US: Anti-Cartel Enforcement


The past year has been one of the most significant in US
anti-cartel enforcement in recent memory. While the year was marked by numerous important developments, two stand out and signal a new level of danger for multinational companies in highly competitive manufacturing industries. First, the Department of Justice Antitrust Division won a major victory in the first jury trial against a foreign corporation accused of criminal price fixing, while securing a jury finding on damages that enables the judge to impose a fine as high as $1 billion. Second, the Division’s auto parts investigation (on which we reported last year) has grown into the Division’s largest investigation ever. While it is ongoing and a number of its targets remain unknown, the investigation is on track to embroil an entire, nationally significant industry of a foreign country - the auto parts industry of Japan - and poses the danger of expanding into related industries as companies race for reduced fines under the Division’s ‘amnesty plus’ programme by disclosing cartel activity in other product areas.

We begin this year’s paper with our customary review of Antitrust Division enforcement statistics and then turn to the AU Optronics (AUO) trial, the auto parts investigation, and other significant developments in criminal antitrust enforcement over the past 12 months.

Antitrust Division enforcement remains steady

As we noted last year, the Antitrust Division continues its aggressive enforcement efforts against cartel activity around the globe. The Division filed 90 cases in fiscal year (FY) 2011, almost matching the record 92 cases filed in FY 1987, and exceeding the number filed in the preceding FY (2010) by 30 per cent.1 The volume of cases alone is impressive. Even more notable is the range of industries the Division targeted in its filings, including auto parts, electronics, and financial services. The Division obtained over $500 million in criminal fines in FY 2011. Total fines obtained in the first few months of 2012 are already higher.2

In addition to obtaining substantial fines, the Division is prosecuting individuals and sending them to prison frequently and for longer periods of time than ever before. In FY 2011, the average prison sentence was 17 months, more than twice the average of eight months in the 1990s. Notably, foreign nationals, with an average prison sentence of 10 months in FY 2011, continue to be favourite targets of the Division’s criminal enforcement.

Landmark cases in motion

United States v AU Optronics

Criminal price-fixing cases are most frequently resolved through negotiated plea agreements, in large part because defendants are risk-averse and generally choose not to ‘take their chances’ with a jury. Corporate defendants avoid jury trials because the potential fines can be staggering. Many individuals from other countries who are charged with criminal antitrust offences often simply avoid prosecution in the US by staying out of the country, thereby avoiding the jurisdictional reach of the Antitrust Division and the US courts. With the Division’s primary enforcement activity directed at foreign defendants, the result has been a dearth of large cartel cases.

Bucking an almost universal trend, the large Taiwanese manufacturer of LCD screens, AUO, and five of its executives decided to fight the Division’s allegations of criminal price fixing before a jury. Indeed, this marked the first time in 10 years that a corporate defendant has litigated an international criminal cartel case in a US court.

To recap the case, in 2006, Samsung Electronics Co sought amnesty from the Antitrust Division for its role in a conspiracy to fix the price of thin-film transistor liquid-crystal display panels (TFT-LCDs). The Division accepted Samsung into its leniency programme, and in June 2010, after a wave of guilty pleas by TFT-LCD suppliers and their executives, a federal grand jury indicted AUO, its US subsidiary and five current and former executives for violating Section 1 of the Sherman Act. The Division alleged that, from 2001 to 2006, the defendants conspired at more than 60 meetings with competitors to fix the prices of TFT-LCD panels.

The AUO trial lasted eight weeks. During the course of the trial, the Antitrust Division called a variety of witnesses, including co-conspirators who pled guilty and served prison terms in the US, representatives of US companies that were victims of the alleged cartel (such as Hewlett-Packard), and an economist who testified on the monetary impact of the conspiracy. Defence attorneys - lawyers representing AUO, lawyers representing its US subsidiary and lawyers representing each of the individual defendants - cross-examined the government’s witnesses aggressively. They did not, however, call any fact witnesses of their own. And none of the individual defendants took the stand. In fact, the only AUO witness was an economist who attempted to rebut the government’s damages evidence.

On 13 March 2012, a federal jury returned split verdicts, but handed the Antitrust Division a decisive victory. The jury convicted AUO and its US subsidiary, as well as the two most senior AUO executives charged in the case. The jury failed to reach a verdict against a third defendant, Steven Leung, resulting in a mistrial. It acquitted the two most junior AUO defendants. A retrial of Leung is presently scheduled for October.

The jury also found that the conspiracy resulted in an illicit gain of $500 million dollars. Under the ‘alternative fine provision’ of the Sentencing Reform Act, corporate defendants convicted of a cartel offence can be fined up to twice the amount of the illicit gain. AUO therefore faces a criminal fine of up to $1 billion. To put the potential fine in perspective, the highest penalty ever imposed for a cartel offence was a $500 million fine entered against F Hoffmann-La Roche in 1999 for its role in the vitamins cartel.

The AUO trial also represented the first time the Antitrust Division had to prove to a jury the illicit gain from a conspiracy, the necessary element to trigger application of the alternative fine provision.3 Absent that proof, the maximum fine for a Sherman Act violation is $100 million. While the US Department of Justice (DoJ) has successfully obtained 19 fines greater than the $100 million statutory maximum, it has only done so through negotiated plea agreements, never at trial.

An important issue in the AUO trial was the applicability of the Supreme Court’s decision in Apprendi v New Jersey,4 which held that any request for an increase of a penalty beyond the statutory maximum must be submitted to a jury and proven beyond a reasonable doubt. The AUO court applied Apprendi, forcing the Division to prove the amount of any gross gains to the jury beyond a reasonable doubt.5 The DoJ’s expert testimony that AUO’s prices were higher than they would have been in absence of the conspiracy apparently convinced the jury that the gross gain to the conspirators in the US exceeded $500 million.

While the result in the AUO trial is being appealed, the jury’s verdict is likely to have far-reaching effects on US cartel enforcement efforts. As an initial matter, the defendants’ appeals may well be rejected - particularly in light of some very strong factual evidence (evidence that was likely a driver in each of the other companies’ decisions to plead). More generally, the trial ‘victory’ is almost certain to embolden the Antitrust Division. The Division will likely be more aggressive in plea negotiations, while companies that find themselves on the other side of the table may well look to the AUO example and find themselves more likely to accede to the DoJ demands. The DoJ is likely to continue its push for ever higher penalties - both for corporations and individual defendants (including foreign nationals like the AUO executives). The DoJ may also be more willing to push the envelope to demand plea agreements and fines for conduct that may have escaped prosecution in the past.

The auto parts investigation

The auto parts investigation began like many international cartel investigations. In February 2010, European Commission officials raided company offices in several EU member states, in connection with alleged price fixing of wire harnesses, which link an automobile’s computers to its various relevant functions. The investigation quickly spread to other automobile components. Under the US Antitrust Division’s (and most other national cartel enforcers’) policies, companies can receive a fine reduction in one product area if they disclose violations in another product. For example, under the Division’s ‘amnesty plus’ programme, a company caught for price fixing wire harnesses has incentives to conduct an internal investigation across other related product lines to identify additional violations. If it is the first to report a violation in a second product line, it receives amnesty or immunity for that conduct and a fine reduction on the initial product investigated by the Division.

The full power of the amnesty plus programme appears to be on display in the auto parts investigation. Notably, the following corporate and individual fines have been obtained in the auto parts investigation:

  • Yazaki Corporation: $470 million (the second-largest criminal antitrust fine ever);
  • Furukawa Electric Company Ltd: $200 million;
  • DENSO Corporation: $78 million; and
  • nine individuals charged, with sentences ranging from a year and a day to 24 months.

And this appears to be the tip of the iceberg. As a general rule, the Antitrust Division’s investigations of a specific company or individual are not disclosed until charges are filed or a plea agreement is announced. According to the DoJ, ‘The auto parts investigation is the largest criminal investigation the Antitrust Division has ever pursued.’ The three corporate defendants who have agreed to pay fines for automobile components in FY 2012 alone have already paid $750 million in fines, more than all of the fines imposed in FY 2011. And, as discussed in more detail below, the Division has drastically ratcheted jail sentences for individuals in the auto parts investigation, nearly doubling the average sentence in the most recent major international cartel investigation (the TFT-LCD investigation).6

Enforcement against foreign nationals

In recent years, the DoJ has significantly ratcheted up its enforcement efforts against individual defendants, seeking longer prison terms for more individuals. From 1990 to 1999 the average prison sentence for individuals convicted of antitrust violations was only eight months. From 2000 to 2009, the average rose to 19 months. Most recently, from 2010 to 2011, the average term of incarceration for individuals jumped to 24 months.7

The DoJ’s rigorous enforcement efforts have not been limited to domestic defendants, with foreign nationals increasingly facing prosecution and longer jail terms. The longest sentence handed down in the LCD investigation was 14 months and was imposed upon Jau-Yang ‘JY’ Ho, the president of a large Taiwanese company.8 However, the majority of the sentences imposed on the LCD defendants, including several high-ranking executives such as a chairman and CEO and several vice presidents, were between seven and nine months.9 In the auto parts investigation on the other hand, mid-level managers have been receiving sentences in the 12- to 24-month range.

Other developments

United States v VandeBrake

Another landmark case that has progressed since we discussed it last year is US v VandeBrake. In May 2010, Steven VandeBrake agreed to plead guilty to three counts of price fixing in the ready-mix concrete industry in exchange for a 19-month prison sentence and a $100,000 fine. The district court rejected the plea agreement, and imposed a record-tying 48-month jail sentence and a fine of $829,715.85.10 VandeBrake appealed to the Eighth Circuit, and this year a divided three judge panel affirmed the sentence.11 In a two-to-one decision, involving three individual opinions, the Eighth Circuit affirmed the sentence, determining that the sentence was not an abuse of discretion and that the district court judge’s upward departure from the antitrust sentencing guidelines was justified. Mr VandeBrake has sought rehearing en banc. Although the Eighth Circuit may ultimately reverse the sentence, individuals accused of price fixing should take note that a judge may well seek harsher penalties than the DoJ is willing to consent to in plea agreements.

United States v Florida West International Airways, Inc

Another notable case is US v Florida West International Airways, Inc. The DoJ charged Florida West with conspiring to fix rates on cargo shipments from Columbia to Miami. The DoJ also charged the company’s former vice president, but Florida West maintains that the executive was secretly employed by another airline and thus that the company should not be held liable for his actions. Notably, Florida West has argued that a nolo contendere plea, which would allow the company to accept punishment without conceding to any wrongdoing, is appropriate under these circumstances. The DoJ has strenuously opposed a nolo plea, under a policy to invariably insist that defendants plead guilty as part of any negotiated resolution of its cases. At a hearing on 1 June 2012 the district court told the parties that it was likely to allow the plea and set a 23 July change of plea hearing date.12 It will be interesting to observe the impact of such a ruling on the Division’s insistence on guilty plea resolutions, particularly against the backdrop of several recent non-prosecution agreements in the financial services industry, which the DoJ has struggled to explain to a defence bar opposed to its unrelenting push for guilty pleas.13


Developments over the past 12 months signal a new enforcement environment that significantly raises the stakes for companies that have engaged in cartel activity or competitor communications that can be characterised as such by the Antitrust Division or competitors seeking immunity or amnesty plus credit. The Division will most certainly approach new cases and plea negotiations more aggressively than in the past, with its confidence bolstered by the AUO trial as well as the ongoing auto parts investigation. Corporate defendants should expect Antitrust Division fine demands that will push the bar ever higher, while individuals now face an environment where one- to two-year negotiated sentences are increasingly becoming the norm in Division demands. And the diffusion of the auto parts investigation through corporate Japan signals a new era where entire national industries may come under the microscope of an aggressive foreign law enforcement agency, whose sights will doubtless be cast on other countries after the full effects of its current activities take hold in Japan.


  1. US DoJ, Antitrust Division Update 2012, Criminal Program, available at
  2. Id. The Division has obtained over $567 million in criminal fines this year.
  3. 18 USC section 3571(d).
  4. 530 US 466 (2000).
  5. Interestingly, on 21 June, the Supreme Court decided that under the Sixth Amendment, criminal fines, in addition to imprisonment and death sentences, are covered by the Apprendi rule, thus implicitly validating the AUO court’s ruling. See Southern Union Co v United States, 567 US (2012).
  6. Prison sentences thus far in the TFT-LCD investigation range from six to 14 months, while sentences in the auto parts investigations range from a year and a day to 24 months.
  7. Antitrust Division Criminal Enforcement, Fine and Jail Charts, 2000-2011, available at
  8. See Jau-Yang ‘JY’ Ho Plea Agreement at 5 (2 June 2010).
  9. See Chang Suk Chung Plea Agreement at 5 (17 February 2009); Chih-Chun Liu Plea Agreement at 5 (27 February 2009); Jui Hung Wu Sentencing Transcript at 14-15 (12 November 2010); Chieng Hon Lin Plea Agreement at 5 (20 February 2009).
  10. See Plea Agreement, United States v Baci, No. 08-cr-350-J-32 TEM (MD Fla 2008), available at
  11. United States v VandeBrake, No. 11-13890 (8th Cir 27 April 2012).
  12. A nolo plea is highly unusual in the antitrust context; in fact, the most recent antitrust case Florida West cited in its filing occurred 18 years ago. If the court accepts one here, it could set a dangerous precedent for the DoJ insofar as it could encourage parties to attempt to circumvent the remedial measures of the amnesty programme, which requires restitution to wronged parties on top of admission of guilt. Florida West maintains that nothing about the nolo plea diminishes the sentencing judge’s discretion to impose a strict sentence; however, the DoJ’s concern would be that such a plea will effectively put downward pressure on ultimate sentencing decisions.
  13. Major financial institutions such as UBS AG, JPMorgan Chase and Wachovia Bank NA have all entered non-prosecution agreements with the DoJ.

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