Category: Extraterritorial Conduct
Multi-Defendant Antitrust Litigation: Lessons Learned from In re: Automotive Parts Antitrust Litigation
Last Friday, in the latest development in the massive auto parts antitrust litigation, the State of California settled with Sumitomo Electric Industries, Ltd. and related companies regarding their sale of wire harness systems and heater control panels at allegedly supracompetitive prices. (For prior posts on this case, see here and here.) Sumitomo did not admit to any wrongdoing, but agreed to pay California over $800,000 and cooperate with California’s litigation efforts against the many other defendants in the case. Sumitomo and its related entities are the only auto parts defendants named in the State of California’s complaint.
On June 21, 2016, the United Kingdom Competition Appeal Tribunal (the “Tribunal”) published notice of an application to commence collective proceedings under Section 47B of the UK’s competition act. If this action continues, it will be the first opt-out collective (class action) competition claims to be heard by the Competition Appeal Tribunal.
EU General Court Overturns EU Commission’s Decision to Fine Airlines €790 Million in Connection with Price-Fixing Cartel
In yet another high-profile enforcement action, last week EU Competition Commissioner Margrethe Vestager announced charges against Qualcomm Inc., a world leader in 3G, 4G, and next-generation wireless technologies and the world’s largest supplier of baseband chipsets, for allegedly abusing its dominant position in the baseband chipset market. The Commission preliminarily concluded that Qualcomm illegally paid a major customer to exclusively use Qualcomm chipsets, and also engaged in predatory pricing by selling chipsets below cost with the aim of forcing a competitor out of the market.
On September 23, the Hong Kong Competition Commission (HKCC) released a draft of its “Leniency Policy for Undertakings Engaged in Cartel Conduct.” The draft specifies when the HKCC will refrain from pursuing monetary penalties against an entity in exchange for that entity’s cooperation. The HKCC was created when Hong Kong’s Legislative Council passed a competition ordinance in 2012. The Competition Ordinance applies to any agreement that has the object or effect of preventing, restricting, or distorting competition in Hong Kong, even if the parties and concerted activity are outside of Hong Kong. Over the past three years, the HKCC has slowly released guidelines related to the implementation of the Ordinance. With the release of the leniency policy, the HKCC is on track to begin enforcing the Competition Ordinance in mid-December 2015.
Our Antitrust practice group recently co-authored a series of articles in Inside Counsel discussing major antitrust issues facing in-house counsel today. Our articles expand on topics that we have covered in this blog, including the Actavis litigation, the change in the competition landscape across the globe and antitrust reforms in Europe and Asia, antitrust enforcement in e-commerce, the implications of the Supreme Court’s decision in North Carolina State Board of Dental Examiners on antitrust liability for professional boards, and the Department of Justice’s recent guidance on antitrust compliance programs.
This spring, the UK Competition and Markets Authority (the “CMA”) published a study on UK businesses’ awareness and understanding of competition law, understanding of anti-competitive behaviors, and penalties for any violations. The study included interviews of more than one thousand senior personnel with responsibility for sales at private sector businesses in the UK. Among other questions, they were asked to answer a series of 10 true/false questions to evaluate their understanding of competition law.
Today the United States Supreme Court denied certiorari in two cases, Motorola Mobility LLC v. AU Optronics et al. and Hsiung and AU Optronics Corp. America Inc. v. United States, declining to resolve a closely watched circuit split on the applicability of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in regulating foreign conduct.
The head of the Department of Justice’s criminal antitrust unit called Monday for greater international cooperation in limiting the cost for companies to cooperate with investigators. Deputy Assistant Attorney General Brent Snyder’s remarks come on the heels of Canadian Competition Commissioner John Pecman’s speech urging development of a “longer term strategic plan” for international antitrust cooperation.
AU Optronics Corp. (“AUO”) filed a petition for a writ of certiori in Hui Hsiung, et al. v. United States of America on March 16, 2015, seeking Supreme Court review of the Ninth Circuit’s 2014 decision that upheld the convictions of AUO and its former executives for their participation in a global cartel to fix the price of liquid crystal display (“LCD”) panels. The United States Department of Justice, Antitrust Division, which had tried AUO and its former executives in the district court in San Francisco, filed its brief in opposition to the petition on May 15, 2015, and petitioners filed a reply on May 22, 2015.
Today we bring you the first part of our second biennial update on DOJ criminal actions in the cartel area. This has been a busy six months for the Antitrust Division, so we are breaking this update up into installments. Today, we look at auto parts.
Last month, the French Competition Authority (“the Authority”) updated the “Procedural Notice” for its leniency program. As in the U.S., the French leniency program allows enterprises that report cartel activity and cooperate in investigations to avoid fines and other penalties.
The Supreme Court has been urged to resolve a circuit split concerning the reach of the Foreign Trade Antitrust Improvements Act (FTAIA) to foreign conduct that may affect U.S. commerce. Motorola this week filed a petition for certiorari in a Seventh Circuit case interpreting the FTAIA as barring Sherman Act claims arising out of the foreign conduct of an alleged liquid crystal display (LCD) panel cartel.
On December 1, 2014, we wrote about the Seventh Circuit’s decision in Motorola Mobility LLC v. AU Optronics Corp., which affirmed dismissal of the vast majority of Motorola’s claims regarding LCD panels.
On December 5, 2014, the Official Journal of the European Union published the European Commission’s new directive on antitrust damages in civil actions (the “Directive”). The Directive went into effect on December 26, 2014.
On December 19, trade officials from the United States and China wrapped up a three-day trade conference in Chicago. As attendee and U.S. Trade Representative Michael Froman stated, the 25th annual Joint Commission on Commerce and Trade (“JCCT”) produced “concrete results.”
On October 9, 2014, the Hong Kong Competition Commission and Communications Authority published draft guidelines under the Hong Kong Competition Ordinance. The guidelines will not be the law; instead, they represent the Commission’s interpretation of the Ordinance and its policies on how the Ordinance will be enforced. The guidelines will, nevertheless, certainly be influential as the Competition Ordinance takes effect and the Commission tests the enforcement waters.
Seventh Circuit Affirms Dismissal of 99% of Motorola’s Claims in LCD Case Based on Motorola’s Lack of Standing
On the day before Thanksgiving—less than two weeks after oral argument—the Seventh Circuit issued its ruling on Motorola’s interlocutory appeal in Motorola Mobility LLC v. AU Optronics Corp., affirming dismissal of the vast majority of Motorola’s claims regarding LCD panels.
This is the first in what we expect to be a series of updates on DOJ criminal actions in the cartel area. Here, we look at highlights over the last six months in the DOJ’s investigations of the auto parts industry, LIBOR, and municipal real estate auctions.
Developments in the Capacitor Cartel Litigation: Class Counsel Appointed and the Antitrust Division Intervenes
In July, we wrote about two putative class action lawsuits alleging that Panasonic, Samsung, and other electronics manufacturers had formed a cartel to boost prices of certain electronic capacitors. Since then, the cases have been consolidated, interim lead co-counsel have been appointed, the Antitrust Division has confirmed its own investigation, and the court has set a preliminary case schedule.
Our regular readers know that we have been carefully following the developments in Motorola Mobility LLC v. AU Optronics Corp., currently pending in the Seventh Circuit. The case addresses the reach of the Foreign Trade Antitrust Improvements Act (“FTAIA”), and will join recent decisions issued by the Second Circuit and Ninth Circuit earlier this year.
We have written extensively about the scope of the Foreign Trade Antitrust Improvement Acts and the extraterritorial reach of U.S. antitrust laws. Now, the scope of the U.S. antitrust laws has arisen in a different context: the Foreign Sovereign Immunities Act (“FSIA”).
In Motorola Mobility LLC v. AU Optronics Corp. et al., the Seventh Circuit is currently considering the reach of the Sherman Act beyond United States borders and will join the Second and Ninth Circuits in interpreting some key provisions of the Foreign Trade Antitrust Improvements Act (“FTAIA”). In that case, which will be heard by the Seventh Circuit on a motion for rehearing, the parties have advanced vastly different interpretations of the FTAIA and the extent to which defendants’ conduct abroad has impacted the United States market, if at all.
China’s antitrust regulators have been on a tear lately. Last year the State Administration for Industry and Commerce (“SAIC”) began its investigation of Qualcomm for allegedly violating China’s 2008 Anti-Monopoly Law. SAIC recently released a statement indicating that this investigation is coming to an end, but Qualcomm may be facing a fine of over $1 billion. Then, in July of this year, SAIC raided offices of Microsoft and its partner Accenture PLC throughout China in connection with an investigation into Microsoft’s alleged anti-competitive bundling of software. And during the last month alone, the National Development and Reform Commission (“NDRC”) accused Chrysler, Mercedes Benz, Volkswagen, and a dozen Japanese auto parts makers of various violations of the Anti-Monopoly law in connection with their pricing of auto parts.
We’ve previously written about Motorola Mobility v. AU Optronics, currently pending in the Seventh Circuit. As many of you know, the Seventh Circuit vacated its March 2014 decision that the higher prices for mobile phones Motorola sold in the United States did not “give rise” to antitrust claims and that Motorola could not show a “direct” effect on U.S. commerce sufficient to satisfy the Foreign Trade Antitrust Improvements Act (“FTAIA”). Briefing is currently underway, and the case is scheduled for oral argument on Thursday, November 13.
Many of you will recall that on March 27, 2014, the Seventh Circuit issued a long-awaited decision concerning the scope of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in Motorola Mobility v. AU Optronics. The Seventh Circuit held that the higher prices for mobile phones Motorola sold in the United States did not “give rise to” its foreign subsidiaries’ antitrust claims, and that Motorola could not show a “direct” effect on U.S. commerce sufficient to satisfy the FTAIA. Just days after this opinion, Motorola asked for a rehearing. After multiple letters back and forth between the Court, the parties, and the Solicitor General’s Office, on July 1, 2014 the Seventh Circuit vacated its prior opinion. Additional briefing is now underway, and is expected to be completed in October.
Historically, Hong Kong has lacked a legal framework for regulating mergers or otherwise deterring conduct that is harmful to competition. The country’s traditional laissez‑faire landscape was substantially altered in June 2012, when Hong Kong’s Legislative Council passed a sweeping new Competition Ordinance (“Ordinance”) to prohibit anti‑competitive conduct and business combinations. The Ordinance also called for the establishment of a Competition Commission (“Commission”) and Competition Tribunal. The Ordinance is slated to take effect in 2015.
Perhaps best known worldwide for its Trappist breweries, Belgium is increasingly hospitable to business regulation. It is among the many countries that have recently introduced new laws and created new agencies to regulate business practices that have undermined economic competition. In April 2013, Belgium revised its Code of Economic Law (“Code”) to implement a simplified competition enforcement regime.
Earlier this month, Israel's Antitrust Authority ("IAA") published a draft policy paper regarding public disclosures that may harm competition. The IAA cited studies that unilateral public disclosures may facilitate coordination between competitors, potentially resulting in "a forbidden restrictive arrangement."
As we noted earlier this month, one factor that may contribute to the increase in criminal antitrust fines over the past ten years is the Antitrust Division’s focus on anticompetitive conduct that is international in scope. Indeed, the Antitrust Division’s chart listing Sherman Act violations yielding a corporate fine of $10 million or more shows that nearly all of the investigations resulting in fines greater than $10 million are international.
A pair of putative class actions has been filed in the past two weeks charging Panasonic, Samsung, and other electronics manufacturers with forming a cartel to boost prices in the sagging market for certain electronics capacitors. The actions follow press reports that officials in the United States and China are investigating the alleged cartel and that at least one manufacturer, who has not yet been identified, has applied for leniency with the Department of Justice.
We are pleased to announce the launch of Antitrust Update, Patterson Belknap’s new resource for the latest news and happenings in the antitrust and competition law arena.
Further to our previous post, The Principles of Federal Prosecution of Business Organizations, by contrast, which the Criminal Division and the various United States Attorney’s offices employ to assess corporate liability and determine an appropriate resolution, speak more generally about corporate cooperation with respect to securing the cooperation of corporate executives.
On May 19, 2014, I participated on a panel entitled “Cross-Border Investigations Involving Multiple Agencies” at the New York City Bar Association’s Third Annual White Collar Crime Institute. The moderator of the panel was Bruce Yannett from Debevoise & Plimpton and my co-panelists were Denis J. McInerney, the former chief of the Fraud Section at DOJ; David Meister, the former Director of Enforcement at the Commodity Futures Trading Commission; and Aaron R. Marcu of Freshfields.