Strategies For Winning The Fight Against Hardcore Cartels

1. Strategies For Winning The Fight Against Hardcore Cartels

2. The challenges we face in incentizing companies to elect to cooperate in our investigations, even as the costs of cooperation continue to rise dramatically Transitioning to criminal sanctions – the pathway out of purgatory The hallmarks of a successful cartel enforcement program

3. The Challenge In Detecting and Proving Cartel Offenses Notoriously difficult offenses to detect, much less prove Sophisticated and well represented offenders Cases built on evidence from witnesses who receive “sweetheart deals” in exchange for cooperation Invariably, evidence is stale Key evidence often located outside of our borders Recalcitrant victims Unsympathetic judges Increased enforcement leads to increased sophistication by cartelists House of cards: if nobody talks everybody walks

4. Incentivizing Cooperation Worldwide success of leniency programs has changed corporate behaviour Choosing cooperation over stonewalling Destabilizing cartel formation Incentivizing companies to conduct thorough internal investigations of all of its businesses (amnesty plus) European companies in the 2000’s Asian companies in recent years Critical importance of securing and sufficiently rewarding second-in cooperation

5. Are We Reaching A Tipping Point? No company decides to cooperate because it is the right thing to do US DOJ and other jurisdictions are imposing heavier and heavier sanctions on cooperators, plus more jurisdictions are imposing sanctions on the same parties for the same conduct If the cost/benefit calculation for cooperation shifts, then enforcement will backslide

6. Overlapping Sanctions Multiple jurisdictions investigating and sanctioning the same conduct and relying upon the same cooperating witnesses Bar and business concern: increasing costs of cooperation and threat of overlapping sanctions Enforcement concern: changing the calculus for cooperation and potential interference with investigations (e.g., creation of conflicting witness statements)

7. Overlapping Sanctions A good problem to have? Gives rise to the question on when will a sentence imposed in one jurisdiction satisfy another jurisdiction’s enforcement interests? Marine Hose – UK jail sentences Freight forwarding – JFTC surcharges Cooperation and coordination by enforcers in air cargo, auto parts, and other matters advanced everyone’s interests

8. Safeguarding The Incentives To Cooperate Ensuring far stiffer sanctions and other negative consequences for non-cooperators and ensuring that all participants are held accountable Ensuring that a cooperator is no worse off than a non-cooperator because it made the decision to cooperate Restitution and civil damage actions Debarment Anticipating future risks in successfully prosecuting holdouts when reaching resolutions with cooperators, (e.g., the methodology used to calculate sanctions)

9. Impact of Criminal Sanctions Will cartel enforcement increase or decreaseif criminal sanctions are introduced? Decrease, if criminal prosecuting authority lacks resources, expertise and interest in partnering with competition authority to pursue antitrust crimes Increase, if resources and expertise are re-dedicated, specialized cartel prosecutors are assigned, and there is the political will to succeed

10. Transitioning To Criminal Sanctions Moving Thru Purgatory Worst-Case Scenario: criminal sanctions exist for cartel offenses but criminal law is not utilized, and therefore only potential leniency applicants are deterred by it. Greatest potential incentive to seeking leniency becomes the greatest deterrent to applying

11. Pathway Out Of Purgatory Educating hard core public prosecutors on merits of corporate leniency programs Market leniency programs as a unique investigative tool for a uniquely difficult crime to detect Use international partners as models for success, such as Canada, Australia, Japan, Korea, the U.K., or Brazil Create prosecutor-to-prosecutor forums to help in the lobbying effort

12. Hallmarks of Successful Cartel Enforcement Programs Companies are self reporting before investigations begin and conducting effective internal investigations resulting in disclosure of additional wrongdoing Agency has a proven track record for fairly rewarding cooperation and punishing holdouts Private bar and business community views agency as tough but fair, principled and transparent

13. Hallmarks of Successful Cartel Enforcement Programs Transparency as to practices and policies across all aspects of cartel enforcement program Incriminating “Hot” documents are no longer available when execute search warrants Conspirators go to great lengths to conceal cartel conduct but are still caught! Agency develops a reputation for safeguarding the integrity of its investigations by severely punishing obstructive conduct

14. Hallmarks of Successful Cartel Enforcement Programs Developed mutually beneficial cooperative relationships with other competition agencies Developing leads thru outreach to procurement groups, media, business community, and other government investigative agencies so that not relying entirely on leniency programs Victims are being compensated for harm suffered

15. Hallmarks of Successful Cartel Enforcement Programs Significant inroads in deterring domestic conduct and greatest threat to businesses and consumers lies outside of your borders Experiencing a significant drop in time it takes from inception of investigation to imposition of sanctions Head of State declares a National Anti-Cartel Enforcement Day