COMPETITION LAW LIVE! CRITICAL LESSONS THROUGH THE
LIFECYCLE OF A CRIMINAL CARTEL INVESTIGATION
Wednesday, September 16th, 2015
8:00 a.m. - 8:30 a.m. - Registration and Breakfast
8:30 a.m. - 12:00 p.m. - Workshop (with break)
Osler Conference Centre - 63rd Floor, First Canadian Place,
100 King Street West, Toronto
Overview of the Hypothetical : Products &
Parties
 4D-LCD is a display technology used in flat-panel computer
monitors, notebook computers, smartphones, tablets and other
devices. The panels are produced and then sent to electronics
manufacturers to be incorporated into finished goods destined for
consumers around the world. They are the single most expensive
component in most electronic products.
 There are three major manufacturers of 4D-LCD panels, together
holding 80% of the global market for 4D-LCD screens:
 KorEa, a vertically-integrated Korean electronics corporation
that produces 4D-LCD panels as well as many other electronic
products.
 CanLCD, a Canadian company that focuses on the design and
manufacturing of LCD Panels.
 US-LCD, an American company that is the worldwide market
leader in sales of 4D-LCD panels with a 40% share of global 4DLCD sales.
 Contracts with private sector customers are negotiated twice a year
and state-owned firms award contracts annually pursuant to a RFP
process.
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Overview of the Hypothetical: Conduct
 Senior sales executives from KorEa, CanLCD and US-LCD began
cooperating with each other in 2009 to attempt to control global
prices of 4D-LCD panels. Through frequent meetings and
communications, they would determine specific price points for the
various standard sizes of 4D-LCD panels and provide those set
prices as quotes for their customers. In addition, they would
coordinate their respective bids in response to the annual RFPs
issued by state-owned enterprises.
 The three manufacturers were able to use this strategy for over 4
years, and increased prices for 4D-LCD panels by more than 20%
which, in turn, led to a significant increase in downstream prices for
computer monitors, notebook computers and other devices into
which the panels are incorporated. The strategy led to consumers
of electronic products that incorporate 4D-LCD panels being
overcharged by an estimated $2 billion globally over the 4 year time
period.
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Overview of the Hypothetical: Investigation
and Government Proceedings
 After attending a mandatory competition law compliance training
session led by CanLCD’s external counsel, Jane Cansale, the VP of
Global Sales for CanLCD, informed CanLCD’s General Counsel about
her dealings on behalf of the company with KorEa and US-LCD. This
starts a chain of events that results in CanLCD seeking immunity
from competition law enforcement authorities in various
jurisdictions, including Canada and the U.S.
 Based on information provided by CanLCD, competition enforcers in
Canada, the U.S., Europe, Japan, Korea and Australia conduct
coordinated raids (i.e. search and seizures) at the offices of US-LCD
and KorEa. Competition enforcers also conduct raids on CanLCD’s
offices around the world to avoid speculation and protect CanLCD’s
identity as an immunity applicant.
 US-LCD ultimately decides to cooperate with authorities and seek
leniency under various leniency programs. KorEa, whose General
Counsel, after reviewing the emails on the company’s servers,
found no documentary evidence of its wrongdoing, decides not to
cooperate with authorities and fight the allegations.
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Overview of the Hypothetical: The Civil
Litigation
 Literally minutes after the Wall Street Journal and the Globe & Mail
break the news about the raids, Overcharge & Justice LLP in Canada
and Action & Sue LLP in the U.S., respectively file class actions for
both direct and indirect damages suffered by direct purchasers of
4D-LCD panels (i.e., electronics manufacturers and state-owned
enterprises) and by the public who purchased electronic products
into which such panels had been incorporated.
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Scene 1: Hatching the Agreement
 Ms. Jane Cansale was hired as the VP of Global Sales for CanLCD in
January of 2009. Ms. Cansale is aware that CanLCD was under
tremendous pressure from its most important customers to materially
reduce prices. In her first negotiations with Microsung, she was forced
to provide them with a 2% discount, reducing not only CanLCD’s
margins but also her compensation, which was tied to CanLCD’s profits.
 In February of 2009, just after Ms. Cansale’s negotiations with
Microsung, Ms Cansale attends the annual Global Electronics
Tradeshow in Tokyo’s Capitol Hotel. In going from booth-to-booth she
introduces herself to others participants at the show.
 Following a dinner sponsored by Microsung, a number of conference
attendees went to the hotel’s lobby bar for a drink. With the Microsung
negotiations fresh in her mind and eager to obtain competitive
intelligence as well as the views of others on the state of the 4D-LCD
panel industry, Ms. Cansale asks Mr. Huang Korsale, Director of Sales for
KorEa, to join her for a drink. They were sharing their thoughts on how
business was doing when Ms. Elizabeth Usale, VP of Global Sales for USLCD walked by and they invited her to join as well.
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Scene 1
Hatching the Agreement
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Scene 2: In-House Counsel Makes A
Discovery
 Following an antitrust compliance training session, General
Counsel for CanLCD, Mitchell West gets a visit from a nervous
Jane Cansale, Vice President, Global Sales for CanLCD.
 Jane tells her General Counsel about an arrangement she has
had with KorEa and US-LCD, their biggest competitors, about
pricing and customer contracts for 4D-LCD panels.
 While Mitchell and Jane are talking, they are joined by CanLCD’s
external legal counsel, Chris Naudie, who has dropped by to debrief Mitchell on the compliance session. Mitchell introduces
Jane and tells counsel what she has learned.
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Scene 2
In-House Counsel Makes a Discovery
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Scene 3: An Emergency Meeting of the Board:
Should the Company Seek Immunity?
 The General Counsel for CanLCD convenes an urgent meeting
of the Board of Directors. The Board consists of the nonexecutive Chair, the CEO, and two outside directors.
 The General Counsel and external counsel from Canada, the
U.S., Korea and EU advise on the potential exposure to the
company based on the conduct that has been discovered.
Each counsel underscores the potential opportunity to
mitigate the fine/imprisonment exposure through the
various immunity policies in place in these jurisdictions and
outlines the basic elements required to obtain immunity.
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Scene 3: An Emergency Meeting of the Board:
Should the Company Seek Immunity?
 The Board raises questions on a number of issues, including:
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potential violations of competition and foreign corruption laws;
fines & imprisonment
civil litigation exposure
debarment exposure
management issues, including disciplinary actions against
culpable executives
governance and disclosure issues
the potential downsides of applying for immunity
alternatives to applying for immunity
the impact on reputation and customer relationships.
 The General Counsel seeks authorization to pursue immunity from
the Canadian Competition Bureau, U.S. Department of Justice,
Korea, the European Commission.
 In this scenario we focus on Canada.
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Scene 3: Immediate Steps in the Internal
Investigation
 Continuing to interview Jane and are reviewing all of her email.
 Have asked Jane to make her home computer and personal email
accounts accessible to our team, and she has voluntarily complied.
 In the process of interviewing all sales staff that might have
communications with KorEa and US LCD.
 Have imaged their company computers and iphones, and have
instructed all relevant staff to preserve their documents.
 Have told Jane not to communicate directly with KorEa and US LCD,
and to report any “inbound” communications from her
counterparts at those companies to our attention.
 Have told Jane to put her participation a trade conference coming
up next week in Banff on hold.
 Have collected a large amount of data, and team reviewing to
identify any information relating to Jane’s statements.
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Scene 3: Conspiracy –Section 45
 Strictly prohibits price-fixing, market or customer allocation,
and production limitations
 The criminal prohibition is directed at “agreements”
between actual or potential competitors
 The offence is the agreement itself
not necessary for the agreement to be implemented
 not necessary for the agreement to have an anticompetitive effect
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Scene 3: Bidding Rigging- Section 46
 Criminal offence for a participant in a bid and
tender process to agree:
not to submit a bid
 withdraw a bid
 about the content of the bid
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Scene 3: Penalties and Consequences
 Statutory fines: up to $25M per count for s. 45; no statutory
maximum for 47
 Imprisonment: up to 14 years
 Civil liability: private actions (on an individual or class basis)
for damages in the $millions
 damage awards often significantly greater than fines;
 in the US damages awards can be trebled (3x)!!!
 Debarment for Federal contracts for 10 years
 Costs of litigation, business disruption and reputational
damage
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Scene 3: Requirements of the Immunity
Program
 Available to both organizations and individuals.
 Time is of the essence as immunity is only available to the first
applicant satisfying the eligibility criteria.
 Creates a “race” to the Bureau.
 The difference between “first-in” and “second-in” may be a
criminal conviction & $millions in fines & prison
 Immunity not available if the applicant coerced others to
participate in the illegal activity or if the Bureau is already aware of
the offence.
 Applicants must:
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terminate their participation in the illegal activity
maintain confidentiality;
provide complete, timely and ongoing cooperation— very
onerous obligationkeep the Bureau apprised of the status of any related criminal
or civil proceedings
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Scene 3: Requirements of the Immunity
Program
 Grants of immunity and the decision of whether to
commence criminal prosecutions, are the sole responsibility
of the Public Prosecution Service of Canada.
 The identity of an immunity applicant will typically remain
confidential until charges are laid against other participants
to the offence, and disclosure of the Crown’s case to the
accused is required.
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Scene 3: UpJohn Warning
 At the beginning of each interview, we have advised the employee
that:
 Osler is counsel to the Company and is not counsel to you
personally.
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We are interviewing you and others in order that we may
gather facts in order to provide legal advice to the Company. As
such, this means that our conversation with you is protected by
privilege.
While our communications are protected by privilege, the
privilege belongs solely to the Company, not you. The privilege
is controlled by the Company, and the Company may decide to
share any information it learns through this interview with
third parties, including the government, without your
permission or notice.
In order for this discussion to be subject to the privilege, it
must be kept in confidence. In other words, with the exception
of your own lawyer, you may not disclose the substance of this
interview to any third party, including other employees or
anyone outside of the Company.
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Scene 4: Marker Request
 The Board instructs its General Counsel to make request for
immunity from the competition law enforcers for various
jurisdictions asap.
 This scenario focusses on CanLCD’s immunity marker request
in Canada.
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Scene 4
Marker Request
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Scene 5: Dawn Raids /Search & Seizures
 CanLCD has successfully established itself as “first-in” for
immunity with the Canadian Competition Bureau, the United
States Department of Justice (U.S. DOJ), the Japan Fair Trade
Commission (JFTC), the Korea Fair Trade Commission (KFTC),
and the European Commission (EC).
 The antitrust enforcers for all six jurisdictions investigating
the case are cooperating with each and have collectively
determined the strategy and timing of dawn raids or surprise
search and seizure on the offices of KorEa and US-LCD
around the world and staged raids of the offices of the
immunity applicant, CanLCD
 This scene focusses on the Competition Bureau execution of
its search warrant on US-LCD’s office in Canada
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Scene 5
Dawn Raids
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Scene 6: Negotiating the Guilty Plea and
Sentencing Recommendation under the Leniency
Program
 Since the raid on their offices around the world, US-LCD has
been working intensively with external counsel to determine
the scope of its legal risk and implement measures to reduce
its exposure.
 Following external counsel’s interview of US-LCD’s Vice-
President, Global Sales, Elizabeth Usale, and counsel’s
review of Ms. Usale’s emails, text messages since 2009, USLCD’s General Counsel recommended to the Board that USLCD admit guilt in return for a substantially-reduced fine in
accordance with the Competition Bureau’s Leniency
Program.
 US-LCD’s Board has approved the recommendation but
imposed some challenging asks on its external counsel,
Mahmud Jamal, including avoiding carve-outs for
individuals.
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Scene 6: Negotiating the Guilty Plea and
Sentencing Recommendation under the Leniency
Program
 At the same time, the Competition Bureau armed with an
enormous volume of information from CanLCD, and in
particular, Jane Cansale, as well as the documents (terabytes of
emails) seized during the raid, is building a compelling criminal
case against US-LCD and KorEa under both section 45
(conspiracy) and section 47 (bid-rigging) of the Competition Act.
 Senior legal counsel of the Department of Public Prosecutions is
outraged by the duration of criminal activity uncovered,
particularly in light of the fact that all three companies tout their
antitrust compliance programs on their websites. He believes
this is the case where individual liability must attach.
 It is in this context that Senior Counsel of the DPP and US-LCD’s
external counsel meet to negotiate the terms and conditions of
US-LCD’s leniency application.
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Scene 6
Negotiating the Guilty Plea
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