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Spring 2013

How Much Is Too Much? A Call For Global Principles To Guide The Punishment Of International Cartels

By John Terzaken and Pieter Huizing

John Terzaken is a partner in the Washington, D.C. office of Allen & Overy LLP and the former Director of Criminal Enforcement for the Antitrust Division of the U.S. Department of Justice. Pieter Huizing is an associate in the Amsterdam office of Allen & Overy LLP. This article was previously published in the Spring 2013 edition of the ABA Antitrust Magazine (Volume 27 No. 2).

Introduction

Few issues engender as much debate in antitrust circles as the concern of overlapping punishment of cartel offenders in international cartel cases. The mass proliferation of antitrust enforcement, rising criminal and civil penalties, and the seemingly boundless extraterritorial reach of national antitrust laws challenge traditional notions of proportional punishment and adequate deterrence in international cartel cases. Authorities and outside counsel alike increasingly struggle to answer the question, “How much is too much?” when it comes to both the number of times a corporation or individual must stand to answer for the same conspiracy and, once prosecuted, the number and magnitude of the penalties that are necessary to remedy the offense.

The experience of defendants in the recent Air Cargo cartel cases is illustrative of this debate. In what was alleged to be a single, overarching conspiracy to fix the price of surcharges on air cargo services, the antitrust authorities of at least ten different jurisdictions undertookenforcement actions: the United States, the European

Union, Australia, Brazil, Canada, Mexico, New Zealand, South Africa, South Korea, and Switzerland.1 The fines imposed by this multitude of authorities added up to as much as nearly USD1 billion for a single defendant.2

The purpose of this article is not to speculate about where deterrence ends and over-punishment begins in cartel enforcement, or to challenge the sovereign right of antitrust enforcers to pursue international conspiracies affecting their consumers. Nor do we seek to advocate for ill-fated ideas calling for the formation of international bodies to govern antitrust enforcement globally at the expense of national enforcement regimes. Rather, following an examination of how this global predicament arose, and the recent ad hoc efforts authorities have attempted to manage the problem, we propose universal acceptance by cartel enforcers of agreed-upon principles for ensuring fairness and proportionality in the charging and punishment of defendants facing parallel enforcement actions.

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The Road Traveled

For over half a century, from the enactment of the Canadian Competition Act in 1889 and the Sherman Act in 1890 to the mid-1940s, Canada and the United States were the only nations prohibiting cartels. In Europe, cartels were then still widely regarded as at least partly beneficial to the national economy. Several European nations even enacted legislation in response to the Great Depression, enabling the government to establish compulsory cartels or to force outsiders to join already existing ones.3 Especially leading up to and during the Second World War, excessive concentration of economic power was used to create “national champions,” which were easy to control and which could outperform their foreign rivals.4

In the aftermath of the war, the United States pressured Germany and Japan to break up the existing cartels and to put in place cartel enforcement regimes.5 At the same time, the United Kingdom adopted a new antitrust regime as part of its social policies to stimulate employment.6 Antitrust law was subsequently included in the 1957 Treaty of Rome as one of the key policy areas of the European Community, laying the foundations for the European Commission’s cartel enforcement practice. In the last few decades, cartel enforcement has spread from North America and Europe to virtually every major jurisdiction in the world. There are now antitrust authorities in over 115 countries across all continents actively pursuing cartel activity, and that list is growing.7

In addition to this impressive proliferation, cartel enforcement by the individual authorities over the years has become more intensive and tougher than ever before. Both mature and new antitrust regimes have come to regard aggressive prosecution of cartel offenders as a primary policy objective.8 This is also reflected in the expansion of jurisdictions that are moving from mere civil/administrative enforcement towards a regime of criminal prosecution. More than half of the EU member states have now

criminalized certain cartel offenses,9 as have countries like Australia, Brazil, Japan, Korea, Mexico, and Russia. Although the shift to criminal enforcement of antitrust offenses has not come without challenges, criminalization of cartel enforcement is undoubtedly gaining momentum globally.

The growth in use of leniency programs has further enhanced the effectiveness of cartel enforcers. In the 1990s, only the United States and a handful of other countries had leniency programs.10 Today, however, there are antitrust leniency programs in more than fifty jurisdictions. This virtually global availability of leniency programs radically destabilizes cartels because of the tremendous incentives for co-conspirators to self-report to authorities once a cartel no longer serves its purpose.

The impact of leniency programs on cartel detection and prosecution cannot be overstated. In the years 2004 to 2010, around 75 percent of all criminal cartel cases filed by the U.S. Antitrust Division had been initiated, or were being advanced, by information received from a leniency applicant.11 Moreover, in the last five years, the European Commission granted full immunity under the leniency program to conspirators in 23 out of the 28 cartel cases.12 Possibly even more striking is the fact that in 2011, the authorities of South Africa, Japan, and Brazil received a startling number of leniency applications—212, 130, and 90, respectively—an overall average of a dozen applications each month.13

At the same time that new and better-equipped enforcers are rapidly emerging on the world stage, the penalties exacted by individual jurisdictions for violations of the antitrust laws have increased to astonishing levels. In the United States, the Antitrust Division imposed unprecedented fines in the last few

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years, with a record-setting USD1.13bn in fines assessed in 2012.14 The European Commission has been equally aggressive in recent years, with a high-water mark of nearly EUR2.9bn in fines in 2010 and a record-breaking EUR1.47bn fine recently imposed in the CRT case.15 We have also seen increasingly aggressive cartel enforcement by EU Member States, such as France, Germany, Italy, and the United Kingdom. Importantly, the trend of more aggressive cartel enforcement is not confined to the United States and Europe. In a 2010 survey by the International Competition Network (ICN), 43 out of 45 interviewed antitrust agencies indicated that the level of penalties under their cartel enforcement programs had increased over the previous ten years.16 Without question, there is a globally shared objective to target conspirators more effectively and more harshly than ever before.

Extraterritorial cartel enforcement has become standard practice for the major enforcement jurisdictions. Whereas the United States was sharply criticized at first for the application of the Sherman Act to foreign conduct,17 other antitrust enforcement regimes now appear to have firmly embraced the principle of extraterritorial cartel enforcement. Out of almost fifty of the world’s major antitrust regimes, Colombia and arguably Canada are the only countries for which the location of the conspiracy is a decisive factor in establishing prosecutorial jurisdiction.18 For the other countries, it is sufficient for the conduct to affect the national trade or commerce.19 Up-and-coming cartel regimes are expected to adopt similarly expansive policies on extraterritorial cartel enforcement.20

The Status Quo

The globalization of cartel enforcement has led to increased international cooperation and coordination among authorities designed to enable and facilitate cross-border investigations. Through efforts of multilateral organizations—like the ICN, the Organization for Economic Cooperation and Development (OECD), and the International Bar Association (IBA)—guidelines and best practices have been developed with an aim to harmonize antitrust enforcement actions.21 Moreover, numerous bilateral agreements have been concluded to govern the level of assistance and the exchange of information in the case of joint investigations.22 And as evidenced by the recent Auto Parts investigation, dawn raids are routinely taking place in close coordination between multiple enforcement agencies.23

Coordination is no longer confined to the investigative stages of international cartel cases. Rather, a ground swell of expanded coordination at the post-investigative phases of prosecution and punishment is quickly emerging. The

demand for coordination is on the rise because of the long list of interested enforcers in any given antitrust investigation. The growing demand for international coordination is further enhanced by concerns that certain legal concepts, like double-jeopardy (non bis in idem) and successive prosecution, may not apply across borders. 24 The general consensus is that defendants in international cartel cases now risk overlapping punishment or “piling on” by multiple enforcement authorities seeking to redress the effects of the same cartel offense.

Recognizing this risk and solving the problem are two completely different issues, with the latter posing a far greater challenge for authorities. There have been numerous ideas proposed in the past to resolve these issues under the auspices of an international body concerned with cartel enforcement.25 But despite the increased proliferation and harmonization of cartel enforcement, the establishment of an international cartel

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enforcement organization has not been, and will never likely be, feasible. Most importantly, for an international cartel enforcement body to be effective, it would require the unlikely commitment of each member state to abdicate sovereignty in the field of antitrust law, a bridge too far for even the most progressive regimes. In this respect, little has changed since the American Bar Association noted in 2005 that: “[e]fforts to promote a single global antitrust regime in the [World Trade Organization (WTO)] or elsewhere are unlikely . . . [as] we are far from achieving global convergence of antitrust policy or modes of analysis, or fully coordinated enforcement.”26

With the development of an “Antitrust UN” unlikely, each jurisdiction is left determining for itself what it considers to be an appropriate punishment for an international conspiracy, often without taking into account the actual or potential enforcement actions of other jurisdictions. This ad hoc approach to global coordination on punishment and prosecution is the status quo in modern cartel enforcement: an approach that is characterized by a troubling lack of consistency, the potential for producing disproportionate sanctions for cartel defendants due to the piling on of individual fines, and even instances of double-counting.

The inconsistencies in this ad hoc approach came into full view in the highly-publicized Air Cargo cases.27 In these cases, air cargo companies were prosecuted for conspiring to fix and coordinate rates and surcharges for the air shipment of goods between and among various countries worldwide. In determining the appropriate method for the fine calculation, the authorities faced the question of whether to base the fine on both inbound and outbound commerce affected by the conduct or just on one or the other. The dilemma was whether it would be fair to fine a company based on both types of commerce when that company faced prosecution in both the country from which it shipped goods, as well as in the country to which it shipped the goods. Because if authorities in the “shipped from” and “shipped to” countries fined a company for both inbound and outbound commerce, that company would de facto be penalized twice as a result of the same effects of the criminal act.

In true ad hoc fashion, the various prosecuting authorities each used different methods to address the problem. For example:

− The European Commission granted all carriers a 50 percent reduction on sales between the European Economic Area (EEA) and third countries “in order to take into account the fact that on these routes part of the harm of the cartel fell outside theEEA.”28

− The U.S. Antitrust Division used a more complex methodology in the various plea agreements. It calculated the fine before the cooperation discount on the basis of (i) outbound shipments and (ii) an upward adjustment for the harm to inbound shipments. The upward adjustment was based on the percentage of inbound shipments compared to the carriers’ total U.S. inbound and outbound commerce. Importantly, this methodology was the outcome of the negotiations with the first party to consent to a plea agreement and was only accepted and used by the Antitrust Division under the recognition of “the complexity of litigating the issues [relating to the volume of affected commerce calculation] and the resulting burden on judicial and party resources.”29

− The Australian Competition and Consumer Commission did not exclude part of the inbound or outbound commerce in its fine calculation. However, it did find it appropriate to factor in fines already imposed by the U.S. Antitrust Division, especially because these fines “ha[d] addressed flights to and from all parts of the world from and to the USA” and accordingly ”encompass[ed] contravening surcharges on flights from the USA to Australia and from Australia to the USA.”30

While all no doubt undertook noble efforts to bring fairness and proportionality to the process, the ad hoc approaches to punishment in the Air Cargo cases were both inconsistent and incapable of solving the underlying over-punishment issue. Indeed, as

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referenced earlier, for their role in the single, overarching conspiracy, defendants were still prosecuted by a multitude of different authorities and penalized by those authorities with varying fines totaling up to nearly USD1bn for a single defendant.

Authorities may stand to face a similarly unsatisfactory result in the current, wide-ranging Auto Parts and Interest Rate cases. The Auto Parts investigation involves semi-finished products, where the revenues for resale and end product sales factored in the fine calculations of the exporting jurisdiction are destined to overlap with revenues already factored in the fine calculations of the importing jurisdiction. For example, Furukawa, a Japanese company, was fined for its participation in the Auto Parts conspiracies based on: (i) sales of auto parts that were manufactured abroad, but sold into the U.S. for installation in cars made or sold in the United States; (ii) sales of auto parts that were actually manufactured in the United States and sold to automotive manufacturers in the United States; and, in part, (iii) sales of fixed auto parts that were manufactured and sold abroad, but put into cars destined for the United States.31 Other jurisdictions may take into account one or more of these same three categories of commerce in exacting their penalties in the Auto Parts cases, which will result in double-counting of sales and, hence, double punishment.

The Interest Rate cases, which involve the investigation of anticompetitive activity targeting the setting of the London Interbank Offered Rate (LIBOR), the Tokyo Interbank Offered Rate (TIBOR), and the Euro Interbank Offered Rate (EURIBOR) for currencies, may present an even greater challenge for enforcers to address potential overlapping penalties.32 The global interest rate standards are relied upon in instruments used to conduct trillions of dollars in transactions annually between parties from all over the world. Undoubtedly, many of the transactions potentially affected by the anticompetitive conduct at issue in the Interest Rate investigations will involvecounterparties from different jurisdictions. Unlike the “shipped to”/“shipped from” fix employed in the Air Cargo cases to avoid double-counting, it is not clear that

authorities will be able to articulate a principled way to segregate the multi-jurisdictional transactions at issue in the Interest Rate investigations. Thus, authorities will have to be even more creative in their ad hoc approaches to punishment in these cases to avoid double-counting and over-approximating harm in imposing sanctions.

The risk of over-punishment is not restricted to corporate defendants and is perhaps most acute in cases where individuals face separate criminal prosecution and potential jail sentences for the effect of their illegal conduct in multiple jurisdictions. In the absence of any international coordination or consideration, individual conspirators in a global cartel currently face potential conviction to jail sentences in various countries and total, disproportionately long prison times.33

Given the limited number of jurisdictions yet to pursue criminal prosecutions, the Marine Hose investigation is the only investigation where parallel cartel prosecutions of individuals have yet demanded application of prosecutorial discretion.34 In the context of a global cartel of all major suppliers of marines hoses, both the U.S. Antitrust Division and the U.K.’s Office of Fair Trading (OFT) wanted to criminally prosecute three U.K. executives (“the UK3”) for their involvement in the cartel. To avoid over-punishment of the UK3, the Antitrust Division coordinated its sentencing approach with its British counterpart. As a result, the Antitrust Division entered into plea agreements that allowed the UK3 to return to the U.K. for prosecution by the OFT and provided for reductions to the imposed U.S. jail sentences by the length of any U.K. sentence.35 The ultimate outcome of the case resulted in a complete deferral of the U.S. jail sentences because the U.K. court sentenced the UK3 to longer jail sentences than required by the U.S. The Antitrust Division nonetheless declared this outcome a clear victory for U.S. consumers, the real result being that “the wrongdoing was punished, and punished adequately.”36

The examples of the Air Cargo, Auto Parts, and Marine Hose cases show that authorities are already fully aware

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of the need to take concurrent cartel prosecutions into consideration in determining the appropriate punishment. These examples also exemplify how authorities are

struggling to find a coherent approach to achieving consistently fair and proportional resolutions in the global cartel enforcement environment.

The Road Ahead

Fair and proportional punishment in cartel enforcement is not just in the interest of defendants, it should also be a key objective of any cartel enforcement agency. The duty that rests upon authorities to ensure that their sanctions are fair and proportional stems from the societal costs associated with over-punishment. First, excessive fines may lead to insolvency of corporate conspirators, which in certain markets may significantly weaken competition and ultimately hurt consumers in that market.37 Over-punishment can also lead to over-deterrence, where businesses become too cautious and refrain from undertaking competitive activity because of fear that the activity may be deemed anticompetitive.38Authorities and consumers alike gain nothing if a perception develops that the punishment of cartel activity will outstrip the severity of the crime, as the result is a diminution of the credibility of overall global cartel enforcement.

Against this backdrop, authorities find themselves at a crossroads in handling the prosecution and punishment of cartel offenders in international cartel investigations. They can follow the same path they have been on––i.e., making up ad hoc fixes as they go along to attempt to avoid unnecessary piling on––which will only lead to continued confusion and frustration in this area and is not a long-term solution to the problem. Alternatively, they can seize this opportunity to start down a new path toward agreed-upon global principles for exercising prosecutorial discretion in international cartel cases: a path consistent with earlier recommendations of the Antitrust Modernization Commission and the ABA for a wide application, where appropriate, of the principle of comity whereby one or more agencies could defer to another in resolving a case.39

The U.S. Antitrust Division has already begun taking steps down this new path by articulating the guiding principles it will employ when confronting the question of whether to exercise discretion in response to a parallel foreign enforcement action.40 A thought-leader in this regard, the Antirust Division is also advocating that other authorities take steps to adopt similar principles to ensure consistency across international investigations.

The Antitrust Division has sketched out a preliminary four-step analysis for determining whether and how to exercise prosecutorial discretion in response to a parallel enforcement action. It examines whether the crime being investigated by another authority is the same as that being pursued in the U.S., and asks:

(1) Is there a single, overarching international conspiracy?

(2) Is the harm to U.S. businesses and consumers similar to the harm caused abroad?

(3) If so, does the sanction imposed abroad take into account the harm caused to U.S. businesses and consumers?

(4) Does the nature and gravity of the sentence imposed abroad satisfy the deterrent interests of the United States?

According to the Antitrust Division, the result of the analysis is not an all-or-nothing proposition. That is, depending upon how these factors stack up, the Antitrust Division may consider reducing the scope of the activities under investigation, reducing the penalties

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applicable to the violation, or waiving prosecution of the matter all together.41

While an important first step toward rationalizing multi-jurisdictional prosecutions and punishment in international cartel cases, the Antitrust Division’s analysis may require further refinement to suffice as a unifying global standard. Specifically, the Antitrust Division’s analysis may be better positioned as a global standard if, rather than narrowly focusing on the inclusion of U.S. harm in the calculation of the foreign penalty, it focused on whether the foreign sanction is (or will be) greater than or equal to the penalty that would otherwise be imposed for purposes of deterrence under national law. This shift would properly focus the analysis on whether a foreign sanction meets the general and specific deterrence goals of a regime, as prescribed by national law, as opposed to unnecessarily focusing on whether specific national harm was considered in the methodology applied by a foreign enforcer to concoct a sanction.

This change is consistent with the resolutions forged by the Antitrust Division and OFT for the UK3, which the Antitrust Division continues to cite as “a prime example of the DOJ using its prosecutorial discretion.”42 Under the Antitrust Division’s current analysis, the UK3 resolution would not have come out the same way. Indeed, a faithful application of the above-mentioned question three in that case would have resulted in a conclusion that the U.S. should separately punish the UK3 with stand-alone U.S. jail sentences because the Crown Court in the United Kingdom did not take into account the harm to U.S. consumers when it handed down its verdict.43 Instead, in formulating the UK3 deal, the Antitrust Division did not focus on how the U.K. penalty would be calculated––i.e., whether U.S. harm would be accounted for in determining the penalty––but rather, whether the overall penalty was a sufficient deterrent for the crime under U.S. law because the sentence was equal to or greater than that which was otherwise imposed in the United States.

The general consensus among enforcers and the regulated community is that the Antitrust Division and OFT struck the right balance in the case of the UK3.44 Accordingly,

that same thinking should inform a global test for exercising prosecutorial discretion in parallel enforcement actions. With that change, the following four-step test emerges:

(1) Is there a single, overarching international conspiracy?

(2) If so, is the harm to national businesses and consumers similar to the harm caused abroad?

(3) If so, will the foreign sanction against the particular defendant be greater than or equal to the penalty that would otherwise be imposed under national law for purposes of general and specific deterrence?

(4) If not, what level of additional sanction is necessary to impose on the particular defendant to achieve a proportionate and deterrent punishment under national law?

This modified test achieves the main objectives of domestic prosecution, i.e., retribution and deterrence, while avoiding the risk of over-punishment. This assessment also more closely resembles the essential thrust of other policies designed to rationalize punishment in instances where a defendant may face prosecution by multiple enforcers, such as the current U.S. Dual and Successive Prosecution Policy or “Petite Policy,” which limits additional punishment to only those situations where a deterrent interest was left unvindicated.45 As the Antitrust Division rightly stressed regarding the application of its model, the outcome of the test should not be interpreted as a definitive “yes or no” to the question of whether any punishment is appropriate. Rather, the result may guide an agency in determining how to exercise its prosecutorial discretion, taken into account in combination with other relevant factors.

Of course, even as modified, the four-step test raises additional questions and significant issues with respect to its proper application as a global standard. As an initial matter, if an earlier foreign sanction limits or

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even eliminates a domestic punishment, an obvious question for authorities will be “who goes first?” The reality is that enforcement agencies to some degree have to justify their budgets and mission with statistics demonstrating the number of actions brought, the amount of fines collected, or the number of individuals jailed. Moreover, intuitively, deference in the case of jail time, as in the case of the UK3, is one thing, but deference in the case of the collection of a USD500m fine, as in the case of the recent AU Optronics case,46 is another. Put simply, whereas no regime is interested in having to pick up the cost of jailing a felon if another is willing to do so, every regime has an interest in filling national coffers with a USD500m fine. Acceptance of any global approach in cartel punishment based on reciprocity will, therefore, not only require a cultural change in the public valuation of antitrust enforcement, it will also require the development of agreed-upon principles relating to the order of prosecution in international cartel cases and the allocation of fine amounts obtained.

The proposed test also fails to account for restitution concerns, that is, victim recovery. In some jurisdictions, cartel fines also serve the purpose of restitution.47 For such jurisdictions, a fifth question arises: what level of additional sanction is necessary to impose on a particular defendant to account for restitution owed to harmed national businesses and consumers? Such a consideration is particularly relevant for jurisdictions that do not yet have a successful system of private enforcement.

Finally, while the modified test will result in a level of general and specific deterrence deemed independently appropriate by each involved national regime, it remains unclear whether, as a whole, regimes would agree that the level of any of their individual deterrence assessments is a sufficient proxy for punishing a defendant for the global, as opposed to the national, impact of a cartel.

Because of its various shortcomings, it is doubtful that even the modified test will soon replace the current ad hoc

approach of antitrust authorities to coordinating punishment in international cartel cases. Nonetheless, the hope is that the Antitrust Division’s pioneering effort, coupled with the mounting concerns of both authorities and the regulated community about the potential for over-punishment in this area, will serve as a catalyst for the further development of guiding principles for ensuring fair and proportional punishment in international cartel cases. Development of suchguiding principles is a crucial next step in the evolution of the global antitrust-enforcement effort. Authorities need to adopt consistent principles with practical application in this area, much the same way they have embraced concepts of consistency, transparency, and predictability in dealing with leniency applications.

As with all change, the transition to a more coordinated approach will be difficult for authorities. It will challenge them to evolve their narrative for justifying the importance of their mission beyond the mere reference each year to staggering fine hauls and jail sentences. Their unified message will have to be one of efficient, fair, and proportional enforcement in international cartel cases––a welcome message to the regulated community and one representative of a well-ordered global enforcement environment.

And while the new world of coordinated punishment remains distant on the horizon, all is not lost for savvy in-house and outside counsel presently facing parallel enforcement in international cartel cases. The Antitrust Division’s articulation of an analysis for exercising discretion in these cases is a significant tool counsel would be well advised to draw upon in their discussions and negotiations with the Antitrust Division, as well as other enforcers, in the near term. These efforts may not just benefit the individual defendant whose punishment is presently at issue, but, more importantly, they may help to advance the pace of the move toward a more permanent change in the way authorities coordinate cartel punishment worldwide.

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Authors

John TerzakenPartner – Washington, D.C.Antitrust

ContactTel +1 202 683 3877john.terzaken@allenovery.com

Pieter HuizingAssociate – AmsterdamCorporate

ContactTel +31 20 674 1166pieter.huizing@allenovery.com

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Endnotes

_______________________________1 See Scott Campbell & Tristan Feunteun, The Air Cargo Cartel, 11 COMP. L.I. 9, 17-19 (2012). In addition to the seven authorities mentioned in this article, the antitrust authorities of Brazil and Mexico also prosecuted members of the cartel. See UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT, CROSS-BORDER ANTICOMPETITIVE PRACTICES: THE CHALLENGES FOR DEVELOPING COUNTRIES AND ECONOMIES IN TRANSITION 4 (2012), available at http://unctad.org/meetings/en/SessionalDocuments/ciclpd16_en.pdf. The Swiss authority also investigated the cartel. See, e.g., AIR FRANCE/KLM, REFERENCE DOCUMENT 2009–2010, ANNUAL FINANCIAL DOCUMENTS 184 (2010), available athttp://www.airfranceklm-finance.com/en/content/download/5069/32349/file/Reference-Document_2009-10_EN.pdf.

2 The most significant combined fines imposed in the various jurisdictions amounted to USD147m for SAS, USD153m for Cathay Pacific Airways, USD168m for Singapore Airlines, USD171m for Japan Airlines, USD241m for Cargolux, USD351m for Korean Air Lines, USD453m for British Airways, and USD898m for Air France/KLM (including subsidiary Martinair).

3 The nations included Norway (1932), Italy (1932), Germany (1933), the Netherlands (1935), Belgium (1935), and Denmark (1937). See Petter Berg, Swedish Cartel Legislation and the Theory of Harm––A Tale of 1001 Committees, in CARTEL DAMAGES AND COST ASYMMETRIES 10 (Feb. 2012), available athttp://openarchive.cbs.dk/bitstream/handle/10398/8407/Petter_Berg.pdf?sequence=1.

4 MASSIMO MOTTA, COMPETITION POLICY: THEORY AND PRACTICE 10 (2004).

5 See, e.g., Hannah L. Buxbaum, German Legal Culture and the Globalization of Competition Law: A Historical Perspective on the Expansion of Private Antitrust Enforcement, 23 BERKELEY J. J. INT’L L. 474, 476–477 (2005); Hiroshi Iyori, A Comparison of U.S.-Japan Antitrust Law: Looking at the International Harmonization of Competition Law, 4 PAC. RIM L. &POL’Y J. 59, 65 (1995).

6 Andrew Scott, The Evolution of Competition Law and Policy in the United Kingdom 6 (LSE Law, Society & Economy Working Papers 9/2009), available at http://www.lse.ac.uk/collections/law/wps/WPS2009-09_Scott.pdf.

7 See Fed. Trade Comm’n, Competition & Consumer Protection Activities Worldwide (last updated Jan. 25, 2013), http://www.ftc.gov/oia/authorities.shtm.

8 For example, the new regulations enacted in India in last few years allowing for more effective cartel enforcement. The Competition Commission of India is now eagerly using the new laws to initiate new investigations, impose large penalties, and put themselves on the map as an aggressive antitrust enforcer. Illustrative are the heavy penalties totaling nearly USD1.2bn recently imposed by the CCI on 12 of the country’s major cement companies. But the Asia-Pacific area has also seen a revival of antitrust regimes which have long been in place. In Japan for example, the powers of the Japan Fair Trade Commission (JFTC) have been significantly increased in recent years to allow for more aggressive enforcement.

9 These member states are Austria, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Ireland, Malta, Poland, Romania, Slovakia, Slovenia, and the UK. In some jurisdictions only certain cartels are criminally prosecuted (e.g., bid

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rigging). See GLOBAL COMPETITION REVIEW, GETTING THE DEAL THROUGH, CARTEL REGULATION (2012); INSTITUTE OF COMPETITION LAW, ANTITRUST ENCYCLOPEDIA, available at http://www.concurrences.com/anglais/droit-de-la-concurrence-150/antitrust-encyclopedia/?lang=en (through the link “Select a Question” and “Procedure - Are there criminal sanctions? What are these? What are the relevant provisions?”).

10 See, e.g., ORGANIZATION FOR ECONOMIC CO-OPERATION & DEVELOPMENT (OECD), FIGHTING HARD-CORE CARTELS: HARM,EFFECTIVE SANCTIONS AND LENIENCY PROGRAMMES 7–8 (mentioning only the established leniency programs of the United States (revised in 1993), the European Community (1996), and Korea (1997), the announced programs of Canada, the United Kingdom and Germany, and the programs considered by France and Sweden), available athttp://www.oecd.org/competition/cartelsandanti-competitiveagreements/1841891.pdf.

11 See GOV’T ACCOUNTABILITY OFFICE (GAO), GAO-11-619, CRIMINAL CARTEL ENFORCEMENT: STAKEHOLDER VIEWS ON IMPACT OF 2004 ANTITRUST REFORM ARE MIXED, BUT SUPPORT WHISTLBLOWER PROTECTION 59 (2011).

12 Not all 23 cases were initiated by a leniency application, however. The 2012 Bananas and CRT cases, for example, were initiated ex officio but full immunity was nevertheless granted in return for the information provided by the leniency applicants. The European Commission has recently stated: “Our leniency policy is another major success and we will draw on its merits, but in the coming months we will also pursue more cases ex officio whenever the opportunity presents itself.” EUROPEAN COMM’N, DG COMPETITION, MANAGEMENT PLAN 4 (2012), available at http://ec.europa.eu/atwork/synthesis/amp/doc/comp_mp.pdf.

13 GLOBAL COMPETITION REVIEW, RATING ENFORCEMENT (2012), available at http://www.globalcompetitionreview.com/surveys/article/31836/analysis-part-3/.

14 Ron Knox, US Books Record Fines of More Than $1 Billion, GLOBAL COMPETITION REV., Apr. 17, 2012, available at http://www.globalcompetitionreview.com/news/article/32786/us-books-record-fines-1-billion/.

15 For an overview of the penalties imposed by the U.S. Antitrust Division in the last 25 years, see U.S. DEP’T OF JUSTICE,ANTITRUST DIVISION, DIVISION UPDATE (Spring 2012), http://www.justice.gov/atr/public/division-update/2012/criminal-program.html. For an overview of the fines imposed by the European Commission since 1990, see EUROPEAN COMM’N, Cartel Statistics (June 2012), available at http://ec.europa.eu/competition/cartels/statistics/statistics.pdf.

16 Int’l Competition Network (ICN), Presentation at the 9th Annual ICN Conference in Istanbul, Turkey: Trends & Developments in Cartel Enforcement (Apr. 29, 2010), available athttp://www.internationalcompetitionnetwork.org/uploads/library/doc613.pdf.

17 Mark S. Popofsky, Extraterritoriality in U.S. Jurisprudence, 3 ISSUES IN COMPETITION LAW & POLICY, ABA SECTION OF ANTITRUST LAW 2423 (2008). The resistance by other states even took the form of “blocking statutes,” such as the U.K. Protection of Trading Interests Act (1980), the Canadian Foreign Extraterritorial Measures Act (1984), and the Australian Foreign Proceedings (Excess of Jurisdiction) Act, No. 3 (1984).

18 Canadian antitrust law requires the existence of substantive jurisdiction. It is unclear if this condition can be met in the case of conduct affecting Canada but entirely taking place outside of its jurisdiction. See R v. Libman, [1985] 21 D.L.R. 174 (Can.) (“[A]ll that is necessary to make an offence subject to the jurisdiction of our courts is that a significant portion of the activities constituting that offence took place in Canada.”). Nevertheless, Canada’s Competition Bureau has succeeded in obtaining plea agreements from participants of cartels taking place outside of Canada. Whether or not this is consistent with Canada’s

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antitrust law is yet to be tested in court. GLOBAL COMPETITION REVIEW, GETTING THE DEAL THROUGH, CARTEL REGULATION (2012) (overview of answers to the question “Extraterritoriality--Does the regime extend to conduct that takes place outside the jurisdiction?”).

With regard to Colombian antitrust law, the source states that it only applies to actions taking place in Colombia.

19 Specific effects-based tests may require the existence of an effect that is for instance “substantial,” “intended,” or “direct.”

20 It is telling in this respect that the Competition Commission of India is currently actively strengthening the basis for its extraterritorial jurisdiction by entering into cooperation agreements with its counterparties in the United States, Russia, China, South Africa, Japan, the United Kingdom, Brazil, and the EU. Aman Malik, CCI Seeks Partnership Agreements with Global Counterparts, LIVE MINT (June 19, 2012; 10:44 p.m.), http://www.livemint.com/Politics/dpYF9UCUL362YGkzfmQlfP/CCI-seeks-partnership-agreements-with-global-counterparts.html?facet=print.

21 Multilateral organizations like the ICN, OECD, and IBA have developed guidelines and best practices to harmonize enforcement actions. See, e.g., ICN WORK PRODUCT CATALOGUE (Sept. 2012), http://www.internationalcompetitionnetwork.org/uploads/library/doc770.pdf; OECD, CARTELS AND ANTICOMPETITIVEAGREEMENTS, http://www.oecd.org/daf/competition/cartelsandanti-competitiveagreements/; INT’L BAR ASS’N, ANTITRUST PROJECTS, http://www.ibanet.org/LPD/Antitrust_Trade_Law_Section/Antitrust/Projects.aspx.

22 See, e.g., U.S. DEP’T OF JUSTICE, ANTITRUST COOPERATION AGREEMENTS http://www.justice.gov/atr/public/international/int-arrangements.html (posting the cooperation agreements of the U.S. Antitrust Division with its counterparties in Australia, Brazil, Canada, Chile, China, the EU, Germany, India, Israel, Japan, Mexico, and Russia).

23 In February 2010 the DOJ, the European Commission, and the JFTC conducted simultaneous dawn raids on manufacturers of various auto parts. See, e.g., John M. Connor, Multiple Prosecutions Point to Huge Damages from Auto-Parts Cartels 4 (American Antitrust Institute Working Paper No. 12-06, December 11, 2012) available athttp://www.antitrustinstitute.org/~antitrust/sites/default/files/WorkingPaper12-06.pdf.

24 See, e.g., ANTONIO CASSESE ET AL., INTERNATIONAL CRIMINAL LAW: CASES AND COMMENTARY 100 (2011); ROBERT CRYER ET AL., AN INTRODUCTION TO INTERNATIONAL CRIMINAL LAW AND PROCEDURE 80 (2010). Notably, for EU member states, the application of the non bis in idem principle in criminal cases (at least) extends to the European Union, under the now binding Charter of Fundamental Rights of the EU, article 50. For the United States, the notion of double jeopardy is complicated by the existence of multiple sovereigns, i.e., state and federal governments. The Department of Justice has developed the “Petite Policy” to establish guidelines on determining whether to bring a federal prosecution based on the same acts involved in a prior state proceeding. See U.S. Attorneys Manual, tit. 9, ch. 9-2.000, Authority of the United States Attorneys in Criminal Division Matters, 9-2.031 Dual and Successive Prosecution Policy (Petite Policy) (2009).

25 William Sugden, Global Antitrust and the Evolution of an International Standard, 35 VAND. J. TRANSNAT’L L. 989, 990 (2002).

26 ABA SECTION OF ANTITRUST LAW, COMMENTS IN RESPONSE TO THE ANTITRUST MODERNIZATION COMMISSION’S REQUEST FOR PUBLIC COMMENT REGARDING INTERNATIONAL COOPERATION: ARE THERE TECHNICAL OR PROCEDURAL CHANGES THAT THE UNITED STATES COULD IMPLEMENT TO FACILITATE FURTHER COORDINATION WITH FOREIGN ANTITRUST AUTHORITIES?

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(2005), available at http://www.americanbar.org/content/dam/aba/administrative/antitrust_law/comments_inter-coop2-06-comm.authcheckdam.pdf. Notably, the president of the German antitrust authority, Andreas Mundt, very recently called for more convergence on national sanctioning procedures applicable to cartel violations within the EU. He stated: “Convergence is not so much a question of deterrence. Convergence is a question of a level playing field for companies in Europe.” Matthew Newman, German Regulator Calls for More Convergence on National Cartel Procedures, MLEX (Dec. 5, 2012), http://www.mlex.com/EU/Content.aspx?ID=295693.

27 See generally Campbell, supra note 1.

28 The decision explaining the exact fine calculation is not yet public. Press Release, European Comm’n, Antitrust: Commission Fines 11 Air Cargo Carriers €799 Million in Price Fixing Cartel (Nov. 9, 2010) (IP/10/1487).

29 Plea Agreement ¶ 8(d), United States v. British Airways PLC, CR-07-183-JDB (D.D.C. Aug. 23, 2007), available at http://www.justice.gov/atr/cases/f225500/225523.htm. Under the methodology, if the inbound shipment to the United States amounted to 40 percent of the carrier’s total U.S. commerce, the base fine (calculated solely on the basis of outbound shipments) would be increased by 40 percent. See James H. Mutchnik, Christopher T. Casamassim & Brenton A. Rogers, The Volume of Commerce Enigma, ANTITRUST SOURCE, June 2008, available at http://www.kirkland.com/siteFiles/Publications/75E349ED3760CB39B8A5C8E5ACCD3F79.pdf.

30 Australian Competition & Consumer Comm’n v. Qantas Airways Ltd., [2008] FCA 1976, Dec. 11, 2008, point 41.

31 The third category of commerce was taken into consideration in determining the starting point for the cooperation discount. Scott Hammond, Deputy Assistant Attorney General for the Antitrust Division, stated: “Not considering that commerce at all would have, I think, understated the seriousness of the offense and the impact this conduct had on the United States.” Ron Knox, The GCR Cartel Roundtable, GLOBAL COMPETITION REV., May 10, 2012, available athttp://www.globalcompetitionreview.com/features/article/31774/the-gcr-cartel-roundtable/.

32 UBS has received conditional leniency in certain jurisdictions, including the United States for manipulating the Yen LIBOR and the Euroyen Tokyo Interbank Offered Rates (TIBOR). Press Presentation, UBS, LIBOR Settlement 2012–– Actions Taken (Dec. 2012), available at http://www.ubs.com/content/dam/static/global/libor/2012-12-libor-actions-taken-en.pdf; see alsoUBS AG, U.S. Dep’t of Justice, Non-Prosecution Agreement (Dec. 18, 2012), available at http://www.justice.gov/iso/opa/resources/1392012121911745845757.pdf. Barclays has received conditional leniency in the United States for manipulating the Euro Interbank Offered Rate (EURIBOR). Press Release, Barclays, Barclays Bank PLC Settlement with Authorities (June 27, 2012), available at http://group.barclays.com/news/news-article/1329925891776/navigation-1330349038798; see also Barclays Bank PLC, U.S. Dep’t of Justice Non-Prosecution Agreement (June 26, 2012), available at http://www.justice.gov/iso/opa/resources/337201271017335469822.pdf.

33 The Business and Industry Advisory Committee to the OECD noted this issue in an OECD discussion on deterrence of antitrust sanctions. It stated: “The notion of optimal deterrence is a complex issue in the case of individuals. . . . In a multijurisdictional context, short prison terms can become long, and fines may become excessive. BIAC suggested that in cases of multiple prosecutions, coordination among jurisdictions would be advisable to avoid unfair and excessive penalties.” OECD, POLICY ROUNDTABLE ON CARTEL SANCTIONS AGAINST INDIVIDUALS 2003 110 (2005).

34 Cf. Michael O'Kane, Cartels, Extradition and Concurrent Criminal Prosecution, in RESEARCH HANDBOOK ON INTERNATIONAL COMPETITION LAW 291, 300-301 (ARIEL EZRACHI ED., 2012).

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35 Plea Agreements, United States v. Allison, CR-H-07-487 (S.D. Tex. Dec. 12, 2007), available athttp://www.justice.gov/atr/cases/allison.htm. For more information on the significance of the case, see, e.g., Sarah Ince & Gordon Christan, United Kingdom: The Marine Hose Cartel: A New Era in International Co-Operation, COMPETITION LAW INSIGHT, Feb. 12, 2008.

36 Ron Knox, DOJ Willing to Defer to Foreign Enforcers––If the Punishment Is Right, GLOBAL COMPETITION REV., Apr. 17, 2012, available at http://www.globalcompetitionreview.com/news/article/31674/doj-willing-defer-foreign-enforcers-punishment-right/.

37 OFFICE OF FAIR TRADING, THE IMPACT OF COMPETITION INTERVENTIONS ON COMPLIANCE AND DETERRENCE, FINAL REPORT§ 3.22 (2011), available at http://www.oft.gov.uk/shared_oft/reports/Evaluating-OFTs-work/oft1391.pdf; Catherine Craycraft et al., Antitrust Sanctions and a Firm’s Ability to Pay, 12 REV. INDUS. ORG. 171 (1997); Gregory J. Werden & Marilyn J. Simon, Why Price Fixers Should Go to Prison, 32 ANTITRUST BULL. 917 (1987).

38 OFFICE OF FAIR TRADING, THE IMPACT OF COMPETITION INTERVENTIONS ON COMPLIANCE AND DETERRENCE, FINAL REPORT§ 3.23; P. Buccirossi et al., Deterrence in Competition Law, GOVERNMENT AND THE EFFICIENCY OF ECONOMIC SYSTEMS DISCUSSION PAPER (2009).

39 ANTITRUST MODERNIZATION COMM’N, REPORT AND RECOMMENDATIONS 213–15 (2007) (recommendation 41), available athttp://govinfo.library.unt.edu/amc/report_recommendation/amc_final_report.pdf; ABA SECTION OF ANTITRUST LAW,TRANSITION REPORT 18–19 (2008) (Recommendation 18), available at http://www.americanbar.org/content/dam/aba/migrated/antitrust/at-comments/2008/11-08/comments_obamabiden.authcheckdam.pdf.

40 Scott Hammond, Deputy Ass’t Att’y General, U.S. Dep’t of Justice, Antitrust Div., Remarks Before the GCR Antitrust Law Leaders’ Forum: Standards for Satisfying the U.S. Deterrent Interests (Feb. 5, 2011).

41 Id.

42 Knox, supra note 36.

43 Sentencing Transcript at 8–9, R v. Whittle, (2008) EWCA Crim. 2560 (Southwark Crown Ct. June 11, 2008) (“The United Kingdom contracts during the period from 2003 to 2007, upon which I must concentrate in this case, was of the order of £17.5 million.”) (emphasis added).

44The ICN Cartel Working Group called the cooperation between the United States and the United Kingdom in the marine hose investigation and the resulting charges and pleas “monumental milestones in international cartel enforcement.” ICNCARTEL WORKING GROUP, REPORT ON CARTEL SETTLEMENTS 36 (2008), http://www.internationalcompetitionnetwork.org/uploads/library/doc347.pdf. The IBA Legal Practice Division Task Force on Extraterritorial Jurisdiction referred to the coordination in prosecuting the UK3 as “a major step forward in resolving potential conflict.” IBA LEGAL PRACTICE DIVISION TASK FORCE ON EXTRATERRITORIAL JURISDICTION, REPORT OF THE TASK FORCE ON EXTRATERRITORIAL JURISDICTION 58 (2009), available at http://tinyurl.com/taskforce-etj-pdf.

45 The Petite Policy provides guidelines for rationalizing the need for additional prosecution and/or punishment in instances where a federal prosecution follows a prior state prosecution of a defendant for identical conduct. The Petite Policy formulates three substantive prerequisites to initiate a federal prosecution in addition to state prosecution. First, the matter must involve a substantial federal interest. Second, the prior prosecution must have left that interest demonstrably unvindicated. The third

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element is the “standard” prerequisite that the government believes that the defendant’s conduct constitutes a federal offense, and that the admissible evidence probably will be sufficient to obtain and sustain a conviction by an unbiased trier of fact. U.S.ATTORNEYS MANUAL 9-2.031 Dual and Successive Prosecution Policy (2009).

46 United States v. AU Optronics Co., No. 3:09-cr-00110 (N.D. Cal. Sept. 21, 2012).

47ICN CARTELS WORKING GROUP, SETTING OF FINES FOR CARTELS IN ICN JURISDICTIONS 7–8 (2008), http://www.internationalcompetitionnetwork.org/uploads/library/doc351.pdf.

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