Antitrust Enforcement Set for Record Year of Fines


Global antitrust enforcement is on pace to set record-level fines in 2014, as the Antitrust Division (Division) of the U.S. Department of Justice (DOJ) and the European Commission (EC) undertake particularly aggressive enforcement efforts, according to a 2014 mid-year cartel report by law firm Allen & Overy. U.S. authorities have issued $709 million in fines in the first half of the 2014 fiscal year — a number three times higher than penalties levied the first half of fiscal year 2013. European Union (EU) efforts total $1.95 billion worth of fines so far. These numbers are expected to rise as authorities traditionally post their biggest fines at the end of the year.

In the U.S., the focus is on international cartels, particularly those in Japan. Seven out of the eight fines the Division issued so far this year — all against foreign corporations — were imposed on Japanese firms.  One of the largest criminal antitrust fines — $425 million — was levied against a Japanese auto-parts maker for bid rigging and price fixing. DOJ is also in the process of investigating its largest antitrust case to date involving allegations of collusion to manipulate the U.S. auto market. Finally, although the Division's criminal enforcement actions have not yet focused on the insurance industry, civil enforcement activities have centered on insurers' use of "most favored nation" clauses in provider contracts.

This focus on international activity, however, has increased tensions with other nations. Japanese, Taiwanese and Korean authorities have criticized applying U.S. law to cartel conduct affecting products not sold directly in the U.S. market. They are urging U.S. courts to limit the Sherman Antitrust Act’s reach given the existence of their own laws and enforcement efforts in their jurisdictions. The U.S. Congress has also criticized directing international efforts at the expense of domestic oversight, prompting the Division to open a new office to handle domestic enforcement.

In Europe, fines of EUR1.41 billion imposed so far represent the highest total of any enforcement agency for the first six months of the year, putting it on track to match or exceed its 2013 total of EUR1.95 billion.

Authorities in other parts of the world are also set to hit record levels of cartel enforcement totals in 2014. Brazil, South Korea and Australia are all on pace to surpass their 2013 fine levels. Japan has imposed US $379 million in fines for the first half of the year, surpassing year-end totals for both 2013 ($225.4 million) and 2012 ($235 million).  Japan has also taken a hard line with individuals, sentencing five Japanese executives to prison. New regimes in China, Singapore and Russia are also expanding enforcement efforts to prosecute cartel conduct occurring outside their borders.

Finally, the report notes multinational companies are not the only ones facing increased scrutiny.  Regional enforcers in the U.S. and Europe are also heightening their enforcement efforts. Such an active regulatory environment makes it increasingly important for organizations of every size to stay up to date on antitrust laws and how they apply to business transactions. Thomson Reuters' online Antitrust Essentials, Canadian Competition Law, EU Competition Law and Global Competition Law courses educate employees on the basic principles of antitrust laws in the U.S. and around the world, the importance of compliance and how to avoid violations in a complex business environment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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