Beyond the Theoretical: Articulating Enforcement Strategies for Successful European Antitrust Criminalization

• Author: Peter Whelan
• Position: Associate Professor in Law and Deputy Director, Centre for Criminal Justice Studies, School of Law, University of Leeds
• Pages: 235-270

BEYOND THE THEORETICAL: ARTICULATING

ENFORCEMENT STRATEGIES FOR SUCCESSFUL

EUROPEAN ANTITRUST CRIMINALIZATION

P

ETER

W

HELAN

*

The EU prohibition on cartel activity can be found in the Treaty on the

Functioning of the European Union Article 101(1), a provision of EU law that

is enforced by the European Commission and the national competition author-

ities and courts of the EU Member States.

1

While the Commission can impose

fines on undertakings for violating the cartel prohibition, it cannot impose

criminal sanctions.

2

This is in line with the general legal European culture

concerning the enforcement of cartel law. Indeed, within Europe there is a

tradition of avoiding the use of personal criminal punishment (which in this

article is defined restrictively as the imposition of a custodial sentence) to

enforce cartel law.

3

Over the last decade or so, however, things have started to

change. In particular, considerable debate has been fostered concerning the

employment of criminal cartel sanctions and the subjecting of convicted carte-

lists to time in prison as punishment for their actions.

A number of institutions have contributed to this debate, including the

Competition Committee of the Organization for Economic Co-operation and

Development (OECD) and the Antitrust Division of the U.S. Department of

Justice. The OECD, for example, in its “Second Cartel Report,” advised its

Member States (the majority of which are EU Member States) to consider: (a)

introducing and imposing antitrust sanctions against natural persons; and (b)

introducing criminal sanctions in cartel cases in jurisdictions where it would

* Associate Professor in Law and Deputy Director, Centre for Criminal Justice Studies,

School of Law, University of Leeds.

1

This is by virtue of Council Regulation No. 1/2003, 2003 O.J. (L 1) 1 [hereinafter Regula-

tion 1/2003]; Consolidated Version of the Treaty on the Functioning of the European Union art.

101(1), 2012 O.J. (C 326) 47, 88 [hereinafter TFEU].

2

Regulation 1/2003, supra note 1, art. 23(5).

3

Christopher Harding, Business Collusion as a Criminological Phenomenon: Exploring the

Global Criminalisation of Business Cartels, 14 C

RITICAL

C

RIMINOLOGY

181, 181 (2006).

235

236

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OURNAL

[Vol. 81

be consistent with social and legal norms.

4

The DOJ, through its policy

speeches, has consistently communicated the message that “the most effective

deterrent for hard core cartel activity, such as price fixing, bid rigging, and

allocation agreements, is stiff prison sentences.”

5

Due in part at least to these

particular efforts, as well as the efforts of a number of academics,

6

it seems

that “[c]ountries in virtually every region of the world” have criminalized car-

tel activity.

7

Europe is no exception and some EU Member States have indeed

criminalized their cartel prohibitions or seriously thought about doing so.

The “European cartel criminalization debate” has raised a number of con-

troversial and difficult issues.

8

These issues include: the necessity and the ap-

propriateness of personal criminal antitrust sanctions;

9

the potential for

differences in attitude concerning the criminality of cartel activity;

10

the im-

pact of human rights on the achievement of the objectives of cartel criminal-

ization;

11

the competence of EU-level institutions to mandate the use of

4

OECD C

OMPETITION

C

OMMITTEE

, H

ARD

C

ORE

C

ARTELS

: R

ECENT

P

ROGRESS AND

C

HAL-

LENGES

A

HEAD

46 (2003) (second report on the 1998 OECD Council recommendation concern-

ing effective action against hard core cartels).

5

Belinda A. Barnett, Sr. Counsel to the Deputy Assistant Att’y Gen. for Criminal Enforce-

ment, Antitrust Div., U.S. Dep’t of Justice, Remarks at the Joint Fed. Ct. of Australia/Law Coun-

cil of Australia (Bus. Law Sec.) Workshop, Criminalization of Cartel Conduct—The Changing

Landscape 1 (Apr. 3, 2009), www.justice.gov/atr/criminalization-cartel-conduct-changing-

landscape.

6

See, in particular, Wouter P.J. Wils, Is Criminalization of EU Competition Law the An-

swer?,in C

RIMINALIZATION OF

C

OMPETITION

L

AW

E

NFORCEMENT

: E

CONOMIC AND

L

EGAL

I

MPLICATIONS FOR THE

EU M

EMBER

S

TATES

60 (Katalin J. Cseres, Maarten Pieter Schinkel &

Floris O.W. Vogelaar eds., 2006) [hereinafter C

RIMINALIZATION OF

C

OMPETITION

L

AW

E

NFORCEMENT

].

7

Gregory C. Shaffer & Nathaniel H. Nesbitt, Criminalizing Cartels: A Global Trend?, 12

S

EDONA

C

ONF

. J. 313, 313 (2011).

8

See generally M

ARK

F

URSE

, T

HE

C

RIMINAL

L

AW OF

C

OMPETITION IN THE

UK

AND IN THE

US: F

AILURE AND

S

UCCESS

(2012); C

RIMINALISING

C

ARTELS

: C

RITICAL

S

TUDIES OF AN

I

NTERNATIONAL

R

EGULATORY

M

OVEMENT

(Caron Beaton-Wells & Ariel Ezrachi eds., 2011)

[hereinafter C

RIMINALISING

C

ARTELS

]; C

RIMINALIZATION OF

C

OMPETITION

L

AW

E

NFORCEMENT

,

supra note 6.

9

See, e.g., Wils, supra note 6; Terry Calvani, Enforcement of Cartel Law in Ireland,in

A

NNUAL

P

ROCEEDINGS OF THE

F

ORDHAM

C

ORPORATE

L

AW

I

NSTITUTE

: I

NTERNATIONAL

A

NTI-

TRUST

L

AW

& P

OLICY

2003, at 1 (Barry E. Hawk ed., 2004); Patricia Hanh Rosochowicz, The

Appropriateness of Criminal Sanctions in the Enforcement of Competition Law, 25 E

UR

. C

OMPE-

TITION

L. R

EV

. 752 (2004); Peter Whelan, A Principled Argument for Personal Criminal Sanc-

tions as Punishment Under EC Cartel Law, 4 C

OMPETITION

L. R

EV

. 7 (2007).

10

See, e.g., Donald I. Baker, An Enduring Antitrust Divide Across the Atlantic over Whether

to Incarcerate Conspirators and When to Restrain Abusive Monopolists, 5 E

UR

. C

OMPETITION

J.

145 (2009); Andreas Stephan, Survey of Public Attitudes to Price-Fixing and Cartel Enforcement

in Britain, 5 C

OMPETITION

L. R

EV

. 123 (2008).

11

See, e.g., S. Parkinson, The Cartel Offence Under the Enterprise Act 2002, 25 C

OMPANY

L

AW

. 187 (2004); Peter Whelan, Criminal Cartel Enforcement in the EU: Avoiding a Human

Rights Trade-Off,in C

RIMINALISING

C

ARTELS

,supra note 8, at 217.

2016]

A

RTICULATING

E

NFORCEMENT

S

TRATEGIES

237

individual criminal sanctions;

12

the effect of cartel criminalization on the ex-

change of information within the European Competition Network;

13

the inter-

national aspects of antitrust criminalization (e.g., extradition);

14

and the

potential for the development of an international consensus on the criminality

of cartel activity.

15

In addition, a number of papers have been published which

either describe the specifics of the criminal antitrust regime in a given juris-

diction

16

or detail how and why a particular criminalized cartel regime has

failed to meet its objectives.

17

There are also some country-specific reports

which, by providing some detail on how future criminal enforcement can be

improved, offer useful insights for other European jurisdictions that are con-

templating criminalizing cartel activity.

18

Unfortunately, what appears to be missing from the current literature is a

systematic, detailed analysis of the extent of one important practical challenge

of European antitrust criminalization: the identification of important enforce-

ment strategies that help to ensure the criminal cartel regime is effective in

practice. With some notable exceptions,

19

the vast majority of the literature

examining the practical aspects of the criminalization debate comments on the

practical problems inherent in a given criminal cartel regime. Relatively little

room is reserved for a more generally applicable analysis of the requirements

of a successful criminal cartel regime, including the articulation of the impor-

12

See, e.g., Gurgen Hakopian, Criminalisation of EU Competition Law Enforcement—A Pos-

sibility After Lisbon?, 7 C

OMPETITION

L. R

EV

. 157 (2010).

13

See, e.g., Peter Whelan, Cartel Criminalisation and Due Process: The Challenge of Impos-

ing Criminal Sanctions Alongside Administrative Sanctions Within the EU, 64 N. I

R

. L

EGAL

Q.

143, 149–54 (2013).

14

See, e.g., Mark Furse, Issues Relating to the Enforcement and Application of Criminal Laws

in Respect of Competition,in H

ANDBOOK OF

R

ESEARCH IN

T

RANS

-A

TLANTIC

A

NTITRUST

466

(Philip Marsden ed., 2006).

15

Ariel Ezrachi & Jiø´ı Kindl, Cartels as Criminal? The Long Road from Unilateral Enforce-

ment to International Consensus,in C

RIMINALISING

C

ARTELS

, supra note 8, at 419.

16

See Nonthika Wehmhorner et al., Part III: Country Experiences with Criminal Law Sanc-

tions,in C

RIMINALIZATION OF

C

OMPETITION

L

AW

E

NFORCEMENT

,supra note 6, at 217.

17

See, e.g., Mark Furse, The Cartel Offence—“Great for a Headline But Not Much Else”?, 32

E

UR

. C

OMPETITION

L. R

EV

. 223 (2011).

18

See, e.g., Terry Calvani & Kaethe M. Carl, The Competition Act 2002, Ten Years Later:

Lessons from the Irish Experience of Prosecuting Cartels as Criminal Offences, 1 J. A

NTITRUST

E

NFORCEMENT

296 (2013).

19

See, e.g., Terry Calvani & Torello H. Calvani, Custodial Sanctions for Cartel Offences: An

Appropriate Sanction in Australia?, 17 C

OMPETITION

& C

ONSUMER

L.J. 119, 137–40 (2009);

Michael J. Frese, The Negative Interplay Between National Custodial Sanctions and Leniency,in

C

RIMINALIZATION OF

C

OMPETITION

L

AW

E

NFORCEMENT

,supra note 6, at 196; Patrick Massey,

Criminalization and Leniency: Will the Combination Favourably Affect Cartel Stability?,in

C

RIMINALIZATION OF

C

OMPETITION

L

AW

E

NFORCEMENT

,supra, at 176; Wils, supra note 6, at

87–90.