Executive Charged With Obstruction of Justice in HSR Premerger Filing
On May 3, 2012, the U.S. Department of Justice (DOJ) filed a two-count felony charge against Kyoungwon Pyo, a senior vice president for corporate strategy of Hyosung Corporation, alleging that he altered corporate documents submitted to the federal antitrust agencies in connection with premerger filings made pursuant to the Hart-Scott-Rodino (HSR) Act. Item 4(c) of the HSR notification form requires merging parties to submit certain internal documents that were prepared “for the purpose of evaluating or analyzing the acquisition with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into product or geographic markets.” The altered documents allegedly misrepresented and minimized the competitive impact of the proposed acquisition. Pyo agreed to plead guilty and serve five months in prison. This case marks the first time obstruction of justice charges have followed a civil merger investigation and highlights the importance of properly complying with premerger notification requirements.
Court Upholds Four-Year Prison Sentence for Price-Fixing Cartel
An appeals court has upheld the 48-month prison sentence and $800,000 criminal fine imposed by a trial court judge against Steven VandeBrake for his participation in a ready-mix concrete price-fixing cartel. The sentence and fine were both substantial upward departures from the U.S. sentencing guidelines and from the terms of the nonbinding plea agreement VandeBrake had entered into with the DOJ. Under the terms of the plea agreement, VandeBrake agreed to plead guilty, serve 19 months in prison and pay a criminal fine of $100,000. However, following a three-day sentencing hearing, the trial judge rejected the plea agreement and imposed the significantly harsher sentence. The appeals court held that the trial judge’s reasons for departing from the sentencing guidelines—including his policy disagreements with the sentencing guidelines, as well as VandeBrake’s “appalling greed” and lack of remorse—were valid and permissible. This is the longest prison sentence ever imposed on a cartel participant.
Resale Price Maintenance Is Per Se Violation of Kansas State Antitrust Law
The Kansas Supreme Court recently held that the U.S. Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), that resale price maintenance is not per se illegal under the Sherman Act does not preempt claims brought under the state antitrust law. This case serves as a reminder that manufacturers need to be careful when establishing pricing policies for distributors and retailers because of how state antitrust laws may be interpreted and enforced.
Compliance Warning: Handle IT Issues Carefully During a Dawn Raid
A recent European Commission decision imposing a fine for obstructing access to emails during one of its “inspections” (dawn raids) provides a reminder that IT issues must be carefully handled during a dawn raid and that compliance training needs to cover this issue in detail. Additional information is available in our May 2012 EU/UK Competition Law Newsletter.
For more information, please contact the lawyers in the Antitrust & Trade Regulation Department at McGuireWoods.