On 13 August 2013 the Governor of Sao Paulo, Brazil, announced that the state plans to sue German engineering firm Siemens over allegations of price-fixing during bidding for a contract relating to construction of the city of Sao Paulo’s metro rail system.  Governor Geraldo Alckmin made it clear that any other companies found to be involved will also face legal action. Prosecutors in the state also announced last week that they had launched a criminal investigation after uncovering strong indications of price rigging during the bidding. The investigation relates to suspected criminal cartel conduct in tenders issued by the Sao Paolo commuter rail company CPTM and the Sao Paulo Metro Company from 1999 to 2009.

The announcements follow reports in July that Siemens had been granted federal immunity from criminal proceedings for both the corporation and senior executives after self-reporting cartel conduct to the Administrative Council for Economic Defence (CADE), the Brazilian competition regulator. The state prosecution office has stated that it has seen documents held by CADE, and that its investigation is based on these. It also said that it had asked Siemens twice to provide information but that it had not complied.

Early in July 2013 CADE searched the offices in a number of cities seizing evidence at thirteen firms. Siemens is the only corporation that has been officially named, but others reported to be involved are Spain’s CAF, Japan’s Mitsui and Bombardier of Canada, a part of French company Alstom. CADE is expected to take up to three months to assess the documents.

Siemens is alleged to been involved in a bid-rigging cartel for the construction, fitting and maintenance of metro trains and lines in Sao Paulo and Brasilia between 1990 and 2007 resulting in bids that were 10 to 20 per cent higher than the market standard. Siemens has been awarded a number of contracts in Brazil in recent years including a contract in 1990 to build Sao Paulo’s metro line number 5 worth 600 million reais and a contract in 2007 for the maintenance of the metro in Brasilia worth 96 million reais.

The allegations are another blow for Siemens who were at the centre of a bribery and corruption scandal in Germany in 2006, and in 2008 paid a record USD1.6 billion fine to settle investigations in both Germany and the US. Siemens issued a statement  in July 2013 saying that it is aware of the probe in Brazil and that is has made great efforts to develop a new and effective compliance system and to encourage employees to comply with antitrust guidelines following its past failures.

As well as demonstrating the difficulties for large multi-national corporations of running an effective compliance system, this case also demonstrates the risks of self-reporting in some countries where federal immunity is not always the end of the matter and state level fines and prosecutions may follow.


Office of Fair Trading logoOn 8 July 2013, the UK’s Office of Fair Trading (OFT) published its final revised Guide to applications for leniency and no-action in cartel cases. The Guide, which took effect on publication, follows two consultations on the draft revisions, the second of which specifically addressed the issue of waiver of legal privilege in leniency applications (covered in paragraphs 3.15 to 3.23 of the Guide).

The OFT has announced that it will no longer require leniency applicants in cartel cases to waive legal privilege under any circumstances. The existing policy is that while waivers are not required in civil competition investigations, they may be in certain circumstances in criminal cases. Applicants may still be asked if they are willing to waive legal privilege, but a refusal to do so will not have any adverse consequences for the leniency application.

The decision not to insist on waiver of legal privilege has been made primarily due to concerns that any requirement would act as a disincentive to potential leniency applicants. In particular, if applicants feel unable to make full and frank disclosure to their legal advisers then it is difficult for them to obtain proper advice in order to make an informed decision about action to take in relation to any cartel activity, especially given that leniency is not usually confirmed until late in the process.

The OFT has also taken into account that many other competition authorities, such as the European Commission and the United States Department of Justice Antitrust Division, do not require waiver as a condition of leniency, and the fact that the Government has confirmed that waiver of legal privilege will not be a condition of the proposed Deferred Prosecution Agreements.

While this change has been overwhelmingly welcomed, the introduction of a new independent counsel to which applicants may be required to submit material over which they are claiming privilege for assessment as to whether that claim is justified, is more controversial.

Critics have pointed out that the disclosure of materials to the independent counsel could result in a waiver of legal privilege over those documents in some jurisdictions, in particular the US. The OFT did not consider these concerns relevant because they deal with considerations outside of the UK legal framework. It remains to be seen whether companies, especially those with wide-ranging international interests, will consider this risk significant enough to deter them from taking part in the leniency process. There are also concerns that an appeal by a leniency applicant against a decision of the independent counsel that privilege does not apply may adversely affect the OFT’s view as to whether the applicant is complying with its obligation of continuous and complete cooperation under the leniency programme. The OFT has said that this will be dealt with on a case by case basis.

Despite these concerns, the decision by the OFT to change its policy and cease to require leniency applicants to waive legal privilege in both civil and criminal proceedings is a significant step forward, and demonstrates the results that robust responses to official consultations can achieve.

The OFT has also published two new Quick Guides to cartels and leniency, one for businesses and one for individuals.


DoJThe US Justice Department announced on 19 July 2013 that Panasonic and its subsidiary Sanyo Electric have agreed to plead guilty and pay USD56.5 million in fines for two separate conspiracies to fix the prices of auto parts and battery cells. Battery maker LG Chem Ltd. has also agreed to plead guilty to price fixing of battery cells and to pay a fine of USD1.1 million. The announcement follows the guilty pleas entered by Diamond Electric and an executive with Swedish company Autoliv on 16 July 2013. Panasonic will pay USD45.8 million and Sanyo USD10.731 million. All three companies have agreed to cooperate in the on-going investigations and charges have been filed for violations of the Sherman Act.

Panasonic was charged with three counts of cartel activity going as far back as 1998. Two of these involved bid-rigging and price fixing of steering wheel switches, turn switches, ballasts and other parts sold to Toyota in two separate conspiracies. The third count involved fixing the prices of ballasts used for lamps sold to Honda, Mazda and Nissan. All of the affected parts were installed in cars sold in the United States and elsewhere. Panasonic was said to have agreed with its competitors to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids and fix, stabilise and maintain part prices. The company has issued a statement saying that it has taken steps to strengthen its compliance programmes.

Sanyo Electric and LG Chem were charged in a separate conspiracy of fixing the prices of cylindrical lithium ion battery cells used in laptops sold worldwide between 2007 and 2008. These are the first guilty pleas in the on-going investigation into price fixing in the cylindrical lithium ion battery cell industry. The companies agreed to price the battery cells at pre-determined levels and then took steps to monitor the agreements and conceal the conspiracy.

This is the latest penalty to result from the on-going investigation into the auto parts industry which has so far seen 12 companies and 15 executives plead guilty and has cost the auto industry more than USD874 million in fines and resulted in prison sentences of between a year and a day and two years. Substantial fines have also been imposed in parallel investigations in Europe, Australia, Korea, Japan and Canada.


The US Justice DepartDoJment announced on 16 July 2013 that Japanese company Diamond Electric Manufacturing (Diamond Electric) has agreed to plead guilty and pay a USD19 million fine for fixing the prices of ignition coils in cars sold in the United States. Takayoshi Matsunaga, an executive from the Swedish company Autoliv, has also agreed to plead guilty in relation to price fixing of seat belts sold to Toyota for installation in cars made and sold in the United States.

Diamond Electric, which has agreed to cooperate with the ongoing investigation, is the tenth auto-parts maker to plead guilty in the Justice Department’s long-running investigation into price fixing, bid-rigging and other anticompetitive conduct in the automotive parts industry. The cartel ran from July 2003 to February 2010 and this is the first case in the investigation involving parts sold directly to a company headquartered in the United States – Ford. Parts were also sold to Toyota and Fuji Heavy Industries, the parent company of Subaru.

Diamond Electric has apologised for its conduct and has stated that it has created a compliance programme and introduced strict new policies relating to pricing activities to ensure that there is no repeat of the anticompetitive behaviour.

Matsunaga, a Japanese national, has been handed a prison sentence of one year and day and a USD20,000 fine. He is the fifteenth executive to plead guilty during the probe. Autoliv itself agreed to plead guilty in June 2012 and was fined USD14.5 million. Felony counts have now been filed in relation to price fixing in violation of the Sherman Antitrust Act, and both agreements are subject to court approval.

To date the investigation has cost the ten companies and fifteen executives USD828 million in criminal fines. Investigations into price fixing of parts in the automotive industry are also underway in Europe, Australia, Korea, Japan and Canada. On 10 July 2013, the EU Competition Commission fined four wire harness suppliers a total of EU141.8 million for taking part in cartels that covered the whole European Economic Area.


On 10 July 2013, the EUThe European flag flies outside of the La Canada shopping centre in Marbella, southern Spain Competition Commission fined four wire harness suppliers a total of EU141.8 million for taking part in cartels that covered the whole European Economic Area (EEA) and affected four major car companies; Toyota, Nissan, Honda and Renault.

The investigation covered five cartels which operated between 2000 and 2009. They involved bid-rigging to coordinate both price and allocation of supplies of wire harnesses, which link together a car’s electrical components.

The largest fine of EUR125 million (over 85% of the total) was handed to Yasaki, the world’s largest maker of wire harnessing systems. The other companies fined were Furukawa, S-Y Systems Technologies and Leoni. The fines were set on the basis of the Commissions’ 2006 Guidelines on fines, taking into account the companies’ EEA sales of the products involved, the very serious nature of the infringement, the cartels geographic scope and their duration.

However, Sumitomo Electric, which was involved in all five cartels, will not have to pay any of its EUR291 million fine because it alerted regulators to the anti-competitive behaviour and as a result benefited from full immunity under the Commission’s 2006 Leniency Notice. The remaining companies received between 20 and 50% reductions under the leniency programme due to their full cooperation with the investigation. They received a further 10% reduction under the settlement procedure for cartels (see the Commission’s 2008 Settlement Notice) which requires companies to acknowledge both their infringement and liability in exchange for an additional discount.

The investigation started with inspections in 2010 and proceedings were opened in August 2012. It has taken just 8 months since settlement discussions started with the companies for the investigation to reach its conclusion. The immunity granted to Sumitomo Electric, which would otherwise have faced a fine twice as large as the total imposed on the other four companies, as well as the substantial reductions that the other participants in the cartels received, serves as a good example of the benefits of cooperation, and in particular of being the first to alert authorities in order to take advantage of antitrust leniency programmes.


AU Optronics Corp executive Shiu Lung Leung was sentenced yesterday in California to two years imprisonment and a fine of $50,000 for his involvement in a criminal conspiracy to fix the prices of liquid crystal displays used in computer screens and televisions.

This sentence followed Leung’s conviction by a federal jury in December 2012 and brings to 13 the number of executives from various companies found guilty of this price-fixing conspiracy.

Leung faced a potential sentence of 10 years imprisonment yet following a contested trial his sentence is less than that agreed by corporate executives in other cartels that have pleaded guilty. This may set a new benchmark for such plea negotiations in the US in future.

To date eight companies involved in this cartel have been sentenced to pay criminal fines totalling more than $US1.39 billion.


Japan’s Yazaki Corporation, the world’s 13th largest global auto parts supplier, has been has fined C$30 million in Canada. The investigation by the Canadian Competition Bureau into the auto parts industry is the largest ever undertaken by Canadian authorities and this fine is the largest ever ordered by a Canadian Court.

This record fine by the Canadian authorities dwarfs a fine of $470m imposed against Yazaki in March last year by the US Department of Justice following a guilty plea to cartel conduct over a ten year period.

The Canadian fine was reduced as a consequence of Yazaki participating in the Bureau’s Leniency Program and providing substantial assistance to the Bureau and the Public Prosecution Service of Canada.