Transnational Antitrust—Samsung Executives and Updated Policy

As we have been mentioning for quite some time, the Antitrust Division of the US Department of Justice has aggressively expanded its prosecutions of foreign companies for antitrust violations. The investigation into the DRAM market, in particular, has been subject to extensive scrutiny, and when we last mentioned that investigation, we suggested that executives at other companies besides Hynix and Infineon would end up pleading guilty to price-fixing. That has happened as three executives from Samsung have agreed to plead guilty into the massive investigation.^[1]

The three individuals are Sun Woo Lee—Samsung’s Senior Manager of DRAM sales—Yeongho Kang—Samsung’s Associated Director of DRAM Marketing for Samsung USA—and Young Woo Lee—Samsung’s Sales Director for Samsung Germany.^[2] Each will pay a $250,000 fine and spend 8 months, 7 months, and 7 months in prison respectively.^[3] The investigation has thus far netted $731 million in fines, which is the “largest amount of fines ever collected by the Department of Justice from a single conspiracy.”^[4] The individuals have agreed to cooperate in the investigation, and have consented to US jurisdiction so extradition will not be required.^[5] They comprise the third wave of guilty pleas,^[6] which suggests that certain executives from Elpida will join their Hynix, Infineon, and Samsung counterparts soon.

At the beginning of this month, Scott D. Hammond, the Deputy Assistant Attorney General for Criminal Enforcement (Antitrust Division), gave a speech to the American Bar Association which goes a long way toward explaining this increased transnational focus. As Mr. Hammond said in the speech, “the most significant trend in the evolution of international anti-cartel enforcement since 1999 has been the more vigorous prosecution of foreign national who violate U.S. antitrust laws.”^[7] In 1999, “no foreign national had served time in a U.S. jail as a result of his or her participation in an international cartel. Today, twenty foreign nationals ­ from Japan and multiple European countries, including France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom ­ have served time in U.S. jails as a result of the Division's international cartel investigations.”^[8] Clearly, the Antitrust Division [hereinafter AD] is concerned about more than just corporate plea agreements that provide for substantial fines; the AD wants individuals.

Part of the expansion is due to foreign countries strengthening their antitrust laws. In 2005, the OECD “recommended that governments consider the introduction and imposition of criminal sanctions against individuals to enhance deterrence and incentives to cooperate through leniency programs,” which has prompted nations on “at least five continents” (such as Canada, the UK, Israel, Ireland, Korea, and Australia) to adopt laws providing for criminal sanctions.^[9] In doing so, they have made it easier to extradite individuals from those countries because, apart from Israel, each country’s bilateral extradition treaty with the US contains a dual-criminality clause.

In addition to strengthening anti-competition laws, foreign governments have become increasingly cooperative with the US. “When the Division began detecting international cartels in the early to mid-1990s, Division prosecutors were routinely told that they would have to wait a year or so to receive a response to a foreign assistance request. They were also told not to be surprised if, once a response finally was received, the answer was simply that no assistance would be forthcoming. Those days are gone.”^[10] Furthermore, the AD has “entered formal antitrust cooperation agreements with Brazil, Israel, Japan, and Mexico and the first international antitrust enforcement assistance agreement with Australia.”^[11]

The US has also increased prosecutions by “adopting a policy of placing fugitives on a ‘Red Notice’ list maintained by … Interpol. … The Division will seek to extradite any fugitive defendant apprehended through the Interpol Red Notice Watch,” and “if a fugitive resides in a country that would not extradite the defendant to the United States for an antitrust offense, the fugitive still runs the risk of being extradited if he travels outside of his home country.”^[12] Extraditions, in turn, have increased since 1999, mainly due to changes in thinking by foreign governments.^[13]

Finally, because the US and other governments are increasingly viewing antitrust violations as a form of theft, the AD is carving out more individuals from its corporate plea agreements.^[14] In the past, the corporate pleas would include non-prosecution agreements for all but one executive, and that executive would typically receive no jail time.^[15] That has changed as the carve-outs have increased. For example, “Infineon had four individuals carved out of its plea agreement; Hynix had five carve outs; and Samsung had seven.”^[16]

If this much has changed in the past six or seven years, there is no telling what will change in the next six years.

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[1] US DOJ, Three Samsung Executives Agree to Plead Guilty, Serve Jail for Participating in DRAM Price Fixing Conspiracy, Mar. 22, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Scott D. Hammond, Charting New Waters in International Cartel Prosecutions, US DOJ, Mar. 2, 2006.
[8] Id.
[9] Id.
[10] Id.
[11] Id. The cooperation agreements “complement” already-existing agreements with a number of countries, but the International Antitrust Enforcement Assistance Agreement with Australia is a comprehensive antitrust mutual legal assistance agreement, which allows the two countries to exchange evidence and assist each other's civil and criminal antitrust investigative efforts. Id. at n.15.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id. The fact that only three Samsung executives have agreed to plead guilty could mean that more will plead guilty at Samsung, or that the other four individuals will challenge their prosecution.