Several additional auto parts cartel criminal cases have been filed by the Antitrust Division, US DOJ in the last month. Two of these cases provide important lessons in understanding how the Antitrust Division operates.
In the first case, a former director of Japan-based Denso Corp. agreed to plead guilty to obstructing justice by destroying documents when he learned that the FBI was executing a search warrant at Denso’s US subsidiary. Kazuaki Fujitani deleted numerous emails and electronic documents in February and March 2010 that contained communications between Denso and competitors regarding price quotations for an auto part sold to Toyota. The crime of obstruction carries a maximum penalty of up to 20 years in prison. Under Fujitani’s plea agreement, if accepted by the court, he will serve one year and one day in a US prison.
The Antitrust Division places the highest priority on prosecuting conduct that obstructs its grand jury investigations. Destroying emails or documents is a guarantee of becoming a prime target of the Division’s investigation. It may seem safe and tempting to an executive located overseas to delete documents when an investigation begins. After all, how will prosecutors in the US ever know? But, if the company later cooperates with the Division, as Denso did, the obstruction will come to light and will be prosecuted.
The Division has even sought extradition of fugitives charged with obstruction of justice. In 2010, Ian Norris, a British executive, was extradited to the US from the UK after a seven-year battle in which British authorities advanced the Division’s extradition request. Norris was tried by a jury, convicted and sentenced to 18 months in prison. Lesson: destroying documents, wherever they are located, is the worst possible reaction to a cartel investigation.
February’s charges against the Bridgestone Corp. highlight another crucial lesson when dealing with the Antitrust Division. Bridgestone Corp, a Tokyo-based company, agreed to plead guilty and pay a criminal fine of US$ 425 million for its role in a conspiracy to fix prices of automotive anti-vibration devices.
In October 2011, Bridgestone had pled guilty and paid a US$28 million fine for price fixing in the marine hose industry. At that time, Bridgestone did not disclose that it had also participated in the anti-vibration rubber parts conspiracy. The Division held Bridgestone accountable for this lapse when negotiating a fine. “The Antitrust Division will take a hard line when repeat offenders fail to disclose additional anticompetitive behavior,” said Brent Snyder, the Antitrust Division’s Deputy Assistant Attorney General for Criminal Enforcement. By contrast, Denso Corp, which was one of the earliest companies to cooperate in the auto parts investigation, negotiated a US$78 million fine. The fine is thought to be about 60 percent below Denso’s guidelines range fine, one of the largest discounts ever for cooperating with the Division.
The lesson from Bridgestone is that if any collusion within a company is detected, it is crucial to immediately conduct a thorough internal investigation and report all problematic conduct at once. If Bridgestone had reported the auto parts conspiracy at the time it pled guilty to the marine hose cartel, it may have received immunity. Instead, it is paying one of the highest fines imposed yet in the auto parts cartel investigation.
To date, 29 individuals have been charged in the auto parts price fixing investigation. Additionally, 26 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of over US$2.25 billion in fines. Companies doing business in the United States must have a serious and comprehensive competition law compliance program. Non-US executives in particular may not fully understand that not only can price fixing fines (and follow-on civil damage actions) be significant, but the Sherman Act carries a maximum ten-year prison sentence. Jail sentences are becoming longer, even for foreign executives.