Transcript CRIMINALIZATION OF ANTITRUST – THE NEW CONSENSUS? ABA Section of International Law

CRIMINALIZATION OF
ANTITRUST – THE NEW
CONSENSUS?
ABA Section of International Law
Fall Meeting 2008
September 25, 2008
Brussels
“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
Criminalization of Antitrust
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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
UNITED STATES
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Per se offence for hard core cartel conduct
– in theory also Rule of Reason
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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
CANADA
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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
UNITED KINGDOM
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Enterprise Act of 2002 – effective as of June 2003
– Criminal sanctions
– Director disqualification orders
– Confiscation orders
OFT’s ‘dual track’ approach (criminal/civil)
OFT / Commission’s ‘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
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)
SWEDEN
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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
IS CRIMINALIZATION DESIRABLE?
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
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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?
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
SCOPE OF A CRIMINAL
ANTITRUST OFFENCE
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
EFFECTIVE IMPLEMENTATION OF
CRIMINAL ANTITRUST ENFORCEMENT
EFFECTIVE IMPLEMENTATION OF
CRIMINAL ANTITRUST
ENFORCEMENT
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Two tier approach in Europe (Commission and NCA’s)
– 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
EFFECTIVE IMPLEMENTATION OF
A CRIMINAL ANTITRUST
ENFORCEMENT
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Transparency and certainty
High risk of detection
Significant sanctions
Investigative powers
Cooperation among enforcement agencies
Support from different stakeholders: regulators, business community,
agencies, judiciary
THE CRIMINALIZATION OF ANTITRUST
AND MULTIJURISDICTIONAL
INVESTIGATIONS
THE CRIMINALIZATION OF ANTITRUST
AND MULTIJURISDICTIONAL
INVESTIGATIONS
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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
Caron Yvonne Beaton-Wells
The University of Melbourne
Victoria, Australia
Philipp Girardet
SJ Berwin LLP
London, England
Susana Cabrera
GARRIGUES
Madrid, Spain
Per Karlsson
Advokatfirman Vinge KB
Stockholm, Sweden
Ken Ewing
Steptoe & Johnson LLP
Washington D.C., USA
Elisa Kearney
Davies Ward Phillips & Vineberg LLP
Toronto, Canada