Monday, July 23, 2007

Paper Maker's Subsidiary Acquitted of Price Fixing, Despite Evidence from Corporate Leniency Applicant

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reports.

The Department of Justice Antitrust Division has been quite successful prosecuting price fixing cartels revealed by applicants seeking amnesty under the Antitrust Division’s Corporate Leniency Program. According to a speech delivered earlier this year by Gerald F. Masoudi, Deputy Assistant Attorney General for International Matters at the Antitrust Division, at a Cartel Conference in Budapest, Hungary (and available on the Justice Department website), the Corporate Leniency Program is the “greatest single driver” of the agency’s cartel enforcement success. Under the program, “the first corporate cartel member that comes promptly to the Antitrust Division, cooperates with our investigation and otherwise meets the requirements of our program will get a promise of full immunity.”

Usually, the outed co-conspirators, whether they are vitamin makers or manufacturers of rubber chemicals, plead guilty and pay enormous fines. Usually, but not always.

Indictment Against Stora Enso North America

Stora Enso North America, the U.S.-based subsidiary of Stora Enso Oyj of Helsinki, Finland, was indicted in December 2006. The Justice Department alleged that the U.S. subsidiary of the second largest magazine paper producer in the world violated Sec. 1 of the Sherman Act by entering into an agreement with one of its competitors to fix prices for brand name, coated publication papers sold to U.S. customers between August 2002 and June 2003. No Stora Enso employees were charged. The evidence against Stora Enso came from the competitor who had successfully obtained amnesty under the Corporate Leniency Program.


Stora Enso denied any wrongdoing and went to trial. Following a five-day trial, a federal jury in Hartford last Friday found Stora Enso not guilty. A judgment of acquittal was entered today.

As a result, the Antitrust Division failed to obtain a conviction or guilty plea following its three-year investigation into anticompetitive conduct in the industry.

Unique Case

David Marx, head of the Chicago Antitrust practice group of McDermott Will & Emery -- the firm which represented Stora Enso – believes that the case marks the first time that a defendant company has been acquitted of price fixing charges after the alleged co-conspirator has been granted amnesty under the Antitrust Division's Corporate Leniency Policy.

A copy of the indictment in U.S. v. Stora Enso North America Corp., Criminal No. 3:06cr323 CFD (USDC Conn.), appears on the Department of Justice website.

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