Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Panasonic and Sanyo plead guilty in price-fixing conspiracies involving automotive parts and battery cells, (Jul 18, 2013)

By Peter Reap, J.D., LL.M.

The Department of Justice has announced that Panasonic Corp. and its subsidiary, SANYO Electric Co. Ltd., have agreed to plead guilty and to pay a total of $56.5 million in criminal fines for their roles in separate price-fixing conspiracies involving automotive parts and battery cells. LG Chem Ltd., a leading manufacturer of secondary batteries, has also agreed to plead guilty and to pay a $1.056 million criminal fine for price fixing involving battery cells.

Osaka, Japan-based Panasonic agreed to pay a $45.8 million criminal fine for its role in the automotive parts conspiracy. SANYO agreed to pay a $10.731 million criminal fine for its role in the battery cells conspiracy. The guilty pleas against SANYO and LG Chem are the first in the department’s ongoing investigation into anticompetitive conduct in the cylindrical lithium ion battery cell industry.

The three-count felony charge against Panasonic was filed in the U.S. District Court for the Eastern District of Michigan. Separate one-count felony charges against SANYO and LG Chem were filed in the U.S. District Court for the Northern District of California. As part of the plea agreements, which are subject to court approval, the charged companies have agreed to cooperate in the department’s ongoing antitrust investigations. Panasonic has agreed to plead guilty for its role in a conspiracy to fix prices of switches, steering angle sensors, and automotive high intensity discharge (HID) ballasts installed in cars sold in the United States and elsewhere. SANYO and LG Chem Ltd. have agreed to plead guilty for their roles in a conspiracy to fix the prices of cylindrical lithium ion battery cells sold worldwide for use in notebook computer battery packs.

“Panasonic is charged with participating in separate price-fixing conspiracies affecting numerous parts used in cars made and sold in the United States while its subsidiary was also fixing prices on battery cells used by consumers of notebook computers,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Pleading guilty and cooperating with the division’s ongoing investigations is a necessary step in changing a corporate culture that turned customers into price-fixing victims.”

Including Panasonic, 11 companies and 15 executives have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $874 million in criminal fines as a result of the auto parts investigation, according to the Department of Justice. Additionally, 12 of the individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. The three additional executives have agreed to serve time in prison and are currently awaiting sentencing. “The FBI remains committed to protecting American consumers and businesses from corporate corruption. The conduct of Panasonic, SANYO, and LG Chem resulted in inflated production costs for notebook computers and cars purchased by U.S. consumers,” said Joseph S. Campbell, FBI Criminal Investigative Division Deputy Assistant Director. “These investigations illustrate our efforts to ensure market fairness for U.S. businesses by bringing corporations to justice when their commercial activity violates antitrust laws.”

Panasonic, SANYO, and LG Chem are each charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine. The Department of Justice explained that today’s charges arose from an ongoing investigation in the cylindrical lithium ion battery cells industry being conducted by the Antitrust Division’s San Francisco Office and the FBI in San Francisco as well as an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI.

Companies: Panasonic Corp.; SANYO Electric Co. Ltd.; LG Chem Ltd.

News: Antitrust AntitrustDivisionNews