The Role of International Cooperation in Investigation and Deterrence of Hard Core Cartels

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The Role of International Co-operation in
Investigation and Deterrence of Hard Core Cartels

• Dr. Simon J. Evenett
• 30 March 2004

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Summary of this presentations findings

• The recognition that evidence required to
  prosecute a cartel may be abroad has raised
  interest in international cooperative mechanisms
  among enforcement agencies.
• Enforcement co-operation can take many formsand
  it doesnt have to be formalised to be effective.

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Summary of this presentations findings

• To date there has been little cooperation
  involving developing countriesbut this can
  change.
• In the near term the competition chapters of
  regional agreements among African countries
  provide an important opportunity to codify such
  co-operation.

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Prosecuting cartels requires specific types of
evidence

• A cartel is an explicit agreement among firms to
  set prices, allocate quotas, rig bids etc.
• Cartels differ from collusion, price leadership
  and other implicit anti-competitive practices.
• Evidence of that explicit agreement, its
  operation, and of the persons and firms involved
  is required for successful prosecution.

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Prosecuting domestic cartels can require
co-operation with foreign agencies
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Prosecuting domestic cartels can require
co-operation with foreign agencies
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First finding

• The need to obtain evidence and testimony from
  persons abroad explains why active enforcement
  agencies have taken a greater interest in
  international co-operative mechanisms.
• So what are those mechanisms?

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Types of international co-operation during cartel
investigations

• Discussing the theory of the case.
• Examining objects and sites.
• Exchanging information and objects.
• Locating and identifying persons.
• Serving documents.
• Taking evidence.
• Providing documents and reports.
• Transferring persons in custody.

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Types of international co-operation during cartel
investigationscontinued

• Executing requests for searches and
  seizuresrecall those dawn raids.
• Locating the proceeds of cartelisation.
• Obtaining forfeitures of proceeds.
• Enforcing administrative and judicial decisions,
  including the collection of fines.
• Providing publicly available evidence.

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Codification of co-operative instruments

• Not strictly necessarymuch happens on an
  informal basis and is said to be very useful.
• Agency-to-agency (or executive)
  agreementsometimes these do not require specific
  governmental approval or the agency is given the
  right by law to sign such agreements.
• Mutual Legal Assistance Treaties that cover
  competition law matterse.g. MLAT between U.S.
  and Canada.

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Second finding

• Co-operation can be both informal and
  effectiveyet agencies tend to prefer the legal
  cover provided by an explicit agreement or
  treaty.
• In what ways could co-operation on cartel
  investigations among African countries be
  strengthened?

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Reality check extent of enforcement
co-operation

• In recent years there has been a small but
  growing amount of co-operation among enforcers on
  cartel cases.
• Moreover, not much of that co-operation has
  involved developing countries.
• What the constraints on such co-operation?
• Is the past the guide to the future?

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Constraints on international co-operation

• Formal constraints on sharing confidential
  business information.
• Operation of leniency programmessolutions.
• Lack of confidence in a partner agency
• Inexperience.
• Respect of information shared.
• Doubts about reciprocity.
• Implications for intra-African co-operation.

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Options for strengthening co-operation

• Develop informal co-operation between existing
  agencies.
• Build confidence in existing enforcement agencies
  by sharing best practices at cartel case
  workshops.
• Consider signing bilateral co-operation
  agreements.
• Consider including co-operation instruments in
  the competition chapters of regional trade
  agreements and bilateral agreements with
  industrialised countries.
• Consider multilateral provisions on co-operation.

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The last two findings of this presentation

• To date there has been little cooperation
  involving developing countriesbut this is likely
  to change.
• In the near term, the competition chapters of
  regional agreements among African countries
  provide an important opportunity to codify such
  co-operation.

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Want to learn more?

• Consider reading the papers listed in the course
  book.
• Waller chapter.
• OECD documents.