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International Law Expert Commentary

6/19/2008 10:45:43 AM EST

Current Trends in Cartel Criminal Prosecutions

By David L. Cook, Counsel, Clifford Chance US LLP

Posted by AME3bg

The landscape of criminal cartel enforcement is undergoing a tectonic shift. David L. Cook, counsel in Clifford Chance US LLP's Litigation and Dispute Resolution practice, who specializes in international litigation, antitrust, commercial litigation and regulatory investigations, discusses this emerging trend and its implications in an Expert Commentary.

The author writes:

Foreign corporations and their executives are now at the forefront of United States antitrust enforcement initiatives, reflected by a steep increase in penalties in recent years. Criminal actions against international cartel participants have increased by virtually every statistical measure – number of cases, amounts of fines, jail sentences and extraterritorial prosecutions.

The temporal contrast in international cartel enforcement is striking. For example, beginning in 1977, several airlines were indicted for violating the Sherman Act. None of the defendants were sentenced to jail and the fines ranged from $30,000 to $100,000. Fast forward to 2006 when four foreign-based manufacturers pleaded guilty to fixing prices of dynamic random access memory ("DRAM") devices throughout the world. The fines totaled more than $730 million and twelve of their foreign executives, including foreign citizens from Korea, Japan and Germany, received jail sentences.

This emerging trend shows no signs of abating. A key component is the increased cooperation and coordination among antitrust authorities internationally. Foreign corporations and their executives are no longer out of reach from United States prosecutors. The Department of Justice’s pursuit of aggressive new tactics against foreign defendants coupled with increased cooperation from foreign enforcement authorities has yielded devastating blows to international cartels around the world.

Since enactment of the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 ("2004 Reform Act"), jail sentences and fines for foreign corporations and their executives have surged. The 2004 Reform Act increased the maximum sentences and fines for Sherman Act violations. United States antitrust authorities received a further boost in their efforts to thwart cartel activity in 2006 when Congress empowered the Department of Justice to use wiretaps in connection with cartel investigations. These domestic amendments, in conjunction with expanded international cooperation, have proven exceptionally effective. By virtually any measure, foreign defendants are paying a heavier price for cartel activity. [footnotes omitted]

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