Dear Readers,
Cartels are the quintessential antitrust offence. Though more fashionable (or at least more visible) concerns may dominate the headlines, cartelization remains the cardinal antitrust sin.
Of course, cartelization can take many forms. There are classic horizontal price agreements between competitors. But cartelization can also take more sophisticated structures. And of course, cartelization takes on different complexions depending on the industry sector at hand, among other factors.
Enforcers (and litigants) maintain a vigilant eye on these variations in order to fulfil their mission of ensuring low prices for consumers. The pieces in this volume address the myriad policy issues raised by cartel enforcement as it progresses through its second century.
Marvin Price & Emma Burnham discuss the reforms enacted in April of this year by the Antitrust Division to its Corporate Leniency Policy as well as updates to that policy’s FAQs. The changes to the policy were the first to be made since its inception in 1993. The new FAQs update previous FAQs issued in 2017 and include a number of FAQs addressing issues not previously discussed. A key goal of the changes was to enhance accessibility to the policy and FAQs for everyone, including members of the public, to ensure equal access to justice.
Chris Mayock discusses how cartel enforcement remains at the top of the European Commission’s priorities, which is evident from the significant number of infringement decisions recently issued and the high level of fines imposed. However, while the fight against cartels continues unabated the battle lines are shifting: there has been a move away from classic cartels to less traditional forms of cartels; the pandemic has posed issues for all enforcers but even more so for the Commission given its multi-jurisdictional remit; the significant increase in damages claims following the introduction of the Damages Directive seems to have had a knock on effect on the level of leniency applications; and this in turn has led to the need for greater ex officio/own initiative investigations. These are challenges facing the Commission, which need to be addressed if strong and successful enforcement against cartels is to be maintained.
Joseph E. Harrington, Jr. focuses on the need to deter cartels. In spite of the many successes in the fight against cartels, enforcement is likely to be suboptimal because competition authorities systematically underdeter cartel formation. The reason is simple: convicted cartels are observed, deterred cartels are not. Consequently, many decisions by a competition authority will be driven by a desire to convict cartels – as that is an observable measure upon which to assess performance – which will be to the neglect of deterring cartels.
Juliette Enser, Georgina Laverack & Victoria Siguan-Cervera note how risks are increasing for those involved in cartel activity in the UK and in particular bid-rigging in public procurement. The UK Government has recently introduced to Parliament the Procurement Bill 2022, which includes a new exclusion from public procurement and debarment regime for cartelists. If enacted, the legislation will mean that companies that engage in price fixing or other cartel activities could face mandatory exclusion by a contracting authority from public procurements for up to 5 years.
Sonia Kuester Pfaffenroth & Brian Desmarais not discuss how the availability of big data and the increasing sophistication of algorithms and artificial intelligence has had an evolving impact on strategic decision-making across many sectors. Pricing algorithms can assist firms to optimize pricing on a near real-time basis in response to competitors’ strategic moves through the rapid analysis of vast quantities of market data. They can also be used — as has been demonstrated by government enforcement actions — to facilitate sophisticated collusion between competitors.
Peter Whelan, while noting that the European Commission has an impressive track record with respect to anti-cartel enforcement, points out that a lacuna exists with respect to its enforcement powers: it cannot impose fines on natural persons who are responsible for their companies’ cartel activity. This article argues that, in order to achieve the deterrence of cartel activity, the Commission should be given the power to impose individual administrative sanctions for violations of the EU-level cartel prohibition.
Finally, Romina Polley looks into German cartel enforcement trends based on statistics as well as recent cases. She also describes how the German Federal Cartel Office has reacted to the challenge of a decreased number of leniency applications over time that was exacerbated by the pandemic. The article also outlines the main procedural changes brought about by the new German Fining and Leniency Guidelines issued in the second half of 2021.
As always, many thanks to our great panel of authors.
Sincerely,
CPI Team
