cartel simulation sessions: the game chip cartelcartel simulation sessions: the game chip cartel...
TRANSCRIPT
![Page 1: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/1.jpg)
Cartel Simulation Sessions:
The Game Chip Cartel“Crime and Punishment Redux: The Practice,
Procedure and Substance of Criminal Competition Law”
May 17, 2010
![Page 2: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/2.jpg)
The persons and events described in this
hypothetical are fictional. Any resemblance
to actual persons or events is entirely
coincidental.
![Page 3: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/3.jpg)
Headshot Tech Inc.
• Located in Tiny Township,
Ontario
• A Canadian manufacturer of
a game controller chip
• Achieved global prominence
in the international video
game market
• Recently acquired by
Megalomax Inc. (a global
hedge fund, headquartered in
Basel, Switzerland)
![Page 4: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/4.jpg)
The Global Game Chip Market
Headshot
45%
Volksbot
25%
Robochip
10%
Matsumax
15%
Truscani
5%
• Volksbot GmbH,
Germany
• Matsumaxi Co. Ltd.,
Japan
• Robochip Ltd.,
United States
• Truscani, Italy
![Page 5: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/5.jpg)
Eddie Goalstick, CEO of Headshot
• Goalstick was instrumental in arranging the acquisition of Headshot by Megalomax
• He has been retained as CEO, subject to an earnout arrangement to be paid over a two-year period
![Page 6: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/6.jpg)
• On the acquisition of Headshot, the entire legal
department was summarily discharged
• Ms. Becky Byte, Megalomax’s executive VP
(legal), has assumed the role of Chief General
Counsel for the company
![Page 7: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/7.jpg)
![Page 8: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/8.jpg)
• Ms. Byte engaged E-services Inc. to conduct a
discreet external audit of Goalstick’s accounts
and activities
![Page 9: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/9.jpg)
• E-Services reported that certain encrypted files were found in Goalstick’s database
• The encryption appeared to be accomplished with “off-the-shelf” software and could be readily cracked
![Page 10: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/10.jpg)
• The files contained a
number of cryptic and
blurry handwritten
documents
• The documents have
the names of
“Volksbot” and
“Matsumaxi”, and
corresponding
columns and figures
![Page 11: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/11.jpg)
• Insert g-mail image
![Page 12: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/12.jpg)
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
20
04
20
05
20
06
20
07
20
08
20
09
H e a d s h o t
V o lk s b o t
M a t s u m a x i
R o b o c h ip
T r u s c a n i
• Ms. Bytes instructs Headshot’s market research division to prepare a spreadsheet of global price ranges and trends for the game controlled chip among all manufacturers for the last 5 years
• It reveals an extended period of double-digit price increases in game controllers in lock-step with all competitors in the market
![Page 13: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/13.jpg)
• Headshot’s North America Marketing Manager has just reported the loss of his portable computer while on a business trip in Europe
• She asks IT to see if crucial files can be recovered
• She is told that a large amount of material has recently been deleted from the Manager’s email accounts and documents folders, although IT may be able to recover this using the backup tapes
![Page 14: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/14.jpg)
• Insert gmail email
![Page 15: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/15.jpg)
• The next day, Ms.
Byte receives a
telephone call from
Houston Murdock, a
local white-collar
defence counsel
![Page 16: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/16.jpg)
• Headshot’s COO received a strange call from his counterpart at Volksbot
• There are rumours of some antitrust activity involving Volksbot and Headshot
• He suggested a meeting at which they could “get to the bottom” of this and “put it all behind them”
• He suggested that “we have to keep this out of the hands of the regulators and lawyers”
![Page 17: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/17.jpg)
• E-services prepared a report
• Ms. Byte wants to prepare a preliminary report for Megalomax’s CEO
• She is comforted in her belief that the report would be privileged
![Page 18: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/18.jpg)
Ms. Byte meets with her external
Canadian and US counsel for advice.
![Page 19: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/19.jpg)
Canadian external counsel makes a call to
the Senior Deputy Commissioner,
Competition Bureau to place a “marker”
![Page 20: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/20.jpg)
US external counsel makes a call to the Chief
of the National Criminal Enforcement Section
of the Antitrust Division of the Department of
Justice to place a “marker”
![Page 21: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/21.jpg)
The Chief of the National Criminal Enforcement
Section of the Antitrust Division of the
Department of Justice and the Senior Deputy
Commissioner, Canadian Competition
Bureau discuss the matter
![Page 22: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/22.jpg)
The Investigation and the
Consequences
![Page 23: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/23.jpg)
• Headshot has now applied for immunity from the Bureau (as well as other agencies, on a global basis)
• In Canada, the maker and proffer processes have been completed
• Headshot has supplied a detailed description of the Game Chip Cartel to the Bureau
![Page 24: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/24.jpg)
• Headshot declined to
enter into a joint defence
with Goalstick
• Goalstick has not
cooperated with
Headshot’s investigation
• Goalstick has been
quietly put on a form
of administrative leave
from Headshot
• Headshot instead
received a relatively
complete debrief from
its North American
Marketing Manager
![Page 25: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/25.jpg)
The problems continue… • Goalstick, though his own
counsel, has applied to the Bureau for individual immunity
• He asserts that he is aware of additional anti-trust conduct within Headshot that he believes may not have been disclosed
• His counsel asks that he be provided with disclosure or details of Headshot’s immunity proffer
![Page 26: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/26.jpg)
… and continue…
• Headshot’s U.S. Counsel learns that
Robochip applied for “amnesty plus” with
the Divison
• They assert that the participants were
involved in another conspiracy relative to
game console software
![Page 27: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/27.jpg)
… and continue …
• The Marketing Manager has actively been destroying documents, even after cautioning
• The Manager has retained his own counsel and is refusing to be interviewed by the Bureau until he receives guarantees that he will not be prosecuted for obstruction
![Page 28: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/28.jpg)
… and continue…
• Headshot is instructed not to pay legal
fees for the Marketing Manager, in light of
his conduct
• The Manager says he cannot afford the
expenses and refuses to attend an
interview with counsel
![Page 29: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/29.jpg)
… and continue …
• A press notice from some of the target companies confirms that dawn raids had taken place
• A noted Canadian Plaintiff’s law firm approached Headshot indicating that it was about to file a class action lawsuit and offered Headshot the opportunity to participate in that Firm’s immunity program
![Page 30: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/30.jpg)
… and continue.
• The Plaintiffs proceed with their claim and Headshot is instructed to quickly reach a settlement
• Headshot thus wants to produce its documents and make its witnesses available for review and interview by the Plaintiffs’ firm – which wants to use this cooperation in order to pressure the remaining parties to settle
• Headshot’s Canadian counsel seeks the Bureau’s advice and consent on this issue
![Page 31: Cartel Simulation Sessions: The Game Chip CartelCartel Simulation Sessions: The Game Chip Cartel “Crime and Punishment Redux: The Practice, Procedure and Substance of Criminal Competition](https://reader033.vdocuments.us/reader033/viewer/2022052519/5f0fa2f57e708231d4452582/html5/thumbnails/31.jpg)
Questions?