By Jeffrey May, J.D.
The federal district court in San Francisco has taken the recommendation of the Department of Justice and fined Nippon Chemi-Con Corporation (NCC) $60 million for its role in a conspiracy to fix prices of electrolytic capacitors. The Department of Justice announced the one-count indictment against Nippon Chemi-Con in October 2017. The action was complicated by a potential conflict of interest arising from the conduct of a former associate who worked on NCC’s defense and later joined the Justice Department. Initially, NCC contended that the appropriate remedy was dismissal of the Indictment or, in the alternative, exclusion of some part of the government’s evidence. Ultimately, NCC agreed to a plea agreement, which stipulated a fine in a range of $40 to $60 million. NCC pleaded guilty in May. Due to the litigation risk arising from the conflict issue, the government asked the court to impose the $60 million fine, and the court agreed on October 3 (U.S. v. Nippon Chemi-Con Corp., Case 3:17-cr-00540-MMC).
In its sentencing memorandum, the government acknowledged that the attorney in question knew or should have known of the conflict presented by his prior representation of NCC. The attorney worked for the Criminal Division in the Office of International Affairs (OIA), where—without disclosing his prior representation—he helped the capacitors team execute a mutual-legal-assistance-treaty request or MLAT for a voluntary interview of a foreign-located witness in the investigation of NCC and its co-conspirators. In light of the circumstances, the government concluded that a $60 million fine was in the interests of justice, even though the guidelines fine was the statutory maximum of $100 million.
Underlying charge. NCC was the eighth company named in the probe that was first officially reported by the Justice Department in September 2015 with a similar charge against Japanese capacitor manufacturer NEC Tokin Corporation. All eight companies charged in the investigation have pleaded guilty.
According to the charge, NCC carried out the conspiracy by agreeing with co-conspirators to fix prices of electrolytic capacitors during meetings and other communications. Capacitors were then sold in accordance with these agreements. As part of the conspiracy, NCC and its co-conspirators took steps to conceal the conspiracy, including the use of code names and providing misleading justifications for prices and bids submitted to customers in order to cover up their collusive conduct, the Justice Department said.
Capacitors, also known as condensers, are a fundamental component of electrical circuits and are used primarily to store and regulate electrical current. Electrolytic capacitors, including aluminum and tantalum types, are a major sub-type of capacitors. These capacitors store and regulate electrical current in electronic products, including computers, televisions, car engine and airbag systems, home appliances, and office equipment.
The $60 million fine is the largest fine imposed in the Justice Department’s investigation into collusion in the capacitors industry, the Justice Department announced yesterday. In addition to the $60 million criminal fine, Nippon Chemi-Con was also sentenced to a five-year term of probation during which the company must implement an effective compliance program and submit annual written reports on its compliance efforts.
Makan Delrahim, Assistant Attorney General in charge of the Antitrust Division, said the sentenced affirmed the "Antitrust Division’s commitment to holding companies, whether foreign or domestic, accountable for conspiring to cheat American consumers." He added that "the five-year probation period promotes deterrence and will help to protect the public."
Companies: Nippon Chemi-Con Corp.
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