Doug Tween and Ben Bauer recently took part in the 13th ABA/IBA International Cartel Workshop. It was attended by the European Commission as well as antitrust authorities from Australia, Brazil, Canada, Japan, Mexico and the US.
The Workshop provided an excellent snapshot of the trends and challenges in global cartel enforcement.
Why the decline in global cartel enforcement?
The hottest topic at the Workshop was the decreasing number of global cartel investigations over recent years.
There is a consensus amongst practitioners that the number of active global cartel investigations is unusually low. The cause is generally considered to be the increased burdens, relative to incentives, in seeking leniency, which are limiting the number of global leniency applications (frequently the starting point for a cartel investigation).
In contrast, among global authorities there was no meeting of minds on the causes of the decline in the number of international investigations. Several potential causes were considered, including:
- the increased burden which enforcers are imposing on leniency applicants (including risks associated with the submission of evidence);
- the availability of cooperation credit beyond the leniency program; and
- the increasing risks from civil litigation.
Unsurprisingly, regulators were in full business development mode, talking up their openness to considering whether they are striking the right balance of incentives and disincentives in making leniency applications.
What are the US Department of Justice’s enforcement priorities?
The US Deputy Assistant Attorney General, Richard Powers, set out the four pillars of its leniency policy:
- Prison: the need for individual liability and criminal sanctions (including custodial sentences for culpable employees) to deter cartel activity;
- Fines: the use of corporate penalties to recoup ill-gotten gains, deter illegal conduct and incentivize offending corporate defendants to seek leniency (or to mitigate their penalties through cooperation or compliance programs);
- Detection: increasing the fear of detection by marrying the leniency program with the DOJ’s other enforcement tools, including informants, warrants, subpoenas, monitoring and undercover agents; and
- Transparency: ensuring the predictability and transparency of the leniency program through written policies, FAQ documents, and public announcements.
The DOJ is currently exploring how to develop its cartel practice to maximize deterrence, detection and self-reporting. In particular, it is focusing on situations where the costs of cooperating with multiple global enforcers have been identified by corporate defendants as a significant disincentive to pursuing leniency – a point made strongly at the Workshop.
How to organize an international cartel defense:
Doug Tween participated on the “Organizing the Defense” panel. Issues considered by the group included whether a presumed leniency applicant should be allowed to join the joint defense group, as well as timing and strategic considerations raised by parallel enforcement actions across the globe.
The panel also identified key issues for any defendant participating in a joint defense group related to a cartel investigation, including:
- avoiding waiver of privilege and inadvertent disclosure;
- understanding the privilege rules in different jurisdictions and coordinating with local experts to avoid costly mistakes;
- considering separate joint defense groups for parallel criminal and civil matters; and
- weighing-up the benefits of written versus oral joint defense agreements.
What are the key takeaways?
Despite the recent slowdown in cartel enforcement, a few things remain clear:
- cartel enforcement continues to be a key enforcement priority globally - the current downtick in cartel investigations won’t last forever;
- practitioners are reminded of the importance of avoiding waiver of privilege and inadvertent disclosure; and
- crucial to any cartel defense strategy is understanding the privilege rules in different jurisdictions and coordinating with local experts.