In U.S. antitrust legal circles, much interest remains in the so-called “psychology” of corporate employees who participate in “cartel” activity such as price-fixing and bid-rigging. With global antitrust regulators recently focusing on Japanese companies in industries such as auto parts, U.S. lawyers need to understand the psychology of Japanese companies and their employees in these matters. A recent panel discussion at a leading antitrust lawyers’ conference in the United States recently demonstrated that while we in the United States may think we know much about this psychology, we probably still have much to learn.
The panel discussion at the American Bar Association’s 2015 antitrust “spring meeting” immediately caught my eye as an criminal antitrust defense practitioner and compliance advisor. Entitled “The Psychology of the Individual Cartelist,” it was advertised as a discussion of “the mentality of the individual cartel defendant, how culture and values play a role in collusive behavior, and how this impacts representation, interviews, and dealing with individual clients.” It featured several distinguished antitrust lawyers from the United States and Japan, a top U.S. government antitrust prosecutor, and a former agent from the Federal Bureau of Investigation’s “Behavioral Analysis Unit.”
The Behavioral Analysis Unit, of course, is a group of FBI agents who closely study the criminal mind. The unit has been popularized in U.S. television shows such as “Criminal Minds,” and the 1991 Hollywood film, “The Silence of the Lambs,” both of which featured the unit’s agents using their sophisticated profiling skills to catch serial killers and other sinister criminals.
But in the world of criminal antitrust law, the suspects are not kidnapping the daughter of a U.S. senator or holding anyone hostage in a dark basement. The suspects – if it is fair to call them that – are office workers. They are street-level sales persons, sales managers, and marketing directors. They try to stay on top of market trends in their industries, and they study their competitors’ activities and pricing very closely – sometimes too closely.
The former FBI agent’s presentation described a variety of different psychological motives, such as financial problems and addictions to gambling, alcohol, and even sex. But as I listened to this part of the presentation, I had difficulty relating it to the world of antitrust as I have seen and experienced it. None of the individual corporate employees I represented in antitrust cases was ever motivated by greed or a desire for money. None ever received additional income or any other personal benefit from participating in collusive activity or looking the other way when such activity was called to his or her attention. And none, as far as I was aware, was motivated by any kind of strange addiction.
The motive in each of my cases was a desire to act in the interest of the company. In some cases, the employee clearly understood that superiors in the company expected at least some degree of collusion with competitors, in the form of respecting what “cartelists” – if it is fair to call them that – call “vested rights.” Under a regime of respecting vested rights, companies compete hard for the business that traditionally or historically has been theirs, and they do not try to “take” business which a competitor considered its “vested right.”
The concept of “vested rights” is obviously inimical to U.S. antitrust law, and, of course, the letter of the law in Japan, Europe, and many other parts of the world. But “vested rights” is a very old and entrenched concept, and one that has arisen time and again in recent antitrust investigations. When I once asked an individual client in Japan to explain why he shared pricing with competitors and made complementary bids designed to ensure that his competitor won some business while his own company kept its “own” business, he explained it this way: “We live in a village.” In the village, in the island nation of Japan, he said, counterpart members of an industry are not out to slay each other. They believe there should be room at the table for everyone to survive and thrive.
And so it was the Japanese practitioner on the panel who wound up addressing the “psychology of the cartelist” most succinctly and effectively, explaining that the fairest way to describe “the cartelist” in Japan is as an ordinary person trying to do his or her job. In that sense, the “cartelist” is very different from the kind of person tracked by the sleuths at the FBI’s Behavioral Analysis Unit. And he or she is very different from the model of the U.S. “white-collar” criminal caught embezzling the company’s money for personal gain. The “cartelists” I have known were fiercely loyal to their employers, their superiors, and their colleagues, with whom they shared an almost familial bond.
In the wake of large antitrust cases such as the auto parts investigation, the compliance challenge in Japan is not to root out the “criminal minds.” It is to promote an internal corporate culture in which the company’s management and employees understand that the threat of antitrust enforcement and costly civil litigation is so great as to pose unacceptable business and personal risks. The company and its employees will always act for the good of the company. As the auto parts case and other highprofile antitrust investigations demonstrate, compliance with competition laws is always in the company’s best interest