2022 Predictions For Litigation, Investigations, And Enforcement Steps Affecting The Automotive Marketplace – Anti-belief/Competitiveness Law

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We have tapped our multidisciplinary Automotive Task Drive to&#13
get their viewpoints on what is probable to come about in conditions of&#13
litigation, investigations, and enforcement steps in the&#13
automotive industry in 2022. We hope these predictions will provoke&#13
discussions and thoughts on how to navigate the coming 12 months.

Haima Marlier on SEC Enforcement:

The U.S. Securities and Exchange Commission (SEC) underneath the&#13
present administration has been hyper-concentrated on two parts that&#13
immediately have an effect on the automotive tech and transportation space: (1)&#13
the use of particular intent acquisition companies (SPACs) by startup&#13
and other providers to go public and (2) environmental, social, and&#13
governance (ESG) and local climate adjust disclosures. SPACs have been&#13
specifically active in the automobile-tech and transportation house,&#13
significantly in electrification startups. The SEC has been&#13
scrutinizing disclosures of conflicts of curiosity that can arise&#13
amongst SPAC insiders and general public shareholders, and will strategy&#13
deSPAC disclosures like standard original community giving (IPO)&#13
disclosures. In December 2021, SEC was notably energetic in&#13
pursuing organizations running in the automotive sphere which have&#13
long gone community by the use of SPACs, which integrated subpoenaing an&#13
electric-auto (EV) company related to profits projections and&#13
statements and getting into into a US $125 million settlement with a&#13
zero emissions transportation procedure company associated to misleading&#13
statements to buyers. We assume to see this enforcement craze&#13
continue into 2022. Turning to ESG and weather alter disclosures,&#13
the SEC is conducting a big-scale inquiry into whether public&#13
firms, like in the automotive space, are adhering to the&#13
agency’s 2010 climate improve disclosure advice, with a purpose&#13
of updating that steering based on its conclusions. ESG disclosures&#13
are also an SEC assessment priority for 2022. Eventually, as with any&#13
disclosures, the SEC will concentration on irrespective of whether ESG disclosures incorporate&#13
content omissions or misstatements about weather adjust and&#13
other troubles. 

Brian Kidd on DOJ Enforcement:

With a renewed aim on white collar and environmental crimes,&#13
the U.S. Department of Justice (DOJ), and its numerous felony and&#13
civil factors, will maximize its aim on the automotive&#13
industry. This will involve the continuation of the forms of&#13
circumstances we have noticed in the the latest previous, which includes attempts to&#13
manipulate emissions controls and faulty or faulty automotive&#13
parts. Along with all those investigations, DOJ will possible&#13
improve its consideration on the automotive industry’s part in&#13
local weather alter, and target any failure to comply with the enhanced&#13
environmental laws that the Biden administration is probably&#13
to place in location. In the EV place, this could translate into&#13
investigations into efforts to manipulate reported EV ranges and&#13
other sorts of “greenwashing.” DOJ’s Foreign Corrupt&#13
Practices Act (FCPA) Unit, Countrywide Stability Division, and&#13
Antitrust Division will also be on the lookout for transnational&#13
bribery cases, sanctions violations, and “no poach”&#13
agreements, as reviewed down below.

James Koukios on Anti-Bribery and Corruption Threat:

Although EVs will most likely mitigate local climate danger, they pose a new&#13
form of possibility for automakers: the possibility that they will be asked to&#13
spend bribes to attain the uncooked supplies used to electric power EV battery&#13
cells. A typical EV necessitates six periods the mineral inputs of a&#13
conventional auto. Extractive industries have historically confronted&#13
high corruption hazard, with one research obtaining that 1 in five situations&#13
of transnational bribery happens in the extractive sector. There is&#13
no explanation to think that extracting minerals this kind of as cobalt and&#13
lithium, which are significant to EV battery performance, will be any&#13
different. As much as 70 p.c of the world’s cobalt provide&#13
is mined in the Democratic Republic of the Congo, which ranked 170&#13
out of the 180 international locations and territories surveyed for their&#13
perceived community sector corruption by Transparency International&#13
(TI). Most lithium is at present created in a lot less corruption-vulnerable&#13
nations, such as Australia (TI rank 11) and Chile (TI rank 25)&#13
but, as demand from customers for lithium skyrockets, automakers could possibly locate&#13
them selves turning to increased danger nations around the world these as Argentina (TI&#13
rank 78) or Zimbabwe (TI rank 157) for their provides. Bribery hazard&#13
is existing even if the automaker is not engaged in extracting&#13
the minerals itself. In an analogous case, in December 2016, a&#13
Brazilian chemical business fixed allegations with U.S.&#13
authorities that it experienced bribed Brazilian officers to get hold of raw&#13
materials for its merchandise from the country’s national oil&#13
business at a more favorable price. Primarily as they switch to&#13
immediate generation of EV batteries, automakers should revisit and&#13
update their 3rd-social gathering thanks diligence techniques and other&#13
compliance measures to mitigate corruption possibility in their battery&#13
source chains.

Brandon Van Grack on U.S. Sanctions and Export Controls:

U.S. sanctions and export controls focusing on China continue on to&#13
cripple the semiconductor industry and the auto companies that&#13
depend on it. Relationship back again to the Obama administration, and reaching&#13
new heights in the Trump and Biden administrations, the national&#13
stability actions that have been imposed versus China have&#13
seriously restricted world-wide obtain to and growth of&#13
semiconductors. And though the pandemic has exacerbated this&#13
lack, and the Biden administration is pushing for greater&#13
investments and developments in U.S. semiconductor output, the&#13
ongoing lack is the industry’s fact for the foreseeable&#13
foreseeable future. The U.S. government’s deployment of export controls,&#13
sanctions, and other national stability-similar tools targeting&#13
China will even further constrain the semiconductor marketplace, even right after&#13
source chain problems related to the pandemic are settled.

Megan Gerking on Antitrust Enforcement:

The DOJ Antitrust Division continues to prioritize felony&#13
enforcement of anticompetitive conduct in labor markets, such as&#13
investigating and prosecuting “no poach,” or non-solicit,&#13
agreements amid providers that contend for labor. In Oct 2016,&#13
the FTC and DOJ introduced a adjust in policy to criminally charge&#13
firms and executives that enter into standalone agreements not&#13
to use or solicit personnel from each and every other. Considering that that time, DOJ&#13
has opened a number of investigations and introduced prison fees&#13
against corporations and particular person executives for allegedly getting into&#13
these kinds of agreements with rivals that correctly lower wages or&#13
divide the marketplace. The Biden administration has reiterated its&#13
continued precedence of antitrust enforcement in labor markets in its&#13
Executive Get on Marketing Competition in the American Economy&#13
and as a result of plan statements and other community remarks by DOJ&#13
Antitrust Division management. While the felony costs to date&#13
have been limited to health care and engineering providers&#13
industries, no business is immune. And, not like other competition&#13
violations, providers do not will need to compete in their sale of products&#13
and expert services to be deemed opponents for workforce. The trend&#13
is expanding—antitrust enforcers throughout jurisdictions are&#13
pursuing anticompetitive perform in labor marketplaces as a&#13

Yuka Teraguchi on ITC Enforcement:

U.S. patent holders can file a complaint with the U.S.&#13
Global Trade Commission (ITC) to seek an exclusion purchase&#13
directing U.S. Customs and Border Patrol to prevent infringing merchandise&#13
from getting into the United States and a cease and desist buy&#13
against the importers and U.S. sellers of the infringing merchandise. In&#13
2021, the ITC acquired 82 new problems, which was considerably larger&#13
than the yearly typical of 65 grievances in&#13
2016–2020. About 10 p.c of the issues concerned&#13
goods in the automotive, manufacturing, and transportation&#13
technologies region and 25 % concerned pc and&#13
telecommunications products, some of which are integrated into&#13
motor vehicles. For illustration, recent problems accused selected&#13
integrated circuits for car or truck factors, navigation programs, and&#13
car command techniques of patent infringement. As cars grow to be&#13
much more outfitted with pc and networking technologies, we count on&#13
the number of ITC grievances in opposition to the automotive field to&#13
improve. In individual, autonomous driving technological know-how is probable to&#13
implicate a new technology of patent infringement allegations.

Mainly because of the generality of this update, the facts&#13
presented herein may well not be applicable in all conditions and ought to&#13
not be acted on with no particular authorized tips based mostly on specific&#13

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