Statistics on Criminal Prosecution of Individuals for Antitrust Violations

The Department of Justice, Antitrust Division, has for most of the past decade focused on obtaining a substantial period of incarceration from at least one senior officer of each corporation involved in a criminal antitrust violation that does not qualify for immunity, including corporations that plead guilty. This reflects the DOJ enforcement policy of making an antitrust violation “more than just a corporation's cost of doing business.” This enforcement policy has in part created an increase of nearly 100% in the average annual number of individuals charged with antitrust offences each year from the earliest years of the decade to the last few years.

The percentage of individual defendants receiving some period of incarceration, the vast majority of which were received through plea agreements, has averaged nearly 80% in the past four years. These current incarceration averages for antitrust violations are in marked contrast to the 1990s and before, when approximately 37% of individuals convicted of antitrust violations received some period of incarceration.

The current average period of incarceration for individual defendants convicted of antitrust offenses has increased by approximately 250% from the 1990s. This is in part explained by the DOJ applying its current policy of seeking a substantial period of incarceration of at least one senior official of any corporation convicted of an antitrust offense, and in part by the 2004 increase in maximum incarceration period for a conviction under 15 U.S.C. ' 1 to ten years. The maximum period of incarceration for an antitrust violation imposed, to date, is four years.

Foreign Defendants

Foreign citizenship of an individual charged with U.S. antitrust offenses exacerbates the difficulty of decision-making. The past decade has seen a marked increase in the percentage of defendants in antitrust prosecutions that are not U.S. citizens ' approximately 75% ' compared with only 10% in the 1990s. In earlier periods, diplomatic considerations, and the difficulty of enforcing antitrust indictments against non-U.S. citizens created DOJ hesitancy in charging foreign nationals with U.S. antitrust offenses.

The average period of incarceration for a foreign national convicted of a U.S. antitrust violation has averaged almost 12 months over the last four years (2007 through 2010), compared with three months during the first four years of the decade. The longest sentence of incarceration received to date by a foreign national convicted of an antitrust violation is 14 months. Nearly 100% of foreign defendants sentenced for U.S. antitrust offenses in the past decade have pleaded guilty. And nearly 100% of these individuals would not have been in a U.S. court for sentencing if they had not voluntarily submitted to U.S. jurisdiction. These foreign individuals submitted to U.S. jurisdiction to avoid permanent expulsion from the United States, which for many multinational business people is a severe career limitation, and to avoid possible impositions on travel outside the United States from placement on the Interpol “red notice” list.

The DOJ has declared antitrust violations a “crime of moral turpitude,” requiring the Immigrations and Customs Enforcement (ICE) agency to bar U.S. entry of convicted antitrust violators. However, the Antitrust Division has a Memorandum of Understanding with ICE that allows convicted antitrust violators free access to the United States as a means of encouraging foreign nationals' submitting to U.S. antitrust jurisdiction. (Some commentators have criticized the Antitrust Division policy of classifying antitrust offenses as “crimes of moral turpitude,” when other agencies within the DOJ, notably the Bureau of Prisons, categorize antitrust violations as “regulatory offenses” for purposes of incarceration placement.)

Many more commentators have criticized the DOJ policy of seeking stringent court-ordered restrictions on pre-trial travel of foreign citizens. The DOJ commonly seeks a district court order prohibiting all travel outside the United States by, and the surrender of passports of, any foreign national charged with an antitrust offense and present in the United States. This policy obviously intends to prevent the flight of foreign citizens from the U.S. jurisdiction, but it also effectively prohibits continued pre-trial employment of the charged foreign national ' even those who have appeared for arraignment and submitted to U.S. jurisdiction ' and substantially increases the leverage the DOJ has in plea negotiations.

Foreign nationals' avoiding U.S. antitrust jurisdiction by fleeing, or remaining outside the United States when charged, is becoming more difficult. The DOJ obtained in 2010 the first extradition to the United States of a foreign national, a citizen of the United Kingdom, indicted for a U.S. antitrust offense. That foreign national was convicted at trial in 2011. The basis for the extradition, however, focused more on the foreign defendant's obstruction of justice charges than on the underlying antitrust offense, as the UK criminalized antitrust violations after the charged antitrust offense was committed. With its criminal penalties for antitrust violations, the UK joins 14 countries that have a criminal antitrust offense, apparently fulfilling the requirement for extradition that the alleged offense be a crime in both jurisdictions, and that the foreign jurisdiction have an extradition treaty with the United States.

Conviction Rates at Trial

A penultimate consideration for counseling the individual charged with an antitrust violation is the percentage of prior convictions the DOJ has obtained after trial. The DOJ's published statistics indicate a nearly complete success rate of approximately 96% over the past decade, where other studies indicate a far less likely possibility of conviction of just under 50% for the much of the same period. See, e.g., F. Waris, D. Burns, J. Chesley, “To Plead or Not to Plead? Reviewing a Decade of Criminal Antitrust Trials,” The Antitrust Source (July 2007), available at http://www.antitrustsource.com/. See the charts below for more details.

(The differences in the DOJ's conviction rate statistics from other studies merits more analysis than this article's space permits. An objective, readily available reference has not been accessible since the Bureau of Justice Statistics published its last Compendium Of Justice Statistics in 2006; it indicates that trials for all federal crimes charged in the preceding decade resulted in a conviction rate of approximately 77%. This author's review of available trial results indicates a result more in agreement with other studies: that there is a “phenomenon of substantially lower antitrust trial conviction rates” than for other federal crimes, currently near approximately 60% over the past decade.)

Conclusion

All of these factors affecting the counseling of an individual charged with an antitrust offense are coalescing for our observation in United States v. AU Optronics, et al.,
(N.D. Cal. No. CR-09-0110), one of the numerous prosecutions arising from cartel activity in the LCD and electronic display markets. AU Optronics, an electronic display manufacturer headquartered in Taiwan with global sales, was indicted in 2010 along with 12 individual officers and directors of the company. AU Optronics is arguably the first large corporate defendant involved in a major multinational cartel investigation not to plead guilty to U.S. antitrust violations charged by the DOJ. No AU Optronics indicted personnel have pleaded guilty to date. Many of the AU Optronics indicted personnel ' including the CEO of the company, who was present in the United States when the indictment was filed ' are prohibited from leaving the U.S. pending trial, requiring the remote management of the company's international operations. Resolution of U.S. v. AU Optronics will provide valuable guidance on representation of corporate and individual defendants charged with antitrust violations in the future. The trial is scheduled to begin on Oct 31.

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David Laing ([email protected]), a member of this newsletter's Board of Editors, is a partner in Baker & McKenzie's Global Antitrust Practice Group in the Washington, DC, office. He is a former trial attorney with the Antitrust Division of the U.S. Department of Justice.

Representing an individual under investigation for, or charged with, an antitrust violation presents difficult decisions for reaching a plea agreement or going to trial, and the past decade of federal prosecution of antitrust violations has substantially increased the complexity of the decisions required. The multiple defendants, including corporate defendants with business incentives to avoid uncertainty and plead early, and corporate or individual defendants that may benefit from the Antitrust Division's leniency policy ' the first to report a violation and cooperate receives immunity from prosecution ' create several potential dilemmas in determining how to position an individual client.

This article provides statistics on trends in Antitrust Division prosecution of individuals to assist in the decisions of how to position individual defendants, and on how to explain strategies to the client ' often one of the most difficult aspects of the representation.

Trends in Antitrust Division Prosecution of Individuals

The Department of Justice, Antitrust Division, has for most of the past decade focused on obtaining a substantial period of incarceration from at least one senior officer of each corporation involved in a criminal antitrust violation that does not qualify for immunity, including corporations that plead guilty. This reflects the DOJ enforcement policy of making an antitrust violation “more than just a corporation's cost of doing business.” This enforcement policy has in part created an increase of nearly 100% in the average annual number of individuals charged with antitrust offences each year from the earliest years of the decade to the last few years.

The percentage of individual defendants receiving some period of incarceration, the vast majority of which were received through plea agreements, has averaged nearly 80% in the past four years. These current incarceration averages for antitrust violations are in marked contrast to the 1990s and before, when approximately 37% of individuals convicted of antitrust violations received some period of incarceration.

The current average period of incarceration for individual defendants convicted of antitrust offenses has increased by approximately 250% from the 1990s. This is in part explained by the DOJ applying its current policy of seeking a substantial period of incarceration of at least one senior official of any corporation convicted of an antitrust offense, and in part by the 2004 increase in maximum incarceration period for a conviction under 15 U.S.C. ' 1 to ten years. The maximum period of incarceration for an antitrust violation imposed, to date, is four years.

Foreign Defendants

Foreign citizenship of an individual charged with U.S. antitrust offenses exacerbates the difficulty of decision-making. The past decade has seen a marked increase in the percentage of defendants in antitrust prosecutions that are not U.S. citizens ' approximately 75% ' compared with only 10% in the 1990s. In earlier periods, diplomatic considerations, and the difficulty of enforcing antitrust indictments against non-U.S. citizens created DOJ hesitancy in charging foreign nationals with U.S. antitrust offenses.

The average period of incarceration for a foreign national convicted of a U.S. antitrust violation has averaged almost 12 months over the last four years (2007 through 2010), compared with three months during the first four years of the decade. The longest sentence of incarceration received to date by a foreign national convicted of an antitrust violation is 14 months. Nearly 100% of foreign defendants sentenced for U.S. antitrust offenses in the past decade have pleaded guilty. And nearly 100% of these individuals would not have been in a U.S. court for sentencing if they had not voluntarily submitted to U.S. jurisdiction. These foreign individuals submitted to U.S. jurisdiction to avoid permanent expulsion from the United States, which for many multinational business people is a severe career limitation, and to avoid possible impositions on travel outside the United States from placement on the Interpol “red notice” list.

The DOJ has declared antitrust violations a “crime of moral turpitude,” requiring the Immigrations and Customs Enforcement (ICE) agency to bar U.S. entry of convicted antitrust violators. However, the Antitrust Division has a Memorandum of Understanding with ICE that allows convicted antitrust violators free access to the United States as a means of encouraging foreign nationals' submitting to U.S. antitrust jurisdiction. (Some commentators have criticized the Antitrust Division policy of classifying antitrust offenses as “crimes of moral turpitude,” when other agencies within the DOJ, notably the Bureau of Prisons, categorize antitrust violations as “regulatory offenses” for purposes of incarceration placement.)

Many more commentators have criticized the DOJ policy of seeking stringent court-ordered restrictions on pre-trial travel of foreign citizens. The DOJ commonly seeks a district court order prohibiting all travel outside the United States by, and the surrender of passports of, any foreign national charged with an antitrust offense and present in the United States. This policy obviously intends to prevent the flight of foreign citizens from the U.S. jurisdiction, but it also effectively prohibits continued pre-trial employment of the charged foreign national ' even those who have appeared for arraignment and submitted to U.S. jurisdiction ' and substantially increases the leverage the DOJ has in plea negotiations.

Foreign nationals' avoiding U.S. antitrust jurisdiction by fleeing, or remaining outside the United States when charged, is becoming more difficult. The DOJ obtained in 2010 the first extradition to the United States of a foreign national, a citizen of the United Kingdom, indicted for a U.S. antitrust offense. That foreign national was convicted at trial in 2011. The basis for the extradition, however, focused more on the foreign defendant's obstruction of justice charges than on the underlying antitrust offense, as the UK criminalized antitrust violations after the charged antitrust offense was committed. With its criminal penalties for antitrust violations, the UK joins 14 countries that have a criminal antitrust offense, apparently fulfilling the requirement for extradition that the alleged offense be a crime in both jurisdictions, and that the foreign jurisdiction have an extradition treaty with the United States.

Conviction Rates at Trial

A penultimate consideration for counseling the individual charged with an antitrust violation is the percentage of prior convictions the DOJ has obtained after trial. The DOJ's published statistics indicate a nearly complete success rate of approximately 96% over the past decade, where other studies indicate a far less likely possibility of conviction of just under 50% for the much of the same period. See, e.g., F. Waris, D. Burns, J. Chesley, “To Plead or Not to Plead? Reviewing a Decade of Criminal Antitrust Trials,” The Antitrust Source (July 2007), available at http://www.antitrustsource.com/. See the charts below for more details.

(The differences in the DOJ's conviction rate statistics from other studies merits more analysis than this article's space permits. An objective, readily available reference has not been accessible since the Bureau of Justice Statistics published its last Compendium Of Justice Statistics in 2006; it indicates that trials for all federal crimes charged in the preceding decade resulted in a conviction rate of approximately 77%. This author's review of available trial results indicates a result more in agreement with other studies: that there is a “phenomenon of substantially lower antitrust trial conviction rates” than for other federal crimes, currently near approximately 60% over the past decade.)

Conclusion

All of these factors affecting the counseling of an individual charged with an antitrust offense are coalescing for our observation in United States v. AU Optronics, et al.,
(N.D. Cal. No. CR-09-0110), one of the numerous prosecutions arising from cartel activity in the LCD and electronic display markets. AU Optronics, an electronic display manufacturer headquartered in Taiwan with global sales, was indicted in 2010 along with 12 individual officers and directors of the company. AU Optronics is arguably the first large corporate defendant involved in a major multinational cartel investigation not to plead guilty to U.S. antitrust violations charged by the DOJ. No AU Optronics indicted personnel have pleaded guilty to date. Many of the AU Optronics indicted personnel ' including the CEO of the company, who was present in the United States when the indictment was filed ' are prohibited from leaving the U.S. pending trial, requiring the remote management of the company's international operations. Resolution of U.S. v. AU Optronics will provide valuable guidance on representation of corporate and individual defendants charged with antitrust violations in the future. The trial is scheduled to begin on Oct 31.

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[IMGCAP(2)]

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David Laing ([email protected]), a member of this newsletter's Board of Editors, is a partner in Baker & McKenzie's Global Antitrust Practice Group in the Washington, DC, office. He is a former trial attorney with the Antitrust Division of the U.S. Department of Justice.