Plenary Overview of Anti-Cartel Enforcement Manual Chapters - Best Practices for Investigative Strategy

1. Plenary I: Overview of Anti-Cartel Enforcement Manual Chapters - Compilation of best practices Investigative Strategy Main issues raised in the UNCTAD Cartel Detection and Investigation Manual made for the “Komisi Pengawas Persaingan Usaha” (KPPU) of Indonesia Pierre M. Horna Officer in charge of the COMPAL Programme Competition and Consumer Policies Branch ICN Cartel Workshop, Panama City, 2 October 2012

2. Content of the presentation: 1. Investigative Strategy2. Challenges

3. 1. Investigative Strategy Whether a cartel becomes known to the KPPU depends on a variety of variables. Many of those variables depend on the actions of third parties and are not in the control of the KPPU. Once a complaint is received or an inquiry is launched by the KPPU, information takes on a new character as potential evidence. Whether information is developed into usable evidence or leads to evidence depends on quality of the agency's investigation and the skill of its investigators. Turning information into evidence requires planning and strategy. The importance of having a well thought out strategy and plan of investigation cannot be overstated. They are critical to successful investigations. They are the key to whether initial allegations of wrongdoing are progressed to charges of a violation. They can make the difference between the success and failure.

4. 1. Investigative Strategy The earliest stages of an inquiry are often the most important. Even if the preliminary stages of an inquiry are limited by severe time constraints, a rote, “cookiecutter”, one-size-fits-all type approach should not be taken. Every industry is different. Every violation of the law is in some aspects unique. At the earliest stages, strategic choices involving timing, secrecy and surprise may determine the outcome of an investigation: whether documents are found or “go missing”, whether witnesses are forthcoming with information or refuse to provide cooperation. Failing to have a strategy or a bad strategy may result in problems or oversights that are not capable of being overcome at later stages in the investigation, regardless of the skill of investigators in following leads or interviewing witnesses.

5. 1. Investigative Strategy The investigation plan uses the case hypothesis to create a plan of action. Even at the earliest stages of an inquiry a written plan of investigation is necessary. The plan should be an organic document that is modified and grows with each new step in the investigation. A properly constructed plan of investigation will allow the investigation team to challenge their assumptions about witnesses and evidence, review hypotheses about the violations and proofs, and make determinations about whether and how investigative leads should be pursued. Along with regular team meetings about investigation activities and results, the investigation plan will provide the road map for the investigation and guide each step in the investigation.

6. 1. Investigative Strategy The investigation plan should outline the actions the staff is going to take to prove the hypothesis of the case and it what order; identify the evidence required to establish an infringement; indicate where the evidence is expected to be found; contain a strategy about how the evidence will be obtained; identify potential witnesses and sources of background information. incorporate a timeline and plan that is designed maintain the secrecy of the investigation ; and obtain the best advantage for the agency in terms of surprise. Other elements should be taken into account when designing the strategy of the investigation: o Investigation Matrix o The Value of Secrecy About the Allegations and Investigation o The Value of Surprise o Drop-in Visits and Interviews o Simultaneous Investigative Activities o Strategic Use of Summonses o Going Public With the Investigation o Using Strategy to Plan an Investigation

7. 1. Investigative Strategy Strategic Planning and Phases of the Investigation A. Complaint Intake and Verification 1. Statements and Documents from the Reporting Party a. Interviews of the Reporting Party b. Document Handling and Authenticity c. Sources of Corroboration of Allegations d. Obtaining a Signed Statement 2. Verification of Allegations B. Investigation Phase o Regulatory Requirements for the Investigation o Summonses, Enforcement and National Police Assistance o Criminal Charges and Procedural Considerations

8. 2. Challenges UNCTAD to focus on: • Lack of useful tools for cartel investigations: • No leniency or immunity; • No administrative search powers; • Difficulty in obtaining evidence with summons. • Evidence rules in Indonesia • Proof requires two types of evidence from five approved types of evidence • Indirect evidence not permitted

9. 2. Challenges (cont’) • Internal Challenges • Tight time frames for various stages of the initial assessment of evidence and full investigation. • Different groups within the KPPU handle initial assessment and full investigation. • Sharing full knowledge and context gained from one stage of the investigation to the next. • Limited time for judges to handle objections with limited knowledge of competition law.

10. Plenary I: Overview of Anti-Cartel Enforcement Manual Chapters - Compilation of best practices Thank you for your attention Pierre.Horna@unctad.org ICN Cartel Workshop, Panama City, 2 October 2012