Antitrust/Competition Law : Reasons to be thoughtful .. and fearful

In the world of global antitrust /competition law enforcement, it has been a busy time since the beginning of April.

Global companies, in some cases their financial backers and certainly their senior executives, should be paying careful attention.

April 1 : in the United Kingdom, a new regime of criminalised antitrust rules came into effect, as did the new beefed-up enforcement agency, the Competition and Markets Authority. The new rules are designed to make it easier to bring criminal prosecutions against cartel members by removing the old requirement of proving “dishonesty”: the simple fact of entering into the price-fixing agreement may now be enough to trigger criminal liability. However, new defences are also available, centred around the absence of any intention to conceal the illegal arrangement. The Confederation of Business Industry (CBI) on behalf of business has said that the new rules risk criminalising a “wide range” of standard commercial transactions.

The new rules clearly have a number of implications for international business and their executives, not least the increased risk of executive extradition (see April 4 below).

April 2 : in the European Union, the European Commission (which is the highest-fining antitrust authority in the world) imposed fines on a leading financial investor (as it happens Goldman Sachs) in one of the companies involved in the high-voltage cable cartel case. Goldman Sachs was held to have exercised “decisive influence” over the company that it owned at the relevant time. The Commission said that the presumption of “influence” for a significant financial investor was the same as for a 100% parent holding company, and it held that Goldman Sachs had failed to rebut the presumption in this case.

This ruling, assuming it is not overturned on appeal, has significant implications for private equity and other financial investors who like to take a ‘hands on’ approach to monitoring their investments, if it turns out that the company in which the investment was made breached antitrust rules.

April 4 : in the United States, the Department of Justice announced its first successful extradition of a foreign national for antitrust offences. Romano Pisciotti, an Italian national, has been extradited from Germany and is now in custody in Florida. The alleged price-fixing in question took place in the marine hose market between 1999 and 2007. Mr Pisciotti’s former employer (Parker ITR) and various other companies have long since been prosecuted and fined for this cartel. This is seen as a watershed moment for the DOJ, which will no doubt encourage it to pursue further extraditions for anti-trust breaches.

April : in Australia, a root-and-branch review of its competition laws and policies got underway as the panel appointed to carry out the review received its terms of reference. At the same time the Australian Competition and Consumer Commission announced its enforcement priorities for 2014.  In particular, the ACCC said that it will look to rely more on international collaboration with competition authorities around the world for detection of price-fixing offences. Businesses operating across many jurisdictions should ensure consistency in their dealings with the various authorities.

Conclusion

All in all, a compelling week for the enforcement agencies. Businesses operating internationally, of whatever size and perhaps like never before, need to ensure that they have strong internal policies and thorough training and monitoring regimes across all their jurisdictions.