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High-visibility securities fraud prosecutions have obscured another white-collar crime phenomenon — antitrust violations. Since 1999, more than 75 corporate executives have been imprisoned for federal antitrust crimes, more than the total for the previous 10 years. And that’s just the beginning, according to James Griffin, a deputy assistant attorney general who has been a key player in some of the Justice Department’s highest-profile antitrust convictions, including the Sotheby’s-Christie’s art auction price-fixing case out of New York. “It’s hard to predict what the numbers will be over the next few years, but the department is moving forward in an equally aggressive manner,” he said. In fiscal 2001, federal prosecutors obtained the longest antitrust jail sentences in the department’s history — 10 years in one case — as well as the largest restitution orders. A trend toward more frequently imposed and longer average prison terms for antitrust offenders continued as well, with the average prison sentence increasing to 15 months. At the same time, individual corporate executives are now facing fines as high as $10 million. In a recent article in the Corporate Counsellor newsletter, David J. Laing — an antitrust expert and a partner at Baker & McKenzie — summarized some of the DOJ’s recent efforts and most noteworthy convictions of the past few years, from the Sotheby’s case to the prosecution of a division president at Archer-Daniels-Midland Co. for price-fixing and mail fraud in 2001. ( Corporate Counsellor is an affiliate of The National Law Journal and law.com.) Just last month, a Luxembourg-based manufacturer of textile staples and its former U.S. director, Troy Sanley, pleaded guilty to participating in a conspiracy to fix prices. The company agreed to pay a $28.5 million criminal fine, and Stanley agreed to pay a $20,000 criminal fine and to serve eight months in jail. In New York, prosecutors have secured nine guilty pleas in recent months in an ongoing investigation of advertising companies, including a former top executive from Grey advertising, according to Douglas Tween, a trial attorney in the New York office of the DOJ’s antitrust division. Tween says the investigation is far from over and that there are still five outstanding indictments related to the series of cases. A confluence of events commencing in the early 1990s helped instigate an aggressive prosecutorial climate. Changes in the federal sentencing guidelines gave prosecutors the tools to seek longer sentences and stiffer fines. Prior to the change, the maximum statutory antitrust fines were $10 million for companies and $350,000 for individuals. At the same time, a change in prosecutorial discretion at the Justice Department “got the ball rolling,” according to Laing. OLD LAWS, NEW VIGOR “The laws have been on the books since 1890s,” he said, “but Gary Spratling, the antitrust division’s deputy assistant attorney general in the 1990s, played an integral role in invigorating the process.” Spratling received wide recognition for major antitrust prosecutions resulting in record-setting corporate fines of up to $500 million. He left DOJ in 2000, but “the door is now open, and it’s not closing anytime soon,” said Laing. Spratling “pushed for bigger cases and international cooperation and converted the DOJ’s corporate amnesty provision into the ‘business development program’ of the antitrust division,” said David Marx, a litigation partner at Chicago’s McDermott, Will & Emery who manages the firm’s antitrust practice. And during Spratling’s tenure, sophisticated investigative techniques were used more aggressively, including undercover operations, Marx said. “It has always been a challenge to get convictions on testimony of co-conspirators, but it’s much easier to create doubt where there’s a videotape — especially since evidence is not disclosed until trial,” he said. In the Archer-Daniels-Midland case, for example, Griffin said, “we had undercover tapes of the conduct. To see the senior corporate executives behave in the manner in which they behaved — literally laughing at the fact they were breaking the law — made clear the egregious nature of the conduct, showing senior executives at major firms they were not above prosecution.” Since Spratling’s 2000 departure, the high-profile penalties for corporate executives have continued — including the 2002 Sotheby’s case in which former Chairman Alfred Taubman was fined $7.5 million and sentenced to a year and a day in prison. “Criminal prosecution remains the highest priority in the [antitrust] division, with close to 40 percent of lawyers involved in criminal investigation full time,” Griffin said. INTERNATIONAL FOCUS There’s also a growing trend by the DOJ to prosecute individuals for cartel activities and for price-fixing schemes at companies based abroad, lawyers involved in cases said. Almost 70 percent of the companies charged by the antitrust department last year were foreign-based firms, and approximately 33 percent of the individual defendants were foreign nationals. Federal prosecutors have convicted foreign executives from Germany, Belgium, the Netherlands, England, France, Switzerland, Italy, Sweden, Canada, Mexico, Japan and South Korea for violating U.S. antitrust laws. And executives from Canada, Germany, Switzerland and Sweden recently have submitted to U.S. jurisdiction and served prison sentences in the United States for antitrust crimes. The United States has also entered into a number of treaties specifically related to mutual assistance in recent years, and foreign jurisdictions are increasingly adopting the aggressive posture of the Justice Department. Similar to the DOJ’s amnesty program, which gives a company an incentive to come forward if it realizes it may have violated antitrust laws, a European leniency program announced in February maximizes incentives for cartel members to break with their conspirators and cooperate with the authorities. Meanwhile, amidst this closer government scrutiny, corporate officers are adopting new practices, experts said. Some companies are seeking advice before there is a problem, like asking for informational seminars about antitrust issues for their sales and marketing divisions, according to Laing. The largest chemical manufacturing association and several chemical manufacturing companies are among those requesting periodic briefings, Laing said. Executives also are being advised to take quick action once they learn their company is the target of an antitrust investigation. This includes ordering an immediate internal review so they can determine if there was wrongdoing and whether the company should exercise the “first mover advantage” made possible by the DOJ’s amnesty program. “It’s not too late to protect yourself if you do it early in the game, especially if your business is one of the first in an industry to be targeted,” Marx said.

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