The long arm of the law for competition offences is getting longer. Individuals are becoming a focus of international competition enforcement co-operation efforts. Employees residing in countries where anti-competitive conspiracies are not the subject of criminal sanction (such as many European states) may now face arrest, extradition and/or prosecution and penalties in jurisdictions where such conduct is criminally prohibited.
On May 2, 2007, for example, eight executives from the United Kingdom, France, Italy and Japan were arrested in the United States and charged for their role in an alleged conspiracy to rig bids, fix prices and allocate markets for U.S. sales of marine hose used to transport oil.
Also in May 2007, the U.S. Department of Justice notified four British executives and former executives of British Airways that they are wanted for interviews in the U.S. in connection with their role in an alleged conspiracy to fix fuel surcharges. That request may be a precursor to extradition proceedings. In both instances, the alleged conduct may or may not be criminal in the individuals’ home jurisdiction.
In most common-law jurisdictions, a presumption exists that personal criminal jurisdiction lies only over a person who is physically present in the jurisdiction. For nonresident individuals, the two most common avenues to establish jurisdiction are:
- by physical presence (as with the eight executives recently arrested in the U.S.); or
- through extradition, a process governed by treaty.
Arrests of foreign nationals while physically present in the jurisdiction can be facilitated through international co-operation and border watch lists. Extradition treaties normally require that both the country seeking extradition and the country of residence of the alleged offender provide for criminal sanction for the alleged conduct. The most notable competition law extradition case involves Ian Norris, a British executive of a multinational company implicated in an international cartel involving carbon products that allegedly operated during the late 1980s and throughout the 1990s.
Norris is the first foreign national indicted under U.S. antitrust laws ever to be ordered extradited to the U.S. by the U.K. government. Norris appealed the extradition order on the grounds that price fixing was not a criminal offence in the U.K. until 2002, two years after the period of the alleged cartel had ended. The government has argued that the conduct alleged, while not a criminal competition offence at the time, did constitute conspiracy to defraud under U.K. criminal law.
A decision on Norris’s final route of appeal is expected soon. If his extradition is upheld, it could open the doors for extradition of executives in other jurisdictions where anticompetitive conspiracy is not yet a criminal offence, provided the same conduct could found a charge under another penal statute in the home jurisdiction.
McCarthy Tétrault Notes:
In Canada, price fixing is a criminal offence as long as it would, if implemented, be likely to unduly lessen competition in a market. Corporate executives have been convicted, paid fines and have occasionally gone to jail for their role in Competition Act offences.
Canada has an extradition treaty with the U.S., so Canadian executives who are alleged to have participated in price fixing affecting the U.S. face the prospect of extradition. While that has not happened yet, the current environment suggests that it is only a matter of time before extradition of a Canadian executive is sought.
Although penalties against corporations for anti-competitive conduct are also becoming more severe, the parallel focus on individuals is meant to send a message that company executives must not direct, participate in or condone criminal anticompetitive conduct.
Enforcement authorities want to counter the perception that fines for anticompetitive conduct are a corporate ‘cost of doing business.’ Through international enforcement efforts aimed at individuals, competition law authorities are sending the message that individuals will personally feel the potentially severe consequences of participating in anti-competitive activity.