I am a little behind on reporting this but on February 27th, the American Antitrust Institute issued a report on American Cartel Enforcement in Our Global Era. The press release is below:
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Today, the American Antitrust Institute (AAI) released the cartel chapter of its forthcoming Transition Report on Competition Policy to the 45th President of the United States. The chapter is entitled American Cartel Enforcement in Our Global Era. This release is part of a series of previews in which the AAI will make select chapters of the transition report available for download in advance of the report’s publication.
“The need for strict anti-cartel enforcement has always enjoyed bipartisan consensus in the antitrust community,” said AAI President Diana Moss, “and it’s clear we can do more to support this important mission.” The cartel chapter provides a detailed empirical analysis of cartel enforcement trends dating back to 1990 and makes a variety of policy recommendations that will help foster optimal deterrence, improve scholarly understanding of cartel behavior, and better protect consumers from what remains a growing threat. The Transition Report’s editor, AAI Associate General Counsel Randy Stutz, said, “This chapter is particularly valuable for putting U.S. cartel enforcement in a global perspective and shedding important light on the evolution of modern cartels, which continue to cause massive harm on an international scale.”
The cartel chapter makes a variety of recommendations to better deter cartel conduct by improving detection, prosecution, and punishment, including the following:
- The U.S. Sentencing Commission should revisit the assumption in its Organizational Guidelines that cartel overcharges are typically 10% of affected sales or, indeed, total market sales. The presumption should be raised to at least 20% for North American cartels and 30% for international cartels.
- Congress should raise the Sherman Act maximum corporate fine for criminal price fixing to $1 billion and the Sherman Act maximum fine for individuals to $10 million.
- Congress, or the Antitrust Division of its own accord, should institute whistleblower rewards in cartel cases akin to those made available in qui tam civil suits under the False Claims Act, and the administration should support legislation protecting cartel whistleblowers from retaliation from their employers for reporting wrongdoing.
- After securing criminal convictions, the Antitrust Division should routinely inquire about, and publicly report on, details concerning how cartels were able to collude and sustain their collusion. It should also consider requiring, in sentencing agreements, that defendants turn over simple post-conviction reports for five years on their production costs, sales, and prices in the affected market.
- The Division should receive a budget increase earmarked for its program to help educate foreign antitrust authorities in how to design effective leniency programs, impose appropriate monetary sanctions, implement criminal provisions in their antitrust laws, and improve their anti-cartel enforcement generally.
Visit the Transition Report section of the AAI website for a free download of the entire chapter and links to the AAI’s related work.
The AAI Presidential Transition Report makes policy recommendations based on the AAI’s mission of promoting competition that protects consumers, businesses, and society. The Report is one way the AAI serves the public through education, research, and advocacy on the benefits of competition and the use of antitrust enforcement as a vital component of national and international competition policy.
Contact:
Randy Stutz, Associate General Counsel, American Antitrust Institute
(202) 905-5420
[email protected]Diana Moss, President, American Antitrust Institute
(202) 536-3408
[email protected]
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The issue of increasing fines for corporate defendants is hotly debated. Some argue, as does the AAI, that the current assumption in the Sentence Guidelines of a 10% overcharge from cartel agreements understates the economic harm from cartels, does not fully capture the illegal gains and is inadequate to deter cartels. A contrary position put forth by many in the defense bar is that with enforcement agencies around the world lining up to prosecute cartels that are uncovered (and in some instances double counting commerce), coupled with follow on private treble damage litigation, the costs of pleading guilty and cooperating have become extreme; possibly resulting in less cartel enforcement. One prediction I can safely make is that the United States Sentencing Commission will not be taking up the issue any time soon. Antitrust sentencing guideline reform is not currently on the Sentencing Commission’s agenda.
The idea of an antitrust whistleblower provision is a sound one that has never quite gotten much traction. The Antitrust Division is quite content to rely on the Corporate Leniency program as a case generator. A whistleblower provision may complicate leniency applications and also encourage unsound complaints by whistleblowers looking to cash in on huge antitrust recoveries. On the other hand, it has always struck me that there may be a more efficient, less costly way, of encouraging disclosures of cartel behavior. All other things being equal, it would be better from an enforcement position to encourage a whistleblower to come forward than to give “amnesty” to an entire company and its qualifying executives. Of course, one individual coming forward is not by itself going to make a case, but it can be a better start than giving leniency to a highly culpable company and its executives.
This is an area worth exploring: Would a whistleblower provision supplement or damage the heretofore effective Corporate Leniency program? A recent article by Canadian competition attorney Steve Szentesi, The Time has Come to Reward Competition Act Whistleblowers, is worth a read.
Thanks for reading.