Antitrust Law Daily Former industry execs charged by U.S. in separate price fixing conspiracies
Friday, February 14, 2020

Former industry execs charged by U.S. in separate price fixing conspiracies

By Jeffrey May, J.D.

Indictment naming NHK Spring Company executives follows company’s guilty plea last year in ongoing hard disk drive probe. Separately, a fourth pharmaceutical exec charged in generic drug conspiracy pleads guilty.

The Department of Justice Antitrust Division announced two new price fixing charges today in ongoing industry probes.

Hard disk drive price fixing conspiracy. A federal grand jury has indicted two former top sales executives at NHK Spring Co. Ltd. for their role in a conspiracy to fix prices for suspension assemblies used in hard disk drives (HDDs), the Department of Justice announced today. Hitoshi Hashimoto and Hiroyuki Tamura, both Japanese nationals, were charged in the federal district court in San Francisco. The charge follows a guilty plea and $28.5 million fine for NHK last year (U.S. v. Hashimoto, Case 3:20-cr-00070-JD).

According to the one-count indictment, Hashimoto and Tamura participated in a conspiracy with their competitors to fix the prices of suspension assemblies used in HDDs. Suspension assemblies are components of HDDs, which are used to store information electronically and are incorporated into computers or sold as stand-alone electronic storage devices. NHK is one of the leading producers of these suspension assemblies. Hashimoto and Tamura allegedly took part in the conspiracy from May 2008 until April 2016.

NHK guilty plea. In July 2019, the Justice Department announced that NHK agreed to plead guilty to fixing prices for suspension assemblies and to pay a $28.5 million fine. The federal district court in Detroit has since entered judgment against the company. No other charges in the ongoing investigation have been disclosed by the Justice Department.

Private actions against HDD producers. A number of private antitrust actions have been filed against HDD manufacturers since the government probe was disclosed. In addition to NHK, Japan-based TDK Corporation, another leading manufacturer of HDD suspension assemblies, has been made a defendant in those private suits. The Judicial Panel on Multidistrict Litigation has consolidated the related actions for pretrial proceedings. Robins Kaplan LLP and Zelle LLP serve as co-lead counsel for the nationwide putative class of end-user plaintiffs in the proceeding.

Generic drug price fixing conspiracy. Separately, the Justice Department announced today that a former senior pharmaceutical industry executive has pleaded guilty for his role in a conspiracy to fix prices, rig bids, and allocate customers for generic drugs. Hector Armando Kellum, who had served as a vice president for sales and marketing at Alembic Pharmaceuticals, Inc., was charged with restricting competition for generic drugs, including, but not limited to, clobetasol and nystatin triamcinolone cream. The charge was filed under seal on February 4 in the federal district court in Philadelphia. It was unsealed today. Kellum has agreed to cooperate with the Antitrust Division’s ongoing investigation (U.S. v. Kellum, Case No. 20-CR-00065).

The Justice Department reported that Kellum’s co-conspirators included a generic pharmaceutical company headquartered in New York and various individuals, including Ara Aprahamian, who was indicted in Philadelphia on February 4. Aprahamian is a former Taro Pharmaceutical executive. The government has not announced a charge against Taro.

Kellum is the fourth executive to be charged in this investigation, and the third to plead guilty, according to the government. To date, two companies have also been charged—Heritage Pharmaceuticals and Rising Pharmaceuticals. The corporate charges were resolved by deferred prosecution agreement. In addition to Kellum and Aprahamian, the two executives were Heritage’s former CEO, Jeffrey Glazer, and former president, Jason Malek. They entered guilty pleas in January 2017.

Attorneys: Peter P. Tomczak (Baker & McKenzie LLP) and David F. DuMouchel (Butzel Long) for NHK Spring Co. (Robins Kaplan LLP) and (Zelle LLP) for end-user plaintiffs. Matthew S. Tannenbaum for Department of Justice. Ann Campbell Flannery (Law Offices of Ann C. Flannery, LLC) and Catherine L. Redlich (Driscoll & Redlich) for Hector Armando Kellum.

Companies: Alembic Pharmaceuticals, Inc.; NHK Spring Co. Ltd.; Taro Pharmaceutical, Inc.; TDK Corp.

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