1. 3. Criminal Price-Fixing Prosecutions Antitrust Law Fall 2014 Yale Law School Dale Collins SLIDES FOR CLASS

2. Antitrust Law Fall 2014 Yale Law School Dale Collins 2 Sherman Act § 1—Creates Offense Creates the offense of a “contract, combination... or conspiracy, in restraint of trade or commerce” Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. 1 1 15 U.S.C. § 1.

3. Antitrust Law Fall 2014 Yale Law School Dale Collins 3 Sherman Act § 1—Makes Offense a Crime Makes the offense a federal crime Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

4. Antitrust Law Fall 2014 Yale Law School Dale Collins 4 Sherman Act § 1—Specifies Sanctions Specifies the maximum criminal sanction under the Sherman Act for the offense Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

5. Antitrust Law Fall 2014 Yale Law School Dale Collins Sherman Act § 1—Specifies Sanctions Sherman Act  Corporations Criminal fines not exceeding $100 million  Individuals Criminal fines not exceeding $1 million Imprisonment not exceeding 10 years 18901955197419902004 1 Corporations$5K$50K$1 million$10 million$100 million Individuals Fines$5k$50K$100K$350K$1 million Imprisonment1 year 3 years 10 years Misdemeanor Felony History of Sherman Act Criminal Penalties 5 1 Effective June 22, 2004.

6. Antitrust Law Fall 2014 Yale Law School Dale Collins 6 Sherman Act § 1—Specifies Sanctions But the Comprehensive Crime Control Act provides for alternative maximum criminal monetary fines of—  twice the gross gain to the defendant, or  twice the gross loss to the victims

7. Antitrust Law Fall 2014 Yale Law School Dale Collins Corporate Leniency Type AType B DOJ received no information regarding reported activity First to report Insufficient evidence to convict company Prompt termination Candor, completeness, and cooperation Corporate act Restitution No coercion/no leadershipFairness (includes no leadership) (sliding scale depending on amount of evidence DOJ already has) Covers all officers, directors, and employees who admit involvement Officers, directors, and employees who come forward with corporation will be considered for immunity on the same basis as if they had approached the DOJ individually

8. Antitrust Law Fall 2014 Yale Law School Dale Collins Individual Leniency DOJ received no information regarding reported activity Candor, completeness, and cooperation No coercion/no leadership

9. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Organizations Application: Samsung Electronics in the DRAM investigation 1 9 Guidelines Calculation 1Base Fine (20% of $1.2 billion (Volume of Affected Commerce) (§ 2R1.1(d)(I) & § 8C2.4(b)) $240 million 2Culpability Score i.Base (§ 8C2.5(a))5 ii.Involvement in or Tolerance of Criminal Activity (§ 8C2.5(b)(I))5 iii.Prior History (§ 8C2.5(c))0 iv.Violation of Order (§ 8C2.5(d))0 v.Obstruction of Justice (§ 8C2.5(e))0 vi.Effective Program to Prevent and Detect Violations of Law (§ 8C2.5(f)) 0 vii.Self-Reporting, Cooperation, and Acceptance of Responsibility (§ 8C2.5(g)(2)) -2 Total Culpability Score:8 Minimum and Maximum Multipliers1.6 – 3.2 1 United States v. Samsung Elec. Co., No. CR 05-0643 (PJH) (N.D. Cal. filed Nov. 23, 2005). Upward adjustments Downward adjustments

10. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Organizations Application: Samsung Electronics in the DRAM investigation 10 Culpability Score Minimum Multiplier Maximum Multiplier 10 or more2.004.00 91.803.60 81.603.20 71.402.80 61.202.40 51.002.00 40.801.60 30.601.20 20.400.80 10.200.40 0 or less0.050.20 Lower bound on minimum multiplier in antitrust cases is 0.75 (§ 2R1.1(d)(2)) Yields a minimum fine of 15% of affected commerce in least serious case Base Fine = $240M Guidelines range: $384 - $768 million Recommendation: $300 million

11. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Individuals Application: Il Ung Kim in the DRAM criminal investigation Mr. Kim was vice president of marketing for the memory division at Samsung Guidelines Calculation aBase Offense Level (§ 2R1.1(a))10 2 bVolume of Affected Commerce (§ 2R1.1(b)(2)(G))—Up to 16 points (More than $100 million) +7 cTotal Adjusted Offense Level17 dVictim-Related Adjustments (§ 3A)+0 eRole in the Offense Adjustments (§ 3B)+3 fObstruction Adjustments (§ 3C)+0 gAcceptance of Responsibility (§ 3 E1.1( a) and (b)) -3 hTotal Offense Level17 iCriminal History Category (§ 4A1.1)I Guidelines range: Incarceration: 24-30 months Fine: $1m - $5m Recommended sentence: Incarceration: 14 months 11 1 Joint Sentencing Memorandum, United States v. Il Ung Kim, No. CR 06-692 (PJH) (N.D. Cal. filed May 1, 2007) (DRAM investigation). 2 The current base offense level is 12.

12. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Individuals Imprisonment Volume of Commerce Adjustments (A)More than $1,000,000add 2 (B)More than $10,000,000add 4 (C)More than $40,000,000add 6 (D)More than $100,000,000add 8 (E)More than $250,000,000add 10 (F)More than $500,000,000add 12 (G)More than $1,000,000,000add 14 (H)More than $1,500,000,000add 16. Used to be 7

13. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Individuals Application: Il Ung Kim in the DRAM criminal investigation Mr. Kim was vice president of marketing for the memory division at Samsung Guidelines Calculation aBase Offense Level (§ 2R1.1(a))10 2 bVolume of Affected Commerce (§ 2R1.1(b)(2)(G))—Up to 16 points (More than $100 million) +7 cTotal Adjusted Offense Level17 dVictim-Related Adjustments (§ 3A)+0 eRole in the Offense Adjustments (§ 3B)+3 fObstruction Adjustments (§ 3C)+0 gAcceptance of Responsibility (§ 3 E1.1( a) and (b)) -3 hTotal Offense Level17 iCriminal History Category (§ 4A1.1)I 13 1 Joint Sentencing Memorandum, United States v. Il Ung Kim, No. CR 06-692 (PJH) (N.D. Cal. filed May 1, 2007) (DRAM investigation). 2 The current base offense level is 12.

14. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Individuals Imprisonment Individual Sentencing Ranges Offense LevelMonths 1210-16 1312-18 1415-21 1518-24 1621-27 1724-30 1827-33 1930-37 2033-41 2137-46 Recommended sentence: Incarceration: 14 months

15. Antitrust Law Fall 2014 Yale Law School Dale Collins Sentencing Guidelines: Individuals Fines  USSG set Guidelines fine range to be from 1% to 5% percent of the affected volume of commerce, but not less than $20,000 1  Considerations 2 Role in the offense Degree to which the defendant personally profited from the offense (including salary, bonuses, and career enhancement) If the defendant lacks the ability to pay the guideline fine, the court should impose community service in lieu of a portion of the fine.  The community service should be equally as burdensome as a fine 15 1 USSG § 2R1.1(c)(1). 2 USSG § 2R1.1 Application Note 2. Kim: Guidelines range: $1 - $5 million (under alternative fines provision) Sherman Act maximum: $350,000 (in effect at time of violation) DOJ elected to proceed under the Sherman Act maximum Recommendation: $250,000