• Login
  • Register
  • PRO
    • PRO Compliance plan
    • PRO Compliance
    • PRO subscription plans
    • Curated articles
    • In-depth
    • Market intelligence
    • Practice guides
    • PRO Reports New
    • Lexology GTDT
    • Ask Lexy
  • PRO
  • Latest
  • GTDT
  • Research
  • Learn
  • Experts
  • Store
  • Blog
  • Events
  • Popular
  • Influencers
  • About
  • Explore
  • Legal Research
  • Primary SourcesBeta
  • PRO Compliance

Introducing PRO Compliance
The essential resource for in-house professionals

  • Compare
  • Topics
  • Interviews
  • Guides
Getting The Deal Through joins Lexology
GTDT and Lexology Navigator have merged

CONTENT DEVELOPMENT

Become your target audience’s go-to resource for today’s hottest topics.

  • Trending Topics New
  • Discover Content
  • Horizons Beta
  • Ideation

CLIENT INTELLIGENCE

Understand your clients’ strategies and the most pressing issues they are facing.

  • Track Sectors
  • Track Clients
  • Mandates New
  • Discover Companies
  • Reports Centre New

COMPETITOR INTELLIGENCE

Keep a step ahead of your key competitors and benchmark against them.

  • Benchmarking
  • Competitor Mandates New

Lexology PRO

Power up your legal research with modern workflow tools, AI conceptual search and premium content sets that leverage Lexology's archive of 900,000+ articles contributed by the world's leading law firms. 

PRO Compliance plan
PRO subscription plans

Premium content

  • Curated articles
  • In-depth
  • Market intelligence
  • Practice guides
  • PRO Reports New

Analysis tools

  • Lexology GTDT
  • Ask Lexy
Explore all PRO content PRO Compliance
  • Find experts
  • About
  • Firms
Introducing Instruct Counsel
The next generation search tool for finding the right lawyer for you.
Back Forward
  • Save & file
  • View original
  • Forward
  • Share
    • Facebook
    • Twitter
    • Linked In
  • Follow
    Please login to follow content.
  • Like
  • Instruct

add to folder:

  • My saved (default)
  • Read later
Folders shared with you

Register now for your free, tailored, daily legal newsfeed service.

Questions? Please contact [email protected]

Register

Antitrust, competition and economic regulation - Autumn 2014

Hogan Lovells

To view this article you need a PDF viewer such as Adobe Reader. Download Adobe Acrobat Reader

If you can't read this PDF, you can view its text here. Go back to the PDF .

China, European Union, Germany, Hong Kong, Poland, USA November 18 2014

Would it be true to say that antitrust enforcement  is becoming increasingly globalised? 

Definitely. We often hear from the business world  about the impact of globalisation on business.  Globalisation is also impacting the antitrust world,  and business needs to bear this in mind when planning  its antitrust strategy. There has been an explosion in the growth of antitrust  agencies around the world in the last century. In 1900,  there were only two antitrust regimes – the U.S.  and Canada. In 1990, there were approximately 20  antitrust agencies. Today, there are over 120 different  antitrust agencies on every continent of the world apart  from Antarctica.  Along with the growth in the number of antitrust  agencies comes a corresponding increase in the  amount of cooperation between antitrust agencies  across the world. There is a range of co-operation that  takes place on a day-to-day basis, from the sharing  of know-how and expertise to deep co-operation on  individual matters where more than one agency is  investigating the same matter, to many other forms  of cooperation along this spectrum of interaction.  Cooperation occurs right across the board in all  enforcement areas: mergers, cartels, and conduct  (or to use the European term, abuse of dominance).  Close cooperation between agencies is becoming  increasingly frequent as agencies develop “pick up the  phone” relationships with each other around the world.  Cooperation also takes place within international  organisations such as the OECD and ICN. These  organisations provide a setting for agencies to  exchange experience and expertise and formulate  best practices and guidance. In addition, there are a number of Memoranda of  Understanding (MOU) and co-operation agreements  between antitrust agencies across the world. The U.S.,  for example, currently has 13 agreements in place  (with Australia, Brazil, Canada, Chile, Columbia, China,  Germany, EU, India, Israel, Japan, Mexico, and Russia).  These set out a general framework for cooperation,  and some also include a framework for cooperating  on individual cases. In addition, the OECD and ICN  have on-going projects aimed at developing the “next  generation” of international enforcement cooperation.4 ACER Quarterly May 2014 – October 2014 To date, the most frequent inter-agency case cooperation  has been in the mergers field. This is followed by the  cartels field where there is also a considerable track  record of cooperation, although to date it has involved a  smaller group of agencies than is the case for mergers.  Cooperation in the conduct area is the least developed  area, although there have been some examples, notably  between the DOJ and the European Commission in  their recent eBooks investigations. There are a couple  of reasons for this. First, there have not been as many  unilateral conduct investigations with international  dimensions as merger or cartel investigations. So, there  have been fewer opportunities to develop cooperative  relationships between agencies in this area. Secondly,  there is less convergence around the world about what  conduct triggers a unilateral conduct investigation and  therefore less scope for cooperation. This is different  from mergers, where cooperation takes place against  a backdrop of mandatory pre-notification regimes, or  cartels, where there is broad agreement on the type  of conduct that warrants investigation. In the mergers field, in 2011 to coincide with the 20th  anniversary of the EU/U.S. Cooperation Agreement,  the Department of Justice (DOJ), the Federal Trade  Commission (FTC) and the European Commission’s  Directorate General for Competition issued revised Best  Practices on Cooperation in Merger Investigations. In  March this year, the DOJ, FTC and Canadian Competition  Bureau issued similar merger guidelines. These guidelines  are not theoretical. They are based on experience among  the agencies of cooperation in many cases, and they  guide the investigative teams when they work on cases  on a day-to-day basis. I see the future as involving “more, more, and more...”  – more international cooperation of more intensity  involving more enforcement areas with more agencies. What benefits flow from this greater cooperation  between antitrust agencies? Rachel Brandenburger: The key benefits for both business and the agencies  are two-fold – more efficient investigations and the  avoidance of inconsistent outcomes and/or remedies.  Of course, if market structures or competitive  interactions differ in different jurisdictions or the alleged  facts or behaviour differ, the same outcome will not be  justified. But, where it is justified, avoiding inconsistent  outcomes benefits the companies concerned, the third  parties with relationships with those companies, and  ultimately the competitive process and therefore the  economies and consumers around the world. As I have said, the same type and level of cooperation  is not needed for each case. There is a spectrum of  cooperation that depends on the issues, conduct, and  markets in each individual case. Cooperation in any  individual case may take many forms from agencies  occasionally “touching base” with each other to deep  and frequent cooperation. Effective cooperation is  certainly not a case of “one size fits all”.  Companies under investigation need to keep in mind  that they cannot control whether there is dialogue  between agencies. Cooperation between agencies can  often be accomplished solely through the discussion of  non-confidential information. However, if an exchange  is going to involve confidential information with another  agency, it will require a confidentiality waiver from the  parties. The decision to provide a confidentiality waiver  is the parties’ choice, but providing the investigating  agencies with confidentiality waivers early in the  investigation usually facilitates effective and efficient  investigations to the benefit of all concerned. Is the cartel enforcement regime getting tougher? Mark Jones: Yes. In Europe it is already tough and there is no sign of  this changing. For example, just this year the European  Commission has levied a total of EUR 1.576 million in  cartel fines. Perhaps more telling is the longer term  perspective: the European Commission’s fines over the  last five years are significantly higher than they have  been over the last decade and a half. As for the future,  unsurprisingly, the new EU Competition Commissioner,  Margrethe Vestager, has told the European Parliament  that she will pursue effective enforcement against  cartels as a “top priority” during her mandate. More generally, antitrust authorities around the  world have continued to improve their enforcement  toolkit on a number of fronts and not just through  increased international cooperation: there is increased  criminalisation of cartel activity; more extensive  deployment of investigatory powers such as dawn  raids; and more effective procedures to uncover and  prosecute cartels through leniency and settlement  regimes which use the prospect of immunity from or ACER Quarterly May 2014 – October 2014 5 reduction of fines to incentivise companies to come  forward with evidence and admit liability. For example, the UK has also amended its criminal  cartel law with a view to making it easier to bring  criminal cartel prosecutions. Under this new law, it  will no longer be necessary to prove dishonesty as  the requisite mental element of the offence, which  should make it easier for prosecutions to be brought.  The UK has also recently made progress with its  criminal enforcement track record. In June, the UK’s  Competition and Markets Authority obtained a guilty  plea from an executive charged with fixing prices,  allocating customers, and bid-rigging in relation to  the market water-storage tanks. This is the UK’s  first successful criminal prosecution since its failed  prosecution of Virgin Airways executives in 2010. What about the U.S.? Would you say that the  enforcement regime is getting tougher there?  Kathryn Hellings: While the U.S. DOJ has been extraordinarily successful  in investigating and prosecuting cartels in recent years,  I would not necessarily say that the U.S. is getting  tougher on targeting international cartels. I would say,  however, that they are getting better at it, as indicated  by the record results they have obtained in recent years.  In my opinion, over the past decade, the DOJ’s success  has been fostered by several new legal developments,  such as increased penalties and wiretap authority, and  the use of additional, more aggressive investigatory  techniques. Additionally, the DOJ’s commitment to  transparent and predictable treatment for cooperation  by the accused with the DOJ has also contributed  greatly to the agency’s success in cracking cartels.  Probably the most notable legal development that  has contributed to DOJ’s success occurred in 2004,  when penalties for antitrust crimes were significantly  increased. Most notably, imprisonment for individuals  was increased from a three-year maximum jail  sentence to a 10-year maximum jail sentence, and  corporate fines were increased from a maximum  of $10 million to a maximum of $100 million. The  stakes are higher than ever before, and these penalty  enhancements have given the DOJ more leverage  when negotiating plea deals. With stiffer penalties  comes greater leverage, which has, in part, led to the  recent success of the Antitrust Division. Additionally, the investigatory tools used by antitrust  enforcers in the U.S. have gotten much stronger, which  has improved the DOJ’s ability to detect cartels and  obtain evidence. For example, over the past 10 years,  U.S. antitrust enforcers obtained wiretap authority.  They began to regularly execute search warrants.  U.S. antitrust enforcers also work more frequently and  closely with federal agents than ever before. With more  tools in their tool chests, U.S. antitrust enforcers are  able to get stronger evidence, which has led to greater  success at the plea negotiation table.  Finally, the DOJ has in the past 10 years worked hard  to provide predictability and transparency for those who  are subject to investigations. The amnesty program  has been incredibly successful, in part because the  Antitrust Division has, in the past 10 years, established  a transparent and predictable program. Defence  counsel has become increasingly comfortable with  the requirements and benefits of the DOJ’s amnesty  program, and, as a result, they are now more likely than  ever to seek amnesty or amnesty plus. Moreover, even  without amnesty, companies are oftentimes quick to  cooperate with enforcement officials, in part because  the benefits of cooperation have, in the past decade,  been frequently espoused by DOJ officials. In short,  in the past 10 years, the DOJ has successfully proven  that cooperation yields reliable and predictable benefits  in criminal antitrust cases. What is Mexico’s track record in pursuing  international cartels? Omar Guerrero Rodríguez: Since Mexico began regulating competition in 1992,  it did not have a significant presence in the field of  investigating and sanctioning international cartels.  The leniency program inserted in 2006 gained  momentum after the May 2011 amendments to the  competition statute, as the power to impose high fines  on cartelists was included and, more importantly, cartel  behavior was criminalized (with potential imprisonment  up to a maximum of 10 years).  Nowadays, most international investigations have  commenced as a natural consequence of leniency  programs, public information in other countries or  cooperation with foreign agencies. As a result, the  former Federal Competition Commission (CFC)  investigated several international cases. These cases,  at the beginning, resulted in small fines (e.g. lysine 6 ACER Quarterly May 2014 – October 2014 case), but more recent cases have significantly  increased the level of fines on cartel participants.  There are a number of international cartel investigations  (although completed in other jurisdictions) which are  still ongoing in Mexico (e.g. consumer electronics  products, and auto parts). In 2014, Cofece (the new competition autonomous  constitutional body in Mexico for all industries except  telecoms, radio and TV) levied its first fine upon an  international refrigerator compressor cartel that had  effects in Mexico. Cofece imposed fines totalling  an equivalent of U.S.$16.9 million in that case. This  number stands in stark contrast to that of the leaders  in the combat against international cartels: the United  States and the European Commission. Both have  already amassed over U.S.$1 billion in fines during  2014, and each is on track to break previous records.  However, it is expected that fine levels in Mexico will  increase significantly, as the cases under investigation  will fall under the new competition regime where fines  can be up to 10% of revenue in Mexico. Mexico’s disappointing track record can be traced  to some determinative factors. First, the switch  from the CFC to Cofece has caused a lag in time as  administrative activities have taken precedence over  investigations. Second, there is no experience on  criminal prosecution. Third, the competition authority  has faced important problems with service of process  through letter rogatories. Fourth, shortage of personnel  to process all information coming from international  investigations (including translations struggles and  costs) has made it more difficult to put a sound case. Additionally, before the 2013 Constitutional amendments,  the CFC did not have the kind of jurisdictional power  that the U.S. or EU have, such as long-arm jurisdiction or  surprise on-the-spot inspections (dawn raids). However, Mexico’s potential for additional investigations  will significantly increase as Cofece develops. First, Cofece  will keep on promoting the leniency program as an avenue  for companies and individuals to blow the whistle and  gain amnesty. Leniency/immunity programs have been  by far the most important factor leading to successful  investigations in both the U.S. and EU, and Mexico will  keep on following that trend. In fact, through the immunity  program, Cofece found out about the refrigerator cartel and  many other cartels under investigation. ACER Quarterly May 2014 – October 2014 7 Cofece has also been busy setting up cooperation  agreements with other countries’ investigation  authorities as well as the OECD in order to improve  access to worldwide investigations, which will facilitate  access to information to determine whether certain  anti-competitive practices have effects in the Mexican  market. According to Cofece, the division devoted to  the pursuit of international cartels has already seen a  65% increase in activity since it was established less  than one year ago. It appears that these developments  will be effective in getting Cofece more active in  pursuing investigations of international cartels. In April 2014, an Italian citizen became the first  foreign national to be extradited to the U.S. solely  based on an antitrust violation. Are we going to  see a lot more extradition in the future? Kathryn Hellings: It has long been the case that the DOJ has used  Interpol’s Red Notice to catch and detain fugitives in  antitrust cases. So, in that way, fugitives in antitrust  cases have always run the risk of detention whenever  they‘ve crossed borders.  That being said, despite the risk of detention, fugitives  were generally not extraditable for antitrust crimes.  This is because most countries did not historically have  criminal antitrust laws. In order to successfully extradite  a fugitive, there must be dual criminality. A person may  be extradited only when his/her actions constitute an  offense in both the requesting and requested states.  While historically very few countries had criminal cartel  laws, making extradition efforts to the U.S. impossible,  in the past decade, the number of countries with criminal  cartel laws has dramatically increased. The number of  countries with criminal cartel laws has, as Mark has said,  more than doubled in the last decade, and that number  is trending upward. With increased global criminalization  of cartel conduct comes an increased risk of extradition.  I think the lesson to be learned is: if you currently  are or become in the future a fugitive in an antitrust  investigation the world is getting more dangerous for  you; there are fewer safe havens. The DOJ’s Antitrust  Division has indicated a willingness to extradite, and  you can expect that they will continue to look for  opportunities – albeit the right opportunities – to do so. Is global antitrust litigation risk now matching  the U.S.? Kathryn Hellings: I can’t say whether the global antitrust litigation risk  now matches the U.S., but I can say that the global  antitrust landscape continues to get more and more  complex and treacherous for companies and individuals  under investigation. It is exactly this landmine of global  investigations and litigation that make our practice  group at Hogan Lovells so attractive. It is becoming  increasingly necessary for companies under investigation  to have one uniform global approach and message –  from the outset of a global investigation through the  resolution of the civil litigation – and we have a unique  team that is capable of providing that for clients. Mark Jones: A greater amount of successful antitrust litigation is  definitely on the cards in Europe. Effective private  enforcement in the EU has to date largely been limited  to a few jurisdictions, such as the UK, Germany, and  the Netherlands. This is now changing. In April 2014,  the European Parliament adopted a directive governing  damages actions for infringements of EU competition law.  This directive seeks to harmonise certain divergences  between Member States’ systems with a view to  establishing a minimum standard which facilitates  competition damages actions throughout the EU. It also  seeks to fine-tune the interaction between private and  public enforcement by, for example, clarifying the extent to  which leniency applications can be ordered for disclosure  in private litigation. Whilst the impact will be felt more in  some Member States than others, the Directive contains  significant changes for every jurisdiction. The European Commission has also adopted a  recommendation which encourages EU Member  States to set up collective redress mechanisms,  including class actions by mid-2015. This would be  on the more restricted opt-in basis, where claimants  have to proactively take steps to join the claim. In the  UK, however, reforms are being pushed to allow the  possibility of opt-in claims as well, where claimants  within a class are automatically included in an action  unless they take steps to opt out. There is already  significant class action activity in some European  countries, such as the UK, where numerous claims have  been brought, although most have settled before trial.8 ACER Quarterly May 2014 – October 2014 Changing competition law regimes  Many regimes around the world have recently  introduced significant changes to their competition  law regime, including Mexico. Why did Mexico  need a new competition law? Ricardo A. Pons Mestre: Mexico’s new political regime considered that  effectiveness in the enforcement of competition law  was essential to foster investment and growth in the  country. Therefore, the competition law regime was  totally overhauled in 2013 through an amendment to  the Mexican Constitution §28.  The 2013 Constitutional reform created two competition  authorities, empowered them with new functions,  launched a new system for challenges of competition  decisions and created specialized constitutional federal  tribunals to hear those challenges. In this context, the  2014 new Competition law was the implementation of  the Constitutional reform that sends a clear message  that competition authorities are empowered with a better  toolkit to perform investigations and detect anti-competitive  conduct. Likewise, criminal and administrative sanctions  were enhanced in order to send a clear deterrence  message to the general public and strengthen the  “carrot and stick” policy.  Omar Guerrero Rodríguez: The reform in the Mexican Constitution §28 came as  surprise, since the 2011 Competition Law amendment  was the axis of all previous reforms to our Mexican  competition law. It was quite odd that after the 2011  competition amendments, which had greatly increased  the ability of regulators (the former CFC) to investigate  and sanction severely anti-competitive behaviour, the  Constitutional amendment dissolved the CFC and  created a new framework. This was especially surprising  to those outside Mexico, where the chairman of the CFC  was also the chairman of the Steering Committee of the  International Competition Network (ICN), and therefore,  the CFC’s recognition outside Mexico did not necessarily  mean that such feeling was shared elsewhere.  Furthermore, there was strong and sound criticism  (e.g. OECD) of the status of competition in the  telecom sector. Two cases decided in 2012 proved  the inadequacy of the previous regime in dealing with  anti-competitive actions. One involved the finding of  anti-competitive practices against Telcel, and the other  involved the purchase of lusacell by Televisa. Although  these cases arose before the 2011 amendments and  thus were not analysed under the amended law, there  was major discontent that those actors were stronger  than the regulator. Thus, there was a feeling that  only by providing a major overhaul of the competition  system at the constitutional level, competition (and  particular in the telecom sector) would be enhanced. The Constitutional amendments have provided Mexico  with the potential to transform from an attractive  developing market into a Latin American powerhouse  on the same level as other countries, such as Brazil. Merger control  In the context of greater cooperation between  agencies across the world, what does business need  to do in order to ensure a smooth process for the  clearance of mergers? Mark Jones: For any significant transaction, it is now not uncommon  for the parties to have to navigate merger control filings  in multiple jurisdictions (sometimes as many as 20).  There has been active merger control enforcement  by many new or evolving regimes in recent years,  including important jurisdictions such as in China, India,  and the COMESA block in Africa. In this context, parties  need to prepare a careful merger control clearance  strategy in advance.  Even the initial determination of where filings are  required can involve significant time and effort. While  there is increasing cooperation between antitrust  agencies worldwide, jurisdictional tests still vary widely  (turnover, market share or asset-based tests).  Timing is an important practical issue to take into account  and coordinate across jurisdictions: how soon is it possible  to file notifications, how long is the review period, and  (since there is more often than not a prohibition on closing  the transaction before the authorities clear it) what the  impact is on the wider deal timetable.  Another important issue is what assessment test each  of the relevant authorities will apply and their differing  approaches to any possible competition concerns. For  example, presenting a consistent approach to issues  such as market definition will generally be desirable.  The transaction parties will also need to consider the  possible need for remedies to the competition issues, 

To view all formatting for this article (eg, tables, footnotes), please access the original here.
Hogan Lovells - Rachel C. Brandenburger, Kathryn Hellings, Mark Jones, Omar Guerrero Rodríguez and Ricardo Pons Mestre
Back Forward
  • Save & file
  • View original
  • Forward
  • Share
    • Facebook
    • Twitter
    • Linked In
  • Follow
    Please login to follow content.
  • Like
  • Instruct

add to folder:

  • My saved (default)
  • Read later
Folders shared with you

Filed under

  • China
  • European Union
  • Germany
  • Hong Kong
  • Poland
  • USA
  • Competition & Antitrust
  • Hogan Lovells

Popular articles from this firm

  1. 浅谈尽职调查 (what is due diligence and why is it important?) *
  2. Biden’s China policy: No details, but several clues on approach *
  3. Free download of licensed digital songs on Baidu – music to the ears of record labels *
  4. Is China truly open for (foreign) business? What investors need to know *
  5. Chinese regulators announce new requirements for exports of medical supplies and nonmedical masks *

If you would like to learn how Lexology can drive your content marketing strategy forward, please email [email protected].

Powered by Lexology
loading...

Related research hubs

  • Poland
  • China
  • Competition & Antitrust
Barbara Clancy
Legal Counsel
International Rugby Board
What our clients say

"The newsfeeds deliver us the most recent legal analysis and practical information. There seems to be a broad analysis which is beneficial to us in analyzing various areas of law. It provides a snap shot update of various legal developments and assists us in staying current. The articles are well covered and include the right amount of detail. The size and depth of articles are good too, so we can get to the information one needs very quickly. The articles are typically of high calibre and from high-calibre authors who provide sufficiently succinct articles so that one can learn much about new developments in a short amount of time. I like the format because it is easy to scan for relevant articles. It's a great tool. I like the fact you can tailor the newsfeeds by jurisdiction and work area, and only receive information relevant to your practice."

Back to Top
  • Terms of use
  • Cookies
  • Disclaimer
  • Privacy policy
  • GDPR compliance
  • RSS feeds
  • Contact
  • Submissions
  • About
  • Login
  • Register
  • Follow on Twitter
  • Search
Law Business Research

© Copyright 2006 - 2021 Law Business Research