LAW & COMPLIANCE

Vigorous Enforcement Drove 2016 Increase in Global Cartel Fines Total

Once again, prosecutions across the globe were the overarching theme of cartel enforcement in 2016, according to Allen & Overy.

Mature and developing competition authorities alike demonstrated an appetite for substantial fines and aggressive enforcement—from the European Commission (a perennial powerhouse) that imposed its largest amount in fines ever of over US$4.09 billion, to the Korea Fair Trade Commission (a recent “five-star-rated” antitrust enforcer) that topped APAC enforcers with $764.81 million in fines, to the South African Competition Commission (a relative newcomer) that levied its largest single cartel fine ever of $110.7 million. 

The theme is likely to continue, with enforcement regimes expanded in Chile and on the way to being implemented in ASEAN countries such as Thailand and the Philippines.

This year also ushered in renewed commitments to international co-operation from antitrust enforcers, culminating in an update by U.S. authorities to their Antitrust Guidelines for International Enforcement and Cooperation that was proposed “to reflect the growing importance of antitrust enforcement in a globalized economy….”

But 2016 comes to a close among swirling political winds that warn of more inwardly focused, nationalistic times to come. The backlash against globalization was felt most dramatically with votes in the U.S. and the UK.

The new political headwinds against globalization suggest that co-operations could be scaled back, which could change strategic decision-making for multinationals.

And cartel enforcement is likely to be no exception. While any changes are unlikely to result in less cartel enforcement, evolving views on jurisdiction, comity and adequate deterrence will no doubt pose new challenges for authorities seeking to coordinate, and thus for companies trying to navigate, global cartel investigations.

What to watch for in 2017

From the U.S.: It appears unlikely that the U.S. will breach the $1 billion fine mark again in FY2017. The Antitrust Division’s fine total dropped precipitously this year following the high watermark of $2.85 billion in FY2015. A similarly modest enforcement year appears to be in store for the Division, as its public investigations appear focused on more tailored markets and it faces the prospect of engaging in protracted litigation in connection with recently indicted cases.

From Europe: Allen & Overy expects substantial fines from the European Commission again in 2017. This is likely to be the result, in large part, of the Commission’s numerous reported, but as yet unresolved, financial services investigations.

From APAC: Allen & Overy also expects the Korea Fair Trade Commission to continue its aggressive streak, with the authority vowing to increase its monitoring of cartel-related activity, particularly in the intermediary goods, commodities and public sectors.

From BRICS: Despite its slumping figures for the past two years, we expect to see Brazil’s Administrative Council for Economic Defense (CADE) post substantial fines in 2017. In November, CADE reported that it maintained about 30 active investigations linked to Operation Car Wash, the investigation and prosecution of corruption and collusion in Petrobras contracting, and that it is set to receive 300% more applications for leniency in 2016 than in 2015.

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