Legal Business Blogs

Global cartel fines drop substantially in first half of 2017 but market collusion and sanctions remain ‘cyclical’

Global cartel fines have decreased significantly in the first half of 2017 with worldwide fines totalling $1.2bn, on track to be significantly lower than 2016 which counted fines of $7.8bn according to Morgan, Lewis & Bockius’ latest midyear cartel report.

The report, however, which covers 70 countries, may not signify an overall drop in cartels investigations or cases, which Morgan Lewis partner Omar Shah said remain in an ‘active pipeline’ and are ‘cyclical.’

Shah said the report did not necessarily represent how busy enforcers are or how many cartels there were. ‘For example, this year we had the re-imposition of the €776m air cargo fine in the EU, which we have not included in this year’s fines. This explains how things can be skewed both ways’ he said.

‘However, our findings show these are getting broader geographically with enforcers worldwide enforcing their laws more widely, despite varying levels of fines’ he added.

According to the report, the trend of lower fines figures appeared to be linked to the gradual winding down, particularly in the United States, of major international cartel investigations, including the US Department of Justice’s (DoJ) auto parts investigation. In May, the DoJ charged 65 people and 48 companies and ordered them pay more than $2.9bn in criminal fines.

Other recent high-profile cartel sanctions include a €2.9bn fine by the European Commission (EC), the highest fine on record for a price-fixing cartel. In this case, the cartel took place between 1997 and 2011 and included the world’s biggest truck makers. One  cartelist, Man, escaped a fine ‘as it revealed the existence of the cartel to the EC,’ the regulator said. All companies acknowledged their involvement and agreed to settle the case.

The cartel is the subject of a potential UK £3.9bn competition damages class action application by the Road Haulage Association’s (RHA) to recover damages from truck manufacturers.

Similarly, according to the report, actions were taken against a range of international banks in financial services, public and private enforcement. The New York Department of Financial Services and $350m fine imposed on BNP Paribas in May after a US Treasury investigation for illegal, unsafe and unsound conduct in connection with CNP’s foreign exchange trading business, was one case cited in the report.

However, according to the report, in 2017 so far, a number of enforcement firsts have occurred around the world, such as the first leniency application granted in India, the EU’s first whistleblower tool to report antitrust violations and the highest Administrative Council for Economic Defense penalty agreed by settlement in Brazil.

‘Authorities are giving greater prominence to whistleblowing programmes and independent own initiative enforcement, and there is speculation of a drop in leniency applications given the complexity of dealing with so many jurisdictions around the world,’ Shah said.

The report concluded that firms can expect to see further enforcement in electronic components, pharmaceuticals, and shipping, as well as in a number of domestic cartel investigations around the world, where there is a strong pipeline of cases launched or progressing in 2017.

In July, allegations emerged about decades of conspiracy between Volkswagen, BMW and Daimler. The companies were accused of secretly working together on technology to form a cartel that could have led to the emission scandal.

The EC said it was investigating the claims, which could result in the car-makers facing multi-billion euro penalties.