Wednesday, March 22, 2006

Obstruction of Justice and Antitrust—CMET, Inc. and Executive Relocation International

CMET, Inc., a Japanese company, has agreed to plead guilty to to “in connection with the settlement of a merger case.”[1] From June 2001 until May 2002, CMET “participated in a conspiracy to corruptly influence, obstruct, or impede the administration of justice, in connection with consent decree proceedings in the Industrial Rapid Prototyping (IRP) industry.”[2] IRP systems transform computer designs for a mechanical or other part into a three-dimensional prototype or model; IRP “is significantly faster and less expensive than traditional methods of creating a prototype, such machining, milling, or grinding.”[3]

While proposed mergers are in part investigated by the Division of the US DOJ, the specific charges in CMET’s obstruction conspiracy are:
  • Concealing from the Department of Justice (DOJ) the full extent and nature of the contemplated business relationship between CMET and its co-conspirators and CMET’s principal motivation for bidding on a technology license being offered under the terms of the consent decree in the merger case;
  • Procuring CMET’s bid for the technology license offered in the consent decree proceedings based on covert understandings between CMET and its co-conspirators concerning future business dealings and the settlement of a patent dispute which, if known to the DOJ, could have disqualified CMET’s technology license bid;
  • Altering the translations of documents which CMET submitted to DOJ in connection with its application to acquire the technology license; and
  • Making misrepresentations, in writing and orally in meetings with representatives of the DOJ, concerning CMET’s intent to vigorously compete in the United States if granted the technology license.[4]
CMET has been charged under the general conspiracy statute (18 U.S.C. § 371) but the underlying offense is covered by 18 U.S.C. § 1505, which makes it a crime for a legal entity to corruptly influence, obstruct, or impede the due and proper administration of the law “under which any pending proceeding is being had before any department or agency of the United States.” The potential punishment for a violation of section 371 is a fine, imprisonment for up to 5 years, or both; per the plea agreement, CMET has agreed to pay a $100,000 fine, which is subject to court approval.[5]

The investigation into the IRP is ongoing, and CMET will likely be called upon to assist in the investigation.

In an unrelated case, a freight forwarder headquartered in Woodbridge, Virginia, agreed to plead guilty yesterday to participation in a bid-rigging conspiracy; it will pay a $76,000 criminal fine.[6]

As we have noted , the Antitrust Division is aggressively prosecuting domestic and international antitrust behavior, which is an interesting development. On March 2, 2006, Scott D. Hammond, the Deputy Assistant Attorney General for Criminal Enforcement (Antitrust Division) delivered a speech to the ABA in which he outlined some of the developments in prosecutions; it will be the subject of tomorrow’s posting.


[1] US DOJ, , Mar. 20, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] US DOJ, , Mar. 20, 2006.

posted by McNabb Associates, P.C. @ 11:22 AM