Cartels: Overview

There is growing international momentum to raise the stakes in antitrust enforcement, because it has such a severe impact on consumers and competitors… anti-competitive conduct has no borders in this global economy so co-operation and universally tough penalties go hand in hand.1

This article gives an overview of some of the recent developments in anti-cartel enforcement in the Asia-Pacific region.

Different countries are at different stages of introducing and enforcing competition law and that is reflected in the nature of capacity building, investigative activity and enforcement decisions. In general, there has been a spate of legislative amendments and new competition regimes becoming active around the region in recent years. Many Asian countries are continuing to introduce new competition laws and establish regulatory authorities - India has brought into force the remaining provisions of its new Competition Act, on 2 July 2010 the Hong Kong Competition Bill was gazetted and introduced into the Legislative Council for first reading, further amendments have been proposed for the Japanese Antimonopoly Act and China has released rules and regulations for its Antimonopoly Law which took effect from 1 February 2011. Further, on 21 April 2010, the Parliament of Malaysia approved two bills (the Competition Commission Bill 2010 and the Competition Bill 2010) that introduce a competition law prohibiting cartels and abuses of dominant position and establish a Malaysian competition enforcement agency.

Background

Cartels are by no means a new concept.2 The harm that they can do to domestic and global economies, and to individual consumers, is well recognised. But it is only relatively recently that there has been a real focus on cartels and the ways in which they can be prevented. In June 1995, the Organisation for Economic Cooperation and Development (OECD) member states entered into an arrangement agreeing to use best endeavours to ensure notification and cooperation where member countries proceed against an anti-competitive practice in international trade. In 1998, the OECD released its Recommendation concerning Effective Action against Hard Core Cartels. The Recommendation proposed two areas of focus: convergence and effectiveness of laws prohibiting hard core cartels,3 and international cooperation and conduct. The OECD and the International Competition Network (ICN) have both provided a forum for international cooperation and discussion about issues concerning the detection and enforcement of cartels. Australia, New Zealand, Korea and Japan are members of the ICN cartel working group. The impact of cartels has also been considered by the United Nations Conference on Trade and Development, which is currently undertaking a study on the economic impact of cartels in developing countries.

The ICN regularly reports on the nature and extent of cooperation between ICN members in international cartel cases, focusing on evidence gathering and evidence exchange.

Developments in the Asia-Pacific region

Australia

On 24 July 2009, the Trade Practices Act 1974 (Cth) (renamed the Competition and Consumer Act 2010 (Cth) (CCA) from 1 January 2011) was amended to criminalise cartel conduct.4 The amendments introduced criminal offences and civil prohibitions that make it illegal to make or give effect to a contract, arrangement or understanding which contains a ‘cartel provision’. A cartel provision is a provision of a contract, arrangement or understanding which has the purpose or effect of price fixing, or the purpose of preventing, restricting or limiting production, market sharing or bid rigging by parties that are (or would be) competitors. Contracts, arrangements or understandings entered into before the legislation came into force may be caught by this legislation and be subject to criminal penalties when the parties give effect to the relevant provision after 24 July 2009. Conduct prior to 24 July 2009 will be dealt with under the old cartel conduct prohibitions.

On 12 December 2010, the government released an exposure draft bill to introduce two new civil prohibitions on anti-competitive price signalling between competitors for targeted classes of goods and services; principally directed to banking services. The government proposes to introduce the bill in the first sitting of parliament in 2011, following public consultation.

The amendments associated with criminalisation have potentially extended the extraterritorial reach of the cartel conduct provisions of the CCA, for example by removing the reference to competition ‘in a market’ (being a market in Australia) and extending the definition of a ‘party’ to an arrangement that includes related corporate bodies, including overseas parents. In addition, regulators in other countries where cartel conduct is also a criminal offence and which have an extradition treaty with Australia, such as the US, UK, Japan and Germany are now able to request extradition of individuals from Australia for the purposes of criminal cartel proceedings overseas, and vice versa.

The legislation provides for imprisonment for up to 10 years and fines of up to A$220,000 for individuals involved in criminal cartel conduct. For individuals involved in civil cartel conduct, the legislation provides for fines of up to A$500,000. A corporation may be fined up to A$10 million or three times the value of the benefit to the entire cartel (whichever is greater), and if the value cannot be determined then the fine may be up to 10 per cent of the corporation’s annual turnover for involvement in criminal and civil cartel conduct. The Proceeds of Crime Act will also apply, so that corporations found guilty of cartel conduct will be additionally liable to restraining, forfeiture orders or both, and also for payment of pecuniary penalties representative of the amount of the benefit received from the offence. In addition, individuals found guilty of cartel behaviour may be barred from holding office as directors or managers in public corporations. Companies are also prohibited from indemnifying individuals for penalties imposed upon them.

The Australian Competition and Consumer Commission (ACCC) released guidelines on how the ACCC will investigate alleged cartel arrangements and make decisions in relation to referral of matters for possible criminal prosecution.5 The guidelines explain that, in the absence of a clear indication that the matter will be prosecuted criminally or subject to civil proceedings, the ACCC will investigate a matter in a manner that preserves its ability to seek criminal prosecution. The ACCC will consult with the Commonwealth Director of Public Prosecutions (CDPP) if it is contemplating referring alleged serious cartel conduct for criminal prosecution. The CDPP will provide preliminary advice to the ACCC as to whether the matter should be pursued with a view to criminal prosecution. The factors that will influence referral by the ACCC to the CDPP for criminal prosecution primarily relate to conduct that causes large-scale or serious economic harm, but also includes clandestine and covert behaviour, etc.6

The ACCC’s Immunity Policy for Cartel Conduct and Immunity Policy Interpretation Guidelines provide guidance on how the ACCC will investigate, prosecute and grant immunity for cartel conduct. The immunity policy is designed to be consistent with leniency policies in the US, UK, EU, Canada and South Korea. The policy confirms that the ACCC is responsible for managing requests for immunity from both criminal and civil prosecutions. The ACCC has the power to grant immunity from civil proceedings and will make recommendations to the CDPP about immunity from criminal proceedings. However, the CDPP will decide for itself whether to grant immunity from criminal prosecution in accordance with the Prosecution Policy of the Commonwealth (including the Annexure to the policy). Eligibility criteria for immunity includes being the first participant in a particular cartel to admit its conduct to the ACCC, where that party was not the cartel ringleader and where full admissions and ongoing assistance are provided to the ACCC. Bearing in mind that, unlike other systems, the ACCC cannot levy fines and must prove contraventions in a court, this has important consequences for the disclosure of information provided by applicants under its Immunity Policy. The Immunity Policy permits individuals to submit immunity applications, which may contrast with the interests of their corporate employer. The alignment between the ACCC and the CDPP in relation to granting immunities is designed to encourage disclosure by cartel participants.

Throughout 2010, the ACCC continued to pursue proceedings against international airlines for alleged involvement in air freight price fixing in relation to fuel surcharges applying to the international carriage of air cargo. The ACCC has, since 2008, commenced proceedings against 15 airlines, six of which have settled. Penalties were also handed down in four proceedings involving international companies that were found to have engaged in cartel conduct. One of those proceedings, involving international suppliers of marine hose, was commenced following searches and arrests conducted simultaneously by the US Department of Justice, the UK Office of Fair Trading, the European Commission and Japan’s Fair Trade Commission. International assistance was provided to the ACCC by both the United States Department of Justice and the United Kingdom Office of Fair Trading in the provision of documents and information located overseas. The ACCC’s request for documents was the first the United Kingdom Office of Fair Trading had granted to any overseas regulator under the Enterprise Act 2002 UK.

New Zealand

In October 2010, the government announced its intention to release a draft exposure bill on the criminalisation of cartels (Proposed Bill).7 This announcement follows the completion of the New Zealand Ministry of Economic Development’s (MED) public consultation process in April 2010, following the release of its cartel criminalisation discussion paper (Paper) in January 2010.8 The Proposed Bill would also follow the recent introduction of criminalisation in Australia and the two countries’ commitment to a high-level outcome of ensuring that those who engage in anti-competitive conduct face the same penalties in both countries. The MED’s Paper, which had sought input on several areas, including how the physical and mental elements of the offence should be defined, attracted 23 submissions. The Paper had suggested three possible approaches to defining the offence - adapting the existing price-fixing prohibition, adopting the Australian legislation, or creating a new offence based on first principles. While public submissions were divided on whether such an offence was necessary in New Zealand, the Proposed Bill indicates that it is the government’s preferred strategy for deterring such conduct.

The Paper and Proposed Bill follows significant increases in civil penalties in 2001 for cartel conduct prohibited by the Commerce Act 1986 (Act).9 Prohibited conduct includes price fixing, market sharing or bid rigging by competitors, and restricting or limiting production. The maximum penalty for businesses increased from NZ$5 million, to the greater of NZ$10 million or three times the value of any commercial gain resulting from the breach or, if the commercial gain cannot be determined, 10 per cent of the turnover of the business of the body corporate and all its interconnected bodies corporate. The maximum penalty for individuals is NZ$500,000. Attempting, aiding, abetting, counselling and procuring, inducing and attempting to induce others to contravene the Act, and being in any way, directly or indirectly, knowingly concerned in or party to a contravention, and conspiring to contravene the Act all potentially attract these penalties.10 Individuals can now also be excluded from management of a body corporate for up to five years. Companies are also expressly prohibited from indemnifying individuals who engage in price fixing against any pecuniary penalties.

There have been no further revisions to the New Zealand Commerce Commission (NZCC) leniency policy (Policy) following the March 2010 revisions.11 The Policy provides conditional immunity from NZCC initiated proceedings to the first party that applies with relevant information. (Immunity is not available if the NZCC has opened an investigation regarding conduct relating to the application unless the NZCC considers it is not in a position to issue proceedings.) The NZCC operates a marker system allowing applicants to mark a place-holder while they compile the necessary evidence. Markers will generally need to be perfected within 28 days. The Policy also incorporates Amnesty Plus, a feature already in place in the US, Canada, Australia and the UK, which allows an applicant not eligible for immunity for one cartel to receive a reduced penalty for involvement in that cartel by informing the NZCC of another separate cartel. The Policy also includes a ‘ringleader’/coercer exception where immunity will not be available to ringleaders/coercers.

In April 2010, the Supreme Court (SC) issued its decision in relation to whether the Act has jurisdiction in relation to an individual’s conduct occurring outside New Zealand. The case involved the wood preservative chemicals cartel, which has already resulted in total fines of over NZ$7.5 million in both civil enforcement action and criminal actions (for misleading the NZCC).12 The SC ruled that the Act’s extra-territorial application does not extend to conduct occurring outside of New Zealand by persons neither resident nor carrying on business in New Zealand. The SC’s ruling overturned the Court of Appeal’s early appellate decision. The case involved an overseas based executive, who was neither a New Zealand resident nor deemed to carry on business in New Zealand, whose (according to the SC) relevant conduct occurred entirely outside New Zealand. However, the SC noted that the act of sending communications into New Zealand, such as a fax, is conduct deemed to have taken place in New Zealand and the Act’s extraterritorial provision is irrelevant.

The NZCC has several ongoing legal proceedings for alleged cartel conduct. These include proceedings initiated in 2007 against companies and individuals in the corrugated fibre packaging industry, proceedings filed in 2008 against 13 airlines (three of which have recently settled) and seven airline staff for their alleged involvement in the air cargo cartel (another US-based individual was joined to the proceedings in December 2009),13 and proceedings filed against a number of companies for their alleged involvement in the freight forwarding cartel. However, in December 2010, following the High Court’s (HC) endorsement the NZCC finalised settlements with two freight forwarding defendants - Geologistics International (Bermuda) Limited (NZ$2.55 million penalty and costs) and EGL Inc (NZ$1.2 million penalty and costs).14 The NZCC also reached a number of settlements in 2010 with defendants and issued a number of warnings in relation to alleged, or attempted, price fixing in industries including domestic waste oil,15 farmers markets,16 online tyre retailers and physiotherapy services.17However, the NZCC was unsuccessful in its gas-insulation switchgear proceedings heard in the HC in March 2010.18

Korea

In December 2010, the Korean Fair Trade Commission (KFTC) announced it would concentrate on stabilising prices and stimulating shared growth in all levels of businesses as part of its 2011 ‘Work Plan’. To achieve this, it will focus on preventing cartels and price hikes relating to daily necessities and raw materials which are closely related to people’s lives and business operations. In January 2010, the then KFTC Chairman Chung Ho Yul explained the impetus behind focusing on eliminating cartels was to invigorate the economy and boost market competition.19

The KFTC said this focus would also include the prevention of bid rigging and building stronger international ties. In February 2010, the KFTC Chairman attended the Bilateral Consultation Meetings with international competition authorities in relation to cartel enforcement and policy direction. In July 2010, the KFTC ran an information session in Shanghai with the aim of educating Korean companies with an international presence about compliance with foreign competition laws and avoidance of international cartel involvement.20 Domestically, the KFTC also aims to emphasise education and build a culture of compliance with competition laws. As part of this, it conducts regular training sessions and produces standard setting compliance guidelines for different industries. The 2011 Work Plan also announced that the KFTC will enact measures to deter cartel conduct in large distribution companies, including proposing a new law which reverses the standard of proof for anti-competitive behaviour and requires companies to justify their alleged anti-competitive behaviour. Furthermore, it aims to strengthen on-site inspection powers for distribution companies and publicise sales commission figures.

The KFTC’s focus on cartels comes after amendments to the Competition Act in 2004, including increasing maximum fines, introducing a new leniency programme and introducing a reward system for cartel informants. In 2005, the KFTC issued a revised enforcement decree and notification. In 2006, the conditions relating to the informant reward payment were relaxed to encourage people to come forward with cartel information. This is reflective of the KFTC’s support of individuals and small and medium sized businesses as a way of attempting to overcome the economic crisis, which was part of the KFTC’s 2009 operations plan.

The KFTC continued to vigorously prosecute and impose fines for cartel behaviour during 2009. On 2 December 2009, the KFTC issued a corrective order and a 668.9 billion won surcharge on six liquefied petroleum gas (LPG) suppliers - E1, SK Gas, SK Energy, GS Caltex, Hyundai Oil Bank and S Oil - who had fixed LPG wholesale prices between 2003 and 2008. These surcharges represent the highest level ever imposed on a single industry. A tough stance was taken by the KFTC because LPG was a ‘typical daily necessity of ordinary people’.21

In 2010, the Commission issued a fine of 119,544 million won on 19 airlines involved in an international air cargo cartel. The KFTA found that the companies, including Korean Airlines, Lufthansa, Air France and Qantas had conspired to introduce fuel surcharges and raise surcharge rates on air cargo travelling between Europe, Japan and Korea between 1999 and 2007.

Recently, on 27 January 2011, the Commission imposed a total surcharge of 26,271 million won on five colour display tube manufacturers who participated in a cartel between 1996 and 2006. The KFTC found that the companies shared confidential information, fixed prices, deliberately curtailed production and inspected each others premises to ensure compliance with the cartel. The Commission considered that this cartel seriously affected the Korean market. The investigation was conducted jointly with foreign authorities, including the US Department of Justice and the European Commission.

Japan

Japan’s revised Antimonopoly Act came into effect on 1 January 2010. The revised Act expands the scope of violations which are subject to surcharges. These now include any private monopolisation of an exclusionary nature and abuse of dominant bargaining positions. Businesses which are ringleaders in cartels or bid rigging will now be subject to pay a 50 per cent increase in the original surcharge rate. In addition, the statute of limitations for surcharge payment orders has been increased to five years.

Leniency regime laws have also been amended. Enterprises belonging to the corporate group can now make joint applications for leniency as a single entity. In addition, the number of enterprises able to apply for leniency in a single infringement case has been increased to a maximum of five entities. Between April 2009 and March 2010, 85 leniency applications were made. There have been indications that a director may be liable for part of a company’s surcharge if a failure to submit a leniency application is found to breach their duties of due care and skill. In December 2010, derivative action was filed by a shareholder against the directors of an optical cable manufacturer company following the issue of surcharge orders.

These amendments continue the wave of changes made to Japanese cartel laws in recent years. These include: introducing harsher penalties in 2002 for repeat offenders; increasing the maximum amount of fines from ¥100 million to ¥500 million; adopting new legislation in 2005 to increase surcharge rates; and introducing a leniency programme. From 4 January 2006, the Act Concerning Prohibition of Private Monopolisation and Maintenance of Fair Trade strengthened the enforcement powers of the JFTC, authorising it to carry out on-site inspections, searches and seizures in a criminal investigation.

A bill to further amend the AMA is currently before the Diet. Changes including the repeal of the administrative hearing procedure and changes to companies’ rights of defence are being debated.

The JFTC has endeavoured to pursue international matters that exert a significant influence on the Japanese market in cooperation with overseas competition authorities and has been active in pursuing criminal enforcement actions. It has criminal extradition treaties with the US and Korea, bilateral cooperation agreements with the US and the European Commission, and has voiced a commitment to strengthening its relations with international competition authorities.22

For the year ending in March 2010, 22 cartel cases were concluded, with cease and desist orders being issued in every case. In one case in October 2009, the JFTC issued a cease-and-desist order to companies manufacturing and selling television cathode-ray tubes after it was found that they met regularly to set prices. That case involved five companies (including foreign entities) that were each ordered to pay surcharge payments of approximately ¥3,300 million. The investigation was undertaken in tandem with the United States Department of Justice and the European Commission.

In May 2010, the JFTC issued 14 cease-and-desist and surcharge orders against a cartel of manufacturers and sellers of optical fibre cable products, with administrative surcharges totalling approximately ¥1,600 million. In December 2010, the JTFC also made surcharge orders of ¥362,520,000 against 30 companies who were found to have engaged in bid rigging for a construction contract.

Singapore

Throughout 2010, the Competition Commission of Singapore (CCS) demonstrated a more active approach and it is expected that it will commence more investigations. For example, on 11 March 2010 the Competition Commission of Singapore (CCS) issued a Proposed Infringement Decision against 14 electrical and building works companies. The companies were found to have engaged in bid rigging in breach of section 34 of the Competition Act. The electrical companies had six weeks from the date of the Proposed Infringement Decision to make representations or argue the case set out by the CCS. The CCS ultimately made an infringement finding against the electrical companies on 4 June 2010. This case was also the first in which a party to the infringement took advantage of the CCS’s amended leniency programme set out in the Guidelines on Lenient Treatment for Undertakings Coming Forward with Information on Cartel Activity Cases (Revised Leniency Guidelines) which came into effect on 7 January 2009. The party seeking leniency obtained a 100 per cent reduction in financial penalty.

On 18 August 2010, the CCS formally advised the Singapore Medical Association (SMA), an association that represents the majority of medical practitioners in Singapore, that its Guideline on Fees (GOF) would contravene section 34 of the Competition Act. The CCS first became aware of the GOF after the SMA made a formal application to the CCS in 2009 to decide whether the issue of the GOF would infringe the Competition Act. The CCS considered that although the GOF would address information asymmetry in the medical sector, there were more effective measures in place. In general, the CCF considers that price recommendations by trade or professional associations are harmful to competition as they would create focal points for prices to converge, restrict independent pricing decisions and signal to market players what competitors would be likely to charge.

India

The cartel provisions in the Competition Act 2002 were notified and came into force from 20 May 2009. Five days earlier, on 15 May 2009, the Competition Appellate Tribunal was established. In 2010, the Competition Commission commenced investigations in several different sectors including civil aviation, real estate, stock markets and onion traders.

In the decision of Competition Commission of India v Steel Authority of India & Anor,23 the Supreme Court of India confirmed that parties directed to assist the Competition Commission with investigations into fair trade practices (including by providing information) do not have any rights to appeal such direction. In the same case, it was also held that the Commission is a necessary and proper party to cases before the Appellate Tribunal. This means the Commission can have involvement in every appeal before the Tribunal.

The Competition Commission of India (Lesser Penalty) Regulations, 2009 prescribe the way in which the Commission can reduce penalties for members of a cartel who make a vital disclosure to the Commission or assist with investigations.24 The Regulations allow the CCI to grant lesser penalties depending upon factors such as the stage at which the applicant comes forward, the quality of information relied upon by the applicant and the evidence already in the possession of the Commission. A discount of up to 100 per cent can be obtained by an applicant who is the first to make a ‘vital disclosure’ to the Commission - one that, by providing evidence the Commission did not have in its possession at the time of application, allows it to either form a prima facie opinion regarding the existence of a cartel or to establish a contravention of the Competition Act 2002. Lesser discounts are also available to later applicants who provide significant added value to the evidence already in the possession of the Commission. A marker system is applied to determine the priority of applications. Any reduction in penalty is subject to conditions, including the cessation of participation in the cartel, requirements for the provision of relevant information, documents and evidence, and genuine cooperation.

Hong Kong

The path to a general competition law regime in Hong Kong began in 2006 when the Hong Kong government, on the recommendation of the Hong Kong Competition Policy Advisory Group,25 released a discussion paper concerning the introduction of a Competition Act.

On 2 July 2010, the Hong Kong Competition Bill was gazetted. It was first read in the Hong Kong Legislative Council on 15 July 2010. The Bill is currently being considered by a Bills Committee. The Bills Committee has met with businesses to discuss the Bill and has received more than 50 written submissions. The Committee is currently considering the Bill and it is expected that debate at its second reading will take place after May 2012.

In addition to the Competition Bill, sample ‘guidelines’ relating to the Bill are expected to be released by the Bills Committee in early 2011. The sample guidelines are likely to contain guidance on how broadly worded prohibitions under the Bill will be investigated and considered in practice.

China

In late December 2010 and early January 2011, two important regulations were released by the National Development and Reform Commission (NDRC) and State Administration of Industry and Commerce China (SAIC): Regulations on Anti-Price Monopoly and Regulations on Industry and Commerce Authorities Prohibiting Monopoly Agreements. The Regulations on Anti-Price Monopoly outline how price related violations of the Antimonopoly Law (AML) will be assessed and enforced and the Regulations on Industry and Commerce Authorities Prohibiting Monopoly Agreements outline how non-price related violations of the AML will be assessed and investigated. Both regulations came into effect from 1 February 2011.

Both Regulations also describe how China’s leniency policy will operate under the AML. Under the NDRC Regulations, the first to report involvement in a price related monopoly agreement and to provide evidence is eligible for a discount in fine of up to 100 per cent. The second to report involvement and/or provide evidence in a monopoly agreement is eligible for a discount in fine of no less than 50 per cent and others who report or cooperate are eligible for a discount of no more than 50 per cent. Fine reductions are available under the SAIC Regulations for non price related monopoly agreements, but the reduction appears only to be available to the first to report. It is unclear whether the SAIC will offer fine reductions for others who report and provide cooperation for non price related violations.

On 4 January 2011, the NDRC issued its first fine for 2011 under the AML. Zhejiang Fuyang Paper Making Industry Association was fined 500,000 renminbi (approximately US$76,000) for monopoly acts in breach of the AML and the Price Law. The AML prohibits price cartels and the Price Law prohibits collusion on prices. The NDRC alleged that at least five meetings were held between the Association’s members during which members coordinated prices in respect of a certain paperboard product. The fine is the largest that has been imposed on an industry association under the AML and Price Law.

Earlier in 2010, the NDRC investigated two price cartel cases. The first involved 18 Nanning and 15 Liuzhou rice noodle producers. The NDRC alleged that the cartel members met to jointly raise prices. The investigation was conducted by NDRC as well as the Bureau of Commodity Prices of Guangxi Zhuang Autonomous Region (the local provincial level NDRC agency) and other local government departments. Administrative sanctions were imposed on all 33 participants ranging from fines to administrative warnings. The lesser penalty of administrative warnings were issued to those participants that cooperated with the investigation, provided evidence and undertook their own corrective measures. The second investigation involved the Xiamen Office of Fujian Tableware Industry Association. It was alleged that the Association had organised a cartel among 28 tableware disinfection businesses to raise prices. The investigation was undertaken by the Xiamen Bureau of Commodity Prices (the local city level NDRC agency) and resulted in the Bureau holding a ‘cautionary reminder meeting’ during which the cartel members were advised about the illegality of their conduct. The industry association and participating businesses ultimately agreed to stop the illegal conduct and take corrective action to counter the effect of the cartel.

Cooperation

The trend for international agencies to cooperate more closely in order to investigate and enforce against cartels continues to gather pace. The involvement of more countries in the prosecution of international cartels is of great significance. This is because having a larger number of prosecuting jurisdictions can increase the exposure of cartel participants to greater fines, which acts as a greater deterrent to cartel arrangements. International cooperation, including exchange of information, is seen as a critical factor in controlling international cartels and also in controlling domestic cartels where companies involved have foreign offices. In many cases, investigation of international cartels is constrained by the inability of many competition authorities to formally exchange information. Nonetheless, informal cooperation can and has been a very effective contribution to effective competition enforcement. For example, coordination of surprise investigations over several jurisdictions can greatly assist authorities in maintaining surprise and avoiding potential evidence destruction, tampering or removal.

Amnesty and leniency programmes, combined with tough penalties have also proven to be successful methods of controlling and punishing cartel conduct domestically and internationally. In the latest ICN Cartels Working Group report on Cooperation between Competition Agencies in Cartel Investigation:

The introduction of leniency programmes in more jurisdictions should be singled out as an increasingly important driver of co-operation between agencies, via waivers of confidentiality from immunity/amnesty applicants.26

As competition laws and agencies across the world become more sophisticated, it is likely that more sophisticated cooperation between agencies will follow. Organisations now need to be vigilant and avoid involvement in potentially illegal cartel conduct in their home jurisdictions as well as overseas.

Notes

1
Graeme Samuel, ‘Future Work of the ICN: Introduction to the 6th International Cartels Workshop’, Third ICN Annual Conference, Seoul, 22 April 2004.

2
As far back as 1776, Adam Smith wrote of the tendency for people of the same trade to conspire against the public, or to contrive to raise prices, whenever they meet together.

3
Recommendation of the Council concerning ‘Effective Action against Hard Core Cartels’, c(1998) 35/Final, 13 May 1998.

4
See part IV of the Competition and Consumer Act 2010 (Cth).

5
Guidelines, ACCC approach to cartel investigations, 14 July 2009.

6
Memorandum of understanding (MOU) with the Commonwealth director of public prosecutions, 14 July 2009.

7
www.beehive.govt.nz/release/next-step-considering-criminalisation-cartels

8
Cartel Criminalisation - Discussion Document, January 2010.

9
This followed a 1998 review by the Ministry of Commerce (now MED): ‘Penalties, remedies and Court processes under the Commerce Act 1986: A Discussion Document’, January 1998.

10
Commerce Act 1986 (NZ), section 80(1).

11
Cartel Leniency Policy and Process Guidelines, 1 March 2010.

12
Poynter v Commerce Commission [2010] 3 NZLR 300.

13
www.comcom.govt.nz/media-releases/detail/2008/internationalaircargocarteltobepro/; Nick Krause “Long wait for cartel case” (2010) www.stuff.co.nz/business/industries/3654840/Long-wait-for-cartel-case

14
Commerce Commission “3.65m in total penalties to date following second freight forwarding case” (2010) www.comcom.govt.nz/media-releases/detail/2010/3-65m-in-total-penalties-to-date-following-second-freight-forwarding-cartel-case

15
Commerce Commission “Waste oil price-fixing case settled out of court” (2010) www.comcom.govt.nz/media-releases/detail/2010/waste-oil-price-fixing-case-settled-out-of-court

16
Commerce Commission “Gisborne Farmers Market agrees to remove pricing rule” (2010) www.comcom.govt.nz/media-releases/detail/2010/gisborne-farmers-market-agrees-to-remove-pricing-rule

17
Commerce Commission “Tyre traders admit price fixing on Trade Me” (2010) www.comcom.govt.nz/media-releases/detail/2010/tyre-traders-admit-price-fixing-on-trade-me

18
Commerce Commission v Siemens AG CIV-2007-404-2165.

19
‘A New Year Message from the KFTC Chairman’, KFTC press release, January 2010.

20
‘KFTC Chairman Discusses International Cartel with Heads of Seven Competition Authorities’, KFTC press release, 8 February 2010.

21
‘Tough Corrective Measures Against LPG Price Cartel’, KFTC press release, 2 December 2009.

22
‘Message from Chairman Takeshima’, JFTC press release, January 2010.

23
Civil Appeal No.7779 of 2010, [D.No.12247 of 2010].

24
The Competition Commission of India (Lesser Penalty) Regulations, 2009 (No. 4 of 2009).

25
Economic Development Branch, Economic Development and Labour Bureau, ‘Report on the Review of Hong Kong’s Competition Policy’, www.edlb.gov.hk/edb/eng/info

26
International Competition Network Cartels Working Group Subgroup 1 - general framework, ‘Cooperation between Competition Agencies in cartel investigations’ Report to the ICN Annual Conference, Moscow, May 2007, p31.

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