First South Korean extradition highlights how arm of US antitrust laws extends to Asia

09 Apr 2020 12:00 am by Hyung-jo Choi

In early March, the US Department of Justice announced that a former executive of Continental Automotive Korea was extradited to the US and pleaded guilty for his role in a global auto-parts cartel, making him the first South Korean extradited to the US on an antitrust charge, a notable development in the 30-year history of the US-Korea extradition treaty.

Kim Eun-soo, picked up in Germany, agreed to serve nine months in prison for his role in a collusive conspiracy for instrument-panel clusters sold to South Korean automobile producers and their subsidiaries in the US.

While the extradition of Kim, already the third person extradited to the US solely based on an antitrust charge, may not be a ground-breaking case in itself, it highlights increasing risks stemming from the far-reaching arm of US antitrust laws to Asia, especially for South Korea and Japan — major cartel violators in the region that have extradition treaties with the US.

— Risks manifested in recent cases —

Even before Kim, the danger of extradition already existed for individuals who have been found to have violated US antitrust laws.

The first such case occurred in 2014 when Romano Pisciotti, an Italian and former executive at Parker ITR, was arrested in Germany and extradited to the US.

Pisciotti pleaded guilty and served more than a year in US prison.

“We have seen three such cases in just these past few years,” said a US attorney working in Seoul. “They demonstrate clearly that if you have been indicted by the US authorities [on an antitrust charge] and travel overseas, there is a tangible risk that you will be extradited.”

In January this year, the US DOJ said that Maria Christina Ullings, a Dutch national and former executive of air-cargo carrier Martinair Holland, was extradited from Italy on 2010 charges of fixing the prices of air cargo services, second criminal antitrust defendant to be extradited to the US.

Before Kim, three executives of Samsung have agreed to plead guilty to the DRAM price-fixing conspiracy in March and August 2006 but they did not fight the US jurisdiction and extradition was not required at the time.

— Growing interest from South Korean prosecutors —

MLex understands the South Korean Ministry of Justice knew of the most recent extradition and worked closely with the US DOJ, indicating its willingness to cooperate. The extradition treaty between the US and South Korea took force in 1999.

Koo Sang-yeop, a South Korean prosecutor and former head of the antitrust division at the Seoul Central Prosecutors’ Office, said in an interview with MLex that extradition based on transparency and reciprocity can be a pivotal mechanism in the global fight against cartels.

Koo, a prosecutor with antitrust expertise, was recently made the head of the International Cooperation Division of the Supreme Prosecutors’ Office. It is understood his assignment reflects the intention of prosecutor-general Yoon Seok-yeol’s to expand prosecutors’ cooperative efforts with foreign counterparts in antitrust cases.

Some in the legal community think that South Korean prosecutors will not take a passive stance to future extradition requests.

Extradition is outside the enforcement domain of the Korea Fair Trade Commission, or KFTC, which makes prosecutors the sole counterpart to the US DOJ. For this reason, it is an opportunity for prosecutors, who are still in an early stage when it comes to dealing with antitrust cases, to demonstrate that they are a capable enforcer. Proposed revisions to the South Korean antitrust law would also empower prosecutors to conduct probes on hardcore cartels on their own, allowing them to use the tools at their disposal more freely.

What remains to be seen is what will happen to the South Koreans currently at large.

The US DOJ investigated several South Korean fuel suppliers for bid rigging on fuel-supply contracts with the US military stationed in South Korea and indicted seven South Korean nationals. The South Korean probe into the case by the KFTC is understood to be still ongoing. There are also two executives of Asiana Airlines that were indicted in the 2010 air-cargo cartel case.

Many are skeptical that the South Korean government will extradite its own citizens in an antitrust case.

Issues such as dual criminality — which require the conduct for which an individual is being sought to be a crime punishable by jail time in those countries — and the minimum prison term of one year that a person must receive from a South Korean court for extradition to be made possible complicate the process.

“South Korea has not extradited its own [citizens] in an antitrust case and such probability in a white-collar crime seems low,” said the US attorney. “There are only a handful of individuals criminally sanctioned for antitrust violations in South Korea, and [given the low criminal enforcement records in the country] it may be difficult for the authorities to force individuals to serve prison terms in the US."

But some high-ranking officials within the prosecution seem to have a different perspective, thinking a country must respond to an extradition requests with transparency and reciprocity.

— Concerns on the rise in Japan —

Japan remains a significant target of the DOJ's efforts to go after antitrust fugitives, with dozens of Japanese executives having been sentenced to US jail as a part of global cases, including capacitors and car-parts cartel cases. Some of those indicted in these investigations reside in Japan, with the possibility of extradition on the horizon.

Japan so far has never extradited antitrust fugitives to either the US or South Korea — the only two nations with which Japan has such agreements. According to the Japanese government’s white paper on crime, the number of fugitives handed over to the US or South Korea for crimes covered in its extradition treaties for the last 30 years has remained at between 0 to 3 annually.

The 2014 extradition of Pisciotti by the DOJ raised alarms in Japan, highlighting the distinct possibility of antitrust extraditions to the US. That’s because the update of Japan’s antitrust law has lowered the bar on extradition enforcement by helping address the dual-criminality provision of the extradition treaties.

The 2010 implementation of the revised Antimonopoly Act raised cartel prison sentences from three to five years, and in effect, raised its statute of limitations to five years — putting it on equal footing as the US statute.

However, Japanese courts have yet to sentence a single individual to jail for antitrust violations. The likelihood of the government giving up its nationals for cartel infractions remains to be seen.

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