Cartel Leniency In The Asia-Pacific Region

One of the worst possible nightmares for in-house counsel is to discover that the business has been involved in a cross-border cartel. Quick and careful action can ensure that the damage is minimized by seizing the leniency option. Navigating the optimal course for leniency applications in the Asia-Pacific region can be particularly challenging because there is such a wide variety of approaches to competition law and its enforcement. Nevertheless, there is an indisputable trend: the number of Asia-Pacific countries adopting or effectively enforcing competition laws is increasing, and this trend should continue in the next few years. The existence of legislation in various stages of development presents challenges for cartel participants seeking leniency for practices having effect in several Asia-Pacific countries. In some countries, cartels are a criminal offense for which executives can serve jail time; in others, only the company is exposed; and in some countries, cartels are not illegal at all. Not all countries with a specific prohibition against cartels have a leniency regime in place. Moreover, in certain countries, the antitrust enforcer retains a certain discretion over whether to grant immunity or leniency, which may deter would-be applicants. To complicate matters further, in some countries it is also necessary to carefully manage the interaction between what is disclosed to the competition authority and how that can create an exposure to private damages litigation. The disclosure of a cartel in a country in which leniency is available may bring the cartel conduct to the attention of enforcers in countries that do not offer leniency. In countries where the availability of leniency is only at the authorities' discretion, a cartel participant may refrain from disclosing its conduct at all. There have been cases in which applicants have applied for leniency in one country and, by being too slow to consider whether the conduct has extended to other countries, have inadvertently encouraged another member of the cartel to take the benefit in those countries. An effective strategy for the use of leniency should be coordinated across all relevant jurisdictions at the same time. This Commentary provides an overview of cartel laws and enforcement in the main Asia-Pacific countries, distinguishing between the countries where leniency is available and where it is not.

Jurisdiction

General Cartel Law

Leniency

Australia

Civil and criminal

Yes

China (Mainland)

Civil

Yes

Hong Kong SAR

Telecommunications and broadcasting industries only

No

India

Civil

Yes

Indonesia

Civil and criminal

No

Japan

Civil and criminal

Yes

Korea

Civil and criminal

Yes

Malaysia

Civil and criminal

Yes (few details)

New Zealand

Civil

Yes

Pakistan

Civil

Yes

Taiwan

Civil and criminal

Yes

Thailand

Civil and criminal

Yes

The Philippines

Civil and criminal

No

AUSTRALIA AND NEW ZEALAND In Australia, cartel conduct is prohibited under the Competition and Consumer Act ("CCA"). The CCA is enforced by the Australian Competition and Consumer Commission ("ACCC"). New Zealand's Commerce Act treats cartels in a manner similar to that of Australia's CCA, except that criminal sanctions (in addition to the existing civil penalties) still are in the process of being introduced. In addition, the New Zealand Commerce Commission has a very similar approach to leniency to that employed by the ACCC. Sanctions for Cartel Conduct. Participation in a cartel is subject to both civil prohibition and criminal sanctions. Individuals can be punished by imprisonment of up to 10 years and/or fines of up to AU$220,000 per contravention (US$230,000). In addition, under the civil prohibition, individuals may be imposed a penalty of up to AU$500,000 per contravention (US$520,000). For corporations, the fine for each contravention (whether criminal or civil) may not exceed the greater of (i) AU$10 million (US$10.5 million), (ii) three times the total value of the benefits obtained as a result of the cartel, or (iii) where those benefits cannot be fully determined, 10 percent of the corporate group's annual turnover in the 12-month period when the offense/contravention applied. Leniency Provisions. Full immunity is available for both criminal and civil sanctions. If the cartel is being enforced as a civil penalty contravention, the ACCC itself grants immunity, while if the cartel is being enforced as a criminal penalty contravention, the Director of Public Prosecutions will grant immunity based on the ACCC's recommendation. Full immunity will be granted to the first applicant that provides full, frank, and truthful disclosure, including full details of all known facts relating to the cartel. Australia has a marker system, so that a company can provisionally claim leniency if it is unsure if there has been a cartel or does not yet have sufficient information, providing a limited window of time in which to...