Criminal and Cartel Antitrust Committee Update

Transcription

1 Criminal and Cartel Antitrust Committee Update December 6, 2013 Thomas McGrath, Nicole Kar, Bernd Meyring, Pierre Zelenko Moderator: Anne Marie Cushmac, SunTrust Bank

2 Agenda 1. Introduction (Anne Marie Cushmac) 2. U.S. Department of Justice (Thomas McGrath) 3. European Union 1. EU Dawn Raids (Pierre Zelenko) 2. Extended Scope of Anti-Cartel Enforcement in the EU (Bernd Meyring) 3. UK Criminal Cartel Offence (Nicole Kar)

3 U.S. Department of Justice Thomas McGrath

4 US DOJ: Personnel Changes Brent Snyder New Deputy Assistant Attorney General for Criminal Enforcement, replacing Scott Hammond

5 US DOJ: AU Optronics Appeal AU Optronics seeks reversal of verdict Oct.17, 2013: AU Optronics and two of its executives urge the Ninth Circuit to overturn conviction Defendants argue that the antitrust conspiracy took place entirely in Asia and thus was not a per se violation of the Sherman Act

6 US DOJ: Auto Parts Cartel Recent guilty pleas: 12 Corporate plea agreements since end of September Toyo Tire & Rubber Co ($120 million) 3 Takata Corporation executives Yasuhiko Ueno (19 months, $20K) Saburo Imamiya (16 months, $20K) Yoshinobu Fujino (14 months, $20K) New indictments Masao Hayashi Kenya Nonoyama To date, the DOJ has charged: 21 companies; and 26 executives More than $1.6 billion in criminal fines

7 Individual liability Trend: more jail sentences over 12 months 8 individuals in 2013 with sentences over 12 months Frank Peake (coastal freight) sentence still pending DOJ requested 87 months Sentencing rehearing set for December 16

8 Benchmarking Investigations LIBOR, Euribor etc., gold, silver, North Sea crude, Forex Rabobank LIBOR, Euribor settlement DOJ: $325 million US CFTC: $475 million Obenbaar minsterie (Dutch prosecutor): $96 million UK FSA: $170 million Total: $1.1 billion

9 EU Dawn Raids Pierre Zelenko

10 E-raids Revised Guidance on dawn raids procedure (March 2013) Clear focus: company s IT environment and storage media All electronic data accounts are usually blocked from the beginning of the raid, including mobile devices such as ipads and Blackberries Inspectors will search laptops, desktops, tablets, smartphones, CD-Roms, DVDs, USB sticks etc. Inspectors can keep storage media until end of inspection but may return it earlier after having made a forensic copy of the data Commission now systematically takes electronic copies (and no longer paper copies) of electronic documents Possibility of continuation of dawn raid at EC s premises Hardware Inspectors can use company hardware (not wiped at the end of the raid) but experience to date is Commission brings its own hardware Searches New work flow based on Nuix (keyword searches) Demo: Viewing electronic data during inspections (available on EC website) Recent raids under Revised Guidance: Sugar raids Oil raids

11 Expensive glitches Regulation 1/2003 duty to cooperate with Commission, give correct information and access to all relevant documents Possible fine up to 1% of total turnover for a company that intentionally or negligently produces incomplete books or records, or refuses to submit to an inspection Fine balance to be struck between rights of defence and obstruction Failure to block accounts EPH (2013): EUR 2.5 million stand-alone fine (for failure to block accounts and diversion of incoming mails)

12 Deutsche Bahn (2013) Challenging the Commission s inspection Can the Commission search an individual s or a company s premises without judicial search warrant (which it consistently does) or would that infringe the European Convention on Human Rights? Nexans (2012) Any action taken by the Commission during the dawn raid (e.g. out of scope interviews) can only be challenged once the final decision is pronounced (i.e., 4-5 years later) However, the legality of the dawn raid decision itself may be contested before the court Decision allowing dawn raid must be sufficiently specific Scope of decision must be supported by reasonable suspicion No fishing expeditions

13 Extended Scope of Anti-Cartel Enforcement in the EU Bernd Meyring

14 Signalling: EU EU approach Price and other information signalling can be challenged as an agreement or concerted practice under Article 101 TFEU (analogue of Section 1 Sherman Act) Concerted practice approach offers EC more flexibility in challenging conduct even when there is no formal agreement. But see Wood Pulp. Horizontal Co-operation Guidelines: Information exchange as a restriction by object (analogue of per se offence in the US, though (limited) possibility of defence through 101(3)) EC Container liner shipping companies investigation Concerted practice To signal? Through signalling? Departure from precedent (Wood Pulp) based on Horizontal Co-operation Guidelines?

15 Signalling: Member States Netherlands: Commitments from three major mobile telecommunication providers Netherlands ACM closes investigation into potential cartel activity in mobile-telecommunications market after finding no price-fixing agreements. However, risk from public statements (e.g. at conferences or in trade journals) about planned price increases or reductions in commercial conditions for consumers, which are not based on a final decision Commitments: Three major mobile-telecommunications providers must refrain from making public statements about future market behaviour in the future and incorporate into compliance programmes and employee training workshops UK: Cement producers market investigation Combination of structural (highly concentrated market with high transparency) and conduct features limited competition by aiding co-ordination between the three major cement producers in the UK (price announcement letters to customers) Competition Commission remedy in consideration: restrictions on the disclosure of cement market data by the government and by cement producers to private sector organisations Monthly data should only be published after a sufficient time lag has passed, and Where disclosure of aggregated cement market data is essential, a process should be put in place to permit exceptions Key sources of monthly and quarterly cement sales and production volume data: (1) Document published monthly by Department for Business Innovation and Skills on its website (BIS), and (2) Website of trade association, Mineral Products Association (MPA)

16 Competition v Regulation: Other practices Using the proper tool: Regulation v competition law CDS: Collective refusal to license The EC is alleging that 13 dealer banks, along with Markit and ISDA have prevented an attempt by exchanges to enter the CDS market Benchmark manipulation cases Oil (Platts) Libor, Euribor Settlements this Wednesday, 4 December of approximately EUR 1.7 billion 8 banks, two decisions (EIRD and YIRD) Forex Others? EC s draft Benchmarks Regulation (18 September 2013)

17 Parental Liability EC has been extending the scope of parental liability over time to reach additional companies through the undertaking concept Private equity (Kendrion, Power Cables) 50/50 Joint ventures (Dow, DuPont) German partnership (Bananas) Currently on appeal to ECJ: Fresh Del Monte Produce Successor liability (Marine Hose) EC has appealed GC judgment in Parker ITR and Parker- Hannifin Unrebuttable presumption

18 The UK Criminal Cartel Offence an update What you need to know Nicole Kar

19 Cartel Offence: Key Changes From 1 April 2014 the Dishonesty requirement will be removed from section 188 of the Enterprise Act 2002: An individual is guilty of an offence if he dishonestly agrees with one or more other persons to make or implement, or cause to be made or implemented, arrangements of the following kind relating to at least two undertakings (A and B) Types of arrangements caught: Price fixing Market/customer sharing Bid-rigging Output limitation

20 Cartel Offence: Key Changes The offence is subject to the following exclusions: The notification exclusion The publication exclusion Notification of bid-rigging arrangements Compliance with a legal requirement

21 Cartel Offence: Key Changes The offence is subject to the following defences: No intention to conceal the arrangements from customers No intention to conceal the arrangements from the CMA Reasonable steps were taken to disclose to legal advisers for the purposes of obtaining advice about the nature of the arrangements before their implementation

22 Cartel Offence: Key Challenges for Business Wide scope of criminal conduct: no requirement for conduct to infringe Chapter 1 CA 98 or Article 101 TFEU will it encourage leniency pleas/leniency applications? Will the offence capture innocent participants/individuals acting within the ordinary course of business? Potentially reduces the gap between personal and corporate liability?

23 Cartel Offence: Key Challenges for the CMA Requirement for sufficient evidence to provide a realistic prospect of conviction Prosecution to prove that individuals agreed to arrangements Need for arrangements to contain reciprocal restriction and relates to undertakings operating at the same level of supply The CMA is required to publish prosecution guidance on the principles to be applied in determining, in any case, whether proceedings for an offence under section 188(1) should be instituted

24 Cartel Offence: Application to Agreements Exempt or potentially justifiable arrangements under the civil regime may be caught by the amended cartel offence: Crisis cartels Cooperation agreements between horizontal competitors (such as commercialisation and standardisation agreements) which include a price fixing element or which limit output Determining premiums in joint underwriting arrangements Non-compete arrangements between two or more parties in the context of setting up a joint venture or multiple parties in an existing joint venture R&D agreements which restrict exploitation of the results, allocate territories/customers or limit the production/supply of competing products Specialisation agreements which restrict production/supply or set prices to immediate customers in the context of joint distribution * Source: BIS Department for Business Innovation and Skills

25 Cartel Offence: penalties The maximum penalty for the cartel offence is 5 years imprisonment and / or an unlimited fine for conviction of the offence on indictment In the OFT s Marine Hose criminal cartel proceedings, three individuals pleaded guilty to the cartel offence and were initially subject to between 2½ and 3 years imprisonment and director disqualification for between 5 and 7 years. The Court of Appeal reduced their prison sentences to between 20 months and 2½ years Two of the three individuals were ordered to pay 366,354 and 649,636 under confiscation orders

26 Thank you for your attention. Questions?

27 Linklaters Key Contacts Thomas McGrath Partner, New York Competition/Antitrust Tel: (1 212) Nicole Kar Partner, London Competition/Antitrust Tel: (44) Bernd Meyring Partner, Brussels, Düsseldorf Competition/Antitrust Tel: (32) Pierre Zelenko Partner, Paris Competition/Antitrust Tel: (33) Tom represents U.S. and international clients in connection with criminal price fixing investigations, private antitrust litigation as well as mergers and acquisitions. He was lead counsel for Air France KLM in the air cargo cartel cases. Most recently, he advised Deutsche Börse on its planned merger with NYSE Euronext. He regularly appears on behalf of clients before the U.S. Department of Justice and Federal Trade Commission. Nicole is a specialist in EC and UK antitrust law. She has particular experience in the mining, energy, retail and healthcare sectors and advises clients on the antitrust aspects of a broad range of matters, including merger review investigations by the European and UK authorities, cartel investigations, cooperation between competitors, distribution arrangements and antitrust compliance programs. Nicole advised the immunity applicant in the only successful UK prosecution of the criminal cartel offence to date and is editor of the UK chapter of Kluwer s cartel digest. Bernd practice focuses on merger control proceedings in the European Commission, the German competition authority and coordination of merger control proceedings worldwide as well as representing clients in cartel investigations and leniency applications, advising on dominance issues and litigating cases in German and the European courts. He has significant experience in the food, retail, energy, healthcare, waste management, and automotive sectors and acts as the global sector leader for retail. Pierre is a partner in the Competition/Antitrust practice of Linklaters in Paris, specializing in EU and French competition law (merger control, horizontal cooperation, vertical restraints, abuse of dominant position, litigation before the French Competition Council and the European Commission) and administrative law. Particular sectors where Pierre has expertise include: energy sector, banking sector and building industry.