Two more jurisdictions, Australia and South Africa, may now join
the growing number of countries that impose criminal penalties for
antitrust violations. The legislatures in both countries recently
introduced legislation that amends their competition law statutes
to criminalize cartel offenses. This is part of an international
trend, as nations on five continents now follow the United
States' approach of criminally prosecuting individuals (and
corporations) for the most serious antitrust violations. High fines
have become commonplace, and courts in a number of countries have
imposed jail sentences. Combating cartels is a high priority for
many antitrust enforcers worldwide, and criminal prosecution of
individuals is seen as an effective deterrent to cartel
Following a slow but steady international trend, the
legislatures in Australia and South Africa recently introduced
legislation that amends their competition law statutes to
criminalize cartel offenses.
The Australian Parliament is considering an amendment that would
criminalize cartel conduct under the Trade Practices Act 1974. A
key feature of the bill is that individuals found guilty of cartel
conduct face imprisonment for up to 10 years and/or fines of up to
AUD$220,000 (US$141,170). The bill covers price fixing; allocation
of customer, suppliers, and territories; and bid rigging. The
Parliament has referred the bill to the Senate Economics Committee,
which will report back in late February.
South Africa's National Assembly has gone further and passed
an amendment to its Competition Act 1998. The bill authorizes the
criminal punishment of a firm's director or a manager, who
caused the firm to engage in a "prohibited practice" or
knowingly acquiesced in the firm doing so. The Competition Act 1998
covers price fixing, market allocation, and bid rigging. The law
would impose fines of up to R500,000 (US$50,000) and/or 10 years
imprisonment. Although the National Assembly has passed the bill,
South Africa's President has refused to sign it due to
undisclosed constitutional concerns. The amendment is expected to
be retabled after the South African general elections in June
The laws in many countries around the globe now mirror the U.S.
approach to sanctions for cartel offences. In the European Union,
nine of the 27 member states criminally prosecute behavior
associated with cartels (the Czech Republic, Estonia, France,
Hungary, Ireland, Romania, Slovakia, Slovenia, and U.K.), and three
more have criminal sanctions for bid rigging (Austria, Germany, and
Italy). Elsewhere, countries with criminal sanctions for cartel
offenses include Canada, Cyprus, Israel and Japan.
Only the United States and United Kingdom actually have
imprisoned individuals for cartel offenses. A notable recent
example is the 2-3 years' imprisonment in the U.K. for three
British businessmen involved in the marine hose industry cartel,
imposed by both the U.K. and U.S. Other jurisdictions, such as
Ireland and France, have sentenced individuals to jail for cartel
crimes, but so far none of those individuals have actually served
any jail time.
regimes prohibit cartels and impose sometimes-extraordinary
fines for cartel offences. In January 2009, an LG executive agreed
to plead guilty and pay a $25,000 fine – on top of a
7-month prison sentence – for his role in a global
conspiracy to fix prices of liquid crystal displays. A month
before, LG pleaded guilty and was sentenced to pay $400 million.
The EU too regularly imposes high fines for price fixing. Its
largest cartel fine was imposed in November 2008 on automobile
manufacturer Saint-Gobain, for €896 million (US$1.14
Convergence has led to increasing cooperation among competition
authorities in detecting, investigating, and prosecuting cartels.
In response, companies subject to antitrust investigations must be
careful to coordinate any leniency applications, investigation
responses, and plea agreements, so as to avoid having the response
to enforcement in one jurisdiction compromise the defense in
another. As more jurisdictions adopt and enforce legislation
authorizing imprisonment for criminal antitrust offenses,
individual defendants will find themselves negotiating how to serve
jail sentences imposed by multiple jurisdictions. As the
international trend towards criminalizing cartel offenses
continues, it is important for companies operating in multiple
countries to better understand these jurisdictions' antitrust
and criminal laws and procedures.
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