On May 5, the European Commission announced that it had sent a statement of objections to a number of suppliers of marine hoses. Marine hoses are used by customers in the oil and defense industries to transport oil and petroleum products between tankers and storage facilities. The statement of objections sets out the Commission's allegations that the companies have participated in a cartel in breach of Article 81 of the EC Treaty and Article 53 of the EEA Agreement. It follows the Commission's announcement that it carried out dawn raids in the sector in May 2007. The companies will now have an opportunity to respond to the allegations and evidence set out in the statement of objections. They will have access to the Commission's file and may request an oral hearing. The Commission's dawn raids were coordinated with the US Department of Justice (DOJ) in the context of a suspected worldwide cartel concerning marine hoses and, in the UK, the Office of Fair Trading (OFT) has also been carrying out a criminal cartel investigation under the Enterprise Act 2002. In December 2007, DOJ announced that three UK individuals had agreed to plead guilty to their participation in a cartel in the supply of marine hoses in the US, and the OFT announced that it had brought criminal charges under the Enterprise Act against those individuals on their return to the UK.
On April 28, the Canadian Competition Bureau (the Bureau) released its Draft Information Bulletin on Sentencing and Leniency in Cartel Cases (the Draft Bulletin) for public consultation. The Draft Bulletin outlines the factors that the Bureau will consider when making sentencing recommendations to the Director of Public Prosecutions (the DPP) and the process for seeking a lenient sentence. Interested parties have been asked to provide comments no later than July 25, 2008. Various aggravating and mitigating factors that may affect the recommended sentence are enumerated in the Draft Bulletin. According to the Draft Bulletin, aggravating factors include: recidivism; coercion or instigation; large corporate size or market share; the degree of planning, covertness and complexity of the cartel activity; obstruction; lengthy duration of the illegal activity; the nature of the victims; and high level of senior officer involvement. Mitigating factors include: co-operation with authorities; acceptance of responsibility; and restitution for victims. With respect to the Bureau’s Leniency Program, the Draft Bulletin provides that the Bureau’s recommendation for leniency will be directly proportionate to the contribution a leniency applicant makes to the Bureau’s investigation and the eventual prosecution. Leniency may be available when the DPP has not yet filed charges and where the party has terminated its participation in the illegal activity; co-operates fully with the Bureau’s investigation and any subsequent prosecution by the DPP; and admits that it has engaged in the anticompetitive conduct which may constitute an offence under the Act and agrees, if charged by the DPP, to plead guilty and be sentenced for its participation in the illegal activity.
On April 30, the Scottish Government announced that Scottish Ministers and the Scottish Health Boards had reached settlement with Norton Healthcare Limited and Norton Pharmaceuticals Limited in relation to civil claims brought against the companies' alleged anti-competitive cartel conduct in connection with the supply to the National Health Service (NHS) of generic drugs. In February 2005, Scottish Ministers and Scottish Health Boards lodged claims in the English civil courts against a number of companies, in connection with their participation in alleged price-fixing cartels in respect of certain generic drugs: warfarin, ranitidine and penicillin-based drugs. Norton Healthcare Limited and Norton Pharmaceuticals Limited have now agreed with Scottish Ministers and Scottish Health Boards, on a full and final basis and without admission of liability, to pay £2,837,500 in compensation. They will also provide co-operation in connection with the continuing civil claims against a number of other companies regarding the alleged price-fixing arrangements for a number of generic drugs. The Scottish Ministers and Scottish Health Boards reached a similar settlement with Goldshield Group Plc, Goldshield Pharmaceuticals Ltd and Forley Generics Ltd in March 2008. These companies also reached settlements with the Department of Health in relation to similar price-fixing allegations in England.
On April 25, the UK's Office of Fair Trading (OFT) announced that it had issued a statement of objections alleging that certain tobacco manufacturers and retailers have engaged in unlawful practices in relation to retail prices for tobacco products in the UK. The allegations relate to arrangements between the manufacturers and retailers to link retail prices of a manufacturer's brand to that of a competing brand and, in relation to some of the companies only, the indirect exchange of retail pricing information. The OFT sent a statement of objections to two tobacco manufacturers (Imperial Tobacco and Gallaher) and 11 retailers (Asda, the Co-operative Group, First Quench (trading as Threshers), Morrisons, Safeway, Sainsbury, Shell, Somerfield, T&S Stores, Tesco and TM Retail). The OFT notes that where it is seeking to attribute liability to other companies, such as parent companies within the same corporate group, it has also addressed the statement of objections to them. The OFT alleges that certain tobacco manufacturers and retailers variously engaged in one or more unlawful practices in relation to retail prices for some or all of a number of tobacco products in breach of the Chapter I prohibition of the Competition Act 1998. Its allegations relate to two practices. First, arrangements between each manufacturer and each retailer to link the retail price of a manufacturer's brand to the retail price of a competing brand of another manufacturer. The OFT considers that this restricted the ability of each of these retailers to determine its selling prices independently. Second, in the case of Gallaher, Imperial Tobacco, Asda, Sainsbury, Shell, Somerfield and Tesco, the indirect exchange of proposed future retail prices between competitors. The companies will now have the opportunity to make written and oral representations in response to the alleged case set out by the OFT in the statement of objections. Any such representations will be considered by the OFT before any final decision is made.
On April 17, the OFT announced that it had issued a statement of objections to 112 English construction companies. The OFT alleges that the companies breached the Chapter I prohibition of the Competition Act 1998 by engaging in bid-rigging activities in response to tenders issued by both the public and private sector. In particular, the companies are alleged to have engaged in cover pricing (colluding with competing bidders to obtain a price that is too high to win the contract) and, in some cases, compensation was paid to unsuccessful tenderers. The OFT stated that it has received 37 leniency applications and that 40 other companies have also admitted participation in some alleged bid-rigging activities.
On April 4, the Belgian Competition Council imposed a total fine of €487,755 on participants in an alleged price-fixing and market-sharing cartel for the chemical BBP. All alleged cartel participants were granted a reduction in fines under Belgium's Leniency Notice. This is the first time that the Belgian Competition Council has imposed a fine for a cartel in a case based on a leniency application. According to the Competition Council's press release, the alleged cartel involved regular meetings lasting from 1994 to 2002.
On April 10, the Chilean Antitrust Court (Tribunal de Defensa de la Libre Competencia) fined Almacenes París and Falabella, two of the three major Chilean retailers, for alleged collusion and abuse of dominance, following charges filed by the National Economic Prosecutors Office (Fiscalía Nacional Económica) and Banco de Chile, the second most important bank. This case started in 2006 when Banco de Chile alleged that both Falabella and Almacenes París applied unlawful pressure on several technology companies to prevent their participation in a highly publicized technology event organized by Banco de Chile. At this event, clients of Banco de Chile would be offered substantial discounts and free of interest installment payment terms for purchasing technology products, prior to the beginning of the World Cup in Germany. The event was ultimately cancelled by Banco de Chile on the basis that several providers declined to participate, despite their initial confirmation. The main evidence relied on by the Antitrust Court included copies of several e-mails between the providers and the accused retailers, and phone calls registers that showed an increase in the total amount of traffic between executives of the two companies and between them and the providers. Both companies were sentenced to pay fines which are high in terms of historic antitrust Chilean practice. Falabella was fined approximately with U$8,000,000 and Almacenes París was fined U$5,000,000. One of the main reasons given by the Antitrust Court for imposing such amounts was that the companies were repeat offenders. They have been convicted in the past for colluding to prevent the use in their stores of bank credit cards on items sold on free of interest installment conditions, in the context of a 2003 Christmas promotion. Both companies have appealed the case to the Chilean Supreme Court.
On April 2, the French Competition Council, which had received a complaint from a consumers association, fined seven doctors' unions for alleged concerted practices between their members in order to raise the price of medical consultations. These alleged practices occurred between the end of 2001 and the beginning of 2005. The Council alleged that the trade unions circulated instructions in order to encourage "sector 1" specialists (specialists subject to government price control as opposed to "sector 2" specialists who are not subject to such a control) to increase their fees by improperly using the so-called "exceptional exceeding" procedure (a procedure allowing sector 1 specialists, in particular and justified circumstances, to charge fees exceeding the price caps imposed by the State). The "exceptional exceeding" procedure, normally has to be used with "tact and temperance". According to the Competition Council, "sector 1" specialists have been able to compensate the lack of revaluation of the price caps fixed by the State Sickness Insurance Fund. The Council held that the circulation by a medical union of collective instructions recommending doctors to resort to the "exceptional exceeding" procedure with the aim of increasing the fees amounted to price collusion. It held that these alleged practices harmed the French national health system, and that the excessive fees to be borne by the patients added up to €180 million over the period. The Competition Council fined the unions a total amount of €814 000.