On October 18, 2017, a federal grand jury sitting in San Francisco indicted capacitor manufacturer Nippon Chemi-Con for participating in a multi-decade conspiracy to fix prices for electrolytic capacitors. Nippon Chemi-Con is the eighth company to be charged in the Department of Justice Antitrust Division’s investigation into Sherman Act violations in the capacitor industry. Six of the seven other charged companies have pled guilty and the seventh company (Nichicon), charged by information, will make its first appearance in November. Like the other capacitor manufacturers charged in this conspiracy, Nippon Chemi-Con’s case will be assigned to Judge James Donato of the Northern District of California.
Nippon Chemi-Con and its lawyers have likely been following the recent developments in the other capacitor corporate defendants’ cases. This summer, Judge Donato rejected the Rule 11(C)(1)(c) pleas (“C pleas”) of capacitor manufacturers Elna and Holy Stone, expressing unhappiness with the amount of fines included in the plea agreements. On October 11, Elna and Holy Stone pled guilty to Sherman Act violations under Rule 11(C)(1)(b) pleas (“B pleas”), which Judge Donato accepted. Under these B pleas, Judge Donato will make his own ruling on the amount of fine, after a review of the United States Sentencing Guidelines and the Pre-Sentence Report prepared by the U.S. Probation Department. Unlike the C pleas that Judge Donato rejected, the government’s recommended fine ($3.825 million for Elna and $600,000 for Holy Stone) does not bind the judge. Given Judge Donato’s stated displeasure with the fine amounts, it would not be surprising if he imposed a fine on each company that is larger than the negotiated fine included in the plea agreements. Judge Donato will sentence Elna and Holy Stone in January 2018.
Nippon Chemi-Con will be watching closely and will certainly consider these developments and Elna and Holy Stone’s ultimate sentences in its decision whether to negotiate a plea or fight the charges. These developments may foreclose the possibly of a C plea for Nippon Chemi-Con, leaving the company to decide whether the uncertainty of the fine amount under a B plea is too great a risk and to take its chances at trial with a jury.