NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
The United States of America and the defendant, Solvay S.A. ("Solvay"), file this Joint Sentencing Memorandum in support of their recommendation that the Court sentence the defendant to pay a criminal fine of $40.87 million. The parties also request that sentence be imposed on April 19, 2006 based on the current record, without need of an evidentiary sentencing hearing or a presentence report.
On March 14, 2006, the United States filed a two-count Information charging Solvay with one count of participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of hydrogen peroxide (Count One) beginning on or about July 1, 1998 and continuing until on or about December 1, 2001, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1, and also charging Solvay with one count of participating in a conspiracy to suppress and eliminate competition by fixing the price of sodium perborates sold to Procter & Gamble (Count Two) beginning on or about June 1, 2000 and continuing until on or about December 1, 2001, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. Solvay is scheduled to be arraigned before Chief Magistrate Judge Larson and enter a change of plea before this Court on April 19, 2006. Solvay will waive indictment and plead guilty under Fed. R. Crim. P. 11(c)(1)(C).
The United States and Solvay jointly submit this Joint Sentencing Memorandum to request that the Court sentence Solvay on an expedited basis pursuant to Crim. L.R. 32-1(b). This Memorandum also outlines the material terms of the Plea Agreement between the United States and Solvay, in the event the Court grants the parties' request to impose a sentence immediately on April 19, 2006, after accepting Solvay's guilty plea. In conjunction with this Joint Sentencing Memorandum, the United States and Solvay have filed a Stipulation in Support of Expedited Sentencing and a Proposed Order for Expedited Sentencing Pursuant to Crim. L.R. 32-1(b).
The United States and Solvay respectfully submit that this Memorandum and the Plea Agreement provide sufficient information for the Court to impose sentence immediately without a presentence report. In addition, an expedited sentencing would accommodate Solvay's corporate representative. If the Court finds that the Plea Agreement and this Memorandum do not provide sufficient information to allow for the imposition of sentence on the scheduled date of the plea hearing, the parties are prepared to submit additional information requested by the Court. A copy of the Solvay 11(c)(1)(C) Plea Agreement is attached as Exhibit A to this Memorandum.
The material terms of the Solvay Plea Agreement include:
1. Solvay will waive indictment, waive all rights as enumerated in the Plea Agreement, and plead guilty under Fed. R. Crim. P. 11(c)(1) to a two-count Information. Count One charges Solvay with participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the price of hydrogen peroxide beginning on or about July 1, 1998, and continuing until on or about December 1, 2001, (the "relevant period") in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. Count Two charges Solvay with participating in a conspiracy to suppress and eliminate competition by fixing the price of sodium perborates sold to Procter & Gamble beginning on or about June 1, 2000 and continuing until on or about December 1, 2001, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. During the relevant period, the defendant was a corporation organized and existing under the laws of Belgium and had its principal place of business in Brussels, Belgium. The defendant was a producer of hydrogen peroxide and sodium perborates, was engaged in the sale of hydrogen peroxide and sodium perborates in the United States and elsewhere, and employed 200 or more individuals. The defendant's sales of hydrogen peroxide to U.S. customers affected by the charged hydrogen peroxide conspiracy totaled approximately $231,000,000. The defendant's sales of sodium perborates to Procter & Gamble affected by the charged sodium perborates conspiracy totaled approximately $31,000,000.
2. The United States and Solvay agree that the appropriate sentence in this case is a criminal fine of $40.87 million and a special assessment of $800 ($400 for each count). The fine is to be paid in full within 15 days of the imposition of sentence. Both parties recommend that no term of probation be imposed. Solvay agrees to have its sentence determined under the United States Sentencing Guidelines ("U.S.S.G.," "Sentencing Guidelines," or "Guidelines"), although Solvay understands the Guidelines are advisory, not mandatory. The United States contends that had this case gone to trial, the United States would have presented evidence to prove that the gain derived from or the loss resulting from the charged offense is sufficient to justify a fine of $40.87 million, pursuant to 18 U.S.C. § 3571(d). For purposes of this plea and sentencing only, the defendant waives its right to contest this calculation.
3. The United States will not seek restitution in this case in light of the civil class action cases filed against defendant, including In re Hydrogen Peroxide Antitrust Litigation, No. 05-666, MDL No. 1682, in the United States District Court, Eastern District of Pennsylvania, which potentially provide for recovery of a multiple of actual damages.
4. The United States agrees that it will not bring further criminal charges against Solvay and its current or former officers, directors, and employees (except for Gareth L. Hall, Robert M. Monsen and Jean-Marie Demoulin, who have been specifically excluded from the Plea Agreement) for their participation in the hydrogen peroxide and sodium perborates conspiracies. In return, Solvay agrees to cooperate fully in the ongoing hydrogen peroxide and sodium perborates investigations. Solvay has already produced documents and made available some of its employees for extensive interviews by Antitrust Division attorneys and agents. Moreover, Solvay has agreed to make additional employees available to the United States for interviews and to produce documents located outside the country, which are beyond the jurisdictional reach of the government's grand jury subpoenas. The documents produced and interviews conducted, as well as additional proffered cooperation, have substantially assisted the United States in furthering its investigations.
UNITED STATES SENTENCING GUIDELINES CALCULATIONS
The parties agree to the following Sentencing Guidelines calculations, which are based on the affected hydrogen peroxide and sodium perborates sales in the United States. Pursuant to U.S.S.G. § 3D1.2(d), Counts One and Two must be grouped in order to determine the proper fine amount. The combined volume of commerce for hydrogen peroxide ($231 million) and sodium perborates ($31 million) is $262 million.
The United States will move, pursuant to § 8C4.1 of the Sentencing Guidelines, for a
downward departure from the minimum Guidelines fine to a fine of $40.87 million due to
Solvay's substantial assistance in the United States' hydrogen peroxide and sodium perborates
investigations. Additionally, Solvay has agreed to produce relevant documents from the United
States and abroad, and has made available several employees for extensive interviews as a
condition to the government entering into the Plea Agreement. The Solvay witnesses have
advanced the government's investigation, and the defendant has agreed to continue to assist in the