Category Archives: Cartel Capers by Robert E. Connolly

3C’s: Bid Rigging Prosecution In Canada Hits Another Setback

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Here’s a quick post from Robert Connolly’s Cartel Capers by James Musgrove and Joshua Chad about an interesting case in Canada.

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Bid Rigging Prosecution Hits Another Setback

The trial judge in a high profile bid rigging case with respect to federal government procurement has directed that a verdict of not guilty be entered for one of the individual accused, ruling that there was no reasonable possibility of a conviction. The trial continues against a number of other accused. This is not the first setback for the Crown in the case. In a pre-trial motion the same judge, Judge Warkentin, ruled that the Competition Act’s provisions allowing the admission of documentary evidence to prove the truth of the matters set out in the documents was unconstitutional in a criminal case. Please see the full news report here.

3C’s: News From Taiwan—Guest Post by Professor Andy C.M. Chen

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News From Taiwan—Guest Post by Professor Andy C.M. Chen

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I am pleased to post this update by Dr. Andy C.M. Chen, a professor at Chung Yuan Christian University in Taiwan. Professor Chen is a graduate of Northwestern School of Law and was formerly a member of the Taiwan Fair Trade Commission. As you will see from Professor Chen’s post, cartels are defined quite differently in Taiwan than they are in the United States.  Professor Chen’s personal web page can be found here.

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Amendments to Taiwan Fair Trade Act

The recent amendments of the Taiwan Fair Trade Act were published by the Office of the President and officially took effect on February 4, 2015. The amendments cover nearly 70% of the provisions in the TFTA and are the most extensive revision ever since the Act was enacted in 1992. The main changes include the followings:

  1. Pre-merger notification

1.1. Shares held by or business turnover of the companies affiliated with the merging parties shall be included in the determination of whether the threshold for filing pre-merger notification has been crossed.

1.2. Individuals or groups who are not legal persons but enjoy de facto control of the merging companies could also be subject to the duty of filing pre-merger notification.

1.3. The Taiwan Fair Trade Commission is authorized to promulgate and apply individual business-turnover thresholds for selected industries.

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3C’s: A Flurry of Activity by the CCI–India Update

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Today’s guest post by Avinash Amarnath reports on several actions by the Competition Commission  of India

India update 2015 Vol 3

Its been quite a busy fortnight for the Competition Commission of India (CCI) especially on the cartel front. The CCI has issued three substantive decisions (two infringement decisions and one decision finding no infringement after a detailed investigation) last week which I have analysed below.

Another chemist and druggist association penalised

In its ninth decision against various chemist and druggist trade associations in India, the Competition Commission of India (CCI) fined the Himachal Pradesh (a state in India) Chemist and Druggist Association 10% of its average turnover for imposing rules requiring:

  • a no-objection certificate from it before a pharmaceutical company could appoint a stockist in the state of Himachal Pradesh; and
  • requiring compulsory payment of ‘product information service’ charges by the pharmaceutical company before launching a drug in the state.

The CCI found that these rules cumulatively resulted in limiting supply in the market and restricted pharmaceutical companies’ ability to launch new drugs onto the market. The president of the trade association was fined 8% of his average income for his liability as an individual.

An interesting takeaway from this decision is the CCI’s analysis of whether pharmaceutical companies can also be found liable for forming an agreement with the trade association to deny stockistship and limit supplies for the want of a no-objection certificate from the trade association. The CCI found that agreements between pharmaceutical companies and the trade association would not qualify as horizontal agreements (falling under Section 3(3) of the Competition Act) or as vertical agreements (falling under Section 3(4) of the Competition Act) as they are neither engaged in identical or similar trade of goods or provision of services  nor operating at different stages or levels of the production chain. However, relying on a previous decision (Ramakant Kini v. Hirandandani Hospital and Ors, a discussion on which appeared in my first post on Cartel Capers), the CCI observed that such agreements could nonetheless be examined under the general prohibition on anti-competitive agreements (Section 3(1) of the Competition Act) and would be subject to a rule of reason analysis. However, in the instant case, the pharmaceutical companies were not found liable as there was no evidence to indicate an agreement between them and the trade association.

The full order of the CCI can be accessed here.

For the Rest of the CartelCapers Story, Click Here:

3C’s: Why Motorola Mobility was a Good Decision for Global Cartel Enforcement

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Why Motorola Mobility was a Good Decision for Global Cartel Enforcement

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Back in September I wrote an article for Competition Policy International (CPI) on the FTAIA and the now vacated Motorola Mobility I decision.  That article can be read here.  I was honored to have that article quoted at length by Judge Posner in the subsequent decision:Motorola Mobility v. AU Optronics Corp, 2015 WL 137907 (7th Cir., decided Nov 26, 2015, amended January 12, 2015). In this decision, the Seventh Circuit held that purchases made by Motorola Mobility’s foreign subsidiaries of LCD panels, which the subsidiary then incorporated into products sold to the parent for sale in the U.S., did not give rise to a damage claim under the FTAIA. The Court found that the cartel victims were Motorola Mobility’s foreign subsidiaries. The key fact was Motorola Mobility’s claim that it purchased more than $5 billion worth of LCD panels from cartel members. The Court responded: “That’s a critical misstatement. All but 1 percent of the purchases were made by Motorola’s foreign subsidiaries.”

Since there is little doubt that the defendants did fix prices, the dismissal of 99% of Motorola’s claims seemed like a windfall for the cartelists, and a decision that could lead to under deterrence of global cartel enforcement. Motorola Mobility has expressed its intent to seek review in the United States Supreme Court. Because of the ambiguity of the FTAIA and the myriad fact patterns that can arise, policy consideration will play a large role in ultimately deciding the scope of the FTAIA. I thought Motorola Mobility was rightly decided and that the decision is actually pro-cartel enforcement. I explained why I thought that was so in a recent article CPI published as part of an “Motorola Mobility Redux” issue. My paper is titled: “Why the Motorola Mobility Decision Was Good For Cartel Enforcement and Deterrence” can be found here without charge.  (There are other excellent articles in the CPI issue but they require a subscription to view.). Below are excerpts of my thoughts on why I thought theMotorola Mobility decision was good for cartel enforcement.

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3C’s: CCI fines Port Owner’s Association and Individuals for Price Fixing

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CCI fines Port Owner’s Association and Individuals for Price Fixing

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Today’s guest post is from Avinash Amarnath.

India Update 2015 Vol. 2

Trade associations continue to be the flavor of the day in the cartel space in India.

On 21 January 2015, the Competition Commission of India (CCI) imposed a penalty on the Dumper Owner’s Association (DOA), a trade association of dumper and hywa [unloading] machinery providers for intra-port transportation of cargo at Paradip Port and its individual officers for controlling the supply of dumpers and hywas at Paradip Port and fixing supply prices. The trade association was fined 8% of its average turnover (for the last 3 years) while the individual officers were fined 5% of their average income (for the last 3 years).

The complaint was brought by Swastik Stevedores Private Limited (the Informant), a company engaged in the business of stevedoring and intra-port transportation of cargo alleging that the DOA, in connivance with the Paradip Port Trust (PPT), the government authority managing Paradip Port had been refusing to provide dumpers and hywas to it.

In particular, the CCI found that:

  1. The DOA had been entrusted with the authority to issue gate passes for dumpers and hywas at Paradip Port by the PPT which gave it a unique advantage in controlling supply at the port as no machinery could enter the port without a gate pass. Further, the members of the DOA owned a substantial number of the dumpers used at Paradip Port. The DOA used this control over the supply of dumpers and hywas to refuse supply to the Informant thereby limiting output through collective action in violation of the Competition Act, 2002 (Competition Act); and
  2. The DOA collectively fixed the rates to be charged for provision of dumpers and hywas. The members       were forced to abide by such rates and were not allowed to individually negotiate rates. This resulted in determination of sale prices through collective action in violation of the Competition Act.

    * * * * * Click Here for the Rest of the Story * * * * *

3C’s: CCI fines Port Owner’s Association and Individuals for Price Fixing

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CCI fines Port Owner’s Association and Individuals for Price Fixing

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Today’s guest post is from Avinash Amarnath.

India Update 2015 Vol. 2

Trade associations continue to be the flavor of the day in the cartel space in India.

On 21 January 2015, the Competition Commission of India (CCI) imposed a penalty on the Dumper Owner’s Association (DOA), a trade association of dumper and hywa [unloading] machinery providers for intra-port transportation of cargo at Paradip Port and its individual officers for controlling the supply of dumpers and hywas at Paradip Port and fixing supply prices. The trade association was fined 8% of its average turnover (for the last 3 years) while the individual officers were fined 5% of their average income (for the last 3 years).

The complaint was brought by Swastik Stevedores Private Limited (the Informant), a company engaged in the business of stevedoring and intra-port transportation of cargo alleging that the DOA, in connivance with the Paradip Port Trust (PPT), the government authority managing Paradip Port had been refusing to provide dumpers and hywas to it.

* * * * * Click Here for the Rest of the Story * * * * *

A Report Card: “Obama Administration Antitrust Policy:

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Brief Summary of “Obama Administration Antitrust Policy: A Report Card” Program

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On January 29, 2015 I attended a program hosted by the Heritage Foundation: Obama Administration Antitrust Policy: A Report Card. The program was free and held in the Allison Auditorium. The program had three panels that focused on 1) the FTC; 2) the DOJ, and 3) Antitrust Abroad.   The panels were outstanding and included speakers who were either current or former senior members of the FTC or the Antitrust Division.

The consensus of the speakers was that it is too early to give an overall Antitrust grade to the Obama administration. It can take years to conduct a proper retrospective of how decisions and priorities have played out. Overall, however, there were a number of “high marks” or “good job” given by each of the panels. The DOJ, however was given one failing grade for (my words) “Plays Well With Others.”  Typically when a new administration takes over, new management speaks well of their predecessors, even though they may have a different approach in some areas. This happened with the Bush to Obama transition at the FTC. It did not at the DOJ. Several panelists noted Obama administration DOJ officials were uncharacteristically critical of their immediate predecessors with remarks such as the “antitrust is open for business”[1] and comments made when, in May 2009, the new administration withdrew the September 2008 Section 2 report on monopolization.

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3C’s: LIBOR Guest Post from Richard Wolfram, Esq.

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I came across a very informative post by Richard Wolfram, Esq. about antitrust standing the LIBOR civil damages litigation.  I thought it would be of interest to Cartel Capers readers, in case you haven’t seen it elsewhere.  Mr. Wolfram kindly agreed to let me repost this.

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In re LIBOR: ‘More Light, Please!’—Questions and Observations As the Decision Dismissing Antitrust Claims for Lack of Antitrust Injury Now Faces Appellate Review
Posted: 28 Jan 2015 10:01 AM PST
by Richard Wolfram, Esq.

(An in-depth article on In re LIBOR and antitrust injury is available here under this title. The following is a preview of my article).

(N.B.: In a coincidence of timing, on Jan. 28, 2015, the date of this posting and publication of the linked article, Judge Lorna Schofield of the federal district court for the Southern District of New York, in a case alleging a conspiracy to manipulate the benchmark rates in the $5.3 trillion/day foreign exchange market, denied the defendants’ motions to dismiss and expressly rejected the test used by the court in In re LIBOR for determining antitrust injury, discussed below. In re Foreign Exchange Benchmark Rates Antitrust Litigation (S.D.N.Y. 1/28/15).)

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3C’s: Antitrust Division Announces FY 2014 Criminal Fine Total

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Antitrust Division Announces FY 2014 Criminal Fine Total

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The Antitrust Division just issued a press release announcing that it collected $1.861 billion in criminal fines for its fiscal year that ended Sept. 30, 2014.  The highlights are that four companies paid fines in excess of $100 million (the Sherman Act maximum), led by the $425 million fine against Bridgestone Corp.   The full press release is below:

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FOR IMMEDIATE RELEASE AT
THURSDAY, JANUARY 22, 2015 (202) 514-2007
WWW.JUSTICE.GOV TTY (866) 544-5309

ANTITRUST DIVISION ANNOUNCES FISCAL YEAR TOTAL
IN CRIMINAL FINES COLLECTED

The Department of Justice collected $1.861 billion in criminal fines and penalties resulting from Antitrust Division prosecutions in the fiscal year that ended on Sept. 30, 2014.

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3C’s: India Update 2015, Volume 1.

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India Update 2015, Volume 1.

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Today’s post is the first in 2015 from my friend in India, Avinash Amarath.

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I wish all readers of Cartel Capers a very happy and prosperous new year. There are two items to report for the first India post of the New Year.

Film Distributor Trade Association fined for price fixing and collective boycott

In its last reported decisions of 2014, the Competition Commission of India (CCI), in two separate cases, fined the Film Distributors Association of Kerala (a state in India) 5% of its turnover (in each case) for indulging in price fixing and collective boycott respectively. The business chain for films in India broadly comprises producers, distributors and exhibitors (i.e. cinema halls and multiplexes).

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