Global cartel enforcement report February 2020 allenovery.com 2 Global cartel enforcement report | February 2020 Foreword Antitrust authorities around the world continued to focus on tackling national and international cartels in 2019, with many jurisdictions showing an appreciable upturn in the level of fines compared to those imposed in 2018. The European Commission (EC) once again topped the global leader board, with fines totalling USD1.6 billion (up by 74% from 2018). The U.S., Japan, Germany, Italy and France also saw significant increases in the level of fines imposed in 2018, while a number of authorities with a reputation for aggressive enforcement, including South Korea and Brazil, saw a marked drop in their fine totals. But behind the numbers sit several major questions, the answers to which may impact international cartel enforcement in the future: • Will the ever-increasing spread of private damages actions, including a wave of claimant actions in Europe following on from the EC’s Trucks and Forex decisions, ultimately make leniency an unattractive proposition? To date, leniency remains the key enforcement tool in many jurisdictions. 100% of decisions in the EU, UK and Japan included an immunity/leniency applicant, as did the majority of decisions in Brazil, Spain and Hungary. But notably, immunity/leniency applicants featured in only 13% of decisions in China and 8% of decisions in the U.S. • Does the broad use of settlement agreements, and the lower fines they deliver, reduce the need for an ex ante leniency strategy? In the EU, Germany, the UK and the U.S., all decisions in 2019 involved settlement, with the EC’s approach on the Forex cartel signalling a willingness to continue to pursue ‘hybrid’ settlement decisions in the wake of the ICAP and Pometon judgments. A notable percentage of decisions in Brazil and South Africa also made use of settlement procedures (88% in Brazil, 80% in South Africa). This has contributed significantly to overall lower fine levels. © Allen & Overy LLP 2020 3 • Will there be a political will to focus in the future more on domestic cartels rather than international cartels? As the cycle of large, long-running international investigations in the financial services and automotive sectors continue to wind down, many new investigations are targeting bid-rigging in domestic industries. In 2019, decisions sanctioning bid-rigging accounted for two thirds or more of the overall number of decisions in South Korea, the CEE region and Italy and 46% of decisions in the U.S. With a number of authorities identifying enforcement against bid-rigging as a strategic priority and adding to their enforcement toolkit (including the launch of the inter-agency ‘Procurement Collusion Strike Force’ in the U.S.), domestic cartels are expected to remain an area of focus in 2020. Irrespective of the answer to each of these questions, one thing is clear: the digital economy will continue to dominate the global antitrust debate. Regulatory scrutiny of the use of artificial intelligence and algorithms in business practices is expected to increase, while antitrust authorities continue to consider whether reform of existing laws is necessary to deal with the challenging issues raised by increasing digitalisation. There are also indications that authorities will be emboldened to investigate novel innovation-based theories of harm, taking their lead from the EC’s investigation into alleged collusion between German car manufacturers to restrict competition in emissions technology. Compliance efforts of companies will, of course, need to adapt and keep pace with these developments, as the focus of authorities increasingly extends beyond traditional ‘high risk’ areas of their business. Report authors Philip Mansfield Thomas Masterman Jack Ashfield Partner – London/Brussels Counsel – London Associate – London Tel +44 20 3088 4414 Tel +44 20 3088 3386 Tel +44 20 3088 1091 [email protected] [email protected] [email protected] allenovery.com 4 Global cartel enforcement report | February 2020 4 2019 global cartel fine levels Canada USD4.45m U USD 1.65bn U.S. USD USD apan 360.2m 637.31m Korea USD80.21m Mexico USD5.65m aian USD1.29m China USD2.37m Brazil USD 235.90m India Chile USD12.01m USD13.34m South Arica Singapore USD8.32m USD1.14m Australia USD37.91m 1 UK – USD56.92m 7 Hungary – USD9.03m 4 1 2 2 Belgium – USD1.37m 8 Austria – USD0.07m 3 5 6 8 7 3 Germany – USD1.04bn 9 France – USD537.98m 9 10 4 Poland – USD0.07m 10 Italy – USD774.21m 11 5 Czech Republic – USD0.09m 11 Spain – USD316.09m 6 Slovakia – USD10.64m 2019 statistics are approximate and may not be exhaustive. They reflect fine levels calculated using an average exchange rate for 2019. The EU fine total relates to decisions taken by the EC. U.S. figures relate to fines imposed at federal level by the DOJ and are for the U.S. fiscal year, which runs from 1 October-30 September. All other countries’ statistics relate to the calendar year. Cartel fines in this context mean fines imposed for a breach of Article 101 TFEU or national equivalent (excluding cases that are purely vertical in nature). © Allen & Overy LLP 2020 allenovery.com 4 5 Hot topics 2020 DIGITAL, DIGITAL, RISE OF PROCEDURAL FINES ‘GOLD STANDARD’ DIGITAL…. INNOVATION-BASED ON THE INCREASE COMPLIANCE Digital markets and platforms are THEORIES OF HARM Perhaps as a reaction to Antitrust authorities are now expected to continue to dominate Although ‘classic’ cartel offences companies demonstrating less of frequently giving greater the antitrust debate in 2020 – such as bid-rigging, information an appetite to cooperate with guidance on what constitutes particularly in Europe where EU exchange, price-fixing, and cartel investigations – or as a sign effective compliance, with the Competition Commissioner market sharing, remained the of an increasingly aggressive overarching need for robust Margrethe Vestager’s portfolio primary enforcement focus in position taken by some regulators compliance to be firmly has been expanded to include 2019, there are indications in the face of fewer cases – 2019 embodied in corporate culture. both Competition and Digital that in 2020 authorities will saw a marked increase in Certain regimes, such as those in Markets – as authorities around be investigating less familiar, antitrust authorities taking Australia, the UK and the U.S., the world increase their focus and potentially novel, action against companies and give credit – in the form of a on the use of data, AI and theories of harm. The EC is individuals for breaching fixed or percentage reduction algorithms. Discussion as to already looking into alleged procedural requirements to in a penalty – to companies with whether existing antitrust ‘tool co-ordination between German produce documents or data or an effective antitrust compliance kits’ are sufficient to deal with car manufacturers accused of co-operate with investigations programme, while some issues raised by the digital delaying innovation around (eg Colombia, Latvia, the authorities impose a requirement economy, or whether radical emissions technologies Netherlands, Lithuania, the UK, to implement/maintain a reworking or new alternatives (sparking a parallel probe in France and Russia). Some of compliance programme are needed, is likely to intensify. China), which suggests the fines were significant as part of their sanction Consumer and data protection greater scrutiny of industry (eg EUR 1.84 million in the Dutch (eg Chile). We expect policies issues will be a vital part of the collaborations on R&D and case) and the Latvian fine was of this type will continue to be debate. Many authorities, technical matters in the future. imposed several years after used by enforcers in 2020 to including those in Australia, Companies may therefore need the breach. In Australia, in the encourage more widespread South Korea, Taiwan, France and to extend their compliance efforts on-going BlueScope case, compliance efforts. the UK, are introducing specialist beyond traditional ‘high risk’ criminal charges have also been digital units and are harnessing areas to include new strategic brought against an individual new technologies to improve risk areas. for his part in obstructing the their detection and investigation ACCC’s investigation. capabilities. Compliance initiatives by corporates are already adapting in response. allenovery.com 6 Global cartel enforcement report | February 2020 FACILITATOR LIABILITY INDIVIDUAL LIABILITY INCENTIVISING CRACKDOWN ON ‘Facilitators’ of cartels remain in A number of authorities have WHISTLE-BLOWERS BID-RIGGING AND the headlines as the European declared an intent to increase As the rate of leniency PURCHASING Court of Justice (ECJ), in 2019, enforcement against individuals applications falls in some ALLIANCES upheld the General Court’s who have been involved in jurisdictions, authorities are decision to quash on procedural cartel activity. The CMA, looking for new ways to Enforcers have continued to grounds fines imposed by the EC for example, has drastically sufficiently incentivise the prosecute bid-rigging across a on ICAP in 2017 for its role as a increased the number of actions reporting of illegal cartel activity. broad range of sectors. The DOJ facilitator in the LIBOR and against directors of companies A whistle-blowing tool for launched an inter-agency TIBOR cases (discussed in last involved in cartel conduct, individuals is an increasingly ‘Procurement Collusion Strike year’s Report). This does not securing nine disqualifications popular option, and is already Force’; the Spanish authority held take away from the fact, in 2019. In Russia, the Federal established in many jurisdictions, for the first time that entities found however, that agencies will Anti-Monopoly Service (FAS) including Australia, the EU, to be involved in bid-rigging would prosecute facilitators, as well introduced a draft law which Hungary, New Zealand, Poland be automatically banned from as ‘participants’: in the UK, would see criminal liability and and the UK.