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Global Cartel Enforcement 2018

2018 was a mixed picture in terms of global cartel fine levels, with only three jurisdictions – Brazil, Germany and Italy – seeing significant increases in the level of fines imposed in 2017, while the U.S. saw a modest rise from a low starting point, and historically aggressive enforcers – such as the European Commission (EC) and the Korea Fair Trade Commission (KFTC) – experienced a second year-on-year decline.

While not much should be read into the statistics given that investigations tend to run for several years, a number of trends may be highlighted:

  • Several long-running international investigations – mainly in the auto and financial services sectors – that have dominated headlines (and fines) over the last few years are now coming to an end, and it is unclear what investigations will fill that “void”, especially when the remaining financial services cases are completed.

  • While a small number of the “newer” enforcers buck the trend, there is a general downturn in the number of leniency applications across many jurisdictions. For example, in Brazil there were 31 leniency agreements in 2017, but there were only five in 2018. This trend poses a significant challenge to future cartel enforcement since historically a material proportion of cartel decisions have been founded on immunity and/or leniency applications; in fact as the table on page 8 in the report shows, only two of the 17 jurisdictions/regions issued cartel decisions in 2018 that did not involve immunity/leniency applications (ie, UK and Taiwan), while the majority of decisions in the EU, Canada, Brazil, Japan, Singapore, India and Germany were based on immunity/leniency applications. This reduction in the number of leniency applications is likely attributable to the spread of private damages actions beyond the U.S., with cartelists increasingly aware that the creation of a paper trail for the purposes of obtaining a leniency discount may end up costing them more money if it facilitates aggressive damages claims which are no longer limited to the U.S..

  • Perhaps aware of the threats to the future success of their pivotal leniency programmes, certain agencies are already looking to bring in new tools to make the leniency process more “user friendly”.

  • In Europe, the Courts are holding the EC to account on how it manages its settlement process so as not to bias the adoption of any infringement decision in hybrid cases (where only some parties elect to settle) and to ensure that there is sufficient transparency in how fine levels are calculated (see the discussion of the ICAP and Pometon judgments on page 9 in the report).

It is perhaps no coincidence that faced with these challenges, some agencies – such as the EC in the recent Nike and Guess cases – now appear to be focusing their efforts on addressing “vertical infringements” (eg, resale price maintenance, restrictions on parallel imports) where they have the discretion of offering generous “cooperation discounts” without having to consider the implications of any formal leniency programmes. This shift in focus, however, may encourage some parties to attempt to characterise vertical infringements as having a horizontal (cartel) component in order to seek immunity from fines and mitigate their exposure with more certainty.

Looking forward, there will undoubtedly be a number of high fines imposed in 2019 as long-running cases come to an end, but this should not distract from the more important message that will be conveyed on the one hand by the number of new immunity/leniency applications filed in 2019 and on the other by the amount of damages that are paid out on the back of cartel decisions that have already been adopted.

Philip Mansfield, Partner

Hot topics 2019

Dawn raids

Dawn raids

Dawn raids carried out in several jurisdictions involved a wide variety of sectors (including metal packaging, pharmaceutical, luxury watches and DRAM), confirming that surprise inspections remain an important tool in the agencies’ armoury and that companies must be well prepared to handle such events. Training should include how to handle electronic document searches, employee interviews and conflicting legal privilege considerations.
Antitrust authorities continue to facilitate cartel detection and enforcement

Antitrust authorities continue to facilitate cartel detection and enforcement

As highlighted in our 2017 Report, antitrust authorities’ toolkits are becoming ever more sophisticated in order to tackle new detection and enforcement challenges: for example, the new digital investigation methology unit, centralised intelligence network, eLeniency and online whistleblowing tools used by the EC, and Spain’s screening unit for identifying potential collusive practices in public bids.
Increased fining power

Increased fining power

A number of jurisdictions have amended their cartel enforcement rules to allow for increased fines, particularly in Asia Pacific. In South Korea, new amendments to the Monopoly Regulation and Fair Trade Act will increase the maximum fine that the KFTC can impose from 10% to 20% of relevant revenue. 
Vertical restraints

Vertical restraints

Vertical restraints are an increasing area of focus, in particular in the EU where the EC has used its discretion to grant fine reductions for cooperation in vertical cases above the 10% limit for cartel cases. We are also seeing instances of attempts to re-characterise complex vertical infringements as “horizontal conspiracies”
Continued trend towards settlement

Continued trend towards settlement

The German Federal Cartel Office (FCO) concluded six of its seven cartel cases through settlement procedures and all of the cartel decisions in the U.S. involved settlement. At the EU level, the EC settled three out of the four cartel decisions issued, bringing the number of settlement decisions to 28 since the regime was introduced in 2008 (a further settlement decision in early 2019 brings the total to 29). It will be interesting to see what impact the ICAP judgment, and the more recent Pometon judgment, will have on the EC’s approach to hybrid settlement cases going forward.
Bid-rigging

Bid-rigging

This remains high on the priority list with a number of jurisdictions (including Brazil and Slovakia) signing cooperation agreements with other administrative bodies in order to seek greater efficiency in cartel enforcement for bid-rigging. 
Information exchange back on the agenda

Information exchange back on the agenda

In the UK, the Court of Appeal upheld the Competition and Markets Authority (CMA)’s fine on Balmoral Tanks for illegally exchanging price information with competitors at just one meeting, sending a clear message that even single instances of illegitimate information exchange will be investigated. The Financial Conduct Authority’s first competition decision (in November) also sanctioned an isolated information exchange, sending an equally clear message to financial institutions. Information exchange cases were also successfully pursued in a number of other jurisdictions, including France, and it has been put forward as a new type of collusion under proposed reforms in South Korea.
Private damages actions – a chilling effect on leniency?

Private damages actions – a chilling effect on leniency?

Although leniency programmes remain an important tool in detecting and enforcing cartels, the spread of private damages actions beyond the U.S. is having a chilling effect on leniency applications. How far this will spread remains to be seen, but authorities around the globe are already feeling the impact.

Download the full report here

Global cartel enforcement report 2019

Covering calendar year 2018

Regional analysis

Previous reports

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