how policy affects market competition. The Capitol Forum provides in-depth coverage of major antitrust matters such as the now abandoned Comcast-Time Warner merger. I was delighted to be asked to speak about cartel issues. David and I have known each other for years. He also was a career Antitrust Division prosecutor. And while I’m no Nostradamus, we did discuss the Forex investigation which just had big news yesterday. If you have a few minutes (around 27) here is a link to the video. And check out the Capitol Forum website, as well as their blog, for the complete coverage they offer.

Thanks for reading (or watching if you have the time).

Forex: $5.6 billion in Fines and Guilty Pleas from 5 Banks

May 20, 2015 by Robert Connolly

Today’s Forex news relates to what truly was a huge and brazen Cartel Caper:

May 20, 2015: Four major banks, Barclays, Citicorp, JPMorgan Chase & Co., and, The Royal Bank of Scotland plc, have agreed to plead to antitrust charges in the Forex investigation. UBS, has agreed to plead guilty to rate rigging charges in the Libor investigation. UBS had previously been given non-prosecution protection in Libor, but lost that because of its recidivism in Forex. In total, the five banks have agreed to pay more than $5.6 billion and plead guilty to multiple crimes related to manipulating foreign currencies and interest rates. The plea agreements are with various federal and state agencies.

In my opinion, charges against individuals are going to follow. The conduct was simply too egregious and costly to only take corporate pleas. And, the Forex cartel continued to operate during the Libor investigation. To get a flavor of the cartel’s operation, read:

The Department of Justice press release is here.

The remarks of Bill Baer at the press conference are here.

Sixth Annual Chicago Forum on International Antitrust Issues

May 20, 2015 by Robert Connolly

I want to give a plug to the Sixth Annual Chicago Forum on International Antitrust Issues being held Monday, June 8-Tuesday, June 9, 2015 at the Northwestern School of Law. I have been to this program in the past and it is excellent. And, this year my partner, Hays Gorey, Jr, is a speaker on one of the panels.

The featured speaker is Brent Snyder, Deputy Assistant Attorney General for Criminal Enforcement, Department of Justice, Antitrust Division. His topic is: “The Proliferation of Leniency Programs: Is Leniency Still an Offer Companies Should Not Refuse or Too Much of a Good Thing?”

There are many panels covering a range of international antitrust issues. Mr. Gorey will be on this panel:

Cascading Cartel Investigations — How to Recognize and Minimize the Risk

Recognizing and minimizing the risk may require proactive techniques to detect antitrust violations and to obtain leniency from the Department of Justice and other antitrust enforcement agencies.

Darrell Prescott, Partner, Baker & McKenzie LLP (moderator)

Hays Gorey, Jr., Partner, GeyerGorey LLP

Kurt Haegeman, Partner, Baker & McKenzie LLP, Brussels

Britt M. Miller, Partner, Mayer Brown LLP

Dr. John Scalf, Senior Consultant, NERA Economic Consulting

The program covers the latest developments in competition regulation around the globe providing practitioners and regulators with up-to-date and practical information. The full agenda can be found here.

Thanks for reading.

Bill Baer’s House Antitrust Oversight Committee Testimony

May 19, 2015 by Robert Connolly

On May 15, 2015 both Bill Baer, Assistant Attorney General, Antitrust Division and Edith Ramirez, Chair of the Federal Trade Commission, testified before the House subcommittee that overseas the competition agencies. This post is a brief summary of Bill Baer’s testimony as it relates to cartel enforcement. His statement to the committee is available here.

Funding—The President requested that the Antitrust Division receive an appropriation of $165 million, a 1.7% inflationary increase over 2015. The Antitrust Division’s budget is offset almost 50% by Hart-Scott-Rodino (HSR) premerger filing fees paid by companies planning to merge. Moreover, the Division routinely obtains criminal fines more than 10 times the annual budget. [The money does not go to the Division’s budget, a bit of a conflict of interest if that were to happen, but does support the Crime Victims Fund.

Some Statistics–Since 2009, the Division has obtained 122 convictions and more than $2 billion in fines and penalties from financial crimes prosecutions of collusion and fraud affecting municipal bond investment instruments, benchmark interest rates, and real estate and tax lien auctions. The Division recently secured a guilty plea in a case involving two companies using complex algorithms to fix prices for poster art online. The auto parts investigation is the largest criminal investigation in the Antitrust Division’s history and to date has resulted in charges against 35 companies and 52 individuals. Thus far, 30 executives and 35 corporations have pleaded guilty or agreed to do so and to pay more than $2.5 billion in criminal fines. Over 100 individual in four states, Alabama, California, Georgia, and North Carolina, for conspiring at local real estate foreclosure auctions.

Incarceration–Individual defendants are going to jail, and for increasing periods of incarceration. Between 2010 and 2014, the average number of individuals sentenced to prison increased 38 percent and the average sentence increased from 20 months to 25 months when compared with the previous five-year period.

Extradition–The Division will continue to seek opportunities for extradition of foreign nationals. Last year an Italian national was extradited from Germany for participating in a price-fixing/bid rigging conspiracy. The Division also extradited a Canadian national charged with conspiracy to defraud the Environmental Protection Agency’s cleanup of certain Superfund sites in New Jersey.

Two other recent items of note:

The Division recently lost a trial when Thomas Farmer was acquitted by a jury on charges that he had participated in a conspiracy to fix prices/rates for ocean shipping of cargo between the Untied States and Puerto Rico (here).

On May 18th, Phillip D. Murphy, the former managing director of Bank of America’s municipal derivatives group from 1998 to 2002, was sentenced to serve 26 months in prison for his role in a conspiracy to defraud related to bidding for contracts for the investment of municipal contracts (here). This is, I believe, the last of the munibond prosecutions–though some defendants still have appeals pending.

Thanks for reading.

Thomas Farmer Acquitted in Puerto Rico Shipping Price Fixing Trial

May 11, 2015 by Robert Connolly

After a three-week trial, Thomas Farmer, a former Crowley Liner Services Vice-President was acquitted of price-fixing and bid rigging charges by a jury in Puerto Rico. The trial was before Federal District Court Judge Daniel Dominguez. The jury was composed of six men and six women. They deliberated for three hours before returning their verdict. Framer had been indicted on March 21, 2013 on a charge of conspiracy to fix and rig Puerto Rico freight surcharges with counterparts from Horizon Lines and Sea Star Line in the U.S. mainland-Puerto Rico trade.

The acquittal marks the end of the Antitrust Division’s otherwise successful investigation into price-fixing on ocean shipping route between Puerto Rico and the United States. Farmer was the second executive to go to trial. Frank Peake, the former President of Sea Star, was convicted in 2013 on a similar charge (here). Peake’s case was noteworthy in that he was sentenced to five years in prison, a record sentence for a Sherman Act conviction (here). The Peake trial came after subordinates of his and co-conspirators from other companies had pled guilty and cooperated with the government. Peak’s direct subordinate at Sea Star, Peter Baci, was sentenced to 48 months in prison and fined $20,000. Peake’s counterpart at Horizon, Gabriel Serra, was sentenced to 34 months in prison. Other executives at Sea Star and Horizon had pled guilty, and received prison terms ranging from seven months to 29 months. Three companies have paid more than $46 million in fines for their involvement in a conspiracy that included setting rates, bid rigging and other practices.

Farmer faced a maximum sentence of ten years in prison. Farmer was represented by Joseph C. Laws, Melanie Matos Gilroy Cardona and Terrance Reed. Farmer was facing a maximum of ten years in prison if convicted and his legal team deserves great credit for the best outcome Farmer could have hoped for. But, there are great difficulties that the Antitrust Division faces in a “last man standing trial.” I am not familiar with the specifics of the Farmer trial but some of these inherent difficulties are:

Staleness: Farmer was indicted in March 2013. The indictment charged a conspiracy: “From at least as early as mid-2005, to in or about April 2008.” So, Farmer was indicted just before the five-year statute of limitations expired. His trial did not begin until more than two years after indictment. Farmer was tried in 2015 for conduct that ended in early 2008. Antitrust violations do not “shock the conscience” the way a crime of violence might, and the long delay between conduct and trial can diminish whatever “jury appeal” a price-fixing case might have had.
Witness Fatigue: When a witness signs a cooperation agreement with the Antitrust Division, he usually doesn’t realize that his cooperation may last longer than many marriages. It can be difficult to work with a witness who has long since (hoped) he had put this chapter of his life behind him. Witness prep so many years after the alleged conduct occured can involve an increasing frequency of “I’m not sure. That was a really long time ago.” And, in this case it was.
Prior Statements: As I said, I have not read the record in the Farmer case so I do not know who the witnesses were. But, there is a good chance some of the witnesses previously testified in the Peake trial. So besides witness fatigue and faded recollections, defense attorneys have prior statements to work with on cross-examination.
The Weak Cases Are The Ones That Go To Trial: It used to be fair to say that the Antitrust Division got plea agreements from those who they had the strongest cases against, but often found itself trying weaker cases, sometimes against senior managers that had insulated themselves from most of the illegal conduct. But, my opinion is that today cases go to trial because the sentencing guidelines are so severe (based on volume of commerce) that the “last man standing,” who can’t get a 5K cooperation agreement/downward departure, has little to lose by going to trial. Mr. Farmer went to trial because he declared he was innocent and a jury did in fact acquit him. But, even a guilty party might go to trial because: (a) he has at least a chance at acquittal; (b) even if convicted at trial, he will likely be sentenced to less time than he could have negotiated with the Antitrust Division pursuant to a recommended guidelines plea agreement; and (c) in any event he can appeal and hope to get a conviction reversed on appeal. In essence, the trial is an extended sentencing hearing, with a chance of acquittal, and even if convicted, a hope the conviction can be overturned. I co-authored an article “A Peek Behind the Record Peake Sentence” (here) that explored some of these ideas.

Congratulations to Farmer’s defense team and also to the Antitrust Division for an otherwise very successful investigation.

Thanks for reading.

ANTITRUST GUIDANCE IN BRAZIL

May 7, 2015 by Robert Connolly

Today we have an update from Brazil by Mauro Grinberg, a former Commissioner of CADE, a former Attorney of the National Treasury and senior partner of Grinberg Cordovil.

****************************************

A Resolution issued by Conselho Administrativo de Defesa Econômica (CADE), dated March 11, 2015, made a comeback of the procedure for antitrust guidance to be requested to CADE. This request for guidance can be used in all competition cases, including cartels.

The first article of such Resolution says that any interested party can forward a request for guidance to CADE, related to specific situations, which may be real or potential. Interested parties can also be trade associations which have, as their goals, representation of the involved sector and can demonstrate that at least one of the represented companies is legitimately interested in such guidance.

There are some requirements for such request for guidance and, although it is pointless, for the purpose of this note, to go through all of them, it is interesting to mention that the party must declare all CADE´s precedents related to the object. So, no request for guidance can be asked before a thorough research through CADE´s jurisprudence. However, any research may have its problems and it is not clear what will happen if a certain research does not present a decision that CADE may understand as fundamental.

Another point that must be reported says that the request for guidance cannot refer to a purely hypothetical issue. This may be a somewhat tricky question because CADE may understand that a question that is not under practice is hypothetical (which, in a way, it may be). It is not clear what can happen if, e.g., a party asks whether it is legitimate to have certain contacts with competitors and, if the conduct is approved by CADE and the party does not perform it due to a further strategic and/or commercial decision, could the party can be punished for having submitted a request for guidance that CADE may consider hypothetical?.

The answer to the request for guidance is binding for CADE and the parties for five years, although the Resolution states that CADE can reconsider its decision, if based on new facts. So, in practice, the Resolution is really binding only for the parties submitting the request for guidance.

A last problematic article states that, if CADE understands that an already existing conduct, which is the object of the request for guidance, has the possibility of being illegal, an administrative file will be opened in order to prosecute the interested party. If the conduct is a possible cartel, a criminal file may also be opened. So, it is fundamental that, in case a party wants to make such request related to a conduct that is under way, it is advisable to stop such conduct before requesting the guidance.

Consequently, a request for guidance, in order to be in the safe side, must be related to conducts that are not being performed but are to be performed and depend on the guidance, with the additional task of demonstrating to the authorities that the request for guidance is not hypothetical.

Mauro Grinberg is a former Commissioner of CADE, a former Attorney of the National Treasury and senior partner of Grinberg Cordovil.

Global Glimpses of Cartel Capers

May 5, 2015 by Robert Connolly

There have been a number of developments around the globe relating to cartel enforcement that I think might be of interest:

Australia

I wrote about this in an earlier post, but a billionaire businessman in Australia invited an investigation, which has now been dropped, with his comments at a business dinner griping about low prices in the market. He got himself in hot water, which never reached a boiling point, by stating he was ready to reduce output of iron ore if his competitors would do likewise. (here)

Cambodia

People are people and as Adam Smith noted, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

In Cambodia, the Ministry of Agriculture and Forestry said that they were investigating a possible secret agreement between middlemen or traders in the supply chain to manipulate the price of agriculture commodities, leaving farmers with no option but to sell their products at a lower price. A spokesperson at the Ministry said traders had divided regions into zones, giving farmers no choice but to sell to that trader and at the trader’s asking price. In this case, if true, the conspiracy was to reduce the prices paid to farmers. (full story here)

Canada

On April 27^th, after a seven-month trial and six days of deliberation, a jury in Ottawa found nine defendants not guilty on all 60 charges of bid rigging and conspiracy to rig bids. “Six years earlier federal prosecutors had charged 14 individuals and seven computer services firms with rigging bids in connection with more than $60 million worth of contracts at three federal departments. Now in the courtroom were six individuals and three of their firms — they had elected to be tried by a jury, the first time anyone had done so in the 39-year history of the Competition Act.” (full story here)

Also in Canada here is a helpful article on the shift in on corporate criminal liability. Corporate criminal liability can now be based on the conduct not only of senior corporate officers such as board members, but also middle managers in some circumstances.

EU Grapples with Extraterritoriality of Competition Law

Like the United States, the EU is working to define the scope of the extraterritorial application if its competition laws. The Advocate General of the European Court of Justice, Melchior Wathelet, urged the court to rescind the Court’s decision that based part of a fine against Innolux based on LCD panels sold by the manufacturers to other companies and eventually shipped to the EU as components in other devices. Wathelet wrote in an opinion that: “It seems to me that, unless further evidence can be furnished that the cartel creates qualified effects in the [European Economic Area], the commission goes too far if it fines cartels relating to products manufactured and sold outside the EEA for the sole reason that those products are subsequently ‘transformed’ or incorporated into other products which (either wholly or in part) arrive in the EEA.” The opinion agreed that EU law could be applied extraterritorially to component price-fixing if the Commission had met a “qualified effects” test. Innolux’s fine stand to be cut almost in half if the Court reduces its fine in accord with the Advocate General’s opinion.

United States

Civil Settlement News

Civil settlements have now exceeded $270 million in federal litigation stemming from the ongoing U.S. criminal antitrust investigation into automotive supplier price-fixing (here). These settlements, however pale in comparison to the civil settlements reached in the follow-on civil suits to the air cargo price-fixing cartel. These settlements now top $1 billion (here). In fairness, the auto parts civil litigation is far from over. These figures relate only to civil settlements in the U.S. Civil damage actions, including class action suits (collective redress), are quickly spreading thoughout the globe.

Senate Committee Launches Investigation of Dish and affiliates

The Senate Committee on Commerce, Science and Transportation has begun an investigation of possible bid rigging between Dish and several of its smaller affiliates on a recent $3 billion spectrum auction. The investigation follows a complaint filed by Verizon with the Federal Communication Commission alleging that Dish colluded with its affiliates to violate the bidding rules as well as antitrust laws. (full story here)

Thanks for reading.

PS. Guest posts, especially about cartel/compliance related developments outside of the United States, are most welcome.