Working with Multiple Competition Agencies in a Cartel Investigation

• Pages: 207-240

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CHAPTER V

WORKING WITH MULTIPLE COMPETITION

AGENCIES IN A CARTEL INVESTIGATION

Any firm selling products or services internationally must factor into

a compliance program the possibility that it may, at some point, become

the subject of a cartel investigation by a foreign enforcement authority.

Once such an investigation is launched, the firm will confront a complex

web of legal and practical issues, including how to respond to the

enforcement agency, whether to take advantage of any leniency policy,

what effect parallel investigations by other authorities may have on the

investigation, and whether any coordination among multiple authorities

can be negotiated. This Chapter looks at these issues and provides

guidance on both planning for, and responding to, investigations.

A. Defining Cartel Conduct

Basic prohibitions on cartels are roughly similar in substance across

the more than 100 national and supranational jurisdictions that have

enacted antitrust laws and developed regimes to investigate and punish

violations. Broadly speaking, jurisdictions across the globe prohibit

anticompetitive agreements among actual or potential competitors to fix

prices, allocate markets or customers, rig bids, or restrict output,

including sales volumes or production capacity. In general, such

agreements or understandings need not be express or written but can also

be implied or inferred and proved through direct or circumstantial

evidence.

Aside from the general prohibition on anticompetitive agreements,

there is variation among jurisdictions on the precise conduct that is

considered illegal, as well as the types of violations that different

agencies are likely to pursue. For example, exchanges among

competitors of commercially sensitive information can qualify as

prohibited anticompetitive conduct under some regimes. In the European

Union (EU),1 the European Commission (Commission) can sanction the

1. As of the end of 2020, EU law no longer applies in the U.K., given its

exit from the European Union. However, a number of amendments were

made to U.K. domestic law to ensure that parts of EU law (as they stood

at the end of the Brexit transition period) were retained, or that U.K.

domestic law was otherwise aligned with EU law in certain areas.

208 International Investigations and Merger Reviews

“exchange of commercially sensitive information” even without an

agreement between or among horizontal competitors, where it leads to

anticompetitive foreclosure, because it “places unaffiliated competitors at

a significant competitive disadvantage as compared to the companies

affiliated within the exchange system.”2 This will be the case “where the

information concerned is very strategic for competition and covers a

significant part of the relevant market.” Similarly, the exchange of

2. Guidelines on the Applicability of Article 101 of the Treaty on the

Functioning of the European Union to Horizontal Cooperation

Agreements, 2011 O. J. (C 11) 15, ¶ 70 (EC). The European Court of

Justice has issued several judgments prohibiting the exchange of pre-

pricing communications between businesses as to price-setting factors,

quotation prices, or price trends. See, e.g., Case C-194/14 P, AC-

Treuhand AG v. Comm’n, 2015 E.C.R. 717 (Eur. Ct. Justice) (affirming

General Court’s holding that a consultancy firm was directly involved in

exchange of commercially sensitive information that formed the basis of

a cartel in the heat stabilizer industry); Case C-286/13 P, Dole Food Co.

& Dole Fresh Fruit Europe v. Comm’n, 2015 E.C.R. 184 (Eur. Ct.

Justice) (finding that pre-pricing communications between businesses as

to price-setting factors can give rise to an anticompetitive concerted

practice if they can reduce uncertainty for the participants about strategy

and competitor conduct).

Multiple Agencies in a Cartel Investigation 209

sensitive information among competitors may be sanctionable in China,3

Brazil, and Singapore, among other jurisdictions.4

The U.S. Department of Justice (DOJ) and the Federal Trade

Commission (FTC) have also recently amplified enforcement of conduct

involving information exchanges,5 issuing formal joint guidance

highlighting certain forms of horizontal collusion and information

3. Under the An ti-Monopoly Law of the People’s Republic of China (AML)

and accompanying regulations, the exchange of sensitive information

among competitors is not itself unlawful. However, according to the

AML and other regulations, an exchange of information may be treated as

a concerted action if business operators (1) conduct themselves in a

manner that is consistent with the criteria used to define “concerted

action”; (2) have communicated with one another; and (3) cannot justify

their conduct. If competitors exchange information and conduct

themselves in the market consistent with the criteria for “concerted

action” without any justifications, the exchange of information could be

found to violate the AML. See State Admin. Mkt. Regulation (SAMR),

Interim Provisions on the Prohibition of Monopoly Agreement (July 26,

2019) [hereinafter Interim Provisions on Monopoly Agreements],

available at

http://gkml.samr.gov.cn/nsjg/fgs/201907/t20190701_303056.html (in

Chinese). See also C

HINA NAT’L DEV. AND REFORM COMM’N (NDRC),

GUIDELINES ON TRADE ASSOCIATION PRICING ACTIVITIES

(⊕ё助科翁頻󲕽愛薜傷) (July 20, 2017), available at

https://www.ndrc.gov.cn/xxgk/zcfb/gg/201707/t20170725_961180.html ?

code=&state=123 (in Chinese).

4. See, e.g., Conselho Administrativo de Defesa Econômica (CADE), Law

12,529/11, Art. 36 (June 5, 2016), available at

en.cade.gov.br/topics/legislation/laws/law-no-12529-2011-english-

version-from-18-05-2012.pdf/view; Case CCS 500/006/09, Infringement

of the Section 34 Prohibition in Relation to the Price of Ferry Tickets

Between Singapore and Batam (July 18, 2012), available at

https://www.cccs.gov.sg/public-register-and-consultation/public-

consultation-items/ccs-imposes-financial-penalties-on-two-competing-

ferry-operators-for-engaging-in-unlawful-sharing-of-price-information

(sanctioning an information exchange arrangement that eliminated the

incentive to price independently and heavily fining the participating ferry

operators, in a seminal finding from the Competition and Consumer

Commission of Singapore).

5. See, e.g., Press Release, U.S. Dep’t of Justice, Justice Department Settles

Civil Antitrust Claim Against AT&T and DIRECTV for Orchestrating

Information Sharing Agreements with Competitors (Mar. 23, 2017),

available at https://www.justice.gov/opa/pr/justice-department-settles-

civil-antitrust-claim-against-att-and-directv-orchestrating.