The enforcement of sanctions against antitrust cartels remained at the forefront of both Canada's Competition Bureau and global antitrust regulators in 2011. While there continue to be only a small number of multinational coordinated investigations, regulators continued their enforcement efforts in domestic price fixing and bid-rigging cases with a pattern of escalating fines and, in the U.S., increased terms of imprisonment for individuals.
In our second annual report on Canadian and International criminal antitrust developments, we bring together the major developments in this important enforcement area and examine trends in enforcement activity. We commence with an examination of the Canadian scene.
Bureau Case Resolutions
Canada's Competition Bureau announced several resolutions of both international and domestic cartel and bid-rigging probes this year.
- Kason Industries Inc. pleaded guilty on March 8, 2011, to a customer allocation conspiracy for the sale of refrigeration and food service equipment components in Canada and the U.S. The Bureau determined that Kason had approximately 40% of the overall sales of food service equipment components in Canada and the U.S., to a value of $3.16 million to the allocated Canadian customers. The Company was fined $250,000. Based on the announced figures, this amounts to a proportional fine of approximately 8%; as well, the Company's fine was payable over five years with a $50,000 initial instalment. (Kason had previously pleaded guilty in the U.S. and paid a US$3.3 million fine.)
- The Bureau's continuing Inquiry into Price Fixing in Certain Retail Gasoline Markets in Quebec resulted in additional pleas of guilty for three individuals. On May 30, an owner of a service station in Magog pleaded guilty and was sentenced to a fine of $20,000 and on June 10, two additional individuals pleaded guilty and paid fines of $10,000 and $15,000 in relation to a conspiracy to fix the price of retail gasoline in the Thetford Mines region of Québec. (These penalties continue the Bureau's trend of imposing either fines or conditional-sentence (house arrest) imprisonment for individuals in this probe).
- On July 19, Les Entreprises Promécanic Ltée. pleaded guilty to three counts of bid-rigging and was fined $420,000 for its role in an agreement to rig bids for private sector ventilation contracts in residential highrise buildings in Montreal. While no individual charges were laid, an employee of the Company who was involved in estimations was subject to a prohibition order (together with the Company) for a period of 10 years. The prohibition order also specified that the Company and individual were required to cooperate with the prosecution of the remaining accused in this case. Thus, it is likely that the Company and individual took advantage of the Bureau's leniency program in the resolution of this matter.
- On November 22, the Bureau announced that it had laid bid-rigging charges against six companies and five individuals alleged to be involved in a specialized sewer service cartel relating to municipal tendering processes in the years 2008/2009 with a total value of $3.3 million. One Company, MSC Réhabilitation Inc., pleaded guilty in relation to 12 calls for tenders and was fined $75,000. Once more, the Bureau appears to have benefited from its leniency program in obtaining the cooperation of certain corporations and individuals in the investigation and eventual prosecution of the case.
Deceptive Marketing Practices and Related Cases
- On August 30, five individuals associated with Ambus Registry Inc. were sentenced for involvement in a cross-border deceptive telemarketing operation in relation to business directories. The individuals were convicted both of deceptive telemarketing under section 52.1 of the Competition Act and also of the offence of fraud under section 380 of the Criminal Code. The two co-founders of the Company were sentenced to a collective term of two years in a federal penitentiary, while two managers received 16 month terms, with the first eight months to be served under conditional sentencing (house arrest) and the remaining eight months on probation. Another manager was given a suspended sentence and placed on two years' probation. In 2007, an individual associated with the Company pleaded guilty and received a $15,000 fine. The Bureau's investigation indicated that over $3.75 million in victim losses arose from the operation of the business directory scheme.
- On September 22, the Bureau announced that charges had been laid in the Bureau's IT Data Direct case against five individuals and four Montreal-based companies in relation to allegations of fraudulent telemarketing that generated over $172 million in gross sales. The scheme marketed directories, subscriptions to online directories, office supplies and medical kits at inflated prices and promoted these to businesses across Canada, the U.S., Europe and Central America.
- On April 12, the Ontario Divisional Court dismissed Toshiba of Canada Limited's application for leave to appeal from the decision of the Ontario Superior Court dismissing its preliminary application for disclosure of Bureau documents and to cross-examine a Bureau affiant as interlocutory proceedings in Toshiba's main motion which challenged the Commissioner's ability to obtain foreign-source documents under subsection 11(2) of the Competition Act in relation to an inquiry into an alleged cartel for cathode ray tubes (CRTs). In complex reasons, Wilson-Siegel, J. held that the proceedings brought by the Commissioner for the Section 11 Order were properly characterized as criminal proceedings to which the Criminal Proceedings Rules applied and thus, on jurisdictional grounds, no appeal was permitted from the initial decision. Interestingly, the Bureau took the position that its inquiry commenced under section 10 of the Competition Act was a criminal proceeding to which the Criminal Proceedings Rules applied. In alternative, Wilson-Siegel, J. determined that the Superior Court's decision refusing production of the Competition Bureau documents was correct in that Toshiba's argument in support of production was based upon mere speculation; however, the Court held that, on a close examination of the underlying materials, there was a basis to doubt the correctness of the ruling by the Superior Court that Toshiba should not be permitted a right to cross-examine the affiant. The Court also concluded that the grounds raised by Toshiba on its challenge to subsection 11(2) of the Act were substantial. On December 8, the Supreme Court of Canada dismissed an application for leave to appeal from the decision of the Ontario Divisional Court. A link to the decision in this case is provided here.
Criminal Law Cases with Competition Law Implications
This year there were a number of criminal law decisions that may have impact on Canadian criminal competition cases, as follows:
- R v. Nixon 2011 SCC 34 (June 24, 2011): This Supreme Court of Canada case dealt with the issue of whether the prosecution can repudiate a plea agreement reached with defence counsel. The accused was charged with the offence of dangerous driving causing death (the accused had driven her motor home through an intersection, striking another vehicle, with the result that a husband and wife were both killed and their young son seriously injured). Initially, Crown Counsel entered into a plea agreement for a plea of guilty to an offence of careless driving and recommendation of a $1,800 fine. On review by senior Justice managers, the proposed arrangement was repudiated as being contrary to the interests of justice and that it would bring the administration of justice into disrepute. The Crown accordingly withdrew the plea agreement and proceeded to trial. The accused brought an application under Section 7 of the Charter alleging abuse of process and seeking a stay of proceedings. The trial Judge allowed the application, but the Alberta Court of Appeal disagreed, holding that repudiating a plea agreement is not reviewable by the courts. The Supreme Court dismissed the further appeal, holding that resiling from a plea agreement was a "core" discretionary function of the Crown and could be reviewed only by a finding of abuse of process. Since, in this case, there was no evidence of prosecutorial misconduct, improper motive or bad faith and the accused was not prejudiced as she was merely returned to the same position she was in initially, there was no abuse of process and, accordingly, the Crown was correct in rejecting the plea agreement.
Why this case is important for criminal competition law: The Supreme Court indicates that there are only very narrow circumstances where the Crown could properly repudiate a plea agreement and if there is substantial prejudice to an accused, a court may determine that repudiation was not justified. Because most criminal antitrust cases in Canada are resolved through plea agreements, this case provides additional comfort for parties entering into plea agreements that any repudiation of such agreements by justice officials will be very carefully scrutinized, thus limiting the ability for the Crown to resile from such arrangements.
In a related development, Alimentation Couche-Tard Inc. is seeking a stay of proceedings against it in the Bureau's continuing Inquiry into Price Fixing in Certain Retail Gasoline Markets in Québec in relation to a repudiation of a January 2010 arrangement for payment of an amount of $3.25 million to the Receiver General coupled with an undertaking to stay proceedings against the Company that had been entered into by a Crown Prosecutor. As at this writing, the parties are proceeding through interlocutory steps and a date for argument on the merits has not yet been set.
- R v. Henry 2011 ONCA 289 (April 12, 2011): The accused in this case moved to set aside his guilty plea on the basis that it was uninformed and involuntary. The court allowed the appeal and set aside the guilty plea, determining that the plea was not sufficiently informed in order to enable the accused to make a properly informed decision about it. The Court held that there were disclosure duties on the prosecutor to ensure that any decision made by an accused about his/her case is made with the full knowledge of the relevant facts (at paragraph ). However, where an accused wished to set aside a guilty plea on the basis of non-disclosure, he or she must demonstrate a reasonable possibility that undisclosed material would have influenced the decision to plead guilty.
Why this case is important for criminal competition law: This case is important for procedure on guilty plea resolutions in antitrust cases because it indicates that the prosecution is required to make adequate disclosure to an accused party before any decision to enter a plea of guilty. However, there is a high bar for a party to meet when alleging that a plea of guilty was not properly informed and made.
- R v. Jones 2011 ONCA 632 (October 11, 2011): This case involved allegations of an improper computer search on a charge of the possession of child pornography. On an appeal by the Crown from an acquittal entered at trial on the basis that police had improperly searched the contents of a personal computer, the Court of Appeal set aside the acquittal and ordered a new trial. In so doing, the Court observed that authorities are not entitled to treat a computer as a single entity and that warrants to search must be capable of specifying particular types of evidence sought. While the Court observed that there was no reason in principle why the state should be entitled to roam through the contents of a personal computer in an indiscriminate fashion than to do so in a personal residence, it was also held that authorities are permitted to conduct a 'cursory' examination of files or folders to determine if the material conforms to the items sought. The Court also held that, while police had proper authority under warrant to conduct an initial search of the computer, the finding of additional material not specifically covered under the warrant was not necessarily justified under the "plain view" doctrine in Section 489 of Criminal Code. Thus, in the case of video files which could only be observed by a further exploratory search of the computer, this material could not be properly seized under the plain view doctrine and required the police to obtain a separate, new warrant. The Court, however, reversed the decision of the trial judge to exclude the video files on the basis of the balancing tests under subsection 24(2) of the Charter outlined in the Supreme Court's decision in R v. Grant.
Why this case is important for criminal competition law: The reasons in this decision provide important guidance to authorities on e-searches of computers and other electronic devices, and could restrict Bureau authorities' ability to seize files or folders that are not specifically described in the warrant to search under sections 15 and 16 of the Competition Act. The case also indicates that the Bureau must be very discriminating in the drafting of search warrants so as to enable a proper search of electronic media.
- R v. Kelsy 2011 ONCA 605 (September 22, 2011): In this case, the Court of Appeal dismissed an appeal from conviction on several charges arising from possession of a loaded prohibited firearm and a quantity of heroin. At trial, the accused brought an application to exclude the firearm and heroin as evidence at trial on the basis that the warrantless search of a knapsack was justified under the "exigent circumstances" search doctrine. The court reviewed the existing jurisprudence under exigent circumstances and determined that the doctrine should be reserved primarily for cases involving imminent destruction of evidence or contrabrand and had largely been codified. While there is a second branch of exigent circumstances based on police and officer safety, this doctrine has been largely replaced by the test in R v. Waterfield to the effect that any interference with liberty must be necessary for the carrying out of a particular police duty and be reasonable having regard to the nature of the liberty interfered with and the importance of the public purpose.
Why this case is important for criminal competition law: For search cases in which the Bureau may attempt to seize records or other evidence not covered by a warrant to search through reliance on the doctrine of exigent circumstances, this case indicates that the Bureau's ability to do so will be limited only to cases where there is a risk of imminent destruction of evidence (and secondarily, to circumstances where it can be established that the seizing officers in question were performing a particular legally-authorized duty). This suggests a more stringent test than that outlined in section 15 of the Competition Act, namely that of "...loss or destruction of evidence".
- R v. Mahmood, R v. Sheikh, and R v. Fundi 2011 ONCA 693 (November 9, 2011): In this case, involving the admissibility of evidence of cell phone records, the Court reviewed and affirmed the principles of analysis for exclusion of evidence under subsection 24(2) of the Charter, affirming that courts are to assess and balance the effect of admitting the evidence on society's confidence in the justice system taking into account the seriousness of the Charter-infringing state conduct, the impact of the breach on the Charter-protected interests of the accused, and society's interest in the adjudication of the case on its merits.
Why this case is important for criminal competition law: This case reaffirms the analysis on the strength of arguments that may be raised to exclude evidence that may not have been properly seized pursuant to a warrant or where other constitutional violations may be alleged in the course of a Bureau investigation.
- R v. J.F. 2011 ONCA 220 (April 6, 2011): In this case, the Ontario Court of Appeal determined whether a party alleged to be aiding or abetting a conspiracy must direct his/her/or its acts or omissions to the formation of the conspiracy. After reviewing the conflicting jurisprudence in Alberta and Quebec, the Ontario Court of Appeal held that it was not required in Ontario that, for a party to be convicted of aiding and abetting a conspiracy, their acts and/or omissions be directed at the formation of the agreement or conspiracy.
Why this case is important for criminal competition law: This case highlights that, depending upon the jurisdiction where the facts supporting an antitrust conspiracy charge may arise, there will be differing analyses as to whether the particular acts/omissions of the party can properly fall within criminal liability as "aiding or abetting" a conspiracy, and thus enable defences to such charges. Note that leave to appeal to the Supreme Court of Canada was granted on November 15, 2011.
- R v. Nedelcu 2011 ONCA 143 (February 24, 2011): In this case, the Ontario Court of Appeal reversed a decision at trial that a transcript of evidence given by an accused on an examination for discovery in a related civil case could be put to him in crossexamination at his criminal trial. In the Court's analysis, since an accused is compelled to testify on an examination for discovery, he was not merely giving evidence to further his own private interests in a civil action against him. Thus, the court held that section 13 of the Charter applied so as to treat the evidence as inadmissible in evidence against the accused even for purposes of challenging credibility.
Note that leave to appeal from this decision has been granted to the Supreme Court of Canada which is scheduled to hear the case on March 16, 2012.
Why this case is important for criminal competition law: If the Supreme Court reverses the decision of the Ontario Court of Appeal, it would provide regulatory authorities such as the Bureau with opportunities (subject to protective orders) to utilize transcripts of proceedings given on discovery or trial in civil cases as cross-examination material in criminal proceedings.
- R v. X.Y 2011 ONCA 259 (April 4, 2011): In this case, the Ontario Court of Appeal held that there had been a breach of informer privilege on the part of police and stayed proceedings against the accused. Briefly, police had recorded an interview with a person who was properly characterized as a police informant and then provided that material as disclosure to defence counsel, thereby disclosing the identity of the informant. In its decision, the Court reaffirmed the principles of informer privilege, holding that the general protection afforded by the rule applies to all informers, both past and present, and that once the privilege is lost, it cannot practically be restored to its original vitality. The Court stated that informer privilege is absolute and is not triggered by the disclosure rights as a component of Section 7 of the Charter. The court stated that the privilege is not a rule of evidence but, rather, an "amalgam of an evidentiary rule and a principle of immunity and secrecy."
Why this case is important for criminal competition law: This case serves to illustrate the primacy of informer privilege, for cases where there may be a true informer to a regulatory agency such as the Bureau (which could arise in "whistleblower" cases).
- 321665 Alberta Ltd. v. ExxonMobile Canada Ltd. 2011 ABQB 292: While not a criminal case, this is a significant decision by the Alberta Court of Queen's Bench, which determined that the sole-sourcing of a contract by operators of a joint venture constituted a violation of section 45 of the Competition Act. The plaintiff, which operated a fluid-hauling business, commenced an action for damages when Husky Oil Operations Ltd. and ExxonMobile Canada Ltd. jointly determined to sole-source a fluid-hauling contract in relation to properties in the Rainbow Lake area of Alberta. The plaintiff alleged that the decision prevented or lessened competition in the supply of fluid-hauling to the oilfield and that the conduct was therefore contrary to Section 45 of the Competition Act. The trial Judge rejected the position of the defendants that they should be considered as a single entity for the competition law analysis, thus incapable of conspiring with each other (not unlike the U.S. Supreme Court 's analysis in Texaco Inc. v. Dagher 369F. 3d 1108). However, the trial Judge rejected this position based on an analysis of the terms of a tenancy-in-common arrangement. The Court otherwise ruled that the conduct of the defendants was such as to constitute the prevention or limiting of competition.
Why this case is important for criminal competition law: This case is an example of the potential reach of criminal competition law doctrines when used in the context of civil disputes. While the decision is grounded in the pre-amended Competition Act, and is arguably erroneous, it could nonetheless have implications for parties involved in joint venture or other similar arrangements that may predate the effective operation of the newly amended conspiracy provisions of the Competition Act (March 12, 2010). The decision is also notable because of the application of the analysis to purchasing parties.
In the fall of 2011, the Government of Canada introduced Bill C-10, the Safe Streets and Communities Act, which has certain implications for the application of the criminal provisions of the Competition Act. One major impact of this proposed legislation for criminal competition cases would be to remove the ability of courts to order a conditional sentence ("house arrest") under sections 742 to 742.7 of the Criminal Code for convictions under the conspiracy section of the Competition Act. This arises because of amendments to the Competition Act as of March 12, 2010 that raised potential terms of imprisonment to 14 years, a term for which the conditional sentencing regime would be unavailable. Thus, for a number of case resolutions for individuals (most notably under the Bureau's continuing inquiry into retail gasoline price fixing in the Province of Québec), sentences of this nature could no longer be applied. However, convicted individuals could be subject to the suspended sentence and probation provisions under subsection 731(1) of the Criminal Code for the Act's conspiracy and bid-rigging offences.
A second effect relates to the period of time under which an individual must wait until making application for a pardon (now called a "record suspension") following conviction for a conspiracy or other offence under Part VI of the Competition Act. Individuals sentenced to imprisonment for more than two years would now be required to apply after a period of 10 years following the conviction, instead of the prior 5 year wait period. As well, additional limiting criteria have been set out on the consideration of whether a suspension should be issued.
As at this writing Bill C-10 has completed Second Reading in the Senate, but awaits a Committee report and Third Reading before proclamation can occur.
There were no alterations to any of the Bureau's criminal policy documents in 2011.
Other Judicial Developments
Although not reflected in a court decision, the filing of the Commissioner of Competition in the matter of Treat America Ltd. v. Robert G. Leonidas on a motion brought by Robert G. Leonidas to limit a letter of request brought by U.S. plaintiffs to obtain his deposition evidence in Canada in relation to an action pending before the U.S.
District Court in Pennsylvania sets out several important observations relative to Bureau investigations. The Commissioner was invited to participate in the proceedings and filed a factum in order to "protect the integrity of (her) investigations into allegations of anti-competitive conduct in the chocolate confectionery industry in Canada." Among the points taken by the Commissioner in her filing on this motion were:
- An acknowledgement that, in relation to persons under investigation, the nature of the Commissioner's duty is "to conduct her investigation without violating any of [his] constitutional rights";
- A note that the Bureau's timing of the public release of an ITO arises from the McIntyre SCC case, namely "once the warrant has been executed, exclusion thereafter of members of the public cannot normally be countenanced";
- An acknowledgement that the ability of government authorities to obtain a sealing order on an information to obtain a warrant (ITO) is severely restricted by the SCC decisions in Mentuck and Dagenais which indicate that the risk to the administration of justice be serious, or "real and substantial" before a sealing order can be obtained; further, this principle applies to all discretionary court orders that limit freedom of expression and freedom of the press in relation to legal proceedings. Moreover, even concerns about potential economic harm to an applicant when combined with the "protection of the innocent exception" would still not override public accessibility;
- An assertion that an immunity applicant is not, in law, a confidential informer in the sense of the long-established SCC jurisprudence and that, unlike a confidential informer, an immunity applicant to the Bureau is informed in advance that his/her/its identity will become public when the Commissioner has a need to disclose it for one of several possible reasons set out in the immunity bulletin;
- An assertion that a right to reveal the identity of an immunity or leniency applicant resides with the Commissioner (as purportedly indicated in the Bureau's immunity and leniency program bulletins); under these programs, it is asserted that the Commissioner retains the right to make an applicant's identity public at some stage in the progress of the case; the timing of this is (at the latest) the point at which charges are laid against other parties and disclosure obligations arise;
- An assertion that the Commissioner has power to subject individuals to the compelled testimony order under Section 11 of the Competition Act;
- An observation that individuals deposed in Canada will be able to take advantage of Charter section 13 in respect of any deposition evidence, thus providing the individual with Canadian use immunity in respect of any testimony given;
- With respect to foreign prosecutions (i.e., whether a U.S. citizen being deposed in the U.S. can claim fifth amendment protection in relation to foreign cases) it was noted that the U.S. Supreme Court stated that "concern with a foreign prosecution is beyond the scope of the self-incrimination clause";
- An observation that individuals deposed in Canada in relation to testimony taken in Canada cannot avail themselves of 5th Amendment protection to protect against potential use by U.S. authorities, notwithstanding that the individual might thereby incriminate him/herself in relation to a U.S. investigation; and
- An observation that the Commissioner does not presently intend to obtain transcripts of depositions of targets of her investigations, but noting that a potential Supreme Court overruling of the Ontario Court of Appeal decision in Nedelcu (discussed above) may enable the Commissioner to do so.
U.S. Antitrust Division
As in prior years, the U.S. Antitrust Division maintained a very active enforcement profile in criminal antitrust matters. For the Division's fiscal period ending September 30, 2011, Division statistics indicate that 90 criminal cases were filed (a 50% increase over 2010) with the imposition of $520 million in criminal fines, indictments against 27 corporations and 82 individuals and the imposition of 21 separate jail terms totalling 10,544 days of jail time. The Division's enforcement efforts touched a broad range of industries such as real estate, optical disk drives, auto parts, air cargo and financial services. Notable among the cases brought by the Division in the year were the following:
- The Division continued its probe into allegations of Thin-Film Transistor Liquid Crystal Display (TFT-LCD) panel price fixing, with the January 13 announcement of indictments against two additional individuals (former executives of HannStar Display Corporation) for conspiracy to fix prices in relation to TFT-LCD panels. The individuals participated in meetings and information exchanges to effect the conspiracy. The investigation has produced more than $890 million in criminal fines, with the indictment of 22 executives and eight companies thus far in the probe.
- On February 24, Horizon Lines LLC pleaded guilty and paid a fine of $45 million for its role in a conspiracy to fix prices in coastal water freight transportation in relation to the fixing of rates and surcharges for water transportation of freight between the continental U.S. and Puerto Rico from May 2002 until April 2008. The investigation also has produced guilty pleas on the part of three former Horizon Lines LLC executives, and other individuals.
- On March 18, Samsung SDI Company Ltd. pleaded guilty and paid a fine of $32 million for its role in a global conspiracy to fix prices, reduce production, and allocate markets in relation to colour display tubes (CDTs), a type of cathode ray tube used in computer monitors and other specialized applications. The indictment indicated that Korea-based Samsung SDI participated in the conspiracy from January 1997 until at least March 2006. The Company agreed to cooperate with the Division's ongoing investigation. The probe has also produced indictments against six individuals in relation to their participation in this conspiracy.
In a notable development, in a ruling on April 20, a federal Judge refused to approve the plea agreement that had been arranged between Samsung SDI and the Division, requiring that full pre-sentence report be prepared. In its ruling, the Court posed the following questions:
- Why should so many possible co-conspirator employees, officers, and directors receive the benefit of an agreement not to prosecute?
- Why shouldn't the fine be the maximum?
- What is needed for expedition versus the normal pre-sentence process?
- On May 17, the Court finally accepted Samsung's guilty plea and payment of a $32 million fine in relation to the above antitrust conspiracies.
- On April 26, two former executives of Air France were indicted by a Chicago Grand Jury for their participation in a conspiracy to fix and coordinate surcharges on air cargo shipments to and from the U.S. and elsewhere. The individuals are alleged to have fixed and coordinated rates on shipments, participating in the conspiracy from as early as August 2004 until at least February 2006. As at the date of these charges, 21 airlines and 21 executives had been indicted in the Division's ongoing investigation into price fixing in the air transportation industry, with more than $1.8 billion in fines imposed, and four individuals sentenced to jail terms.
- On May 4, UBS AG entered into a civil non-prosecution agreement and agreed to pay $160 million in restitution, penalties and disgorgement to federal and state agencies arising from UBS's acceptance of responsibility for anticompetitive conduct by former employees. The conduct related to unlawful agreements to manipulate the bid process for municipal investment contracts that were used to invest the proceeds of, or manage risks associated with, bond issuances by municipalities and non-profit entities. The Division's investigation into this area resulted in indictments against 18 former executives of a number of financial services companies and one corporation. In December 2010, Bank of America agreed to pay $137.3 million in similar restitution to federal and state agencies for its participation in anti-competitive conduct in the municipal bond derivatives market. The imposition of such non-prosecution arrangements (in this probe for UBS AG and for other participants as detailed below) is a highly unusual development for the Division, which by policy has historically avoided such arrangements.
- On May 27, EVA Airways Corporation pleaded guilty and paid a $13.2 million fine for its participation in a conspiracy to fix prices relating to air cargo international shipments, including to and from the U.S., from at least January 2003 until February 14, 2006. The Company transported a variety of cargo shipments on scheduled flights within Taiwan and internationally. The indictment charged that EVA and other co-conspirators engaged in a conspiracy by agreeing during meetings, conversations, and other communications on particular cargo base rates or fees to be charged for certain shipments and levied cargo rates in accordance with those agreements, monitoring and enforcing adherence to them.
- On June 20, Tre-State Ready Mix, Inc., an Iowa ready-mix concrete Company pleaded guilty to participating in a price fixing conspiracy in relation to ready-mix concrete sold in the northern district of Iowa. The investigation also produced pleas of guilty from another ready-mix concrete producer as well as certain individuals connected with those companies.
- On July 7, JPMorgan Chase & Co. entered into a civil non-prosecution agreement with the Division to resolve its role in anti-competitive activity in the municipal bond investments market and agreed to pay $228 million in restitution, penalties and disgorgement to federal and state agencies. JPMorgan Chase agreed to accept responsibility for anticompetitive conduct by former employees in the period 2001 through 2006 relating to unlawful agreements to manipulate the bid process on municipal investment and related contracts. The agreement was similar to that reached with UBS AG on May 4.
- On August 30, an after-market auto light distributor, Sabry Lee (U.S.A.) Inc. agreed to plead guilty on a charge of conspiring with others to eliminate competition by fixing prices of after-market auto lights. The unlawful conspiracy occurred from September 2003 until September 2005. The Company was ordered to pay a fine of $200,000 and to cooperate with the Division in its ongoing investigation. Sabry Lee was the first Company to be charged in the Division's investigation into after-market auto lighting. Three individuals were also indicted, with one agreeing to serve 180 days in prison and to pay a $25,000 criminal fine.
- On September 15, Bridgestone Corporation pleaded guilty on an indictment alleging conspiracies to rig bids and to make corrupt payments to foreign government officials in Latin America relating to the sale of marine hose and other industrial products manufactured by the Company. A combined fine of $28 million was imposed. The conspiracy involved the rigging of bids and fixing of prices, as well as allocation of market shares relating to the sales of marine hose in the U.S. and elsewhere, as well as the making of corrupt payments. Bridgestone and its co-conspirators agreed not to compete for one another's customers either by not submitting prices or bids, or by submitting intentionally high prices or bids to certain customers. The Division's investigation into the marine hose matter has to date resulted in indictments against five corporations and nine individuals, with a total of 4,557 days in prison being imposed. The plea agreement with Bridgestone recognized significant cooperation extended by Bridgestone in its relations with the Divisions. The cooperation included the Company's conducting a worldwide internal investigation, making employees available for interviews, and providing "voluminous evidence and information" to the Division. It was also acknowledged that the Company terminated many of its third party agents and took remedial actions with respect to employees responsible for many of the corrupt payments.
- On September 29, Furukawa Electric Co. Ltd., a supplier of automotive wire harnesses and related products, agreed to plead guilty and to pay $200 million in fines for its participation in an antitrust and bid-rigging conspiracy involving the sale of parts to automobile manufacturers. Three Japanese national executives also agreed to plead guilty and to serve prison time in the U.S. with ranges from one year to 18 months. These were the Division's first indictments in its ongoing international cartel investigation relating to price fixing and bid rigging in the auto parts industry. It was alleged that the Company participated in the conspiracy from as early as January of 2000 until at least January of 2010. The Company and individuals carried out the conspiracy by agreeing during meetings and conversations to allocate the supply of wire harnesses and related products on a model-by-model basis and to coordinate the price adjustments requested by automobile manufacturers in the U.S. and elsewhere. It was also alleged that the harnesses and related products were sold to automobile manufacturers at non-competitive prices and that the participants engaged in meetings and conversations to monitor and enforce adherence to the bid-rigging and price fixing scheme.
- On September 30, MOL Logistics (Japan) Co. Ltd. agreed to plead guilty and to pay $1.84 million in penalties for its role in conspiracies to fix fees in relation to freight forwarding services for air cargo shipments from Japan to the U.S. from about September 2002 until at least November 2007. It was alleged that the Company and its co-conspirators agreed during meetings and discussions to coordinate and impose freight forwarding service fees and charges on customers purchasing freight forwarding services for cargo shipped by air from Japan to the U.S. It was further alleged that the Company and its co-conspirators levied service fees in accordance with those agreements and engaged in meetings and discussions for monitoring and enforcing adherence to the agreed upon fees.
- On September 30, Morgan Stanley entered into a civil settlement agreement in relation to an agreement with KeySpan Corporation that restricted competition in the New York City electricity capacity market. The settlement provided for disgorgement of profits and payment of a $4.8 million civil penalty. The complaint alleged that KeySpan and Morgan Stanley executed agreements to enable KeySpan to withhold substantial output from capacity so as to increase prices for electricity generation in the New York City area. Morgan Stanley earned revenues by retaining a spread between fixed prices for derivative agreements related to these arrangements.
- On September 30, Hitachi-LG Data Storage Inc. agreed to plead guilty and pay a fine of $21.1 million for participating in antitrust conspiracies to rig bids and fix prices for the sale of optical disk drives sold to various manufacturers, as well as participation in a scheme to defraud one manufacturer in a procurement process. The indictment alleged that from June 2004 to approximately September 2009, the Company and its co-conspirators participated in a series of conspiracies to discuss bidding strategies and pricing in optical disk drives, with the result that non-competitive and collusive prices were arranged between companies, as well as their enforcing adherence to the agreements.
- On October 4, Danfoss Flensburg GmbH, formerly Danfoss Compressors GmbH, agreed to plead guilty and to pay a fine of $3 million for its participation in an antitrust conspiracy to fix prices of light commercial compressors, a type of refrigerant compressor used in devices such as water coolers and vending machines. It was alleged that, from as early as October 2004 and continuing until September 2007, Danfoss participated in the conspiracy by agreeing to coordinate prices of the compressors sold in the U.S. and elsewhere, as well as exchanging information to monitor and enforce adherence to the fixed prices. The Division's investigation produced indictments against two other companies, Panasonic Corporation and Embraco North America Inc. (which both pleaded guilty in 2010), as well as three former executives of those Companies.
- On November 30, a former executive of a Peruvian airline, Cierlos Airlines, pleaded guilty to a charge of participating in an antitrust price fixing conspiracy by agreeing to impose an increase to fuel surcharges on air cargo shipments from the U.S. to locations in South and Central America, over the period September 2005 until at least November 2005. Two other executives had previously pleaded guilty on their participation in the alleged conspiracy.
- On December 8, two executives of Cargolux Airlines International SA pleaded guilty and agreed to serve prison terms of 13 months for their participating in conspiracies in relation to surcharges including security and fuel surcharges, in international air freight forwarding markets.
- On December 8, Wachovia Bank N.A. (now known as Wells Fargo Bank N.A.) entered into a civil non-prosecution agreement with the Division in which it accepted responsibility for anti-competitive conduct by former employees in relation to unlawful agreements to manipulate the bid process for municipal investment and related contracts. This agreement was similar to the earlier arrangements entered into by UBS, Bank of America, and JP Morgan Chase & Co. Wachovia agreed to pay a total of $148 million in restitution, penalties, and disgorgement to federal and state agencies, and agreed to cooperate with the Division's continuing investigation into this area.
Graham Reynolds has an extensive background as both a senior federal and provincial prosecutor, he brings unique and effective skills to his antitrust advisory and litigation practice at Osler
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