CCC’s: UK’s Competition and Market Authority: [Real] Estate Agents Cartel Case Study

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I thought this might be of interest to readers and/or to pass on to clients.  The UK’s Competition and Markets Authority (CMA) just published a case study of their investigation of a real estate against cartel in the UK (here).   Below are the lessons learned section of the study:

What are the lessons?

  • Be careful when talking business with your competitors – make sure you don’t agree not to compete with each other.

  • Be especially wary of any conversations about pricing, or about a shared approach to pricing. Each business must set and decide its prices independently.

  • Competition law applies to small businesses as well as large ones. The estate agents in this case were small local or regional businesses.

  • The consequences of breaking competition law can be severe; fines can be as much as 10% of a business’ global turnover and a director can be banned from being a director of a company, or being involved in the promotion, formation or management of one, for up to 15 years. In the most serious cases, individuals can go to prison for up to 5 years. [In the United States the maximum prison sentence is 10 years.]

  • Competition law applies to all industries and the CMA will take action against those breaking the law.

  • The Somerset estate agents’ cartel is the second recent enforcement case the CMA has taken in the property sector. The CMA remains committed to tackling illegal anti-competitive conduct in the sector.

You can subscribe to the CMS for email updates (here).

Thanks for reading.

CCC’s: Antitrust and Artificial Intelligence, Empirical Analysis in Class Certification: A Research Update (Guest Post)

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By: Ai Deng, PhD,  Principal, Bates White Economic Consulting

Hope everyone had a wonderful Labor Day weekend. During my time off CartelCapers, I have been working on several research projects. In this post, I’d like to give the interested readers an update on two of them.

When Machines Learn to Collude: Lessons from a Recent Research Study on Artificial Intelligence

From Professors Maurice Stucke and Ariel Ezrachi’s Virtual Competition published a year ago, to speeches by the Federal Trade Commission Commissioner Terrell McSweeny and Acting Chair Maureen K. Ohlhausen, to an entire issue of a recent CPI Antitrust Chronicles, and a conference hosted by Organisation for Economic Co-operation and Development (OECD) in June this year, there has been an active and ongoing discussion in the antitrust community about computer algorithms. In a short commentary (downloadable here), I briefly summarize the current views and concerns in the antitrust and artificial intelligence (AAI) literature pertaining to algorithmic collusion and then discuss the insights and lessons we could learn from a recent AI research study. As I argue in this article, not all assumptions in the current antitrust scholarship on this topic have empirical support at this point.

Sub-regressions, F test, and Class Certification

Did the anticompetitive conduct impact all or nearly all class members? This question is central to a court’s class certification decision. And to answer the question, a methodology—known as sub-regressions (also labelled less informatively as simply the “F test” in the recent Drywall litigation)—is being increasingly employed, particularly by defendants’ expert witnesses. A key step of a sub-regression type analysis is to partition the data into various sub-groups and then to examine data poolability.[1]

Forthcoming in the Journal of Competition Law & Economics, my article titled “To Pool or Not to Pool: A Closer Look at the Use of Sub-Regressions in Antitrust Class Certification” focuses on three areas of interest pertaining to sub-regressions:

  • The related law and economics literature related to this methodology
  • Courts’ recent class certification decisions in cases where parties introduced sub-regression analysis
  • Several methodological challenges, many of which have not been previously acknowledged, as well as potential ways to address them. Specifically, what test should one use? How does one choose the subsets or partitions of data to test? Are individual estimates of damages always the most reliable approach when we believe the impact varies across customers or across some other dimensions?

This paper is currently being processed at the Journal. If you would like a copy, please feel free to reach out to me.

As always, I appreciate your thoughts and comments. You can reach me at ai.deng@bateswhite.com or connect with me on LinkedIn [here].

Thanks for reading.

Ai Deng, PhD
Principal, Bates White Economic Consulting
Lecturer, Advanced Academic Program, Johns Hopkins University
direct: 2022161802 | fax: 2024087838
1300 Eye Street NW, Suite 600, Washington, DC 20005
ai.deng@bateswhite.com
BATESWHITE.COM

[1] I first provided an update on this project on CartelCapers here.

Antitrust in Asia: HONG KONG: June 2-3, 2016

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I wanted to pass on some information about another great ABA Antitrust Section program“Antitrust In Asia.”  The program is in Hong Kong, China on June 2-3, 2016, but early registration savings end on May 12.  The faculty includes enforcers from China, Competition Commission of Hong Kong, Competition Commission of India, Japan Fair Trade Commission, Korea Fair Trade Commission, Competition Commission of Singapore, and the U.S. DOJ & FTC.

Antitrust enforcement in Asia has taken a prominent and increasingly important place in the global competition ecosystem. This conference features leading enforcers, academics, and practitioners who will address key developments across the Asia-Pacific region, as well as provide conference attendees unique opportunities to interact with top policy-makers.  Here is a link to the full agenda, which includes: Merger Review, Enforcement Directions in Asia, Abuse of Dominance, and Private Actions.  The conference also features a “Roundtable with Enforcers From China’s AML Agencies” (Ministry of Commerce (MOFCOM), National Development and Reform Commission (NDRC) and State Administration for Industry and Commerce (SAIC)).  While the panels are always great, even better are the informal encounters with the enforcers, corporate counsel and other colleagues who attend the event.

Unfortunately, I won’t be attending.  I blew my modest international travel budget on the ABA Cartel Workshop in Tokyo, Japan in February.  Here is a short Cartel Caper blog post from that conference and a link to a conference follow-up article I wrote for Law 360 (here).  If you do attend the Antitrust in Asia conference and would like to post a blog entry about it, I’d be happy to publish it.  I am always looking to expand the international content of the blog.

Thanks for reading.

Two Executives Charged for Conspiring to Eliminate Competition to Supply Water Treatment Chemicals

Two water treatment chemicals executives were indicted in Newark, New Jersey, for their roles in a conspiracy to eliminate competition among suppliers of liquid aluminum sulfate to municipalities and pulp and paper companies in the United States, the Department of Justice announced today.

Vincent J. Opalewski, former president, vice president and general manager of a water treatment chemicals manufacturer headquartered in Parsippany, New Jersey, and Brian C. Steppig, director of sales and marketing of a water treatment chemicals manufacturer headquartered in Lafayette, Indiana, are the second and third executives charged in connection with the conspiracy, which sought to eliminate competition for contracts to supply liquid aluminum sulfate.  Liquid aluminum sulfate is a coagulant used by municipalities to treat drinking and waste water and by pulp and paper companies in their manufacturing processes.

“Municipalities and pulp and paper companies deserve competitive prices for water treatment chemicals,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “These charges reflect our ongoing efforts to hold accountable those who conspire to cheat their customers responsible for their crimes.”

“These charges send a message that anyone intent on corrupting the free market will be identified and brought to justice,” said Acting Special Agent in Charge Andrew Campi of the FBI’s Newark Division.  “Our mission is to protect victims who don’t see these crimes occurring, but who always end up paying the price.”

The indictment, returned by a grand jury in the U.S. District Court for the District of New Jersey, alleges that Opalewski, from 2005 to 2011, and Steppig, from 1998 until 2011, and their co-conspirators participated in the conspiracy by meeting to discuss each other’s liquid aluminum sulfate business, agreeing to stay away from each other’s historical customers, submitting intentionally losing bids to favor the intended winner of the business, withdrawing inadvertently winning bids and discussing with each other prices to be quoted to municipalities and pulp and paper companies.

The charges contained in the indictment are allegations and not evidence of guilt.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The investigation into collusion in the liquid aluminum sulfate industry is being conducted by the New York Office of the Antitrust Division and the FBI’s Newark Division.  Anyone with information regarding price fixing, bid rigging or customer allocation in the sale and marketing of liquid aluminum sulfate should contact the Antitrust Division’s New York Office at 212-335-8000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.

CCC’s: Brent Snyder’s Remarks On Individual Accountability for Antitrust Crimes

Brent Snyder, the Antitrust Division’s Deputy Assistant Attorney General for Criminal Enforcement, made extended remarks today at the Yale Global Antitrust Enforcement Conference (here). Mr. Snyder emphasized that the Division has long believed, and acted on this belief, that holding individuals accountable for antitrust crimes was both appropriate and the best means of deterrence:

This emphasis on individual accountability is fundamental to Antitrust Division prosecutors. The division has long touted prison time for individuals as the single most effective deterrent to the “temptation to cheat the system and profit from collusion.” My predecessors ensured that this message was often repeated. To quote just one of them, Scott Hammond said that “[i]t is indisputable that the most effective deterrent to cartel offenses is to impose jail sentences on the individuals who commit them.”

Mr. Snyder also made the first remarks (I believe) on how the September 9, 2015 Yatesmemorandum (here) has affected Antitrust Division practices:

Our record with respect to individual accountability speaks for itself. But we are embracing the Deputy Attorney General’s directive to do even better. We have adopted new internal procedures to ensure that each of our criminal offices systematically identifies all potentially culpable individuals as early in the investigative process as feasible and that we bring cases against individuals as quickly as evidentiary sufficiency permits to minimize the risk that cases will be time-barred or that evidence will become stale from the passage of time. We are also undertaking a more comprehensive review of the organizational structure of culpable companies to ensure that we are identifying and investigating all senior executives who potentially condoned, directed, or participated in the criminal conduct.

It will be interesting to see how/if the Yates memo affects Division prosecution decisions in regard to how far down the cartel bench in a given company the Division may go to hold individuals accountable. After all, many cartels, particularly international cartels, can involve many employees (and former employees) of a firm.

It will also be interesting to see if the new policy memo has any effect on the Division’s Corporate Leniency Program. It can be argued that granting leniency to all culpable current employees of the leniency applicant is inconsistent with the Yates memo if the necessary cooperation could be gained at a lower cost. That may be a  topic covered in an upcoming ABA program: The DOJ Amnesty Program After The Yates Memo (here).

Thanks for reading.

“Bring Back Antitrust ” by David Dayen

I thought readers might be interested in this article “Bring Back Antitrust” by David Dayen in the Fall issue of The American Prospect. The headline paragraph of the article is:

“Despite low inflation and some bargain prices, economic concentration and novel abuses of market power are pervasive in today’s economy—harming consumers, workers, and innovators. We need a new antitrust for a new predatory era.”

The article’s focus is market concentration resulting from mergers and alleged anticompetitive practices.  The article has a decidedly progressive tilt, arguing that the current state of concentration in most industries is harmful for consumers. For example, some may cringe at this statement: “Since the Reagan Justice Department neutered antitrust enforcement, a posture substantially ratified by increasingly conservative courts….”   But the article also cites scholarly studies:

            John Kwoka, an economics professor at Northeastern University, collected retrospective data on 46 closely studied mergers, and found that 38 of them resulted in higher prices, with an overall average increase of 7.29 percent. In cases where the Justice Department imposed some sort of condition for accepting a merger, like divestiture of some product lines or bans on retaliation against rivals, the price increases were even higher, ranging from 7.68 percent to 16.01 percent. By this analysis, consumers don’t benefit at all from merger activity, as market power overwhelms whatever efficiency gains.

Two former colleagues of mine, Allen Grunes and Maurice Stucke were quoted in the article. Despite the merger/concentration focus of the article, I was interviewed by Mr. Dayen about cartel enforcement. I was quoted in the article relating to the Antitrust Division’s closing of four field offices in January 2013, including the Philadelphia Field Office where I was Chief. (They could have just asked me to leave—they didn’t have to close the whole office :-).  “The shuttering of over half of the field offices damaged agency morale. The remaining offices can’t cover the territory,” says Robert Connolly, chief of the field office in Philadelphia when it was closed. “I think there’s a sense that the Antitrust Division is not that interested in local and regional cases.” To me, the bigger picture was also that the regional offices were also incredibly successful in fighting international cartels. For example, the prosecution of international cartels was jumped started with the successful prosecution of the ADM lysine cartel by the [still open] Chicago field office.  The now closed Dallas office prosecuted the vitamins cartel and my office prosecuted the graphite electrodes and related cartels. All of the Division’s criminal enforcement sections, whether in DC or in the field, have had great success prosecuting international cartels. What mattered was not the address of the staff handling the case, but their talent/experience, interest in antitrust enforcement and pride in being a public servant. The Division lost a lot of that “stuff.” But while the field office closings was a setback, obviously the Division marches on with great success.

“Bring Back Antitrust” is full of the history of antitrust enforcement, discussion of important cases, both famous and not so much, and offers a point of view that may get some attention in the upcoming presidential election.

Thanks for reading.

PS.  There is also an opinion piece in the Washington Post (here) that discusses “Bring Back Antitrust.”

CCC’s: Kenneth Davidson: Enforcing Antitrust– Leniency, Consumer Redress, and Disgorgement

With his permission, I am gladly reposting a very interesting commentary written by Kenneth M. Davidson, a Senior Fellow at the American Antitrust Institute on September 1, 2015

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Over the past 25 years “leniency” policies pioneered by the Antitrust Division of the US Department of Justice have been enormously successful in identifying and prosecuting unlawful cartel behavior.  That success has been replicated by competition agencies in the European Union and elsewhere.  The key to its success has been to offer immunity to the first cartel member that provides the competition agency with evidence that the cartel exists.  The leniency program has led to billions of dollars in fines and imprisonment in the United States of executives of corporations that participated in the cartel.  Notwithstanding these impressive results, I think the effectiveness of competition law needs to be enhanced by a general adoption of policies that require antitrust violators to disgorge all ill-gotten gains earned from anticompetitive actions.

The need for disgorgement is indicated by some perplexing results that have followed the implementation of leniency program.  Greater enforcement of the laws against cartels and other anticompetitive practices ought, in theory, result in the formation of fewer cartels.  Yet enforcement statistics indicate that the number of cartels identified appears to be rising and, even more surprisingly, cartels that have been successfully prosecuted appear to be reforming at an increasing rate.  Professor John Connor, my colleague at the American Antitrust Institute, probably the leading expert on cartel enforcement, published a study in 2010, Recidivism Revealed, which provides data indicating that the rate at which prosecuted violators recreate cartels has continued to rise.

Connor and another AAI colleague, Professor Robert Lande, who have together tracked antitrust penalties and recoveries from private antitrust actions, have suggested the answer to this seeming anomaly is that fines, imprisonment, and private recoveries are not high enough to deter the formation or reformation of cartels.  Their article, Cartels as Rational Business Strategy: Crime Pays, concludes that the formation of illegal cartels will be deterred only if the penalties exceed the anticompetitive profits times the chances of getting caught.  This “optimal deterrence” theory requires that if a company earns a million dollars in unlawful profits and calculates that it has a fifty percent chance of being caught the fine ought to be two million dollars.  Lande and Connor estimate that the total recoveries from public and private antitrust actions is less than 21 percent of the amount needed to deter violations.

I have argued in past Commentaries on the AAI website that I doubt that cartel members can or do make these kinds of calculations when secretly setting up their cartels.  More important, my reading of the history of law enforcement is that punishment alone is unlikely to suppress crime.  Even drastic actions like cutting off the hands of pickpockets do not appear to have been successful.  Even if higher civil and criminal penalties were more effective, they do nothing to compensate those who have suffered from antitrust violations.

A study published this summer by Professor Andreas Stephan, Public Attitudes to Price Fixing, surveyed attitudes about cartels in the US, UK, Germany and Italy indicates that public support for antitrust enforcement is less than optimal, at least in the US.  Price fixing between supposed competitors was an ideal object for this study.  A majority of those surveyed understood that the cartel agreement is likely to lead to higher prices than the individual companies would charge.  A substantial majority of the public in all four countries believed that price fixing is harmful to consumers on the grounds that it secretly raises prices to consumers, is dishonest and unethical.  Curiously, the majority view that price fixing is harmful was substantially higher in the three European countries than it was in the US.  Even stranger, was the finding that a majority of the public in Europe believed that price fixing is illegal whereas only forty percent of the American public believes that price fixing is unlawful.

Given that antitrust was invented in the US, the billions collected in fines by the Antitrust Division, and the imprisonment of corporate executives by US courts, it is hard to believe that only a minority of Americans believe that price fixing – the most blatant antitrust violation – is unlawful. How might this disparity be explained? One might guess that the higher rates of belief in Europe that antitrust law exists and outlaws price fixing is a fluke based on timing of high profile cases brought by the EU.  I suggest a different reason.  US antitrust law has become so complicated and so infused with law and economics jargon that it is more difficult for the American public to understand what the courts prohibit under a tangled web of laws that are written in arcane language.  The EU treaty adopts American antitrust principles but states them in shorter clearer language.

Two other factors may help explain why there seems to be greater awareness of competition law in Europe.  The first is that EU competition law is seen as a way for Europe to defend its industries from anticompetitive practices by American companies.  The second is that since 2010, the EU has passed a series of regulations that are designed to compensate individuals for anticompetitive overcharges and for losses of profits due to anticompetitive practices.  These regulations have been widely covered in the media.  The EU regulations are intended to make it easier for individuals and companies to prove they have been harmed by antitrust violations and to collect for the damages they have suffered. A person or group need not present separate proof of a violation of EU competition law if the EU or a national competition agency has found the company to have violated the law.  Injured parties need only show their harm.  Furthermore consumers can sue a manufacturing cartel even if they bought from retailers who charged higher prices because the manufactures sold to retailers at fixed higher prices.  In addition, injured parties are entitled to full payment for their losses plus interest on the amounts they were overcharged.

None of this is available under US law.  Moreover, US courts have created numerous procedural hurdles over the past 30 years that make it considerable more difficult for individuals and groups of consumers to collect for damages they have suffered from antitrust violations.  The only significant recent US legislation designed to help those injured by antitrust violations is ACPERA.  This 2004 law helps plaintiffs prove their antitrust claims if the government has already established the violation.  The help to plaintiffs that are entitled to from violators who have obtained leniency comes at a cost to plaintiffs.  They must forgo their right to treble damages if the already proven violator cooperates with the plaintiffs in providing evidence of the violation.  So far this law has not provided much help to plaintiffs. As a result of procedural obstacles created by courts, there are a declining number of cases where US businesses, groups or individuals are able to collect when they are victims of antitrust violations.

The differences in recovery of damages for anticompetitive practices in the US and the EU should not be overstated.  Professors Lande and Connor estimate that, despite procedural hurdles, Americans recover more compensation through private actions than the government obtains from civil and criminal penalties.  Although European law that encourages member states to allow class actions, it does not require their member states to allow lawsuits that combine the claims of all persons harmed by anticompetitive practices.  Nor does European law allow lawyers to be paid contingency fees.  The effect of these two provisions severely undercuts the viability of lawsuits to compensate individuals who have been harmed by competitive violations.  American experience demonstrates that the large expenses of antitrust lawsuits are generally financed by American lawyers who expect to recover those expenses and be compensated by payment of a portion of the recovery of a successful lawsuit.  However due to court created barriers American consumer redress actions have ceased to be a formidable enforcement and consumer protection avenue.   Thus it seems that the European public has more grounds for optimism than do Americans.  The new rights to compensation for antitrust injuries promised by the EU provide hope that, despite clear flaws, their implementation will become effective in contrast to claims in American courts where decisions seem to promise only more difficulties in obtaining redress for those harmed by anticompetitive actions.

The procedural problems in the US and EU with recovery for damages through individual or class actions could be solved by aggressive implementation of disgorgement remedies.  Disgorgement is a long-established doctrine that empowers US courts to require violators of federal law, including the antitrust laws, to pay out all of the ill-gotten gains obtained from their violations.  Disgorgement focuses on the total amount of unlawful gains rather than proof by plaintiffs demonstrating their individual harms. Stripping the violators of their ill-gotten gains would be a substantial improvement in deterrence.  As noted above, Professors Connor and Lande’s extensive research indicates that under current US law the total of antitrust fines, imprisonment and private recovery is far less than the total antitrust harm created by violators whose actions have been shown to be anticompetitive.

After disgorgement, the funds can be distributed to those who can be identified as having been harmed by the violation.  This would alter the focus of public and private antitrust actions from theoretical mathematical models of “allocative efficiency” to putting money in the hands of those who have been harmed by antitrust violations.  Such payments, large and small, would make consumers and businesses aware of how much they have been harmed by anticompetitive behavior and provide the public with understandable reasons to support more vigorous antitrust enforcement.

Where the disgorgement fund exceeds the amounts that are claimed as damages, where the identities of the entities and individuals harmed cannot be fully ascertained, where the costs of distribution of damages exceeds the amounts to be distributed, disgorgement law provides a variety of ways to distribute the excess.  Under the Cy Pres doctrine the court may distribute the funds to non-profit organizations like the AAI or law school antitrust advocacy programs.  Or if it finds no suitable non-profit recipient, remaining funds can be turned over to the federal treasury.

In his law review article Disgorgement As An Antitrust Remedy, Professor Einer Elhauge asks “is it time for disgorgement to assume center stage as an antitrust remedy?”  He has a series of reasons why he believes in disgorgement.  His influential article led to broader acceptance of disgorgement remedies by the FTC in its 2012 statement on disgorgement and by the EU in its 2014 directive on Antitrust Damages.  I believe that it is time for further action to implement disgorgement in both public and private actions and to eliminate the rules that currently deny recovery for antitrust damages.  Routine recovery of full disgorgement can address much of the relative weakness of American public support for antitrust law and strengthen the EU system for compensating those damaged by antitrust violations.  Disgorgement will not eliminate the need for civil and criminal penalties for violations of antitrust law or the need for injunctions to remedy anticompetitive practices, but it will allow enforcement agencies to disentangle the questions of fairness to consumers from the kinds of penalties needed to deter antitrust violations.

CCC’s: DOJ to Hire Compliance Expert

Here’s a link to a Reuters story by Karen Freifeld reporting that United States Department of Justice is hiring a Compliance Expert. The compliance expert will help evaluate whether to charge corporations that fail to detect and prevent wrongdoing by employees. The DOJ compliance expert will advise whether he believes the company had a robust compliance program or one that was window dressing–or something in between.

A candidate has been reportedly offered the position and is undergoing the background check process. The position is in the Criminal Division of DOJ, which has responsibility for health care, securities and FCPA violations, among others. This development will not directly affect the Antitrust Division, which sometimes has policies different from the Criminal Division. But, the Antitrust Division recently, for the fist time ever, gave credit to a company in a plea agreement for a compliance program. I wrote about this in a previous Cartel Capers post: Senior Antitrust Division Official Comments on Credit for Compliance Programs.  This new compliance position within the DOJ is another important step forward in the recognition by the DOJ of the valuable role played by compliance programs.

Thanks for reading.

Five School Bus Owners Indicted for Bid-Rigging and Fraud Conspiracies at Puerto Rico Public School Bus Auction

A federal grand jury in San Juan, Puerto Rico, returned an indictment against five individuals for participating in bid rigging and fraud conspiracies at an auction for public school bus transportation contracts in Puerto Rico’s Caguas municipality, the Department of Justice announced today.

A seven-count felony indictment was filed yesterday in U.S. District Court of the District of Puerto Rico in San Juan against five bus transportation company owners: Gavino Rivera-Herrera, Luciano Vega-Martínez, Alfonso Gonzales-Nevarez, José L. Arroyo-Quiñones and René Garay-Rodríguez.

Count one charges the bus owners with participating in a conspiracy to rig bids and allocate the market for public school bus transportation services in the Caguas municipality.  The second count charges the bus owners with conspiracy to commit mail fraud and counts three through seven charge the bus owners with committing mail fraud.  According to the indictment, the defendants and others defrauded, and conspired to defraud, the Puerto Rico Department of Education and the Caguas municipality, among others, in order to fraudulently obtain contracts for school bus transportation services.

These charges relate to a 2013 Caguas municipality auction, at which four-year contracts for public school bus transportation were awarded.  The indictment alleges that the defendants participated in the charged offenses from around August 2013 until at least May 2015.

“The defendants are charged with depriving taxpayers, the Municipality of Caguas and the Puerto Rico Department of Education of the benefits of a competitive bidding process for school bus contracts,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “This is unacceptable.  The Division will continue its efforts to protect U.S. citizens across the country and hold accountable those who subvert competition.”

“Today’s case is the latest in our ongoing efforts to investigate and prosecute financial crimes, one of the priorities of the Department of Justice,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.  “These arrests serve as a reminder that federal law enforcement agencies intend to vigorously prosecute those who manipulate the economic system to enrich themselves at the expense of the government.”

“Price fixing victimizes the consumer which in this case are the honest, hardworking and tax paying citizens living in Puerto Rico,” said Special Agent in Charge Carlos Cases of the FBI’s San Juan Division.  “Let there be no doubt, the FBI, along with law enforcement partners, will continue to investigate, charge and prosecute any individuals involved in these type of acts.”

The bus owners are charged with bid rigging and market allocation in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than $1 million.  Each count of mail fraud, and conspiracy to commit mail fraud, carries a maximum sentence of 20 years in prison and a $250,000 fine.

This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in Puerto Rico’s school bus transportation services industry.  This investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the U.S. Attorney’s Office of the District of Puerto Rico, the FBI’s Puerto Rico Field Office and the U.S. Department of Education Office of Inspector General.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Puerto Rico Field Office at 787-754-6000.

Current and Former Executives of an Automotive Parts Manufacturer Indicted for Roles in Conspiracy to Fix Prices – Investigation Has Resulted in Charges Against 90 Individuals and Corporations

A Detroit federal grand jury returned a one-count indictment against two executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Norio Teranishi, formerly of NGK Spark Plug Co. Ltd., and Hisashi Nakanishi of NGK Spark Plug, with conspiring to fix the prices of spark plugs, standard oxygen sensors, and air fuel ratio sensors, sold to DaimlerChrysler AG, Ford Motor Company, Fuji Heavy Industries (Subaru), General Motors Company, Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corporation, and certain of their U.S. subsidiaries.

Teranishi is the former General Manager of Sales and Vice-Head of the Automotive Component Group at NGK Spark Plug.  During the alleged conspiracy, Nakanishi served as the Managing Director of NGK Spark Plug Europe.

The indictment alleges, among other things, that beginning at least as early as January 2000 and continuing until at least July 2011, Teranishi and Nakanishi, and their co-conspirators participated in, and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply, and fix the price of spark plugs, standard oxygen sensors, and air fuel ratio sensors sold to certain automobile manufacturers, in the United States and elsewhere.

“As a result of Antitrust Division’s automotive parts investigation, more than 50 individuals have been held accountable for corrupting the competitive process in this important global market,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “The Antitrust Division will continue to vigorously prosecute those individuals who engaged in criminal antitrust violations in this vital market.”

“The criminal manipulation of the global automotive parts market through price fixing and bid rigging is a serious offense,” stated Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office.  “The FBI, together with the Department of Justice Antitrust Division, will continue to aggressively pursue those who seek to commit criminal antitrust violations in order to gain a competitive advantage through corruption of the global marketplace.”

NGK Spark Plug is a corporation organized and existing under the laws of Japan with its principal place of business in Nagoya, Japan.  On Oct. 8, 2014, NGK Spark Plug pleaded guilty and agreed to pay a $52.1 million criminal fine for its role in the conspiracy.

Including Teranishi and Nakanishi, 55 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry.  Additionally, 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.

Teranishi and Nakanishi are charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visitwww.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.