1. CRIMINALIZATION OF ANTITRUST – THE NEW CONSENSUS? ABA Section of International Law Fall Meeting 2008 September 25, 2008 Brussels

2. “For jurisdictions that can provide the necessary legal protections for the accused, criminal sanctions provide the greatest potential for deterrence and the most appropriate punishment for individual cartelists” ICN, 2004 Cartels Workshop

3. Criminalization of Antitrust Canada and the U.S. have had criminal antitrust offences since 1889 and 1890 respectively Canada and the U.S. have had criminal antitrust offences since 1889 and 1890 respectively In Europe the focus has traditionally been placed on administrative enforcement In Europe the focus has traditionally been placed on administrative enforcement UK criminalized certain anticompetitive conduct in 2002 followed by Ireland in 2004 UK criminalized certain anticompetitive conduct in 2002 followed by Ireland in 2004 Recent cases in UK and Ireland suggest a shift towards effective application of criminal sanctions Recent cases in UK and Ireland suggest a shift towards effective application of criminal sanctions Recently, Russia, the Netherlands, the Czech Republic have called for criminal sanctions for cartel conduct Recently, Russia, the Netherlands, the Czech Republic have called for criminal sanctions for cartel conduct Several other EU countries have contemplated certain violations of antitrust laws as criminal offences: France, Germany, Austria, Denmark, Estonia, Romania, Slovakia, Slovenia Several other EU countries have contemplated certain violations of antitrust laws as criminal offences: France, Germany, Austria, Denmark, Estonia, Romania, Slovakia, Slovenia Draft legislation was introduced in Australia in 2008 Draft legislation was introduced in Australia in 2008

4. UNITED STATES Per se offence for hard core cartel conduct Per se offence for hard core cartel conduct –in theory also Rule of Reason Corporate and individual sanctions Corporate and individual sanctions DOJ and State/local prosecutors – not FTC DOJ and State/local prosecutors – not FTC Amnesty / Leniency / Leniency Plus Amnesty / Leniency / Leniency Plus Sentencing Guidelines / Alternative Fine Provision Sentencing Guidelines / Alternative Fine Provision Effect of conviction on civil follow-on cases Effect of conviction on civil follow-on cases  HOT TOPICS Extradition: Norris case Extradition: Norris case Marine Hose: search & sentencing cooperation Marine Hose: search & sentencing cooperation Collateral offences: fraud and corruption, obstruction Collateral offences: fraud and corruption, obstruction

5. CANADA Criminal offences Criminal offences –conspiracy, bid rigging, price discrimination, price maintenance, predatory pricing Bifurcated approach Bifurcated approach –Competition Bureau (investigative agency) –Director of Public Prosecution (prosecutor) Undueness standard – not per se illegal Undueness standard – not per se illegal No Sentencing Guidelines No Sentencing Guidelines HOT TOPICS HOT TOPICS Competition Policy Review Panel Report Competition Policy Review Panel Report Draft Information Bulletin on Sentencing and Leniency in Cartel Cases Draft Information Bulletin on Sentencing and Leniency in Cartel Cases Use of Prohibition Orders Use of Prohibition Orders

6. UNITED KINGDOM Enterprise Act of 2002 – effective as of June 2003 Enterprise Act of 2002 – effective as of June 2003 –Criminal sanctions –Director disqualification orders –Confiscation orders OFT’s ‘dual track’ approach (criminal/civil) OFT’s ‘dual track’ approach (criminal/civil) OFT / Commission’s ‘dual track’ approach (criminal/civil) OFT / Commission’s ‘dual track’ approach (criminal/civil)  HOT TOPICS US/UK criminal enforcement: Marine Hose case US/UK criminal enforcement: Marine Hose case UK stand-alone criminal enforcement: BA/Virgin case UK stand-alone criminal enforcement: BA/Virgin case Increasing focus by corporate advisors on the role of individuals Increasing focus by corporate advisors on the role of individuals Financial reward programme for informersFinancial reward programme for informers Risk of individual applications for immunityRisk of individual applications for immunity Obstruction risks for company and individualsObstruction risks for company and individuals Separate legal adviceSeparate legal advice

7. AUSTRALIA Draft bill January 2008 - new legislation by end 2008 introducing dual civil-criminal regime for cartel conduct Draft bill January 2008 - new legislation by end 2008 introducing dual civil-criminal regime for cartel conduct –prohibitions reflect basic OECD definition of hard-core cartel conduct –dishonesty proposed as key differentiator –corporate and individual liability Bifurcated approach to enforcement Bifurcated approach to enforcement –ACCC (investigative agency) –Director of Public Prosecutions (prosecutor) Court-imposed penalties: no Sentencing Guidelines Court-imposed penalties: no Sentencing Guidelines  HOT TOPICS Extent of differentiation between criminal and civil prohibitions; appropriateness of dishonesty elementExtent of differentiation between criminal and civil prohibitions; appropriateness of dishonesty element Workability of the bifurcated modelWorkability of the bifurcated model Extent of ACCC powers and resourcesExtent of ACCC powers and resources Increase in private enforcementIncrease in private enforcement Criminal charges for obstruction following civil settlement (fall-out from the Visy case)Criminal charges for obstruction following civil settlement (fall-out from the Visy case)

8. SWEDEN Swedish Government Committee on Modernisation of the Competition rules (2003-2004), a criminalization model for hard-core cartels New Competition Act (Nov 1, 2008) – –criminalization rejected but disqualification orders for cartel infringements – –will keep so far unsuccessful leniency program (introduced in 2002) – –Competition Authority may issue fines against undertakings in uncontested cases  HOT TOPICS Bid rigging asphalt case Bid rigging asphalt case Heavy investments and prestige put into the Swedish leniency program Heavy investments and prestige put into the Swedish leniency program ECN aspects ECN aspects Strong opposition against a criminal amnesty system for individuals Strong opposition against a criminal amnesty system for individuals

9. IS CRIMINALIZATION DESIRABLE?

10. Why criminalization might be desirable? Why criminalization might be desirable? –deterrence –individual accountability attributes to more effective enforcement –enhanced investigative powers (search and seizure, subpoena) –increased effectiveness of leniency/amnesty programs ●BUT reasonable punishment? deprivation of liberties and freedoms? reasonable punishment? deprivation of liberties and freedoms? high legal and evidentiary burdens high legal and evidentiary burdens chilling effect on business chilling effect on business more resources and decreased efficiency more resources and decreased efficiency negative effect on leniency programs? negative effect on leniency programs?

11. IS CRIMINALIZATION DESIRABLE? Are there any other alternative means? Are there any other alternative means? –individual administrative fines –disqualification orders / prohibition orders as an alternative –private enforcement as a supplement/complement

12. SCOPE OF A CRIMINAL ANTITRUST OFFENCE

13. Should criminal sanctions be reserved for ‘hard core’ cartel conduct? Should criminal sanctions be reserved for ‘hard core’ cartel conduct? What standard should be applied? What standard should be applied? –per se (U.S. and Australia) in US, general Sherman Act provisions – detail left to courtsin US, general Sherman Act provisions – detail left to courts in Australia, detailed statutory provisions proposed with problems of undue complexity and potential overreachin Australia, detailed statutory provisions proposed with problems of undue complexity and potential overreach –dishonesty (UK and Australia?) or other “aggravating features” (UK) the ‘dishonesty’ test: ordinary people would consider the alleged conduct dishonest and defendant knew that ordinary people would think the conduct to be dishonestthe ‘dishonesty’ test: ordinary people would consider the alleged conduct dishonest and defendant knew that ordinary people would think the conduct to be dishonest implications of the Norris litigationimplications of the Norris litigation –undueness (Canada) accused intended to enter into the agreement and knew or ought reasonably to have known that the agreement (if entered into) would prevent or lessen competition undulyaccused intended to enter into the agreement and knew or ought reasonably to have known that the agreement (if entered into) would prevent or lessen competition unduly

14. EFFECTIVE IMPLEMENTATION OF CRIMINAL ANTITRUST ENFORCEMENT

15. Two tier approach in Europe (Commission and NCA’s) Two tier approach in Europe (Commission and NCA’s) –co-operative (U.S.) or conflicting? (Korea, Brazil) Bifurcated model in Canada and Australia (investigative agency and public prosecutor) Bifurcated model in Canada and Australia (investigative agency and public prosecutor) –court imposed sentences / no sentencing guidelines –leniency / immunity considerations Amnesty / leniency Plus Amnesty / leniency Plus Sanctions for individuals Sanctions for individuals

16. EFFECTIVE IMPLEMENTATION OF A CRIMINAL ANTITRUST ENFORCEMENT Transparency and certainty Transparency and certainty High risk of detection High risk of detection Significant sanctions Significant sanctions Investigative powers Investigative powers Cooperation among enforcement agencies Cooperation among enforcement agencies Support from different stakeholders: regulators, business community, agencies, judiciary Support from different stakeholders: regulators, business community, agencies, judiciary

17. THE CRIMINALIZATION OF ANTITRUST AND MULTIJURISDICTIONAL INVESTIGATIONS

18. Co-operation agreements Co-operation agreements Intergovernmental networking & training (eg ICN) Intergovernmental networking & training (eg ICN) –know-how sharing and significance of personal contacts –coordinated approach to enforcement priorities –technical assistance programs Proliferation of leniency/amnesty programs Proliferation of leniency/amnesty programs –guarantee applicants who seek leniency protection against criminal prosecution –additional evidence gathering opportunities –“set off” provisions in leniency / plea agreements Extradition treaties Extradition treaties Cross-border markets Cross-border markets

19. Caron Yvonne Beaton-WellsPhilipp Girardet The University of Melbourne SJ Berwin LLP Victoria, AustraliaLondon, England Susana CabreraPer Karlsson GARRIGUESAdvokatfirman Vinge KB Madrid, Spain Stockholm, Sweden Ken EwingElisa Kearney Steptoe & Johnson LLPDavies Ward Phillips & Vineberg LLP Washington D.C., USAToronto, Canada