CRIMINALIZATION OF ANTITRUST

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CRIMINALIZATION OF ANTITRUST THE NEW CONSENSUS?

• ABA Section of International LawFall Meeting
  2008September 25, 2008Brussels

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For jurisdictions that can provide the necessary
legal protections for the accused, criminal
sanctions provide the greatest potential for
deterrence and the most appropriate punishment
for individual cartelists
ICN, 2004 Cartels Workshop
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Criminalization of Antitrust

• Canada and the U.S. have had criminal antitrust
  offences since 1889 and 1890 respectively
• In Europe the focus has traditionally been placed
  on administrative enforcement
• UK criminalized certain anticompetitive conduct
  in 2002 followed by Ireland in 2004
• Recent cases in UK and Ireland suggest a shift
  towards effective application of criminal
  sanctions
• Recently, Russia, the Netherlands, the Czech
  Republic have called for criminal sanctions for
  cartel conduct
• Several other EU countries have contemplated
  certain violations of antitrust laws as criminal
  offences France, Germany, Austria, Denmark,
  Estonia, Romania, Slovakia, Slovenia
• Draft legislation was introduced in Australia in
  2008

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UNITED STATES

• Per se offence for hard core cartel conduct
• in theory also Rule of Reason
• Corporate and individual sanctions
• DOJ and State/local prosecutors not FTC
• Amnesty / Leniency / Leniency Plus
• Sentencing Guidelines / Alternative Fine
  Provision
• Effect of conviction on civil follow-on cases
• HOT TOPICS
• Extradition Norris case
• Marine Hose search sentencing cooperation
• Collateral offences fraud and corruption,
  obstruction

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CANADA

• Criminal offences
• conspiracy, bid rigging, price discrimination,
  price maintenance, predatory pricing
• Bifurcated approach
• Competition Bureau (investigative agency)
• Director of Public Prosecution (prosecutor)
• Undueness standard not per se illegal
• No Sentencing Guidelines
• HOT TOPICS
• Competition Policy Review Panel Report
• Draft Information Bulletin on Sentencing and
  Leniency in Cartel Cases
• Use of Prohibition Orders

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UNITED KINGDOM

• Enterprise Act of 2002 effective as of June
  2003
• Criminal sanctions
• Director disqualification orders
• Confiscation orders
• OFTs dual track approach (criminal/civil)
• OFT / Commissions dual track approach
  (criminal/civil)
• HOT TOPICS
• US/UK criminal enforcement Marine Hose case
• UK stand-alone criminal enforcement BA/Virgin
  case
• Increasing focus by corporate advisors on the
  role of individuals
• Financial reward programme for informers
• Risk of individual applications for immunity
• Obstruction risks for company and individuals
• Separate legal advice

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AUSTRALIA

• Draft bill January 2008 - new legislation by end
  2008 introducing dual civil-criminal regime for
  cartel conduct
• prohibitions reflect basic OECD definition of
  hard-core cartel conduct
• dishonesty proposed as key differentiator
• corporate and individual liability
• Bifurcated approach to enforcement
• ACCC (investigative agency)
• Director of Public Prosecutions (prosecutor)
• Court-imposed penalties no Sentencing Guidelines
• HOT TOPICS
• Extent of differentiation between criminal and
  civil prohibitions appropriateness of dishonesty
  element
• Workability of the bifurcated model
• Extent of ACCC powers and resources
• Increase in private enforcement
• Criminal charges for obstruction following civil
  settlement (fall-out from the Visy case)

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SWEDEN

• Swedish Government Committee on Modernisation of
  the Competition rules (2003-2004), a
  criminalization model for hard-core cartels
• New Competition Act (Nov 1, 2008)
• criminalization rejected but disqualification
  orders for cartel infringements
• will keep so far unsuccessful leniency program
  (introduced in 2002)
• Competition Authority may issue fines against
  undertakings in uncontested cases
• HOT TOPICS
• Bid rigging asphalt case
• Heavy investments and prestige put into the
  Swedish leniency program
• ECN aspects
• Strong opposition against a criminal amnesty
  system for individuals

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• IS CRIMINALIZATION DESIRABLE?

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IS CRIMINALIZATION DESIRABLE?

• Why criminalization might be desirable?
• deterrence
• individual accountability attributes to more
  effective enforcement
• enhanced investigative powers (search and
  seizure, subpoena)
• increased effectiveness of leniency/amnesty
  programs
• BUT
• reasonable punishment? deprivation of liberties
  and freedoms?
• high legal and evidentiary burdens
• chilling effect on business
• more resources and decreased efficiency
• negative effect on leniency programs?

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IS CRIMINALIZATION DESIRABLE?

• Are there any other alternative means?
• individual administrative fines
• disqualification orders / prohibition orders as
  an alternative
• private enforcement as a supplement/complement

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• SCOPE OF A CRIMINAL ANTITRUST OFFENCE

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SCOPE OF A CRIMINAL ANTITRUST OFFENCE

• Should criminal sanctions be reserved for hard
  core cartel conduct?
• What standard should be applied?
• per se (U.S. and Australia)
• in US, general Sherman Act provisions detail
  left to courts
• in Australia, detailed statutory provisions
  proposed with problems of undue complexity and
  potential overreach
• dishonesty (UK and Australia?) or other
  aggravating features (UK)
• the dishonesty test ordinary people would
  consider the alleged conduct dishonest and
  defendant knew that ordinary people would think
  the conduct to be dishonest
• implications of the Norris litigation
• undueness (Canada)
• accused intended to enter into the agreement and
  knew or ought reasonably to have known that the
  agreement (if entered into) would prevent or
  lessen competition unduly

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• EFFECTIVE IMPLEMENTATION OF CRIMINAL ANTITRUST
  ENFORCEMENT

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EFFECTIVE IMPLEMENTATION OF CRIMINAL ANTITRUST
ENFORCEMENT

• Two tier approach in Europe (Commission and
  NCAs)
• co-operative (U.S.) or conflicting? (Korea,
  Brazil)
• Bifurcated model in Canada and Australia
  (investigative agency and public prosecutor)
• court imposed sentences / no sentencing
  guidelines
• leniency / immunity considerations
• Amnesty / leniency Plus
• Sanctions for individuals

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EFFECTIVE IMPLEMENTATION OF A CRIMINAL ANTITRUST
ENFORCEMENT

• Transparency and certainty
• High risk of detection
• Significant sanctions
• Investigative powers
• Cooperation among enforcement agencies
• Support from different stakeholders regulators,
  business community, agencies, judiciary

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• THE CRIMINALIZATION OF ANTITRUST AND
  MULTIJURISDICTIONAL INVESTIGATIONS

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THE CRIMINALIZATION OF ANTITRUST AND
MULTIJURISDICTIONAL INVESTIGATIONS

• Co-operation agreements
• Intergovernmental networking training (eg ICN)
• know-how sharing and significance of personal
  contacts
• coordinated approach to enforcement priorities
• technical assistance programs
• Proliferation of leniency/amnesty programs
• guarantee applicants who seek leniency protection
  against criminal prosecution
• additional evidence gathering opportunities
• set off provisions in leniency / plea
  agreements
• Extradition treaties
• Cross-border markets

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Caron Yvonne Beaton-Wells Philipp Girardet The
University of Melbourne SJ Berwin LLP Victoria,
Australia London, England Susana Cabrera Per
Karlsson GARRIGUES Advokatfirman Vinge
KB Madrid, Spain Stockholm, Sweden Ken
Ewing Elisa Kearney Steptoe Johnson
LLP Davies Ward Phillips Vineberg
LLP Washington D.C., USA Toronto,
Canada