SANYO and LG Chem: The Customer Quote Was Already Agreed

SANYO and LG Chem battery-cell price fixing charges concerned agreements over the cylindrical lithium-ion cells used in notebook computer battery packs. In its announcement of the criminal charges, the Justice Department alleged that the companies agreed on prices, issued customer quotations reflecting those agreements and exchanged information to keep the agreed prices in place. For someone working on cell quotations or pack pricing, the useful connection is between the offer the customer received and the rival conversation that decided the number.

The Justice Department announced the companies’ agreements to plead guilty on July 18, 2013. The same announcement covered Panasonic, SANYO’s parent, in a separate automotive-parts matter. The battery-cell investigation concerned notebook computer packs, with the Antitrust Division’s San Francisco Office and the FBI in San Francisco investigating those antitrust violations.

The Price Inside the Notebook Battery Pack

A cylindrical lithium-ion cell is a rechargeable battery that can be grouped with other cells into a more powerful pack. The SANYO criminal charge describes the company as manufacturing and selling both cells and packs containing multiple cells.

LG Chem’s plea agreement makes that commercial chain explicit: both the cells and notebook packs containing the price-fixed cells moved through U.S. and international trade, along with payments for them. A pack-pricing employee may see the cell price inside a pack quotation, while a cell account manager may handle the quotation for the component itself. We follow that connection because it identifies the product, customer and price decision behind the agreement.

The notebook buyer’s cost was part of the harm described in the criminal investigation. The FBI said the battery conduct inflated production costs for notebook computers bought by U.S. consumers.

SANYO’s Charge Followed the Agreement Into the Quote

The criminal charge against SANYO alleged price fixing from about April 2007 until about September 2008. It described meetings, conversations and communications in Korea, Japan and elsewhere in which participants agreed to charge predetermined prices for cylindrical lithium-ion cells used in notebook computer packs.

The charge then followed the agreement into the sales work. Prosecutors alleged that SANYO and its co-conspirators issued quotations in accordance with the agreed prices, collected and exchanged information on prices and sales to monitor compliance, and authorized subordinate employees to participate. They also alleged steps to conceal the conspiracy and the contacts through which it operated.

We see the absurdity in asking a supplier for a price its competitors helped decide. According to the charge, a quote could look like one supplier’s offer while carrying a number worked out with the competition.

For an employee asked to circulate pricing information or implement a particular quote, the instruction can explain how the agreement traveled through the company. The SANYO charge expressly included authorization, orders and consent for subordinate participation. An account employee could know the implementation even without having attended the meeting where the price was agreed.

LG Chem’s Plea Connected Rival Meetings to U.S. Sales

In its criminal plea agreement filed October 10, 2013, LG Chem agreed to plead guilty and set out the factual basis for the offense. It acknowledged that employees, including high-level personnel, participated in discussions and meetings with competitors at which agreements were reached to fix notebook battery-cell prices. The agreement covers the same period as SANYO’s charge.

The plea identifies LG Chem as a Korean producer with its principal place of business in Seoul. It describes the company’s rechargeable cells as components used in notebook computer and power-tool packs, while its account of the price agreement concerns cells for notebook computer packs. An employee responsible for several battery products could connect the pricing instruction to the particular notebook-cell accounts it affected.

LG Chem’s plea records at least $3,359,000 in notebook battery-cell sales affecting U.S. customers during the relevant period. It gives an account or pricing employee a concrete connection between competitor meetings and business reaching U.S. customers.

The agreement also records that cells and packs containing price-fixed cells were sold to customers in Northern California. An overseas supplier meeting and a U.S. customer’s purchase can belong to the same commercial story. The employee who understands the account can help explain how the price traveled between them.

What a Battery-Cell Insider Can Compare

The useful price-fixing evidence connects a rival discussion to the product, customer and quotation it affected. For comparable conduct today, we examine the customer offer, changes to it, competitor contacts and follow-up sales information with the person who knows the account.

A cell account employee may know the customer discussion, a pack-pricing employee may know which component price entered the offer, and someone handling sales information may understand why a rival wanted it. Their knowledge becomes more useful when the communication and the commercial records refer to the same product and customer.

There is a useful comparison in the 2018 Creative Construction Conference paper Review of Collusion and Bid Rigging Detection Methods in the Construction Industry. Describing a study of road-construction bidding in Long Island, the review reported that colluding firms’ offers were less closely connected to service costs than those of other firms:

For a battery pricing team, that finding suggests a practical question about a changed quotation: what explains the number? We compare the commercial explanation with the instructions and competitor discussions behind it. The battery charge’s account of quotations following agreed prices shows why an insider’s knowledge of the decision matters alongside the price history.

The component-to-customer connection also appeared in the criminal case against AU Optronics and its U.S. subsidiary, where a jury convicted the companies of LCD panel price fixing. HP and Dell procurement witnesses described panel purchases and finished-computer costs, as the government’s court brief recounts. Battery cells and display panels enter different parts of the notebook, but both examples show why the buyer’s understanding of a component price belongs beside the supplier’s account of how it was set.

Antitrust Whistleblower Rewards for Battery-Cell Price Fixing

The Justice Department and Postal Service rewards program can pay an antitrust whistleblower reward. If you see comparable battery-cell coordination today, we assess whether your information fits, including how it explains the agreement and the customer quotes that carried it out.

If your information also connects coordinated prices to knowingly false claims for government payment, we examine that False Claims Act connection separately. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Your own role in pricing decisions, whistleblower protection and leniency belong in the conversation with our experts and antitrust whistleblower lawyers. We work through those personal questions with you while building the account of what the business did.

You Know How the Quote Was Set

If you saw a notebook-cell price agreed with a rival or sales information exchanged to keep it in place, speak to one of our Whistleblower Experts about how the price was set. We build the case around your knowledge of the pricing decisions and bring in antitrust whistleblower lawyers who understand agreements carried through component sales. You have a partner from the first discussion through the pursuit of a recovery.