New investigations into possible cartel activity among European truck manufacturers have highlighted the tools available to some antitrust enforcement agencies. In separate investigations both the European Commission (EC) and the UK’s Office of Fair Trading (OFT) have conducted on-site investigations of the offices of truck manufacturers, and the OFT has gone a step further and offered a reward to individuals who come forward with additional information about the alleged cartel. This may be designed to support a more robust criminal prosecution of cartel activity by the UK.
In September 2010, the OFT opened investigations into suspected price-fixing and market-allocation by truck manufacturers. The OFT carried out an unannounced inspection at the UK premises of Mercedes-Benz and reportedly requested information from several other manufacturers. It also used its criminal powers to arrest the managing director of Mercedes-Benz’s UK commercial vehicle operations.
The OFT is pursuing parallel civil and criminal investigations under the Competition Act 1998 and the Enterprise Act 2002, respectively, which it commenced after receiving information on suspected cartel activity, possibly provided by a whistleblower or a third party making a complaint.
In January 2011, the EC also conducted on-site investigations at the premises of several truck manufacturing companies in a number of Member States. The EC said it had reason to believe that the companies may have infringed EU antitrust rules on cartels and restrictive business practices or the abuse of a dominant market position (Articles 101 and 102 TFEU).
The UK investigation
In late January, the EC investigations were followed by the OFT appealing for further information in its civil and criminal investigations, offering the possibility of rewards of up to £100,000 for those individuals that came forward. The OFT is seeking information that may be relevant to its investigations, in particular relating to suspected contacts between individuals from competing vehicle manufacturers operating in the UK. The OFT also highlighted the possible availability of leniency.
This is unprecedented action by the OFT. The OFT has never before appealed for information with the offer of a financial reward. In addition, the OFT has never before made a payment to an individual under its reward scheme, which was introduced in 2008.
The UK’s informant reward scheme
Under the informant reward scheme, an individual may receive up to £100,000 for providing information on a cartel to the OFT. The amount of the reward actually given will depend on the effort and risk taken by the informant, the value of the new information, and the harm to the economy and consumers from the conduct. The UK is one of only a handful of jurisdictions to offer informant rewards to individuals, along with Hungary, South Korea and Pakistan.
The OFT stated that individuals directly involved in an alleged cartel ordinarily may not claim a reward. Instead the OFT expects them to apply for immunity from criminal sanctions under its leniency policy (described below). Nonetheless, the OFT may consider a reward in addition to leniency, where the person’s role in the cartel was peripheral, such as an employee occasionally directed by his superiors to attend a cartel meeting, but not asked to take an active part in the cartel.
The UK reward is intended to encourage people with "inside" knowledge to come forward, to increase the chances of detecting cartels and improve the possibility of criminal convictions. In civil investigations the OFT very often finds the existence of a cartel on the basis of circumstantial evidence. However, circumstantial evidence would unlikely be sufficient to secure a conviction in the criminal courts. The OFT’s active use of the scheme perhaps signals that it is intending to get even tougher on sanctioning cartel activity, including pursing both civil and criminal sanctions where at all possible.
The UK’s leniency program
In addition to its reward scheme, the OFT operates a leniency program, whereby an individual or a company may receive immunity from criminal prosecution and financial sanctions, respectively. The goal is to increase detection of cartels, which are secretive by nature. In order to gain complete immunity, certain conditions must be satisfied, as set out below.
For individuals, they must admit participation in the criminal offence, provide all information and cooperate fully with the OFT, refrain from further participation in the cartel, and not have taken steps to coerce another undertaking to take part in the cartel. In addition, the OFT must not believe that it already has, or is in the course of gathering, sufficient information to bring a successful prosecution of that individual.
For a company, it must provide all information and cooperate fully with the OFT, refrain from further participation in the cartel, be the first to report and confess involvement in the cartel, and not have taken steps to coerce another undertaking to take part in the cartel activity. The OFT must not have had any pre-existing investigation into the cartel.
In the trucking investigation, since the OFT already has commenced civil and criminal investigations into suspected cartel activity in the sector, both individuals and companies will now struggle to obtain immunity from criminal penalties and fines. However, if a company has succeeded already in obtaining full civil immunity, then its past and present employees will enjoy automatic immunity from criminal investigation. The OFT may also be willing to grant immunity to employees of any company that has succeeded in obtaining partial immunity.
The European Commission investigation
The EC also is conducting a civil investigation of suspected competition law infringements in the truck manufacturing industry. The EC started its investigation aggressively with simultaneous dawn raids, in a number of Member States including reportedly Sweden, the Netherlands, Italy, Belgium, Luxembourg and Germany.
Less is known about the current status of this investigation, and there is no legal deadline by which the EC must complete its inquiries. Like the OFT in the UK, the EC operates a leniency policy for companies, applying similar conditions to those in the UK. However, the EC does not offer individual rewards and does not have the jurisdiction to carry out criminal investigations.
The OFT’s position is that there is no link between the two investigations, which it says are being conducted separately and are different in scope. However, the OFT has also confirmed that it is cooperating closely with the EC .
Both investigations are in their early stages. Therefore it will likely be some months before further information about the investigations becomes public. In the meantime, the investigations and the OFT’s highly publicized use of its rewards scheme will serve as a stark reminder of the risks of cartel activity by a corporation or its employees. Involvement may be uncovered by a fellow cartelist blowing the whistle or by employees who are aware of the conduct. Civil and criminal sanctions will be pursued with vigour, even if that means the government must make substantial payments to obtain necessary information.