The Cartel Report: Commentary On Antitrust Enforcement From Around The World

Keywords: Cartel Report, antitrust, enforcement

Not too long ago, many countries—perhaps even most countries—either did not criminalize cartel conduct or did not enforce the laws prohibiting cartels. In the past 20 years or so, that has changed dramatically. Today, cartels, "the supreme evil of antitrust,"1 are unlawful throughout much of the world. In addition, national authorities are cooperating more frequently to investigate potential cartel conduct.

While nations increasingly agree on the need to deter cartels, they often disagree on how to accomplish that goal. The United States relies heavily on criminal laws, for example, while other countries rely more heavily on administrative sanctions or civil fines. Leniency programs, while increasingly common, also differ in their requirements and effects. These differing enforcement regimes pose challenges for international businesses, which are now often subject to overlapping investigations and enforcement actions.

Helping businesses to face these emerging challenges is the idea behind The Cartel Report. The Cartel Report does not collect cases or enforcement statistics—plenty of other publications do that quite well. Rather, it offers commentary about trends and developments in cartel enforcement from Mayer Brown's competition lawyers in Europe, Asia and the Americas.

In this inaugural issue of The Cartel Report, we take a look at some of the developments and investigations that are shaping global antitrust enforcement, beginning with a development that was once unthinkable: the extradition of a foreign executive to the United States to stand trial on criminal antitrust charges. We then turn our attention to Europe (pg. 2), where ongoing investigations into food products are testing the limits of international cooperation. In Asia (pg. 4), China has joined the auto parts investigations in a big way. We close with a report from Brazil (pg. 6), where the Brazilian authorities recently imposed significant fines and divestments designed to break up a domestic concrete cartel.

We hope you enjoy this issue and welcome your questions and comments.

News from the United States

THE FIRST EXTRADITION OF A FOREIGN NATIONAL ON ANTITRUST CHARGES

The United States has criminalized cartel activity for more than a century. For most of that time, however, foreign executives have been able to violate the cartel laws with near impunity because, to the frustration of the US Department of Justice ("DOJ"), the US government had little or no ability to force foreign executives to travel to the United States to confront the charges or serve a criminal sentence.

Things began to change in the early 1990s, however, when the DOJ began targeting foreign executives. As part of that effort, the DOJ put in place a set of "carrots" and "sticks," developed in conjunction with its Leniency Program, to convince foreign companies and their executives to plead guilty and to serve time in US prisons. The DOJ's efforts have proven effective: dozens of foreign executives have agreed to be imprisoned in the United States after pleading guilty to antitrust offenses.

Not all foreign executives, however, are willing to return to the United States voluntarily. And, until recently, there was little the DOJ could do about that. Then, earlier this year, the DOJ successfully extradited Romano Pisciotti to the United States to face criminal antitrust charges. This is the first time the DOJ has ever successfully extradited anyone based on antitrust charges.2

The story behind Pisciotti's extradition is interesting. According to court documents, Pisciotti worked for Parker ITR Srl ("Parker"), an Italian manufacturer of marine hoses. Parker pled guilty in 2010 to participating in a global price-fixing conspiracy. In the plea agreement with Parker, the DOJ "carved out," or reserved its right to prosecute, Pisciotti. But Pisciotti, who lived and worked in Italy, was not willing to travel to the United States voluntarily. And he could not be extradited from Italy because his conduct was not criminal under Italian law.

The DOJ responded by indicting Pisciotti under seal. It also requested, via a so-called Interpol "Red Notice" letter, that Interpolmember nations detain Pisciotti so as to allow the US government to seek his extradition to the United States.

In the meantime, Pisciotti continued to work for Parker. After a business trip took him to Nigeria, he arranged to return to Italy via Frankfurt, Germany. German authorities arrested him while he was waiting to catch his connecting flight. At the US government's request, German authorities then initiated extradition proceedings, which Pisciotti challenged without success. Not long after being extradited to the United States, Pisciotti pled guilty to a conspiracy to rig bids, fix prices, and allocate market shares of marine hose. He agreed to serve two years in prison (with credit for the nine months and 16 days he was held in custody in Germany) and to pay a $50,000 fine.

Pisciotti's extradition highlights the growing risks foreign executives face when they decide not to return to the United States to face antitrust charges. Cartel conduct is now criminal in more than 30 countries, including Australia, Brazil, Canada, Israel, Japan, Korea, Mexico, the United Kingdom and Russia. For an executive facing criminal antitrust charges in the United States, travelling internationally—or doing something as innocuous as catching a connecting flight—increasingly poses serious extradition risks. Even an unscheduled stopover in the wrong country could result in extradition proceedings.

Pisciotti's extradition will likely embolden the DOJ in cases involving foreign executives. In the past, many foreign executives declined to submit to the jurisdiction of the US courts and instead remained in their countries. Indeed, the DOJ currently has indictments on file against more than 40 executives from Japan, South Korean and Taiwan who have elected not to return to the United States. After Pisciotti's extradition...