Tag Archives: Antitrust Division

***Antitrust Monitor (2 of 2)*** Informal Blog Post by Robert Zastrow regarding Anheuser-Busch InBev’s Proposed Acquisition of Grupo Modelo

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Today’s Wall Street Journal article regarding Anheuser-Busch InBev’s Proposed Acquisition of Grupo Modelo ( US Fights AB InBev With Tested Game Plan by Brent Kendall), brought back memories of my life before Verizon when I was general counsel to the New York State Beer Wholesalers’ Association and prosecuting attorney in connection with the Heileman Schlitz merger.
I commend Mr. Kendall’s article, which emphasizes the degree to which DOJ now relies on “hot documents” in merger cases.  In this particular case, DOJ cites emails in which AB executives worried about pricing pressure from Modelo.  The key issue is likely to be whether Modelo was a cause for particular concern, or whether other premium brands, e.g. Heineken, posed similar issues, not because the premium brands were sold at the same price as Bud, but because if the gap between Bud and Modelo narrowed, customers would trade up.  Presumably, this would not include construction workers such as my wife’s crew chief, who had a large Bud tattoo on his right arm!
This article underscores the importance of early attorney involvement in merger planning.  How easier it would have been for AB had the lawyers emphasized the importance of documents to the marketing and sales staffs.  And, even if the company seeks counsel later, it is never a bad idea for counsel to get the files from a small number of marketing and sales executives to see what they say about the target.   Acquirers can pay premiums reaching the billions if a merger does not consummate, and an early assessment of the risk caused by bad documents is essential.
I vividly recall sitting on a panel in the mid 90’s with a former AAG, who shall go nameless.  He assured the audience that corporate counsel would soon develop procedures for monitoring emails and insuring that incriminating statements were not recorded.  The Bar did not realize then how ubiquitous electronic communications would become — there was barely an Internet then — and how difficult it would be to monitor hundreds of executives who were generating content at their computers all day.

Justice Department Files Antitrust Suit Lawsuit Challenging Anheuser-Busch InBev’s Proposed Acquisition of Grupo Modelo

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Merger Would Result in U.S. Consumers Paying More for Beer, Less Innovation; Lawsuit Seeks to Maintain Competition in the Beer Industry Nationwide

WASHINGTON — The Department of Justice filed a civil antitrust lawsuit today challenging Anheuser-Busch InBev’s (ABI) proposed acquisition of total ownership and control of Grupo Modelo. The department said that the $20.1 billion transaction would substantially lessen competition in the market for beer in the United States as a whole and in 26 metropolitan areas across the United States, resulting in consumers paying more for beer and having fewer new products from which to choose.

Americans spent at least $80 billion on beer last year. According to the department, ABI’s Bud Light is the best selling beer in the United States and Modelo’s Corona Extra is the best-selling import. Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers, the department said.

The department’s lawsuit, filed in the U.S. District Court for the District of Columbia, seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate.

“The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers. This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry.”

ABI and Modelo–the largest and third largest beer firms, respectively–together control about 46 percent of annual sales in the United States. MillerCoors, the second largest beer firm, accounts for about 29 percent of nationwide sales. Beer is generally grouped into four distinct segments by industry participants–sub-premium, premium, premium plus and high-end. The sub-premium segment includes: Busch (owned by ABI); and Keystone (owned by MillerCoors). The premium segment includes: Bud Light; Coors Light; and MillerLite. The premium plus segment includes: Michelob (owned by ABI); and Modelo Especial (owned by Modelo). The high-end segment includes: imports such as Corona (owned by Modelo) and Heineken; and a variety of craft beers.

According to the department’s complaint, the U.S. beer market is already highly concentrated, and prices are increased by strategic interactions among the largest brewers, including ABI and MillerCoors. ABI generally acts as the price leader, implementing annual price increases in the sub-premium, premium and premium plus segments of the U.S. beer industry. MillerCoors and other brewers have typically joined the ABI price increases, while Modelo has not. By pricing aggressively, Modelo–through its importer, Crown Imports–puts pressure on ABI to maintain or lower prices, especially in certain parts of the country. As a result, Modelo has become a particularly important competitor in the U.S. market.

The complaint quotes internal company documents demonstrating both ABI’s determination to maintain its upward price leadership in the U.S. beer industry and Modelo’s present-day position as a significant competitive threat to ABI:

 

    • ABI has implemented a “conduct plan,” whereby ABI hopes to establish “the highest level of [price] followership” by its large rivals by being as “consistent,” “simple” and “transparent” as possible;

 

 

    • ABI believes that its conduct plan provides the highest possibility of “sustaining a price increase” and “ensuring competition does not believe they can take share through pricing”;

 

 

    • By contrast, Modelo’s pricing strategy in the United States is known as the “momentum plan” and aims to narrow the “price gap” between Modelo’s imports and domestic premium beers, such as ABI’s Bud Light, stealing market share from ABI by enticing consumers to “trade up” to Modelo beer; and

 

 

    • ABI executives acknowledge that Modelo has “put increasing pressure” on ABI competitively, and that Modelo’s strategy is at odds with ABI’s well-established practice of leading prices upward with the expectation that its competitors will follow.

 

The complaint also discusses ABI’s efforts to target Corona. ABI considered Corona to be a significant threat, and launched Bud Light Lime in 2008 to compete with Corona. ABI went as far as to mimic Corona’s distinctive clear bottle.  Ultimately, instead of trying to compete head-to-head with its own product, Bud Light Lime, ABI is thwarting competition by buying Modelo.

The department alleges that ABI’s acquisition of total ownership and control of Modelo would eliminate the existing competition between ABI and Modelo, further concentrating the beer industry, enhancing ABI’s market power and facilitating coordinated pricing between ABI and the remaining large players. Consumers would, as a result, see higher prices and less innovation.

The department’s complaint also alleges that ABI and Modelo efforts to remedy the anticompetitive aspects of their transaction are inadequate. The complaint states that ABI has agreed to sell Modelo’s existing 50 percent interest in Crown to its Crown joint venture partner, Constellation. ABI would also enter into an exclusive agreement to supply Constellation with Modelo beer to import into the United States, although ABI can terminate this supply agreement after 10 years and would retain the Modelo brands and its brewing and bottling facilities.

“The companies’ attempt to fix this anticompetitive deal through the sale of Modelo’s existing interest in Crown and a temporary supply agreement is not sufficient to prevent consumer harm from ABI’s acquisition of its competitor, Modelo,” said Baer.

The complaint states that the combined effect of the proposed acquisition of Modelo and the proposed fix is to eliminate from the marketplace a sophisticated brewing firm with a long history of success and replace it with an importer which will own no brands or brewing facilities and be totally dependent on ABI for its supply of Corona and other Modelo brands.  The documents in the case show that as Crown’s CEO wrote to his employees after the acquisition was announced: “our #1 competitor will now be our supplier…it is not currently or will not, going forward, be ‘business as usual.’” The department’s complaint said that not only will competition be harmed by the loss of Modelo as a competitor, but by removing an independent brewer–Modelo–from the market, strategically coordinated pricing will become easier in the future.

ABI is a Belgian corporation with its principal place of business in Leuven, Belgium.  In 2011, ABI had revenues of approximately $39 billion. ABI currently has a 43 percent voting interest and a 50.35 percent economic interest in Modelo. ABI has stated in its annual reports filed with the Securities and Exchange Commission that it does not have voting or other effective control of Modelo. Through the proposed acquisition, ABI would acquire control of, and the remaining economic interest in Modelo.

Modelo is a Mexican corporation with its principal place of business in Mexico City.  In 2011, Modelo had revenues of approximately $7 billion.

***Antitrust Monitor (Inaugural Issue): 2013 Forecast***

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Renewed Vigilance Regarding Civil Enforcement; Continued Consolidation, Integration and Acceptance of Structural Changes at Criminal Program; Higher Morale

Baer’s Confirmation is unlikely to change momentum, policies or priorities.

As the Obama Administration prepares for a second term, Bill Baer has been confirmed as Assistant Attorney General.  The Antitrust Division’s informal profile photo of Baer captures his genuine humility and good will that many Antitrust Division attorneys will immediately recognize from numerous interactions with him when he represented clients as a partner at Arnold & Porter.  Baer’s easygoing nature is no contrivance and he will build on this long track record of good relations with many of the attorneys and mid-level managers at the Antitrust Division.  In addition to the normal productivity enhancements associated with having confirmed leadership at the helm, Baer’s tenure at the FTC suggests that he will implement an effective management style and push more expansive enforcement goals.  We also believe that Baer’s confirmation will improve morale (discussed more fully below) and Baer will quickly calm the ripples caused by programmatic changes that resulted in field office closure and attrition of seasoned prosecutors in the criminal program.

Continued Civil Enforcement Vigilance 

In its first term, the Obama Administration took some modest steps toward its goal of revitalizing civil enforcement.  The Division repudiated the Bush administration’s monopolization guidelines and expressed a greater willingness to challenge unilateral conduct and exclusionary business arrangements, although it only brought one monopolization case.  That the Obama administration managed a slight increase in second requests is significant since it occurred in the midst of significantly dampened merger activity caused by the financial crisis.  Perhaps the most telling metric was discovered by the Stanford Law Review (SLR Online, 65 STAN. L. REV. ONLINE 13, July 18, 2012):

“[t]he Bush Administration conducted 0.04 investigations per Hart-Scott filing; Obama conducted 0.05 investigations per filing. The Bush Administration made 0.013 second requests for information per Hart-Scott filing; Obama’s made 0.020—a 50% increase on a per capita basis.

Combine this 50% increase with a few more high profile enforcement actions that included AT&T/T-Mobile, H&R Block/TaxAct, NASDAQ/NYSE, and BCBS/Physicians Health, and the Obama administration can make a plausible case that it has already reinvigorated enforcement. During his Senate confirmation hearings in July, Baer told lawmakers that he supported Congressional action to repeal the Supreme Court’s Leegin decision which imposed rule of reason analysis for resale price maintenance where per se analysis, albeit with loopholes, had sufficed in the past.

This was music to Democratic ears in the Senate that clearly prefer more aggressive enforcement.  Senator Herb Kohl, D-Wis had expressed concerns back in July regarding Google potentially using its market power in search engine technology to favor its products and services.  Baer did not answer Kohl’s question as to Google, but he did share his enforcement philosophy generally: “being vigilant whether its Microsoft or Alcoa Aluminum about firms that are successful, and we don’t want to penalize success but to make sure it’s not improperly translated into unfair advantage in other markets, is really a key part of what antitrust is all about.”  This comment suggests a revival of monopoly leveraging, always a favorite of Democrat administrations even if the courts have been less receptive.

Will Baer lead the Division on a path to reinvigoration?  He may have provided an answer last week when he came out of the box swinging against the merger between Bazaarvoice and Powerreviews Inc. (involving online customer reviews for retailers) and Oklahoma Chiropractors (which challenged joint contracting agreements with insurers).  Of these first two significant actions of Baer’s tenure, Bazaarvoice is the one that is suggestive of reinvigoration and expansion.  The customer reviews market is evolving at rocket speed, there are challenges for the government regarding market definition and it is unclear that the barriers to entry can be all that high, particularly when well-funded behemoths like Google and Facebook seem to have position for market entry.  Notably, the company was vocal in its frustration about the “six months” it spent in negotiations with the Antitrust Division, suggesting that it could have announced this challenge prior to Baer taking the helm.  The fact that Baer announced it after he assumed his duties suggests that he sees a strong case.   Certainly it would not have escaped Baer’s attention that a decision like this would allow many to interpret this is a bullish signal that Baer plans to reinvigorate, revitalize and expand the Antitrust Division’s mission regarding civil enforcement.

At the FTC, Chairman Leibowitz, a Democrat, has served as an FTC commissioner for eight years and as chairman for almost four years. As rumors circulate regarding his likely departure, President Obama must consider potential replacements. The president could appoint a new chairman from the sitting Democratic commissioners, or he could choose someone from outside the agency. The president recently nominated Joshua Wright, a Republican, to replace outgoing Republican commissioner J. Thomas Rosch, whose term expired in September. Commissioner Rosch has indicated that he will stay in his position until the Senate confirms Wright. Although no more than three of the FTC’s five commissioners, who each serve seven-year terms, can be of the same political party, President Obama’s reelection ensures a Democratic majority at the FTC. Three of the five FTC commissioners will continue to be Democrats, and the chairman, who appoints the directors of the Bureaus of Competition and Consumer Protection, will also be a Democrat.  Accordingly, there is little reason to expect a new direction in antitrust enforcement priorities.

Continued Consolidation and Integration of Structural Changes at Criminal Program 

In the first Obama term, cartel enforcement was the Division’s top criminal priority to the exclusion of things like procurement fraud.  Almost certainly, these headwinds still exist, but time will tell whether Baer can be successful at reducing impediments to opening investigations that do not present themselves on first impression as Section 1 conduct.  Although people can argue over the causes, the Antitrust Division grand jury investigations plummeted from over 150 to fewer than 60 overall and new openings fell from 66 to 29.  Most of this came at the expense of Department’s procurement fraud program and overall anti-competitive deterrence in the area of government procurements has been grievously affected as a result.

On paper, cartel enforcement was little changed from the Bush years, although some of the Division’s numbers were marginally inflated by splitting criminal information’s in non-traditional ways and there is a widespread concern that the pipeline of “small” or “bread and butter” investigations is dry.  Airline Shipping and Auto Parts are behemoth investigations that generate a wealth of statistics, but there are 90 fewer industries that are the subject of grand jury investigations and it is impossible to measure deterrence that is not happening.

In procurement fraud, the Bush administration gave the Antitrust Division a long leash and authorized its use of resources in most allegations that affected the pre-award contract process.  As the Obama Administration strained its resources to support invigorated civil enforcement and it pushed investigative resources toward financial crimes, the administration implemented a series of policy changes that significantly reduced Antitrust Division criminal investigations.  First, it was made much more difficult for attorneys to open grand jury investigations involving matters that did not present themselves on first impression as suspected antitrust conspiracies.  Since very few antitrust criminal cases ever “present” as fully-fledged antitrust conspiracies (i.e.. evident participation by more than one competitor), investigation requests plummeted.  This effect was particularly pronounced in procurement because so few government contracts are awarded through an invitation for bid (”IFB”) process and more are awarded sole source, best value and through a request for proposal procedure where price is not the only factor.  These contracting schemes make it difficult, if not impossible as a matter of law, to use the Sherman Act to prosecute schemes affecting contracts that were not awarded through an IFB process.

Second, the Antitrust Division implemented a new, computerized tracking system that made it harder to keep open investigations that were not being actively investigated.  Because grand jury authority is held at the AAG level in contrast to the Criminal Division (delegated to the DAAG) and the United States Attorneys’ Offices (delegated to line assistants), getting grand jury investigations opened takes the Antitrust Division greater resources than other components.  Line attorneys refer to this process with dread as “the investigation to get grand jury investigative authority.”  Because the Antitrust Division has to invest greater resources into securing grants of grand jury authority and because this authority requires higher levels of approval, it is relatively unusual to reopen a grand jury investigation after closure.  In the past, keeping investigations “on the books” might allow a staff to focus on another industry or to offer help to another investigative staff on an investigation that had “gone hot.”  It also might allow another contract to be awarded or another coordinated price increase to be implemented that might significantly further the investigation.  For these and other reasons, putting open cases on the back burner became verboten and if investigations did not hit success early on they got closed.  The new case matter tracking system often pushes staffs to make tactical decisions that would be better made later after the emergence of new leads, information or evidence.  Ironically, in some respects, the Antitrust Division now pursues an operations policy that reminds line attorneys of some partner investigative agencies who years ago would have to close investigations and then struggle to reopen them if a staff determined that a three month delay was advisable.  Because case filings (i.e. stats) are the paramount metric, this provides disincentives to working any case that is at all considered “marginal” and the Division’s deterrence footprint has shrunk.

Third, by January 30, 2013, the Division will have closed four of its seven field offices, a move that has adversely impacted morale.  Although this was sold as a serious consolidation plan for which many employees would avail themselves and relocate to Washington D.C. or the remaining field offices (San Francisco, New York, and Chicago), this does not seem to be happening in any great numbers.  Using the Philadelphia and Cleveland Field Offices as examples, we count a total of three attorneys who will be staying with the Division.

Baer’s mission is not an easy one.  He joins the Antitrust Division just prior to the formal shut down of four offices and significant attrition; he joins an Antitrust Division that has fewer raw materials in the investigations pipeline.  Still we have caucused Antitrust Division attorneys who are staying with the agency and there is reason for optimism.  As word filters back that Antitrust Division attorneys who severed or retired were dealt with fairly and considerately, active concerns will dissipate and we believe Baer can drive a newly structured criminal program to fire on all cylinders by the end of this fiscal year.   There could be reinvigorated activity as a rumored new section formed in Washington D.C. (staffed by detailees and transferring attorneys) and offices in San Francisco, Chicago (currently slated for one additional expat prosecutor) and New York receive transferring prosecutors and lateral hires to stem attrition, and we expect to see vibrant competition by attorneys for investigations.  Most notably, the rumored new section in Washington D.C., that will be comprised of expats from some of the closed field offices, will see the National Criminal Enforcement Section (NCES) as its main competition and we expect fierce competition to develop creative strategies for generating new cases.

11/3/1998 EDPA Historical Society Celebration of 50 Years of Antitrust Enforcement by the Philadelphia Field Office of the Antitrust Division

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Later this month, four Antitrust Division field offices in Atlanta, Cleveland, Dallas and Philadelphia close their doors for good.  The link below hearkens back to happier day on November 3, 1998, when the Historical Society of the Eastern District of Pennsylvania honored and celebrated the Philadelphia Field Office’s 50th year of cartel enforcement

Please click the link below:

Historical Society Celebrates Philadelphia Field Office of the Antitrust Division

 

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Former Financial Services Broker Sentenced to 10 months in MuniBonds Investigation

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WASHINGTON — A former financial services broker was sentenced today in U.S. District Court for the Southern District of New York, for his participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

Adrian Scott-Jones, of Morriston, Fla. , a former broker for Tradition N.A. , was sentenced by District Court Judge Harold Baer Jr. for his role in the conspiracies. Scott-Jones was sentenced to serve 18 months in prison and to pay a $12,500 criminal fine.

“From soliciting intentionally losing bids for investment agreements to paying out kickbacks to manipulate the competitive bidding process, the conspirators went to great lengths to defraud municipalities across the country,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s sentence sends a clear message that the division will continue to hold executives accountable for their anticompetitive conduct. ”

On Sept. 8, 2010, Scott-Jones pleaded guilty to participating in multiple conspiracies with executives of General Electric Co. (GE) affiliates, from as early as 1999 until 2006. According to the charges, GE and other financial institutions and insurance companies (providers), offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities hired brokers like Scott-Jones and Tradition to conduct bidding for contracts to invest money from a variety of sources, primarily the proceeds of municipal bonds issued to raise money for, among other things, public projects. Scott-Jones also participated in a conspiracy with representatives of a second provider located in New York City.

According to court documents, in each conspiracy, Scott-Jones gave co-conspirators information about the prices, price levels or conditions in competitors’ bids, a practice known as a “last look,” which is explicitly prohibited by U.S. Treasury regulations. Scott-Jones also solicited and received intentionally losing bids for certain investment agreements and other municipal finance contracts. As a result of Scott-Jones’ role in corrupting the bidding process for investment agreements, he and his co-conspirators deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds used by municipalities for various public works projects, such as water pollution abatement projects and low-cost housing. The department said that the conspiracies cost municipalities around the country millions of dollars.

“Today’s sentencing reaffirms the ongoing success of our efforts to weed out corruption in the municipal bond market,” said George Venizelos, Acting Director in Charge of the FBI in New York. “The FBI will continue to work closely with our partners from the Antitrust Division to protect the integrity of the competitive bidding process in public finance. ”

“Individuals who manipulate the competitive bidding system to benefit themselves will be held accountable for their criminal activity,” said Richard Weber, Chief, Internal Revenue Service Criminal Investigation (IRS-CI). “Quite simply, Mr. Scott-Jones profited at the expense of the towns and cities that needed the money for important public works projects. IRS Criminal Investigation is committed to working with our law enforcement partners to uncover this kind of corruption and secure justice for American taxpayers. ”

A total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation, 19 of whom have been convicted at trial or pleaded guilty; one is currently awaiting trial. Additionally, one company has pleaded guilty.

The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York Office, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Today’s convictions are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

UBS Securities Japan to Plead Guilty to Felony Wire Fraud For Long Running Manipulation of LIBOR Benchmark Interest Rates

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Two Former Senior UBS Traders Face Felony Charges Unsealed Today

UBS AG to Pay Substantial Penalty in Agreement Reflecting
Substantial Cooperation, Significant Changes

WASHINGTON — UBS Securities Japan Co. Ltd. (UBS Japan), an investment bank, financial advisory securities firm and wholly-owned subsidiary of UBS AG, has agreed to plead guilty to felony wire fraud and admit its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Attorney General Eric Holder announced today.  The criminal information, filed today in U.S. District Court in the District of Connecticut, charges UBS Japan with one count of engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating LIBOR benchmark interest rates.

As part of the ongoing criminal investigation by the Criminal and Antitrust Divisions of the Justice Department and the FBI into LIBOR manipulation, two former senior UBS traders also are charged.  Tom Alexander William Hayes, 33, of England, and Roger Darin, 41, of Switzerland, were both charged with conspiracy in a criminal complaint unsealed in Manhattan federal court earlier today.  Hayes is also charged with wire fraud, based on the same scheme, and a price fixing violation arising from his collusive activity with another bank to manipulate LIBOR benchmark rates.

UBS Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $100 million fine.  In addition, UBS AG, the parent company of UBS Japan headquartered in Zurich, has entered into a non-prosecution agreement (NPA) with the government requiring UBS AG to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation.  The NPA reflects UBS AG’s substantial cooperation in discovering and disclosing LIBOR misconduct within the financial institution and recognizes the significant remedial measures undertaken by new management to enhance internal controls.

Together with approximately $1 billion in regulatory penalties and disgorgement – $700 million as a result of the Commodity Futures Trading Commission (CFTC) action; $259.2 million as a result of the U.K. Financial Services Authority (FSA) action; and $64.3 million as a result of the Swiss Financial Markets Authority (FINMA) action – the Justice Department’s criminal penalties bring the total amount of the resolution to more than $1.5 billion.

“By causing UBS and other financial institutions to spread false and misleading information about LIBOR, the alleged conspirators we’ve charged – along with others at UBS – manipulated the benchmark interest rate upon which many transactions and consumer financial products are based.  They defrauded the company’s counterparties of millions of dollars.  And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves,” said Attorney General Holder. “Today’s announcement – and $1.5 billion global resolution – underscores the Justice Department’s firm commitment to investigating and prosecuting such conduct, and to holding the perpetrators of these crimes accountable for their actions.”

“UBS manipulated one of the cornerstone interest rates in our global financial system,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.  “The scheme alleged is epic in scale, involving people who have walked the halls of some of the most powerful banks in the world.  Today’s agreement by UBS Japan to plead guilty, the charges against individual alleged perpetrators of these crimes, and our agreement recognizing the steps being taken by UBS AG to right itself demonstrate the Justice Department’s determination to hold accountable those in the financial marketplace who break the law.  We cannot, and we will not, tolerate misconduct on Wall Street of the kind admitted to by UBS today, and by Barclays last June.  We will continue to follow the facts and the law wherever they lead us in this matter, as we do in every case.”

“The criminal complaint charges two senior UBS traders with colluding to manipulate Yen LIBOR interest rates for the purpose of improving trading positions held by Hayes and UBS,” said Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division.  “Coordinating the movement of interest rates even by a very small margin meant higher profits and bigger bonuses for the conspirators at the expense of those that relied on LIBOR as a reference rate.”

“The manipulation of LIBOR affects financial products including mortgages, credit cards, student loans and many other interest rate products,” said FBI Associate Deputy Director Kevin L. Perkins.  “This practice further erodes Main Street’s confidence in Wall Street.  The public expects our financial institutions to maintain proper oversight of their businesses and to ensure the public is not harmed by criminal activity within these institutions.  In this case, UBS acknowledged its failures and cooperated with our investigation.  The FBI would like to thank its federal partners in this investigation – the Department of Justice Criminal Division’s Fraud Section and Antitrust Division, Commodity Futures Trading Commission’s Division of Enforcement and the Securities and Exchange Commission’s Division of Enforcement whose joint efforts brought a successful resolution to this matter.”
 
According to documents filed in these cases, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR serves as the primary benchmark for short-term interest rates globally, and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were estimated at approximately $450 trillion.

LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks.

Between July 2006 and September 2009, Hayes was a senior trader employed in the Tokyo office of UBS Japan, which then operated under the name UBS Securities Japan Ltd.  Among other financial products, Hayes traded in interest rate derivatives that essentially consisted of bets against other traders on the direction in which Yen LIBOR would move.  UBS was a member of the Yen LIBOR panel, and Darin was, at certain times relevant to the criminal complaint, a trader responsible for making and supervising LIBOR submissions to the BBA on behalf of the bank.  In a statement of facts attached to the NPA and plea agreement, Hayes is referred to as “Trader-1” and Darin is referred to as “Submitter-1.”

Beginning in September 2006, UBS Japan and Hayes orchestrated a sustained, wide-ranging and systematic scheme to move Yen LIBOR in a direction favorable to Hayes’ trading positions, defrauding UBS’ counterparties and harming others with financial products referencing Yen LIBOR who were unaware of the manipulation.  Between November 2006 and August 2009, Hayes or one of his colleagues endeavored to manipulate Yen LIBOR on at least 335 of the 738 trading days in that period, and during some periods on almost a daily basis.  Because of the large size of Hayes’ trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits.  For example, Hayes once estimated that a 0.01 percent movement in the final Yen LIBOR fixing on a specific date could result in a $2 million profit for UBS.

According to the charging documents, UBS Japan and Hayes employed three strategies to execute the scheme: from November 2006 through September 2009, Hayes conspired with Darin and others within UBS to cause the bank to make false and misleading Yen LIBOR submissions to the BBA; also, Hayes caused cash brokerage firms, which purported to provide market information regarding LIBOR to panel banks, to disseminate false and misleading information about short-term interest rates for Yen, which those banks could and did rely upon in formulating their own LIBOR submissions to the BBA; and Hayes communicated with interest rate derivatives traders employed at three other Yen LIBOR panel banks in an effort to cause them to make false and misleading Yen LIBOR submissions to the BBA.

As alleged in the charging documents, Hayes, Darin and other co-conspirators often executed their scheme through electronic chats.  On Nov. 20, 2006, for example, Hayes asked a UBS Yen LIBOR submitter who was substituting for Darin, “hi . . .  [Darin] and I generally coordinate ie sometimes trade if ity [sic] suits, otherwise skew the libors a bit.”  Hayes went on to request, “really need high 6m [6-month] fixes till Thursday.”  The submitter responded, “yep we on the case there . . . will def[initely] be on the high side.”  The day before this request, UBS’s 6-month Yen LIBOR submission had been tied with the lowest submissions included in the calculation of the LIBOR fix.  Immediately after this request for high submissions, however, UBS’s 6-monthYen LIBOR submissions rose to the highest submission of any bank in the contributor panel and remained tied for the highest, precisely as Hayes had requested.

Another example of such an alleged accommodation occurred on March 29, 2007, when Hayes asked Darin, “can we go low 3[month] and 6[month] pls?  . . .  3[month] esp.” Darin responded “ok”, and the two had the following exchange:

Hayes:

 what are we going to set?

Darin:

 too early to say yet . . .  prob[ably]  .69 would be our unbiased contribution

Hayes:

 ok wd really help if we cld keep 3m low pls
Darin: as i said before – i [don’t] mind helping on your fixings, but i’m not setting libor 7bp away from the truth. . .  i’ll get ubs banned if i do that, no interest in that.
Hayes: ok obviousl;y [sic] no int[erest] in that happening either . . . not asking for it to be 7bp from reality anyway any help appreciated[.]

Hayes received the help he requested.

In addition, the criminal complaint charges Hayes with colluding with a trader employed at another LIBOR panel bank in May 2009, in violation of the Sherman Antitrust Act.  Hayes allegedly engaged in the collusive scheme to fix the price of derivative instruments whose price was based on Yen LIBOR.  In electronic chats, Hayes asked the trader to move 6-month Yen LIBOR up due to a “gigantic” position Hayes had taken.  For the trade in question, UBS trading records confirmed that each 0.01 percent movement in LIBOR would generate profits of approximately $459,000 for Hayes’ book.  The trader at the other bank responded that he would comply, and his bank’s submission moved by 0.06 percent compared to its submission the previous day, for which Hayes thanked him.

In entering into the NPA with UBS AG, the Justice Department considered information from UBS, and from regulatory agencies in Switzerland and Japan, demonstrating that in the last two years UBS has made important and positive changes in its management, compliance and training to ensure adherence to the law.  The department received favorable reports from the Swiss Financial Market Supervisory Authority (FINMA) and the Japan Financial Services Authority (JFSA) describing, respectively, progress that UBS has made in its approach to compliance and enforcement and UBS Japan’s effective implementation of the remedial measures the JFSA imposed based on findings relating to the attempted manipulation of Yen benchmarks.

The investigation is being handled by Deputy Chiefs William Stellmach and Daniel Braun and Trial Attorney Luke Marsh of the Criminal Division’s Fraud Section, and Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, New York Field Office.  Assistant Chief Rebecca Rohr and Trial Attorneys Alexander Berlin and Thomas Hall of the Criminal Division’s Fraud Section, Trial Attorneys Portia Brown and Wendy Norman of the Antitrust Division, and Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut have also provided valuable assistance.  The Criminal Division’s Office of International Affairs also provided assistance in this matter.  The investigation is being conducted by the FBI’s Washington Field Office.

The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the Department and, along with the FSA, has played a major role in the investigation.  The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations and, among other efforts, has made an invaluable contribution to the investigation relating to UBS.  The Department of Justice also wishes to acknowledge and thank FINMA, the Japanese Ministry of Justice, and the JFSA.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the Department is grateful for their cooperation and assistance.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.

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NJ Company Pleads Guilty For Role in Bid Rigging Scheme at Municipal Tax Lien Auctions

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Investigation Has Yielded 11 Guilty Pleas

WASHINGTON — A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty today for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.

A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey.  As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid.  Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.

“The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.

According to the court documents, Mercer, along with the nonprofit corporation which assigned some of its liens to Mercer, was involved in a conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.

Today’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.

Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

AU Optronics Executive Convicted For LCD Price-Fixing Conspiracy

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WASHINGTON — Following a three-week trial, a federal jury in San Francisco today convicted an executive of the largest Taiwan liquid crystal display (LCD) producer for his participation in a worldwide conspiracy to fix the prices of thin-film transistor-liquid crystal display (TFT-LCD) panels sold worldwide, the Department of Justice announced.

Shiu Lung Leung, AU Optronics Corp.’s former senior manager in the Desktop Display Business Group, was found guilty today in U.S. District Court for the Northern District of California in San Francisco, of participating in a worldwide TFT-LCD price-fixing conspiracy from May 15, 2002 to Dec. 1, 2006.

AU Optronics Corp., based in Hsinchu, Taiwan, and its American subsidiary, AU Optronics Corp. America, headquartered in Houston, were found guilty on March 13, 2012, following an eight-week trial. Former AU Optronics Corp. president Hsuan Bin Chen and former AU Optronics Corp. executive vice president Hui Hsiung were also found guilty at that time. A mistrial was declared against Leung after that trial. Today’s verdict is the result of Leung’s retrial.

“This international price-fixing conspiracy impacted countless American consumers by raising the price of computer monitors, notebooks and televisions containing LCD panels,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “Today’s guilty verdict demonstrates that the Antitrust Division will continue to hold executives accountable for crimes that undermine a competitive marketplace.”

The indictment charged that AU Optronics Corp. participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary joined the conspiracy as early as spring 2003. Today a jury found that Leung, along with the previously convicted companies and former executives, was guilty of fixing the prices of LCD panels sold in the United States. The conspirators fixed the prices of LCD panels during monthly meetings with their competitors, which were secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan.

LCD panels are used in computer monitors and notebooks, televisions and other electronic devices. By the end of the conspiracy, the worldwide market for LCD panels was valued at $70 billion annually. The LCD price-fixing conspiracy affected some of the largest computer manufacturers in the world, including Hewlett Packard, Dell and Apple.

The company and its U.S. subsidiary were sentenced on Sept. 20, 2012, before Judge Susan Illston, to pay a $500 million criminal fine, matching the largest fine imposed against a company for violating U.S. antitrust laws. Chen and Hsiung were each sentenced to serve three years in prison and to each pay a $200,000 criminal fine.

As a result of this ongoing investigation, eight companies have pleaded guilty or been convicted to date and have been sentenced to pay criminal fines totaling more than $1.39 billion. Of the 22 charged executives, 13 have pleaded guilty or have been convicted and seven remain fugitives.  The executives who have been sentenced have been ordered to serve a combined total of 4,871 days in prison.

The maximum penalty for a Sherman Act violation for an individual is 10 years in prison and a $1 million fine. 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 the statutory fine.

Today’s charges are the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the FBI in San Francisco. Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

Two Alabama Real Estate Investors and their Company Plead Guilty to Conspiracy to Rig Bids and Commit Mail Fraud Involving Real Estate Foreclosure Auctions

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Investigation Has Yielded 10 Guilty Pleas to Date

WASHINGTON — Two Alabama real estate investors and their company pleaded guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.

Robert M. Brannon, of Laurel, Miss.; his son, Jason R. Brannon, of Mobile, Ala.; and their Mobile-based company, J & R Properties LLC, pleaded guilty today to an indictment originally returned on June 28, 2012 in the U.S. District Court for the Southern District of Alabama charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud.  According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

The Brannons and their company were also charged with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The Brannons and their company are charged with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.

“The conspirators subverted the competitive bidding process by engaging in a collusive scheme to artificially depress prices at real estate foreclosure auctions and to defraud financial institutions and homeowners out of money and property,” said Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s guilty pleas send a strong message that the division is committed to prosecuting those who fraudulently subvert competition for their own financial gain.”

“The success of this investigation represents the FBI’s staunch commitment to target and investigate those who are willing to abuse and exploit illegal advantages during this legal process for personal gain at the expense of suffering citizens and businesses,” said Acting Special Agent in Charge of the FBI’s Mobile Division Stephen E. Richardson.

Including today’s pleas, to date, eight individuals—Harold H. Buchman, Allen K. French, Bobby Threlkeld Jr., Steven J. Cox, Lawrence B. Stacy, David R. Bradley and the Brannons—and two companies—M & B Builders LLC and J & R Properties— have pleaded guilty in the U.S. District Court for the Southern District of Alabama in connection with this ongoing investigation.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for companies. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals, and a fine of $500,000 for companies. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

The investigation into fraud and bid rigging at certain real estate foreclosure auctions in southern Alabama is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.

Today’s charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.StopFraud.gov.

Ohio Auto Parts Supplier Exec Pleads Guilty in Price Fixing and Bid Rigging Conspiracy

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OHIO AUTOMOBILE PARTS SUPPLIER EXECUTIVE PLEADS GUILTY IN PRICE-
FIXING AND BID-RIGGING CONSPIRACY

Executive Agrees to Serve One Year in U.S. Prison

WASHINGTON — An executive at the Ohio subsidiary of a Japanese automotive supplier pleaded guilty today for his role in a conspiracy to fix prices and rig bids of anti-vibration rubber parts sold in the United States and elsewhere, the Department of Justice announced. This is the first charge in the department’s ongoing investigation into price fixing and bid rigging in the automobile anti-vibration rubber parts industry, which is one of the department’s ongoing investigations into anticompetitive conduct in the automotive parts industry.

According to a one-count felony charge filed on Oct. 30, 2012, in the U.S. District Court for the Northern District of Ohio, in Toledo, Hiroshi Yoshida, a Japanese national employed at the Ohio-based U.S. subsidiary of an automobile anti-vibration rubber supplier headquartered in Saitama, Japan, participated in a conspiracy to rig bids for, and to fix prices of, automobile anti-vibration rubber parts sold in the United States and elsewhere. According to the charge, Yoshida’s involvement in the conspiracy began at least as early as October 2005 and continued until at least June 2011. The department said Yoshida and his co-conspirators carried out the conspiracy by agreeing, in meetings and discussions, to allocate the supply of certain automobile anti-vibration rubber parts, to exchange prices, to submit noncompetitive bids and to sell the parts at collusive and noncompetitive prices in the United States and elsewhere.

According to the plea agreement, Yoshida has agreed to serve 12 months and one day in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.  Yoshida’s sentencing is scheduled to take place on Dec. 20, 2012.

Anti-vibration rubber parts are comprised primarily of rubber and metal, and are installed in automobiles to reduce engine and road vibration. Anti-vibration rubber parts are installed in suspension systems and engine mounts, as well as other parts of an automobile.

“This is the first charge in the division’s investigation into anticompetitive conduct involving automotive parts used to reduce engine and road vibration,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The aim of this multi-year conspiracy was to do away with competition among suppliers, through bid rigging and price fixing, in order to maximize profits.”

“We are pleased with the guilty plea entered today by Mr. Yoshida and his acceptance of responsibility, as the anti-vibration rubber parts industry is a critical component of the automobile manufacturing process,” said Stephen D. Anthony, Special Agent in Charge of the FBI Cleveland Division. “The Cleveland FBI is committed to working with our Department of Justice partners in the Antitrust Division to keep this industry and other critical industries competitive by aggressively pursuing any conspiracy in Northern Ohio that undermines free competition and our economy.”

Including Yoshida, nine companies and 12 executives have pleaded guilty or agreed to plead guilty in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc. and TRW Deutschland Holding GmbH pleaded guilty and were sentenced to pay a total of more than $790 million in criminal fines. Nippon Seiki Co. Ltd. and Tokai Rika Co. Ltd. have agreed to plead guilty and await arraignment and sentencing. Additionally, Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa, Hisamitsu Takada, Norihiro Imai, Kazuhiko Kashimoto, Toshio Sudo and Makoto Hattori have pleaded guilty and been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each.

Yoshida is charged with violating 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 the statutory maximum fine.

Today’s guilty plea arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automobile anti-vibration rubber parts industry, which is being conducted by the Antitrust Division’s Chicago Field Office and the FBI’s Cleveland Field Office. Anyone with information concerning the subject of this investigation should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.