Scott D. HammondDeputy Assistant Attorney General

U.S. Department of Justice, Antitrust DivisionDetroit, MichiganFebruary 15, 2013

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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

Auto Manufacturer

Issues RFQs for New Model

Contracts Awarded To Conspirators At Collusive Prices

Conspirators Meet and

Coordinate Annually

Conspirators Fix Prices

and Submit Rigged Bids

Conspirators Meet and Allocate

Sales

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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

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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.

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Changes in Competition LawsWhat changes/developments in your competition law have impacted your cartel enforcement program over the last 10 years?

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Creation of New Investigative PowersWhat 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?

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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

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1990-1999Average

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Incarceration TrendAverage Prison Sentence in Months

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37%

62%71%

Percentage of DefendantsSentenced to Prison

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

$107Million

$350Million

$338Million

$473Million

$630Million

$701Million

$1 Billion

$555Million $524

Million

$1.1 BillionTotal Criminal Antitrust Fines

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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

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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

•

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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

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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

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Type A Corporate Leniency Conditions

1. Division has no information about the activity2. Upon discovery, took “prompt and effective” action to

terminate3. Candor, and continuing and complete cooperation4. Confession a truly corporate act, not isolated to

individuals 5. Where possible, restitution6. No coercion, not the leader or the originator

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Type B Corporate Leniency Conditions

1. First in2. Without evidence likely to result in sustainable conviction3.- 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)

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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

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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

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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/leniency.html

• For an Antitrust Primer on how to detect antitrust crimes please visit: http://www.justice.gov/atr/public/guidelines/211578.htm

• •