Scott D. Hammond
Deputy Assistant Attorney General
U.S. Department of Justice, Antitrust Division
Detroit, Michigan
February 15, 2013
The Auto Parts Investigation
• Largest criminal antitrust investigation ever:
• Impact on U.S. businesses and consumers
• Number of companies and executives involved
• Cooperation and coordination with enforcers abroad
• Prosecutions to date:
• l 2 individuals have pled guilty and are cooperating
• 10 of 12 surrendered to U.S. jurisdiction
• Jail sentences range from 1-2 years
• 9 companies have pled guilty and are cooperating
• $809 million in total fines imposed to date
• $470 million criminal fine imposed on Yazaki
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Auto
Manufacturer
Issues RFQs for
New Model
Conspirators
Fix Prices
and Submit
Rigged Bids
Conspirators
Meet and
Allocate
Sales
Conspirators
Meet and
Coordinate
Annually
Contracts Awarded To Conspirators
At Collusive Prices
Road Map to Auto Parts Investigation
• Global network of enforcement to deter and detect
cartel offenses
• Raising the stakes for antitrust crimes
• Tools and strategies used by the Antitrust Division
to detect antitrust crimes
• Tools and incentives provided to companies to
implement effective antitrust compliance programs
and to conduct thorough and effective internal
investigations
4
ICN Member Survey
on Trends and Developments in
Anti-Cartel Enforcement
• Survey of 46 jurisdictions represented in ICN
Cartel Working Group
• The world is changing – heightened focus on
detecting and deterring hardcore cartels including
new laws, harsher sanctions, and more aggressive
investigative tools
• Where you can find complete results:
http://www.internationalcompetitionnetwork.org/
uploads/library/doc613.pdf.
5
Number of Countries
50
45
40
35
30
25
20
15
10
5
0
11
7
6
Adoption of Per Se
Standard
10
Remedial Provisions
Settlement Provisions
11
Obstruction Provisions
Increased Statute of
Limitations
23
New Violation Provisions
Institutional/ Procedural
Provisions
35
Leniency Provisions
Investigative Powers
Increased Penalties
Changes in Competition Laws
What changes/developments in your competition law have impacted your
cartel enforcement program over the last 10 years?
43
35
19
6
Creation of New Investigative Powers
39
33
31
21
12
5
Wiretap Authority
New Powers to Interrogate or
Obtain Statements from
Witnesses
Compulsory Process for
Documents/ Information
Changes in Leniency Program
Expanded Search Powers
8
Adoption of Leniency Program
45
40
35
30
25
20
15
10
5
0
Adoption of or Changes in
Leniency Program
Number of Countries
What changes/developments have taken place in your competition law over
the last 10 years, with respect to the creation of new investigative powers
that have advanced your cartel enforcement efforts?
7
Ramped Up Enforcement in U.S.
• U.S. Congress raised statutory maximum penalties
in June 2004 to 10 years incarceration
(individuals) and $100 million fine (corporations)
• Full investigative arsenal: wiretap authority,
search warrants, FBI investigators, border watches
and Interpol Red Notices for fugitives
• Emphasis on individual accountability through the
imposition of jail sentences for culpable
executives
8
Incarceration Trend
Average Prison Sentence in Months
25
20
8
1990-1999
Average
2000-2009
Average
2010-2012
Average
9
Percentage of Defendants
Sentenced to Prison
71%
62%
37%
1990-1999
average
2000-2009
average
2010-2012
average
10
Total Criminal Antitrust Fines
$1 Billion
$701
$630
Million
Million
$473
Million
$1.1 Billion
$555 $524
Million Million
$350 $338
Million Million
$107
Million
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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Proof of Actual Deterrence
• U.S. DOJ has detected numerous cartels that
violated competition laws around the world but
chose not to extend cartel activity to U.S. market,
because they feared U.S. detection and sanctions
• The risk of under-punishment by a jurisdiction is
that its businesses and consumers will be
victimized by cartels that could have been deterred
12
The Leniency Carrot
• The Division’s Corporate Leniency Policy offers
huge incentives to be the first to voluntarily
disclose antitrust crimes
– No charges filed against company
– No charges filed against cooperating employees
– No fines and no jail
– Eligible for reduced civil damage exposure
– Confidentiality policy protecting applicant
identity and information
13
The Leniency Stick
• Full immunity is only available to the first
company to self report and meet the conditions of
the program
• The second company and those that follow (as
well as their executives) face severe sanctions
14
The Leniency Race
• The winner-take-all approach creates distrust and
panic within the cartel and destabilizes it
• Individual exposure also creates a potential race
between the company and its own employees
15
Type A Corporate Leniency Conditions
1. Division has no information about the activity
2. Upon discovery, took “prompt and effective” action to
terminate
3. Candor, and continuing and complete cooperation
4. Confession a truly corporate act, not isolated to
individuals
5. Where possible, restitution
6. No coercion, not the leader or the originator
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Type B Corporate Leniency Conditions
1. First in
2. Without evidence likely to result in sustainable conviction
3.- 6. “Prompt and effective” termination; candor,
continuing and complete cooperation; truly corporate
confession; restitution
7. Leniency would not be unfair considering nature of
activity, applicant’s role, and timing (burden increases
with time)
17
Conducting Internal Investigations
• The majority of antitrust investigations lead to the
discovery of additional, unrelated antitrust crimes
• The cultivation of “cartel trees”
• How the Antitrust Division provides companies
with the necessary tools and incentives to detect
and report misconduct before it is too late
18
The Amnesty Plus Program
• Company negotiating plea agreement in current
investigation of Product “A” obtains lower fine by
disclosing existence of second, unrelated conspiracy
involving Product ”B”
• Company receives amnesty for Product “B” and receives
a substantial additional reduction (the “plus”) in the fine
for Product “A”
• Key that interests of both company and its employees are
aligned in internal investigation because both stand to
benefit from self reporting
19
The Flip Side to Amnesty Plus
• The Division is looking for additional, unrelated
crimes and employs “cartel profiling” techniques
• Use of the “omnibus question” in witness
interviews to ferret out additional wrongdoing
• If we find it first, then the penalties are likely to be
severe – the Division’s “Penalty Plus” program
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Looking For More Information?
• For more information on the Antitrust Division’s
Corporate Leniency Policy please visit:
http://www.justice.gov/atr/public/criminal/lenienc
y.html
• For an Antitrust Primer on how to detect antitrust
crimes please visit:
http://www.justice.gov/atr/public/guidelines/2115
78.htm
•
•
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