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Thursday, July 14, 1994

 Room 3107

Department of Justice

9th & Constitution, N.W.

Washington, D.C.

11:53 a.m.

ATTORNEY GENERAL RENO: I am here today to announce that the Department of Justice's Antitrust Division, in an unprecedented joint effort with the Canadian competition authorities, has broken up an international price fixing conspiracy in the $120 million fax paper industry today.

A Japanese corporation, two American subsidiaries, and a former president of one of the U.S. subsidiaries raised the price of thermal fax paper used primarily by small businesses and home fax owners by about 10 percent. They have all agreed to plead guilty and pay criminal fines of more than $6 million.

This sends an important message to foreign firms that want to do business in the United States. They must

1take our antitrust laws seriously and they must pay by our
2rules of fair competition when they set prices to be paid
3by United States consumers.
4I want to thank and congratulate Anne Bingaman
5and the Antitrust Division and George Addy of the Canadian
6Bureau of Competition Policy for their outstanding,
7cooperative efforts in bringing about this first joint
8criminal antitrust case, which has resulted in successful
9prosecutions in both countries. I think this partnership,
10this cooperation is an example for all of us in the future
11as to how we must work together to address issues that
12have international impact and concern.
13If international businesses engage in
14conspiracies that victimize consumers in multiple
15jurisdictions, the United States Government will cooperate
16with foreign competition authorities to protect consumers
17here and around the world.
18Now I would like to ask Anne Bingaman to make a
19few remarks.
20MS. BINGAMAN: We are proud of this announcement
21today. It is historic. It is a first. It is the result
22of unprecedented shoulder-to-shoulder cooperation
23throughout this investigation with George Addy and the
24Canadian Bureau of Competition, that has resulted in fines
25of over $6 million, a criminal information of three

1corporations and an individual, including a Japanese
2corporation, a subsidiary of that corporation, an American
3corporation, and another corporation headquartered in
5It is the first of what we hope will be many
6such efforts, and we are extremely proud of this result.
7I want to tell you it came originally from a tip from the
8Canadians. We initiated legal process here and, under
9court order, were able to share the results of our
10discovery here with the Canadians. They, similarly,
11obtained documents in Canada which, because of our treaty
12with them allowing for mutual assistance, they were able
13to share with us. We interviewed witnesses jointly. We
14took proffers from witnesses jointly.
15The Canadians set up a data base of document
16summaries which we shared with them. They filed an
17information or indictment yesterday, or two days ago, in
18Canada. The investigation is ongoing, and it is
19unprecedented, but critically important, in an era when
20national boundaries are less and less important that the
21antitrust authorities be able to work as one, to work as a
22team, a true team, to work next to each other, to share
23information, and to not allow criminal price fixing
24conspiracies to hide behind national borders. That's what
25this is about and we're very proud of it.

1It is a great honor to have George Addy, head of
2the Canadian Bureau of Competition, here from Canada
3today. I will ask George to speak.
4MR. ADDY: Thank you.
5QUESTION: Would you spell your name, sir?
7I'd like to echo the comments that you've heard
8today. This is a precedent-setting case. It's a case
9that demonstrates the need for cooperation and the
10benefits that can directly flow from cooperation to the
11North American markets. The case itself started with a
12complaint from a businessman in Toronto, which gave rise
13to our investigation. We discovered information that we
14passed on to Anne and her colleagues, which led to greater
15cooperation and joint efforts in tracking this case down.
16I don't think that either our case in Canada or
17the case which Anne and Ms. Reno have just spoken of today
18in the U.S. could have reached the point that they have
19reached without cooperation. There was a need on both
20parts, of both agencies, to secure information and
21assistance from the other, and I don't think either one of
22us would be where we are today without that cooperation.
23I look forward to further cooperation of this
24type in future cases.
25Thank you.

1QUESTION: Could you tell us how the conspiracy
2worked? How'd they do it?
3MR. ADDY: It was a conspiracy whereby the
4manufacturers of the products, of the thermofax paper, met
5at various locations. As you will see from the
6documentation that has been filed, there were some
7meetings in the U.S. And if you can obtain the
8information which has been filed in the public record in
9Canada, it will also disclose that there were meetings
10abroad, in Japan, to discuss the conspiracy and the
11agreement to fix prices in the market.
12QUESTION: Could you elaborate?
13QUESTION: Do you know how much this cost
14consumers, and is that reflected in the fines?
15MR. ADDY: The fine, from a Canadian
16perspective, and Anne will obviously speak for the
17situation here, but the fine to date, and it is an ongoing
18matter --we have indicted and had a plea by one of the
19conspirators, Kanzaki, on Tuesday in the Federal Court of
20Canada, in Toronto -- the fine in that case is precedent-
21setting from the perspective that it's the highest
22percentage of sales that's been reflected in a fine. The
23fine was $950,000 that was imposed by the court on
24Tuesday, and that accused a share of sales in Canada are
25such that the fine represents almost 20 percent of what

1those sales are. So it's a very high percentage.
2We have had absolute dollar fines of higher
3levels, but as a percentage, it's higher.
4Do you know, Anne, for here?
5QUESTION: Do you know how much it cost
6consumers in total?
7MS. BINGAMAN: The market is $120 million a
8year. The conspiracy set forth in the information lasted
9somewhere between half a year and a year, as alleged in
10the information. The investigation is ongoing as to the
11duration and other aspects.
12The total amount of the fines in the United
13States is almost $6.5 million, something just under that -
14- $6-plus million.
15QUESTION: If you were dealing with a 10 percent
16markup and it was a $120 million a year business, for half
17a year you come out to roughly $6 million. For the entire
18year, it would be $12 million. So if this conspiracy were
19going on for a full year, aren't they making a $6 million
20profit out of it, even if they do have to pay a fine?
21MS. BINGAMAN: We are continuing this. There
22are other possible violators. The case is not over yet.
23We secured the fines that we did, which are high. $6-
24plus million is a large fine by any standard, and the
25investigation is ongoing. So this is not over yet.

1QUESTION: Is anybody going to jail?
2MS. BINGAMAN: We have three corporations of the
3four named in the information and one individual, who has
4pled guilty. But we are not recommending jail time for
5this individual.
6QUESTION: When you had your joint press
7conference with Senator Metzenbaum and some others some
8time ago, you mentioned about 10 price fixing or other
9conspiracies around the world that you were looking into.
10Is this the first of those, and what can we be looking for
12MS. BINGAMAN: This is indicative of the kind of
13thing that goes on. I did not have this specifically in
14mind, in all honesty. But it is exactly the kind of
16You have, typically, in these kinds of
17conspiracies simple products that are fungible, that are
18not manufactured products. That is, in a sense they are
19basic inputs, usually, to other processes. There are
20usually a handful of companies making the product. And
21so, it's easy for foreign companies and one or two U.S.
22companies to allocate, and divide, and fix prices in the
23entire world market, or certainly the part of the market
24we're concerned with, which is the United States.
25So this is typical in the sense of the fact

1pattern involved. And yes, there are other such cases
2that we're working on.
3QUESTION: Should we run out and report that
4consumers should now expect to pay less for fax paper, or
5am I being naive?
6MS. BINGAMAN: I think consumers will pay less
7for fax paper. Exactly how much less, I can't tell you.
8What we are about is that in the market, competition sets
9the price for fax paper and not price fixing conspiracies.
10So the market for fax paper should be left to function as
11a market does through competition and prices should drop.
13QUESTION: Well, wouldn't you expect these
14companies, which, by your own account, have about half of
15the market, will build these legal costs into their
16overhead and charge us more anyway?
17MS. BINGAMAN: The legal costs are nothing like
18--do you mean the $6 million in fines?
20MS. BINGAMAN: The market should take care of
21that. If competition works and they are competing with
22each other, they should not be able to build costs in.
23No. That should not happen.
24QUESTION: Are consumers going to get any of
25that money back? I mean, what will happen to the fines?

1MS. BINGAMAN: Under the U.S. system, the fines
2go into the Federal Treasury. They are criminal
3penalties. They went to $10 million only a couple of
4years ago. It used to be $1 million was a maximum. This
5is a substantial improvement.
6The money, under the U.S. system, does not go to
7consumers, ever. The way Congress has set this up, the
8Justice Department, in criminal cases, which this is,
9collects fines, as set by the court, ultimately. There is
10the possibility of private action, if consumers choose to
11bring that, in which they collect damages if they prove
12them and follow on private cases, which are not criminal,
13but civil.
14Under the U.S. system, the Justice Department
15has never, and does not now, collect damages directly for
16consumers. Consumers do that themselves through private
18QUESTION: Well, on that subject, will you be
19looking at today's --
20MS. BINGAMAN: At the what? I can't hear you.
21QUESTION: Will you be looking at today's
22Federated-Macy's merger?
23MS. BINGAMAN: That isn't decided yet, to the
24best of my knowledge.
25QUESTION: Whether you'll be looking at it?

1MS. BINGAMAN: Yes. Right.
2QUESTION: Of the $6 million in fines, will
3about $5 million go to the U.S.?
4MS. BINGAMAN: No. We have $6-plus million to
5the U.S., plus the additional amount to Canada.
6MR. ADDY: One should not lose sight of the fact
7that this is ongoing and there will be further fines on
8this, as this case advances.
9QUESTION: So it is a separate $950,000 to
10Canada so far?
11MR. ADDY: That's right. That's right.
12QUESTION: It's a $7.5 million total, roughly,
13so far.
14MR. ADDY: Yes, so far.
15I think, just to follow up on one of Anne's
16comments, the efforts and the cooperation in this case
17were housed, or took place within an agreement that's
18called a Mutual Legal Assistance Treaty, which has been in
19place a relatively short period of time, since 1991, I
20think. It's directed at criminal activities, as well.
21But, from our perspective, this is a very good signal of
22the benefits that can happen and be benefits for both
23Canadian and U.S. consumers if the agencies are allowed to
24cooperate fully in pursuing these type of activities.
25QUESTION: Sir, can you get back to these

1meetings? Who was there? What did they talk about? How
2did it work on the ground?
3MR. ADDY: There is some material that has been
4filed in --
5QUESTION: The camera can't read. I'm sorry.
6I'm barely literate myself.
7MR. ADDY: Well, I'm sorry. The matter's
8ongoing and I don't want to go transgress what's on the
9public record already. So I commend to you the material
10that has been filed in the Federal Court, and it's public
12MS. BINGAMAN: The Canadians -- let me speak to
13that -- have a very different procedural system than we
14do. There is an extensive statement of facts, which was
15filed in Canada. I had not seen it until this morning,
16myself. But it was filed in open court in Canada two days
17ago and, as a convenience to the press, the press in
18Canada has had this. It is a public document in Canada
19and I understand it will be available here later. But
20it's quite comprehensive.
21It is not the procedure we use in this country.
22QUESTION: Sir, how did you find out what went
23on in those meetings?
24MR. ADDY: Well, we used the powers under the
25act and we cooperated with Anne's groups. We had search

1warrants executed. There was a coordination of use of
2compulsory powers in the U.S. and Canada, simultaneous
3execution of search warrants. There were discussions
4between investigative officers in both agencies, joint
5interviews of informants and potential accused. It was
6the usual process, if you will, from the enforcement
7perspective with the unusual and, I think, remarkable
8additional flavor of the cooperation between the two
10QUESTION: So these guys kept minutes?
11MR. ADDY: Well, there were documents seized in
12the search warrants, et cetera.
13QUESTION: Is this the first time the U.S. and
14Canada have cooperated on a big antitrust case?
15MR. ADDY: That's why I mentioned the treaty.
16There is other work ongoing now under that treaty. This
17is the first case that has resulted in a conviction in
19MS. BINGAMAN: We have other cases we're working
20on them with. But this is historic because, one, in all
21likelihood we never would have heard of this but for the
22tip to the Canadian authorities from a complainant in
23Canada which they then passed on to us. We were then
24able, on the basis of that tip and the information from
25that complainant, to open a Grand Jury and subpoena

1witnesses and documents. The Canadians similarly issued a
2search warrant in Canada, and we went forward with them
3together, closely coordinating our document and witness
4subpoenas and interviews from the very beginning. So we
5worked as a team. We worked closely, and the case was
6really possible because the documents and the witnesses
7were in both places. Both markets were affected.
8It shows what the ability to exchange
9confidential information can do. The key point here
10legally, I think, and I will just take one second, is
11before this 1991 Mutual Legal Assistance Treaty was
12ratified by both legislatures, we were not allowed to give
13them confidential information not could they give us
14confidential information.
15Well, you can see, in law enforcement you are
16immediately into the realm of confidential information.
17The minute you issue a subpoena of any kind, that's
18protected by law, as it should be. But the problem is if
19you also can't share it with law enforcement authorities
20who also have confidential information very valuable to
21you, if you're separated by the procedures that had been
22in place until 1991, you cannot move forward. In effect,
23the criminal conspirators have a huge advantage over the
24governments because they can hide documents one place or
25another, not have witnesses cross borders. You can't get

1hold of any transcripts because they're confidential, and
2you're stymied.
3Someone mentioned here a minute ago that the
4bill which will be introduced shortly is a bipartisan bill
5in the Congress, which would authorize the Department of
6Justice to negotiate similar types of confidentiality
7agreements, that is, sharing of confidential information,
8on a country-by-country basis for both civil and criminal
10This case today is an example of why that bill
11and the authority it gives us to share confidential
12information under protected circumstances -- there are a
13lot of safeguards built into the bill -- but this is an
14example, and it's the first big example -- we have others
15ongoing -- of why this is so critically important to law
17QUESTION: Do you have other countries
18specifically in mind now? When you get the legislation
19that would allow you to negotiate similar treaties with
20other countries, do you have other countries particularly
21in mind -- such as Japan or Russia?
22MS. BINGAMAN: Well, I would not want to comment
23on specific countries. We would undertake country-by-
24country to consider negotiations if they are interested in
25talking to us.

1Let me emphasize, if we put such a treaty or an
2agreement in place, if this legislation passes and another
3country is added for civil and criminal, we are never
4required to cooperate, just as the Canadians and we are
5not required in any particular case to cooperate. Each of
6us has to determine that, even with this treaty in place,
7it is in the best interests of both agencies to proceed in
8a particular case, as it clearly was here. But it does
9not take away any discretion. It does not mean that we
10have to do anything.
11It simply makes it possible, if each of us
12determines it's in our own country's best interests, to
14QUESTION: This is the first case that has
15resulted in a conviction in Canada under this mutual legal
16assistance in criminal matters.
17MR. ADDY: Correct.
18QUESTION: Have there been other cases in the
19United States?
20MS. BINGAMAN: I believe we have had help. I'm
21going to have to ask Joe Widmar here.
22Do you know if we've obtained -- I think we
23have, but I don't know? I should have that information
25MR. WIDMAR: We have obtained other, we have

1obtained help from Canada on occasion.
2MS. PHELAN: The plastic forks.
3MR. WIDMAR: Yes, the plastic forks.
4QUESTION: The plastic forks. Picnic ware.
5Also, the $950,000 fine in Canada, does that go
6to the Treasury or to the consumer?
7MR. ADDY: No. It's exactly the same scenario.
8It goes to the Treasury, the Consolidated Revenue Fund.
9QUESTION: Mr. Addy, what was the nature of the
10original tip? Did a businessman have trouble getting
11competitive bids, or what?
12MR. ADDY: He complained to the bureau that he
13was shopping for this. He's what they call a thermal
14paper converter. He was trying to obtain a supply and
15came to us with a complaint about the pricing of that
17QUESTION: And who was that businessman?
18QUESTION: Can you tell us about the fellow?
19MR. ADDY: I'm having my office check now
20whether he's agreed to let us disclose his name. That's
21not on the public record.
22QUESTION: Did this person participate in the
23investigation after he came to you? Did he wear a wire?
24Did he help you in this?
25MR. ADDY: No. No. It was, his role in the

1investigation, primarily, was to provide us the
2information on his initial complaint. After that, after
3that period, we took over and worked with Anne's group.
4QUESTION: Do you expect further fines in Canada
5or further prosecutions in Canada?
6MR. ADDY: I expect further developments on this
7case. Yes.
8QUESTION: Do you know how much the price fixing
9cost Canadian consumers?
10MR. ADDY: I suppose you can do the same type of
11math that Anne was running through a minute ago. The
12market in Canada -- and correct me if I misstate it,
13Martin -- but the market in Canada was in the order of $18
14million during, for that year, and there were several
15players in that market. The company that pleaded guilty
16on Tuesday was not the only supplier, obviously, in the
17Canadian market. And that company, Kanzaki, cooperated
18and assisted us in our investigation in the case as well.
19QUESTION: Someone mentioned that these
20companies control about half of the market. I wanted to
21confirm that and also ask you if you think that they
22wanted to control so much of the market?
23MS. BINGAMAN: That is up to the market. We're
24not in the business of deciding who controls what
25percentage of the market unless the control is obtained

1through illegal acts, and in that case we stop the acts
2and try to restore the market situation. The acts here
3were price fixing. But they don't go to percentage
4control of the market.
5The conduct here that was illegal was blatant,
6naked price fixing. So that's what's stopped.
7QUESTION: The Canadian press reports this
8morning have Rittenhouse and Appleton Papers as co-
9conspirators. Does Justice Department allege that as
10well? If not, why not?
11MS. BINGAMAN: We have an investigation ongoing
12and that is all I can say on it at this point. You can
13read our information. We're prohibited by law from going
14beyond what's on the public record. But the investigation
15is continuing.
16QUESTION: I have two other things to clarify.
17The $950,000 fine, is that Canadian dollars --
18MR. ADDY: Yes.
19QUESTION: -- or U.S. dollars?
20It's Canadian dollars?
21MR. ADDY: We levy our fines in Canadian
23(General laughter)
24QUESTION: The market share alleged by these
25companies, they control half of the market is the U.S. --

1is that correct?
2MS. BINGAMAN: You know the truth? I didn't
3know that fact. I take it as a given if it's correct.
4But I personally don't -- is that correct?
5MS. PHELAN: Well, it's 40 percent to 45
7MS. BINGAMAN: This is Lisa Phelan, who did the
9I was remiss in not mentioning the staff. Lisa
10killed herself. Bob Kramer is here, too, too, and John
11Greaney. We have had a tremendous staff on this that has
12just done a wonderful, wonderful job. I should have said
13that at the beginning because the truth is I stand up here
14and act like I'm taking credit, but it goes on very much
15by the lawyers here, not me personally.
16QUESTION: Forgive my simplicity, perhaps, but
17if they controlled only about 40 percent of the market and
18they were fixing the prices, why couldn't the rest of the
19market simply have undercut them and driven the price down
20that way?
21MS. BINGAMAN: You'd think they would have.
22We're looking at that also.
23QUESTION: So this could, in fact, affect,
24really, the entire market?
25MS. BINGAMAN: The investigation is ongoing.

1That's all I can say.
2Okay. Thank you all very much. We're very
3proud of this.
4Thank you.
5[Whereupon, at 12:23 p.m., the press conference
6was concluded.]