It is not exactly “breaking news” that in Bell Atlantic v. Twombly, 550 U.S. 544, 577 (2007) the Supreme Court held that a complaint may be dismissed if it does not allege “enough facts to state a claim to relief that is plausible on its face.” In the aftermath of Twombly it became more difficult for plaintiffs to sustain pleadings that relied on reasonable inferences of collusion from parallel conduct. Lower courts took to heart the policy concern expressed in Twombly that the enormous cost of private antitrust litigation could cause defendants to settle non-meritorious suits simply to avoid the expense of litigation. [Also, the threat of frivolous suits that are simply too costly to defend would put a chill on pro-competitive conduct]. But, Twombly has not been the death knell of private antitrust actions. The Supreme Court has also recognized that Congress drafted the antitrust laws with the express purpose of encouraging private enforcement. See Reiter v. Sonone Corp., 442 U.S. 330, 344 (1979). And as the Sixth Circuit has noted, “Rational people, after all, do not conspire in the open, and a plaintiff is very unlikely to have factual information that would exclude the possibility of non-conspiratorial explanation before discovery.” Erie County, Ohio v. Morton Salt, 702 F. 3d 860, 869 (2012) (emphasis in original). These policy interests compete as courts weigh on a case-by-case basis whether plaintiffs have “nudged their claims across the line from conceivable to plausible.” But, it seems it may be easier to budge the judge on the nudge as time has passed from the Twombly decision. [Read more…]
Ed. Note: The post below is from guest contributor Avinash Amarnarth. Avisnash is an attorney with the law firm ‘Vinod Dhall and TT&A’ in New Delhi, India.
Hello from India to all readers! It has been quite a while since my introductory post. There has been a relative lull of activity on the cartel front in India.
However, on 27 October 2014, the Competition Commission of India (CCI) following a complaint filed by M/s Xcel Healthcare, a stockist for pharmaceuticals in the state of Goa, found that the Chemists and Druggists Association, Goa (CDAG) had continued to violate an earlier order of the CCI against it. The CCI found that CDAG had continued to control the supply of pharmaceuticals in Goa through a stipulation that all stockists in Goa must obtain a no-objection certificate (NOC) from it and pressuring pharmaceutical companies into not supplying to those stockists who did not obtain an NOC. The CCI had, in its earlier order, found that such actions amount to a collective boycott/refusal to deal leading to limitation and control of supply in violation of the Competition Act. In the present case, the CDAG had pressurised Glenmark Company and Wockhardt Limited, two pharmaceutical companies, into not supplying to the informant, who had not obtained an NOC from CDAG.
The CCI found that Glenmark and Wockhardt could not be found to be in violation of the Competition Act as the individual agreements between them and CDAG did not qualify either as a horizontal agreement or as a vertical agreement under the Competition Act. The CCI found that there was no evidence of any horizontal agreement between Wockhardt and Glenmark to suspend supplies to the informant. Further, the CCI observed that the mere decision by Wockhardt and Glenmark to suspend supplies to the informant cannot be said to amount to a vertical agreement between these companies and their existing stockists.
Apart from passing a cease and desist order, the CCI imposed a penalty at the rate of 10% (the maximum percentage that can be imposed under the Competition Act) of the average receipts of the CDAG for the last 3 years (amounting to roughly USD 172,888) and decided to initiate proceedings against the individual office bearers of the CDAG.
A few observations on the decision itself. First, this is the first decision of the CCI where a party’s recidivism was considered as an aggravating factor in imposing penalties resulting in the maximum permissible percentage of penalty being imposed on CDAG. Second, the decision creates some confusion about the CCI’s approach to anti-competitive agreements under Section 3 of the Competition Act. As I had highlighted in my previous post, the CCI in an earlier order in Ramakant Kini v. Hiranandani Hospital had held that agreements, which are neither horizontal agreements nor vertical agreements, could still be assessed under the general prohibition on anti-competitive agreements under Section 3. However, the present decision finds that the agreement between the pharmaceutical companies and CDAG qualified neither as a horizontal agreement nor as a vertical agreement and therefore could not be examined under Section 3; thereby suggesting that agreements that are neither horizontal nor vertical cannot be examined under Section 3. It remains to be seen whether this dichotomy in approach will be litigated at the appellate stage.
At a broader level, this decision is the latest in a spate of decisions of the CCI against chemist and druggist trade associations for adopting collective actions aimed at restricting the commercial freedom of individual stockists such as requiring NOCs from the association for operation and fixing their trade margins. In fact, this is the 8th decision of the CCI against chemist and druggist associations in the last 2 years. The CCI has even issued a public notice warning chemist and druggist associations against adopting such actions (here). Other trade associations that have been regularly penalised are film distributors’ associations and travel agents’ associations. It appears that the problem with certain industries in India is a lack of competition culture more than anything else. In fact, in the present case, the minutes of the meetings of the association revealed that the association was trying to use “political clout” to evade the CCI’s order. Apart from enforcement actions, advocacy and training initiatives for such industries are also crucial to spread awareness about competition law and competition rules. The CCI has undertaken such initiatives to some extent but perhaps more focus is needed on those industries where these issues seem to recur.
The full order can be accessed at this link.
Supreme Court of Canada (“SCC”) jurisprudence in the cartel space is rare – and therefore valuable. While not always good news, it provides definitive guidance.
On October 17, the Supreme Court of Canada, ruled that plaintiffs involved in class action proceedings against multiple gas station operators would be granted access to the Canadian Competition Bureau’s (the “CCB’s”) wiretap evidence collected during the course of its criminal investigation into the conduct. The majority decision of the SCC held that neither the Competition Act nor the Criminal Code prevented a civil court from ordering the disclosure, by the CCB, of wiretap evidence obtained in connection with a criminal investigation.
Between 2004 and 2006, the CCB conducted an investigation, known as operation “Octane”, looking into alleged price fixing of retail gasoline prices in several smaller cities in the province of Québec. The investigation led to criminal charges being laid against 54 corporations and individuals. During the course of the investigation the CCB successfully intercepted and recorded more than 220,000 private communications pursuant to seven judicial authorizations.
When the criminal investigation became known, a class action proceeding was commenced against some of the criminally accused parties, as well as additional defendants who were not charged criminally. During the course of these civil proceedings, counsel for the plaintiffs sought to obtain the transcripts and recordings of the conversations that the CCB had intercepted pursuant to wiretaps.
In July 2012, the Superior Court of Québec accepted class counsel’s request and ordered that the CCB and the Director of Public Prosecutions provide the requested recordings to the lawyers and their experts participating in the class proceedings, with the requirement that these recordings be screened to protect the privacy of third parties not connected to the proceedings. The Québec Court of Appeal declined to review the Superior Court’s decision, and the matter was then brought before the SCC.
In reaching its decision to deny the appeal and permit the disclosure of the wiretapped conversations, the SCC drew a distinction between the justification required to permit the interception of private communications and the justification required to permit the disclosure of already intercepted communications. The SCC held that, in terms of authorizing the interception of private communications, the Criminal Code provides a mechanism to protect private communications that is necessarily balanced against the right of the state to intrude on privacy to further the suppression of crime. As a result, electronic surveillance can only be authorized in limited circumstances relating to the investigation of serious crimes and the investigation of threats to Canada’s national security. However, the SCC found that once private conversations have already been intercepted, the focus of the inquiry turns to civil discovery and disclosure principles. Thus, the SCC reviewed the applicable discovery rules related to the rights of discovery in civil lawsuits, requiring the disclosure of documents relevant to an issue in the proceedings in the possession of a third party. Based on these rules of civil procedure, the SCC approved the disclosure of recorded wiretapped conversations gathered as part of a criminal investigation, subject to the restrictions imposed by the Superior Court judge.
The decision has implications for all relevant parties. There are general privacy concerns, which were addressed as discussed above. There are also considerations for the CCB. The costs of the CCB in managing the production – and deletions – ordered may be considerable. The CCB may also find that it will get less information from parties on a voluntary basis – since it is not obvious that the decision will be restricted to information gathered by wiretaps. Plaintiffs, while immediate beneficiaries, may find that they obtain more materials than they can reasonably, or economically, manage.
The biggest impact, however, will be on defendants – the subject of investigations. All other things being equal, additional information in the hands of plaintiffs is unlikely to be beneficial to them. There may also be changes in tactical considerations, including what they are willing to proffer to government investigators. As well, in the past, defendants would often seek not to come into possession of certain CCB materials, so that they need not be produced on discovery. This approach may no longer be relevant.
However much any party may be happy – or unhappy – with the decision, it is now – and for the foreseeable future will likely be – the law. Plaintiffs will have access to a wider, in some cases much wider, suite of information in cartel follow-on class actions. This may not be a whole new world, but it is a notable shift.
Until next time,
James Musgrove & Joshua Chad
Today’s post is by Joan Marshall, my partner at GeyerGorey. Joan and I both worked in the Antitrust Division, DOJ but in different offices. Joan prosecuted many major price fixing and bid rigging cases, including the vitamins cartel.
The Antitrust Division has now publicly recognized that there is a grand jury in the Northern District of California investigating possible price fixing, bid rigging, and market allocation among manufacturers of capacitors. Numerous class action price fixing suits have been filed. The Division has filed a motion seeking a stay of proceedings in the civil private class action litigation. Capacitors are electrical components used to store energy and have applications in data processing equipment, personal computers, communication systems, cellular phones, consumer electronics, automotive systems, defense and aerospace systems, power management systems, and many other electronic devices. There are several types of capacitors and they are found in nearly every electronic product. A typical smartphone contains up to five hundred capacitors. The global market for capacitors is estimated to be nearly $18 billion in 2014.
The Antitrust Division will typically seek a stay of the civil proceedings until it has largely finished the work of its criminal investigation. Stays usually have two components. The first is a stay on the discovery of documents. This stay is more limited with the Division usually not opposing discovery of documents that it has already obtained so that the civil litigants can at least proceed with that aspect of their discovery. The Division typically, however, seeks much longer stays of witness depositions in order to prevent its witnesses or prospective witnesses from making multiple statements. In the capacitors motion the Division seeks a stay on merits discovery until April 2015, with a further stay on merits depositions until November 2015. (Witnesses such as IT personnel or document custodians are not considered merits witnesses.). The Division has also proposed an indefinite stay of discovery of any party’s or witness’s communications with the government or the grand jury relating to capacitors, except by order of the Court for good cause.
It is well established that the government may intervene for the purpose of limiting discovery when there is a parallel criminal proceeding, although the scope and length of the stay is sometimes contested. In this case the government’s motion to intervene is unopposed. There is a status conference in the civil case scheduled for October 29th before Judge James Donato and the government seeks to be heard at that conference.
An interesting fact in this investigation is that the Antitrust Division has proceeded by the use of subpoenas. The Division prefers to initiate an investigation with search warrants wherever possible. This approach preserves evidence from possible destruction and creates momentum for the government and uncertainty on the defense side. Executing search warrants also signals to the subjects that the government had probable cause necessary to secure the warrants. This can indicate that there is an amnesty applicant already and the company and its executives are cooperating with the Division. Does the lack of search warrants in the capacitor investigation indicate there is no leniency applicant? Probably not. This is a worldwide investigation. There are parallel capacitor investigations in at least China, Japan, Korea and the EU. If there is a leniency applicant anywhere in the world, it would be foolhardy not to rush in to seek leniency in the United States. A possible scenario is that there are not relevant documents in the United States. A search warrant requires probable cause to believe a crime has been committed as well as probable cause to believe that documents that evidence the crime are at a particular location. The relevant documents may simply all be overseas.
It is also possible that the grand jury investigation will conclude that the conspiracy in other parts of the world [if there is one] will not meet the FTAIA requirements for a prosecution of “direct, substantial and reasonable foreseeable effects” on commerce in the United States. For example, cartel members may discuss and fix prices, rig bids, or allocate markets in Asia and/or Europe but refrain from collusion in the United States. Antitrust Division officials have commented in speeches that they aware of numerous international cartels that deliberately refrained from extending their anticompetitive activities into the United States, presumably because of the jail penalties that the Antitrust Division seeks to impose.
Of course this is all speculation. The grand jury proceedings are secret and the Antitrust Division does whatever it legally can to protect the fact of and identify of leniency applicants and cooperators. In time, leniency applications and cooperating witnesses may become public either because they self-disclose or because in the course of a later criminal trial, the government is required by law to make disclosure of cooperation agreements. As this investigation unfolds, more will be revealed.
 See, e.g., Organisation for Economic Co-operation and Development, ROUNDTABLE ON PROMOTING COMPLIANCE WITH COMPETITION LAW — Note by the Delegation of the United States, June 2011. http://www.justice.gov/atr/public/international/273461.pdf, paragraph 17.
 Id., paragraph 16, citing Donald I. Baker, The Use of Criminal Law Remedies to Deter and Punish Cartels and Bid-Rigging, 69 Geo. Wash. L. Rev. 693, 705 (Oct./Dec. 2001). “The Division has long advocated that the most effective deterrent for hard-core cartel activity, such as price fixing, bid rigging, and market allocation agreements, is significant prison sentences. Prison sentences are important in anti-cartel enforcement because companies necessarily commit cartel offenses through individual employees, and because prison is a penalty — in contrast to fines — that cannot be reimbursed by the corporate employer. As a corporate executive once told a former Assistant Attorney General: ‘[A]s long as you are only talking about money, the company can at the end of the day take care of me . . . but once you begin talking about taking away my liberty, there is nothing that the company can do for me.; Executives often offer to pay higher fines in exchange for a reduction in their jail time, but they never offer to spend more time in prison in order to get a discount on their fine”.
On October 15, 2014 the Department of Justice recognized the historic achievements of the auto parts cartel investigation team, which was led by the Antitrust Division and the FBI. While the investigation is still ongoing, that may be the case for years as things wrap up or trials take place so it’s fitting for DOJ to recognize the extraordinary work done to date. Some of the award recipients have already left the DOJ.
Worldwide, the auto parts investigation is just getting started in some places. South Africa recently announced that it was investigating 82 automotive component manufacturers for collusion on 121 automotive components. By the time all global auto parts litigation is finally over, including civil suits, the matter may rival the Hundred Years War in length.
The Department’s announcement includes this:
The first Distinguished Service Award is presented to members of the investigative and litigation team responsible for exemplary performance in the prosecution of conspiracies in the automobile parts industry. This team, honored for its leadership, dedication and tireless investigation of global anticompetitive cartels, is responsible for the historic prosecution of over a dozen price-fixing, bid-rigging and market-allocation conspiracies in the automobile parts industry. This four-year investigation was unprecedented in both its scope and the volume of commerce affected by the illegal conduct. Due to the team’s efforts, 26 companies have agreed to pay fines totaling $2.3 billion and 20 individuals have been sentenced to serve jail sentences. The conspiracies uncovered by the investigation affected more than 25 million cars purchased by American consumers and over $5 billion in automotive parts sold to U.S. car manufacturers and automobile plants in 14 states. As a result of the extraordinary efforts of the team, competition was restored to the auto parts industry, and the companies and individuals responsible were held accountable for their illegal conduct.
Award recipients include, from the Antitrust Division, Chief Lisa M. Phelan; Assistant Chief Kathryn M. Hellings; Trial Attorneys Shane Cralle, Paul Gallagher, Kenneth W. Gaul, Mark C. Grundvig, Jason Jones and Eric Meiring; Washington Criminal I Section Secretary Priscilla Scruggs; Paralegal Unit Paralegal Specialist Meghan Ballard; and Office of Operations Trial Attorney Portia Brown; from the FBI’s Washington Field Office, Special Agents Kristina Honeycutt and Faustine M. Smith-Neil; and from the FBI’s Detroit Field Office, Special Agent Douglas R. Wood Jr.
Congratulations to all.
 The 121 automotive components allegedly affected by the collusion include, but not limited to, Inverters, Electric Power Steering ECU, Electric Power Steering and Motors, Glow Plugs, Electric Power Steering systems, Rear Sunshades, Pressure Regulator, Pulsation Damper, Purge Control Valves, Accelerator Pedal Modules, Power Management Controller, Evaporative Fuel Canister systems, Knock Sensors, Spark Plugs and Clearance Sonar systems.
Belgium has joined the ranks of foreign countries asking the Seventh Circuit to uphold its original ruling in Motorola Mobility v. AU Optronics. The Seventh Circuit originally ruled that the purchase by Motorola Mobility’s foreign subsidiaries of LCD panels could not meet the FTAIA requirements that the defendants’ price fixing had a “direct, substantial and reasonably foreseeable effect” on U.S. commerce and the “effects gave rise to a claim” under the federal antitrust laws. The court found that “the effect of component price fixing on the price of the product of which it is a component is indirect….” The court was concerned with overzealous extraterritorial application of the Sherman Act. “The position for which Motorola contends would if adopted enormously increase the global reach of the Sherman Act, creating friction with many foreign countries and “resent[ment at] the apparent effort of the United States to act as the world’s officer…”
The apparent bright line ruling that component price fixing could not satisfy the FTAIA alarmed the Antitrust Division, which had successfully prosecuted the LCD cartel (although the government’s prosecutions also rested on LCD panels directly imported into the U.S.). At the request of the government, the court vacated the Motorola Mobility opinion and will rehear the case. The United States has filed several amicus brief urging that the court find that the FTAIA requirements can be met by component price fixing. Belgium joins numerous nations, including Korea, Japan and others, in urging the Court to again find the FTAIA bars Motorola’s civil suit.
The Belgian brief relies heavily on F. Hoffman-La Roche Ld. v. Empagran S.A. 542 U.S. 155 (2004). In Empagran, the Supreme Court acknowledged that the FTAIA should be interpreted “to avoid unreasonable interference with the sovereign authority of other nations,” which “helps the potentially conflicting laws of different nations work together in harmony—a harmony particularly needed in today’s highly interdependent commercial world.” The Empagran opinion acknowledged the foreign government’s concern that “a decision permitting independently injured foreign plaintiffs to pursue private treble damages remedies would undermine foreign nations’ own antitrust enforcement policies by diminishing foreign firms’ incentive to cooperate with antitrust authorities in return for prosecutorial amnesty.” Empagran, 542 U.S. at 142. The Belgian brief points out that Belgium now has a leniency program and states that it would be a serious disincentive to seeking leniency in Belgium if purchases made in Belgium could be the basis for a treble damage suit in the United States. In other words, suppose a seller of cocoa to Belgium chocolate producers sought leniency in Belgium, but the chocolates made from the cocoa were imported into the United States. Would the cocoa seller be subject to treble damages in the United States instead of the scheme of collective redress available in Belgium? This is just one example of the issues that could arise in the FTAIA context. [Read more…]
Ed. Note. I’ve decided to start an occasional feature on “Why I Love Antitrust.” This thought popped into my mind when I learned that my good friend Phil Warren was being honored with the California Antitrust Lawyer of the Year Award. Knowing and working with Phil ranks pretty high on “Why I Love Antitrust.” Plus, I figure if I run out of reasons to write about why I love antitrust, it is probably time to retire.
On Thursday, October 16, 2014 Phillip H. Warren was honored by the Golden State Antitrust and Unfair Competition Law Institute as the Antitrust Lawyer of the Year. Phil was the Chief of the San Francisco field office of the Antitrust Division from 2002 until very recently. He is now a partner in Covington & Burling’s San Francisco office. Phil led the Division’s San Francisco office during a time when it achieved incredible success. Some of the major international antitrust prosecutions that were brought while Phil led the San Francisco office included commodity chemicals and five different high technology products–DRAM, LCD panels, cathode ray tubes, optical disk drives, and lithium ion battery cells. He also closely supervised all aspects of several major criminal antitrust trials. He oversaw some of the largest and most successful prosecutions in the Antitrust Division’s history, but Phil gave equal attention and support to all of his assigned matters, regardless of the dollar size of the investigations. Under his leadership the San Francisco office obtained more than $2.5 billion in fines. Phil also had a unique position among Chiefs of Antitrust Division offices in that San Francisco was an active office in not only criminal matters, but civil matters as well. He is one smart guy.
Phil joined the Division in 1980 and had many successes as a trial lawyer before he rose up the ranks. But, I am not going to go into all of Phil’s accomplishments and awards. Phil really didn’t want me to post anything about his Antitrust Lawyer of the Year award but relented when I told him that I wanted to start recognizing the accomplishments of career Division attorneys and this would just be the kick-off. Phil’s humility is just one of his exceptional qualities. Phil had earlier opportunities to receive this award but he declined while he was Chief of the San Francisco office. He did not want any personal recognition to take the spotlight off his staff.
I was in many management meetings with Phil. Despite the many successes of his office, Phil was always interested in hearing others’ ideas on investigation, prosecution and management issues. He was like E. F. Hutton. When Phil spoke, people listened. I am sure Phil never made a decision or advanced a position out of any self-interest. His concern was always how to best advance the mission of the Antitrust Division and support the staff that did the work. His love of the institution, and his desire to serve the public and the people who worked in the Division was always evident. The Antitrust Division has always had talented people and I’m sure it always will. Phil’s spirit of service set him apart. I’d like to add a personal tribute I think Phil will appreciate. Of all the exceptional people I have worked with in the Antitrust Division, three stood out for me: John Hughes, the Chief I had the honor to work under for many years in the Philadelphia office; Ralph Giordano, the late former Chief of the New York office; and Phil Warren. Fantastic lawyers and even better people.
I attended a program on Wednesday night sponsored by the ABA Section of Antitrust Law on “Hot Topics in Antitrust and Criminal Enforcement in the Financial Sector.” The program was hosted by Jones Day in Washington, DC. The program focused on government enforcement in the financial sector with developments in foreign currency exchange (Forex), municipal bonds and LIBOR. A theme of the program was the team effort between the Antitrust and Criminal Divisions of DOJ.
The program was moderated by Mark Rosman, Partner, Wilson Sonsini Goodrich & Rosati. The panelists were:
- Brent Snyder, Deputy Assistant Attorney General, DOJ Antitrust Division
- Daniel Braun, Deputy Chief for Litigation, Fraud Section, DOJ Criminal Division
- Ellen Koplow, General Counsel, TD Ameritrade
- David P. Wales, Partner, Jones Day
The program lasted about an hour after an earlier hour of networking. My impressions of the main points of the discussion are:
- While the Criminal Division and Antitrust Division have always had some interaction, Libor marked the first true joint investigation. Attorneys from both Divisions worked hand in hand from conducting joint witness interviews to bringing charges and negotiating settlements. The Forex investigation is proceeding in the same coordinated fashion. The benefits from this cohesion are, among others, increased manpower, broader expertise in analyzing complex markets allowing for a broader range of charges where appropriate; and one “team” for defense counsel to deal with.
- The Libor investigation has resulted in numerous charges to date and the investigation is continuing. There have been no charges yet in the Forex investigation, but DOJ has acknowledged that the investigation is ongoing.
- The Antitrust Division’s Corporate Amnesty Policy apples only to Title 15 violations. But, where Antitrust has issued a corporate leniency letter, the Criminal Division has not and will not “charge its way around the leniency” by bringing fraud charges for the same conduct. On the other hand, the government will push back on efforts to label fraud conduct a Title 15 violation to take advantage of the leniency program.
- The DOJ is taking a closer look at arguments that a corporate guilty plea to a criminal charge will result in an “Arthur Anderson” implosion of the business and possible serious economic consequences to the economy at large. Experience over the last several years has indicated that not every corporate plea is a fatal blow to the enterprise. By way of example, the panel noted that the DOJ has recently criminally charged two foreign banks, Credit Suisse and BNP Paribas, pursuant to plea agreements whereby they pled guilty and paid fines of $2.6 and $8.9 billion (These were not Libor/Forex cases).
- There was a discussion of the consideration DOJ gives to corporate compliance programs when making charging decisions. Mr. Braun stated that the Criminal Division will take into account the corporate compliance program in effect at the time of the offense and any subsequent remedial measures in deciding whether and/or what charges to bring. Braun suggested that in-house counsel is generally the person who can make the most compelling case about the sincerity and breadth of the company’s compliance program. The Antitrust Division does not give credit for compliance programs, which it considers to be “failed” if a violation has taken place. Mr. Snyder did state, however, that Antitrust is considering whether there might be ways to give credit for compliance efforts. (Both Bill Baer and Brent Snyder have given recent speeches addressing the Antitrust Division’s policy on compliance programs (here and here). They are well worth a read. I covered these speeches in an earlier post (here).
- My last takeaway: This was an excellent program and a good way to spend time with the enforcers and defense attorneys practicing in this area. Food and wine, beer and soft drinks were supplied! But, the programs are also available by telephone. If not already a member, you should consider joining the ABA Section of Antitrust Law and the committees that sponsored the program: Cartel & Criminal Practice Committee; Compliance & Ethics Committee and the Financial & Insurance Services Committee
If you have any questions, feel free to give me a call. Thanks for reading.
Welcome Back to Canadian Cartel News. Following Volume 1’s primer on Canada’s anti-cartel legislation, Volume 3 provides an overview of the Canadian Competition Bureau’s Immunity and Leniency programs.
Like many of its counterparts around the world, the Canadian Competition Bureau (the “Bureau”) has established immunity and leniency programs to encourage parties to admit their involvement in the commission of Competition Act offences and to cooperate in the subsequent prosecution of such offences. The Bureau has released an Immunity Program Bulletin as well as a Frequently Asked Questions document. In regard to its Leniency Program, it has also released a Leniency Program Bulletin and a Frequently Asked Questions document.
The Immunity Program allows for immunity from criminal prosecutions to be granted to a party who has committed a Competition Act offence, on the condition that this party is the first person to report the matter to the Bureau and that the person assists the Bureau by providing information for use in prosecuting others that were involved in the same offence. To receive immunity, the applicant must either have disclosed an offence to the Bureau of which the Bureau was not previously aware, or the applicant must be the first to come forward to the Bureau before the Bureau has sufficient evidence to recommend that the matter be prosecuted. The successful applicant receives immunity from prosecutions for itself and its employees, officers and directors. Of note, the Bureau does not give any special treatment or consideration to a party because it has been granted immunity or favourable treatment in another jurisdiction. To be the successful Immunity applicant in Canada, the party must be the first to report the offence to the Bureau.
The Leniency Program offers favourable treatment to subsequent parties that come forward and cooperate with the Bureau in its prosecution of Competition Act offences. The first leniency applicant will typically receive a significantly reduced fine (typically a 50% reduction), as well as immunity for its employees, officers and directors. As well, if the Immunity applicant is unable to fulfill the requirements of the Immunity Program, the first Leniency Program applicant will be able to request immunity. Subsequent leniency applicants will receive lesser reductions in fines, and its personnel are not guaranteed full immunity, but the corporate penalties are less than they otherwise would have been had the party not come forward and cooperated. Moreover, a Leniency Program applicant may be able to receive a further reduction in its fine amount for its leniency-related offence if it also reports to the Bureau information concerning additional Competition Act offences that qualify for the Immunity Program (known as “Immunity Plus”). [Read more…]
Today’s Guest post is from Markus Röhrig who is a partner at the European law firm Hengeler Mueller. He is admitted to the German and the New York bars. Mr. Röhrig specialises in German and European competition law. He frequently advises clients with respect to European and German cartel investigations, behavioral issues (abuse of dominance) and merger control cases.
When Regulation No. 1/2003 celebrated its tenth anniversary earlier this year, Vice President Almunia announced that the European Commission (EC) would launch an initiative to review how the enforcement system has performed and to explore further improvements. In July 2014, European Commission published a report which sets out a thorough analysis of the enforcement activities of the EC and the National Competition Agencies (NCAs) in the past ten years and a number of proposals to enhance antitrust enforcement in the EU in the years to come. The EC is currently engaged in discussions with stakeholders.
The EC’s objective is to create a genuinely common area for antitrust enforcement in Europe. In its report, the EC submits several proposals to achieve that goal. These include, first, enhancing procedural convergence. According the EC, some NCAs lack fundamental enforcement powers such as, e.g., the power to inspect the premises of private individuals or the ability to effectively collect electronic evidence. Second, the report finds that there is scope to harmonize and enhance the effectiveness of sanctions for antitrust infringements. Amongst other things, the report specifically mentions that all NCAs should be able to apply the concept of parental liability and economic succession, as established by the European courts, and that a uniform rule on the legal maximum of administrative fines for antitrust infringements would be desirable. The report also stresses that the achievements made in terms of leniency policy need to be secured. The third area which the report addresses is highly controversial in the EU, namely the role which sanctions on private individuals –especially criminal sanctions– should play in antitrust enforcement. The report points out, rightly I believe, that such sanctions can work as a disincentive for companies to seek leniency. [Read more…]