The Justice Department’s Antitrust Division seemingly won’t rest until it has jailed every Asian affiliated with the liquid crystal display panel industry. Yesterday the DOJ indicted a Taiwanese executive of HannStar Display Corporation over his role in an alleged “price fixing” conspiracy that ended five years ago. This isn’t about protecting consumers and competitive markets — it’s about padding the Antitrust Division’s statistics:
As a result of this investigation, more than $890 million in criminal fines have been obtained to date. Including today’s indictment, 22 executives and eight companies have been charged in the department’s ongoing investigation into price fixing in the LCD industry.
Impressive numbers. But what do they really tell us? The $890 million in fines is a pure windfall for the US Treasury. None of it goes to compensate the alleged “victims” — which, according to the DOJ include such mom-and-pop outfits as Hewlett-Packard and Apple — who have to retain their own antitrust counsel and file separate civil lawsuits.
Nor is this about “deterrence” as Antitrust Division leaders routinely claim. The total amount of antitrust fines continue to escalate annually. It’s not a deterrent if you’re constantly having to use more “deterrence.” I’ve heard DOJ leaders argue — with a straight face — that increased fines lead to a decrease in undetected antitrust violations. It’s a dog-whistle argument: Antitrust eliminates violations that are imperceptible to the naked eye.
And from a policy standpoint, these massive fines contradict the very reason we’re told antitrust statutes are necessary: to preserve and promote competition. There is no way you can make an industry more competitive by removing large amounts of capital. The fines are the equivalent of the LCD manufacturers digging a giant hole and throwing $890 million in cash into the hole. It’s destruction of wealth. Instead of using that money to make, say, LCD products, that $890 million now goes to service the US government’s debt or finance another war.
Finally there’s the matter of the 22 individuals charged and punished by the Antitrust Division. Many of these individuals are not US citizens. The DOJ has publicly adopted a stance of targeting non-US citizens for harsher treatment under American antitrust laws. (But remember, DOJ officials are incompetent, not evil!) There are many advantages to such a policy. It gives the US an excuse to impose its standards of antitrust liability on the rest of the world. Foreign citizens may be easier to extract guilty pleas from, as they fear an extended separation from their families and homeland. And if cases do go to trial, prosecutors can prey upon the jury’s nationalism to secure guilty verdicts.
But regardless of the defendants’ nationalities, the fact remains that anyone charged with “price fixing” is a political prisoner of the US DOJ. The root of “price fixing” has always been the government’s desire to squash free speech. The Taiwan executive charged in yesterday’s indictment committed the “crime” of participating in meetings — that took place outside the United States — where LCD prices were discussed with competitors. The simple exchange of information, about matters related to the private property of a person’s employer, is considered a felony in the United States on par with armed robbery.
This cannot be repeated enough: Antitrust laws criminalize the peaceful, voluntary exchange of information. This is far more sinister than patent or copyright laws. Basically you can go to jail just for doing your job and trying to advance the interests of your shareholders.
And under the US model of antitrust, the DOJ’s jurisdiction is universal. You can commit a crime by having a private lunch with your competitor in any part of the world. It’s not even necessary that any “cartel” act directly impact commerce within the US. Once the DOJ opens an investigation, it has license to criminalize any routine business act as “obstruction of justice” or “conspiracy” — again, without regard to where the business operates or what impact, if any, it had on US commerce.
Consider the case of Ian Norris, which I’ve reported on previously. Mr. Norris is long retired from his position as chief executive of a British company that got caught up in a “price fixing” probe over a decade ago. DOJ officials decided to make an example out of Norris, a man in poor health, by kidnapping him from his native country and forcing him to stand trial in Philadelphia. The UK government wouldn’t allow Norris to be tried on the price-fixing charge, so instead the DOJ tried him on “obstruction of justice” and “conspiracy” charges — basically saying he lied and caused others to lie to an earlier grand jury about price-fixing.
The jury acquitted Norris on the obstruction count but illogically convicted him on conspiracy. He’s serving an 18-month prison sentence — and that’s in addition to the five years the DOJ spent kidnapping him via an illegal extradition treaty — which is now on expedited appeal to the Third Circuit Court of Appeals (briefs are due within the month).
What exactly is accomplished by imprisoning a 68-year-old man? He’s now a ward of the American taxpayer, and considering his poor health, that’s not an inconsiderable expense. Norris was already long-retired, so it’s not as if his conviction would change the business practices at his former company. For that matter, his company long-ago settled civil “price fixing” charges and cooperated with US and EU investigators. There was no legitimate deterrence or restitution objective fulfilled by separately pursuing Norris.
The DOJ claims this was about the protecting the integrity of the judicial system. But there’s no integrity to a system where a man is convicted of “conspiring” to “obstruct” the administration of justice for which he was never tried or convicted of any substantive offense. Furthermore, the supposed conspiracy wasn’t even successful. Nothing Norris did prevented the DOJ from coming in years after the fact and feigning horror at the supposed “price-fixing” that was going on.
What this all comes down to — and Jim Harper’s gonna hate this — is the moral turpitude of the DOJ prosecutors. Their narcissism and sense of moral righteousness is what drives all of these cases. They imagined some offense that Norris committed against them years earlier and used it to justify a brutal rampage through the UK and US court systems — persistently demanding that everyone appease their need for bullying and revenge.
These “price fixing” cases are not the product of bureaucratic incompetence. Quite the opposite. They are the direct consequence of allowing evil to masquerade as good, of bullies to cloak themselves in the language of justice, and of institutionalized inequities between the unelected minority and the silent majority.
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They were fined in the European Union too. Clearly the hatred of private property is global.
Where’s the presidential address honoring Ian Norris?
That reminds me of something I didn’t mention above. In the pre-sentencing paperwork, there was a letter pleading with the judge for leniency in sentencing Mr. Norris. The author was Dominic Grieve, the MP representing Norris’ constituency in the UK. Grieve just happens to be the attorney general of the UK as well, although his letter made clear he was only speaking for himself and not the Crown. Still, Grieve was merciful enough to ask the judge allow Norris to spend his sentence in the UK, which apparently fell on deaf ears.
Now the UK aided and abetted the US in this shameful matter. But for whatever it may be worth, the decision to extradite was made by the previous Labour government through the Home Secretary’s office. Maybe Grieve and his Conservative colleagues will take all this to heart in seeking stronger protections for their citizens against abusive US prosecutors.
Really? Quite surprising. I’m not expecting radical change in how the UK government operates in the slightest, but for its officers to display basic human decency on a personal level is at least a step in the right direction.
Part of Grieve’s reaction, I suspect, arises from the strongly negative press the Norris case generated in the UK over the past few years. Several London papers, notably the Guardian, were rightly incensed at the US actions in the context of abusing the post-9/11 extradition treaty that grossly favored the US.
When you sell above the price of your competitors, you are accused of price gouging.
When you sell below the price of your competitors, you are accused of dumping.
When you sell at the same price, you accused of collusion, participating in a trust.
The moral of this story: abandon commerce, it’s an activity which is frowned upon by society.
What surprises me is the simple observation from most microeconomics textbooks, that in duopoly situation the only alternatives are either collusion or price-war. Both are illegal. Which leads me to an obvious question: what are the firms in such situation supposed to do? Commit suicide?
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