2015 Mid-Year Criminal Antitrust and Competition Law Update

                                                  (iii)    Prison Sentences

Thus far in FY 2015, the number and average length of prison sentences secured by the Antitrust Division have decreased.  If this trend continues, it will represent an eight-year low for average prison sentence length.

(*Through 6/30/2015)

As for total days in prison imposed, eight defendants have been sentenced to serve 3,803 days in prison.  All but one of these sentences was imposed on Japanese nationals in connection with the auto parts investigation.  That may change in the second half of the year, if prison terms are entered for the scores of guilty pleas in connection with bid rigging of real estate auctions.  Further, we may see individuals sentenced in the ongoing foreign exchange rate and LIBOR investigations.

(*Through 6/30/2015)

(*Through 6/30/2015)

                    2.    Developments in International Investigations

                              a.    Foreign Exchange Market

The U.S. DOJ’s investigation with respect to foreign exchange markets (“FX”) has dwarfed all other global anti-cartel law enforcement announcements in 2015.  Since 2013, the DOJ has been engaged in a criminal investigation of suspected manipulation of certain FX markets.[5]  On May 20, 2015, the DOJ announced, that as a result of the investigation, four major banks–Citicorp, JPMorgan Chase & Co., Barclays PLC, and The Royal Bank of Scotland plc–each agreed to plead guilty to a one-count felony charge of conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market in the United States and elsewhere.[6]  These parent-level guilty pleas by financial institutions are significant because parent-level pleas (rather than subsidiary-level pleas) in that industry are rare, having not happened in the United States in decades.[7]  The sizes of the criminal fines imposed are also substantial: Citicorp agreed to pay $925 million, nearly double the largest antitrust fine previously imposed; Barclays agreed to pay $650 million; JPMorgan agreed to pay $550 million; and RBS agreed to pay $395 million.  Prior to the imposition of these fines, the largest U.S. antitrust fine imposed was $500 million.[8]

Each of the financial institutions that acknowledged participation in the FX conduct agreed to a three-year corporate probation period.  Although these financial institutions have resolved the investigations, it appears that the DOJ’s FX-related investigations are not complete, as DOJ may seek to charge individual traders for FX-related misconduct.

In addition to these antitrust and related penalties, Barclays PLC settled related charges by the U.S. Commodity Futures Trading Commission (CFTC) for attempted manipulation, false reporting, and aiding and abetting other banks’ attempts to manipulate FX markets.[9]  According to the CFTC, the amount of the civil fine reflects in part that Barclays did not settle at an earlier stage of the investigation.  As reported in our 2014 Year-End Criminal Antitrust and Competition Law Update, several other banks previously reached settlements with the CFTC in connection with the attempted manipulation of the FX markets.[10]

                              b.    LIBOR and Other Global Benchmark Rates

The DOJ’s investigation of potential manipulation of global benchmark interest rates, including LIBOR and EURIBOR, also resulted in record level fines in 2015.  In April, Deutsche Bank AG entered into a deferred prosecution agreement to settle claims with the DOJ, the New York State Department of Financial Services (DFS), the CFTC, and the U.K. Financial Conduct Authority (FCA) relating to the manipulation of LIBOR and another key benchmark rate.[11]  To resolve the investigation, Deutsche Bank pleaded guilty to one count of wire fraud and one count of price fixing, and it also paid fines of $625 million to the DOJ, $600 million to the DFS, $800 million to the CFTC, and $344 million to the FCA.[12] The deferred prosecution agreement requires Deutsche Bank to retain an independent compliance monitor for a three-year term.  As part of the investigation, Deutsche Bank’s wholly owned subsidiary, DB Group Services (UK) Limited, also pled guilty to one count of wire fraud in connection with its role in manipulating LIBOR and agreed to pay a $150 million fine.   Taken together, these fines of more than $2.3 billion are the largest fines that any financial institution has paid in connection with the LIBOR investigations.

In addition, in May 2015, the DOJ determined in its sole discretion that the conduct UBS voluntarily reported concerning the FX markets breached the company’s December 2012 non-prosecution agreement resolving the LIBOR investigation.[13]  As a result, UBS AG was required to plead guilty to one count of wire fraud relating to legacy conduct and to pay a $203 million criminal.

Like UBS, Barclays also had entered into a non-prosecution agreement in 2012 to resolve allegations relating to manipulation of LIBOR.  Barclays admitted that its FX-related conduct violated a principal term of its non-prosecution agreement and it agreed to pay an additional $60 million criminal penalty based on that violation, but its non-prosecution agreement was not revoked.

The DOJ has also continued its pursuit of individuals in these investigations.  In 2015, Anthony Allen and Anthony Conti, former British traders at Rabobank who were indicted in October 2014 on conspiracy and wire fraud charges in connection with an alleged scheme to manipulate USD and Yen LIBOR, pleaded not guilty to the charges in the U.S. District Court for the Southern District of New York and were released on bail pending trial.  Allen, who was the first defendant charged by the DOJ in LIBOR-related cases to waive extradition, will stand trial with Conti, who later also waived extradition, in October 2015.[14]  In addition, in March 2015, a federal magistrate judge rejected former UBS trader Roger Darin’s motion to dismiss the charge that he conspired to manipulate the Yen LIBOR.[15]  In June 2015, Darin, a Swiss citizen who has not appeared in the United States to fight the charge, asked U.S. District Court Judge Paul Crotty to reverse the magistrate judge’s decision.[16]  A decision is pending.

                              c.    Auto Parts

The Division’s investigation into the auto parts industry continued unabated in this, its sixth year, resulting in more plea agreements with significant fines and prison sentences.  In the first half of 2015, plea agreements or indictments involving individuals have outnumbered those involving corporations, as is customary at the tail end of investigations.  Over 50% of the individuals carved out of the protections of their employers’ corporate plea agreements in the auto parts investigation have now been indicted by the Department of Justice or have agreed to plead guilty.

The Division began the year by announcing a plea agreement with Sanden Corporation on January 27, 2015 for its involvement in a conspiracy to fix prices of air conditioning systems sold to Nissan North America.  Sanden agreed to pay a $3.2 million fine.[17]  On March 12, 2015, the Division announced that Espar, Inc. had agreed to plead guilty to a conspiring to fix prices of parking heaters and would pay a $14.97 million fine.  Espar, Inc. is a subsidiary of Eberspaecher Climate Control Systems International Beteiligungs-GmbH.[18]  The Espar plea is the first involving parking heaters.

On March 31, 2015, the Division announced a plea agreement by Robert Bosch GmbH (“Bosch”); the German-based company is the world’s largest independent auto parts supplier.  Bosch pleaded guilty to fixing prices of certain spark plugs, oxygen sensors, and starter motors, and agreed to pay a $57.8 million fine.[19]  Yamada Manufacturing Co. agreed to plead guilty to a conspiracy to fix prices for manual steering columns on April 28, 2015.  Yamada will pay a $2.5 million criminal fine.[20]

The Division also took significant actions against individual executives in the first half of 2015.  On January 22, 2015, the Division announced the indictment of former Takata Corp. executive Hiromu Usuda.  Usuda was the Group and Department Manager in Takata’s Customer Relations Division from January 2005 until at least February 2011, and was indicted for his alleged role in conspiring to fix prices of seatbelts.[21]  The Division also indicted two former Mitsuba Corp. executives, Hiroyuki Komiya and Hirofumi Nakayama, on a two-count indictment alleging both conspiracy to fix prices and obstruction of justice.[22]

On April 23, 2015, the Division announced that it had reached an agreement with Takashi Toyokuni of Hitachi to plead guilty to conspiring to fix prices of alternators and starter motors.  Toyokuni will serve 15 months in federal prison, pay a $20,000 criminal fine, and provide ongoing cooperation to the Division’s investigation.[23]

In May, the Division announced indictments of three additional executives.  Michitaka Sakuma of T.RAD Co. Ltd., a former executive and member of the board of directors, was indicted for his alleged role in conspiring to fix prices of radiators.[24]  The Division also indicted two executives of NSK Spark Plug, Norio Teranishi and Hisashi Nakanishi, for allegedly conspiring to fix prices regarding spark plugs, oxygen sensors, and air fuel ratio sensors.[25]

To date, the Division has charged 55 individuals in this investigation, and 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.  Although the Division’s investigation into the industry appears to be slowing, we anticipate that there will be further developments before the end of 2015.

                              d.    TFT-LCD Panels

The first half of 2015 also marked noteworthy developments in the long-running proceeding brought by the Department of Justice against Taiwan-based AU Optronics Corporation, its U.S. subsidiary AU Optronics Corporation America, and certain company executives (AUO) regarding the scope and nature of AUO’s obligations under  judicially-imposed monitorship, as well as the culmination of AUO’s attempts to obtain an appellate reversal of their conviction.

As detailed in previous Updates, the TFT-LCD case reflected a significant development in terms of the duration of probationary period required by the court and the imposition of a court-appointed monitor to oversee the companies’ compliance with the terms of probation.  As previously noted, these heightened obligations were in large part based on AUO’s refusal to accept responsibility for what was viewed as egregious price fixing conduct.  The import of these requirements–not just for the parties alone but the antitrust community at large–became evident once again this spring when the United States District Court for the Northern District of California, the trial court responsible for supervising the TFT-LCD case, issued a series of orders that called into question AUO’s ability to meet the terms of its probation.

On April 1, 2015, the district court ordered AUO to appear for a hearing to determine whether it had violated the condition of its probation obligating it to “develop, adopt, and implement, an effective compliance and ethics program.”[26]  This order followed a report by the court-appointed monitor on AUO’s alleged non-compliance.  The monitor’s report specifically criticized AUO for failing to meet certain milestones, but more critically, averred that AUO had improperly disregarded “basic compliance measures and recommendations…previously proposed by the monitor” and had “not proactively monitored the compliance program or responded to detected risks of non-compliance.”  Shortly thereafter, the parties, the U.S. Probation Office, and the court-appointed monitor entered into an agreement to forego a hearing to address the alleged probation violation in exchange for a fifteen month extension to the probationary period, including the submission of additional compliance reports.[27]  While the submissions by the parties contain very little discussion of the underlying facts and circumstances, the overall framework of the agreement suggests that AUO had significant difficulties in conforming its behavior to the monitor’s interpretation of terms of probation and that the monitor expected AUO to substantiate its compliance over the term of the extended probationary period.

This year also marked the end of the various AUO defendants’ attempts to obtain appellate reversal of their convictions.

At the close of 2014, AUO was also seeking en banc review of an adverse unanimous panel ruling on their Ninth Circuit appeal, which had affirmed their convictions, fines, and sentences.  Although the Ninth Circuit denied the request for en banc review, the panel issued an amended opinion on January 30, 2015.[28]  Leaving most of its prior opinion untouched, the three-judge panel made two substantive changes.  First, it revised its discussion of differences between the TFT-LCD matter and the Court’s prior decision in Metro Industries v. Sammi Corp.[29]  Previously, the panel had dismissed as unnecessary dicta Metro Industries‘ statement that the rule of reason should be applied to foreign conduct.  In its revised opinion, the panel instead distinguished the facts of the AUO case from Metro Industries and reached the conclusion that the rule of reason statement in Metro Industries does not apply when part of the conduct and the effects of that conduct occurred in the United States.[30]  Second, the panel addressed on the merits the “domestic effects” prong of the Foreign Trade Antitrust Improvements Act (“FTAIA”); specifically, whether AUO’s conduct was sufficiently “direct, substantial and reasonably foreseeable” with respect to the effect on United States commerce.  The panel concluded that it was, reasoning that the “constellation of events that surrounded the conspiracy” led to the conclusion that the impact on the United States was “an immediate consequence” of the price fixing.  The court also quoted the Seventh Circuit’s observation in Motorola Mobility LLC v. AU Optronics Corp. that the indirect-purchaser doctrine of Illinois Brick did not block the Department of Justice from seeking criminal remedies.[31]

The AUO defendants sought a writ of certiorari, relying in large part on an alleged split of appellate authority regarding the meaning of the FTAIA in connection with TFT-LCD cases.  Specifically, as reported in our 2014 Year-End Criminal Antitrust and Competition Law Update, the U.S. Court of Appeals for the Seventh Circuit had issued an opinion in Motorola in which it held that Motorola could not maintain U.S. Sherman Act claims for the purchase abroad of allegedly price-fixed LCD panels by its foreign subsidiary because of the FTAIA’s limits on the application of U.S. antitrust law.[32]  AUO argued that the different interpretations of the FTAIA by the two appellate courts–each in connection with the same underlying conduct–warranted review.[33]  The DOJ opposed review, arguing that the two opinions were fully consistent because both courts recognized that conspiring to fix the prices of TFT-LCD panels to be sold for delivery to the United States fell within the FTAIA section 6a’s import-commerce exclusion.[34]  Additionally, the DOJ argued that both circuits recognized that the price fixing of a component abroad can have a direct effect on U.S. commerce in finished products incorporating the price-fixed component–an effect for which the jury made a specific finding in the AUO case.  Concurrently, Motorola sought review of the Seventh Circuit’s decision.

On June 15, 2015, the U.S. Supreme Court denied both petitions for writ of certiorari.[35]

                              e.    Roll-On, Roll-Off Cargo

The ongoing investigation into price fixing and bid rigging in the international roll-on, roll-off ocean shipping industry (involving cargo such as cars, trucks, and agricultural equipment that can “roll” on and off of cargo ships without the need for containers) entered a new phase in the first half of 2015.  Several firms–Nippon Yusen Kabushiki Kaisha (NYK), Kawasaki Kisen Kaisha, Ltd. (K-Line), and Compañía Sud American de Vapores, S.A.–pleaded guilty in 2014 to charges of price fixing and customer allocation for ocean shipping services and, to date, more than $135 million in fines have been levied.[36]

In early 2015, two K-Line executives pleaded guilty and were sentenced in conjunction with the investigation.  The first executive to plead guilty in January 2015 was Hiroshige Tanioka, a K-Line assistant manager, team leader, and general manager.  He received an 18-month prison term, and agreed to pay a $20,000 fine.[37]  Mr. Tanioka admitted to participating in the conspiracy from at least as early as 1998, continuing through until at least April 2012, which was significantly longer than any of the other executives charged.   One week later, Takashi Yamaguchi, a K-Line general manager and executive officer, pleaded guilty and received a 14-month prison term, along with a criminal fine of $20,000.[38]  Toru Otuda, a K-Line general manager, also pleaded guilty in March 2015, and received an 18-month prison term, and a $20,000 criminal fine.[39]

In addition to the three K-Line executives, Susuma Tanaka, an NYK assistant manager, team leader, and general manager, pleaded guilty in March 2015 and received a 15-month prison term, and a $20,000 criminal fine.[40]

Notably, thus far all of the individuals charged have come from the two Japanese firms–NYK and K-Line–and none from Compañía Sud American de Vapores, which was the first firm to plead guilty in February 2014.

                              f.    Precious Metals

As noted in our 2014 Year-End Criminal Antitrust and Competition Law Update, it has been reported that both the Criminal and Antitrust Divisions of the DOJ, as well as several other U.S. and global regulators and enforcers, are investigating potential manipulation of precious metals markets.[41]  On February 23, 2015, HSBC confirmed certain of these reports, disclosing that it received a request for the production of documents relating to the DOJ’s criminal antitrust investigation into precious metals markets.[42]  HSBC also reported that the CFTC issued a subpoena to HSBC USA seeking production of documents and information related to HSBC’s precious metals trading operations.[43]  Similarly, in March 2015, Barclays disclosed that it has been providing information to the DOJ in connection with the DOJ’s criminal investigation into precious metals markets.[44]

                              g.    Capacitors

As we reported in our 2014 updates, manufacturers of capacitors have reported receiving inquiries from enforcement authorities in Asia, Europe, and the U.S. regarding an investigation into possible collusion.[45]  The investigations are being conducted by China’s National Development and Reform Commission, the U.S. DOJ, the Japanese Fair Trade Commission, the European Commission, the Korean Fair Trade Commission, and the Taiwan Fair Trade Commission.  The investigations reportedly were prompted by leniency applications in the U.S. and other jurisdictions.  Private treble damages lawsuits have been consolidated in a multi-district litigation proceeding in the U.S. District Court for the Northern District of California.  According to statements made by the Antitrust Division in those civil proceedings, the investigation is ongoing.  No pleas or indictments have been announced as of the date of this update.

                    3.    Developments in Domestic Investigations

                              a.    Municipal Bonds

The United States Court of Appeals for the Second Circuit, on June 4, 2015, upheld the convictions of Gary Heinz, Michael Welty, and Peter Ghavami after a jury in the Southern District of New York convicted them of conspiracy to commit wire fraud in the bidding process for municipal bonds while employed at UBS Financial Services, Inc., in violation of 18 U.S.C. §§ 371 and 1349 and, as to Heinz and Ghavami, wire fraud in violation of 18 U.S.C. § 1343.[46]  On appeal from the conviction on those non-antitrust charges, the defendants argued that the District Court erred by denying their motion to dismiss the superseding indictment as time barred.  The Second Circuit concluded that relevant charges were within the 10-year statute of limitations provided in 18 U.S.C. § 3293(2) for wire fraud offenses (including conspiracy to commit wire fraud) in which “the offense affects a financial institution,” because the charged conduct led UBS and two other banks to reach resolutions with the Department of Justice and other regulators in which the banks “admitted wrongdoing, accepted responsibility for the illegal conduct of certain former employees, and agreed to pay more than $500 million in fines and restitution to federal agencies and municipalities.”[47]

The U.S. District Court for the Western District of North Carolina on May 18, 2015, sentenced Phillip D. Murphy, the former managing director of Bank of America’s municipal derivatives group from 1998 to 2002, to a 26-month prison term.[48]  As a result of the Antitrust Division’s municipal bonds investigation, Murphy had pleaded guilty on February 10, 2014, to non-antitrust charges of participation in a conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts.  The Government alleged that the conspiracy increased the number and profitability of particular investment agreements municipalities awarded to Bank of America.

                              b.    Tax Lien Auctions

In March 2015, a New Jersey federal judge refused to dismiss the indictment against Gregg Gehring, an investor who allegedly conspired to manipulate the bidding process at auctions conducted by New Jersey municipalities for the sale of tax liens.  Gehring claimed that an earlier order excluding time to accommodate discovery review from the 70-day speedy trial calculation violated his right to a speedy trial, and asked the court to dismiss his indictment.  U.S. District Judge Susan Wigenton denied Gehring’s motion without an accompanying explanation.[49]

                              c.    Real Estate Auctions

The Antitrust Division continued its aggressive push to root out bid rigging in public auctions for real estate foreclosures, tacking on more prosecutions following those discussed in our prior Updates.

Recent criminal enforcement efforts continue to focus primarily on foreclosure auction bid-rigging schemes in the Northern District of California, but have also continued in Georgia and North Carolina.  Since January 2015, eight additional individuals have pleaded guilty or agreed to plead guilty for their roles in these bid-rigging schemes, and two individuals have been indicted.

In the Northern District of California, Mark Roemer and Bradley Roemer pleaded guilty to conspiring to rig foreclosure auctions and to commit mail fraud in Alameda County[50], while Chung Li “George” Cheng pleaded guilty to conspiring to rig foreclosure auctions and to commit mail fraud in both Alameda and Contra Costa Counties.[51]  Wayne Lippman pleaded guilty to conspiring to rig foreclosure auctions in both Alameda and Contra Costa Counties.  Each faces potential imprisonment and fines.[52]  Most recently, on July 8, 2015, real estate investors John Shiells, of Danville, California, and Miguel De Sanz, of San Francisco, California, each pleaded guilty to three counts of bid rigging at foreclosure auctions, and three counts of mail fraud, in Alameda, Contra Costa, and San Francisco Counties.  According to the DOJ, to date 56 individuals have pleaded guilty to criminal charges as a result of the Department’s aggressive investigation and prosecution of bid rigging and fraud at public foreclosure auctions in Northern California alone.  Additionally, multicount indictments for bid rigging and fraud are pending against 19 individual real estate investors in the Northern District of California.  Officials at both the FBI and the DOJ have indicated that they will continue in full force to investigate and prosecute individuals who engage in fraudulent bid rigging and other anticompetitive activities at foreclosure auctions.[53]

Also in the Northern District of California, Ramin Rad “Ray” Yeganeh, was indicted by a grand jury on June 26, 2015, for conspiring to rig foreclosure auctions in Alameda County, and his not guilty plea was subsequently accepted by U.S. Magistrate Judge Kandis Westmore.  Prosecutors sought Mr. Yeganeh’s indictment when his lawyer announced his intention to plead not guilty, after first agreeing with prosecutors to plead guilty just one month prior.[54]

The government also intensified its efforts in Georgia in early 2015, obtaining guilty pleas from four individuals for their participation in bid-rigging conspiracies across the state.  Mohammad Adeel Yoonas and Kevin Shin pleaded guilty to conspiring to rig foreclosure auctions and to commit mail fraud in Gwinnett County.[55]  Eric Hulsman and David Wedean pleaded guilty to conspiring to rig foreclosure auctions and to commit mail fraud in Fulton and DeKalb Counties.[56]  According to the DOJ, David Wedean’s prosecution marks the eighth of its kind in the state of Georgia.[57]

Additionally, in North Carolina, a federal grand jury indicted Rodney S. Daw for conspiracy to commit mail fraud as part of a scheme related to public real estate foreclosure auctions.  The indictment accuses Daw of conspiring with others to make and receive payoffs from co-conspirators in exchange for agreements not to compete in public auctions, and to divert money away from homeowners, financial institutions and others with a legal interest in selected properties.[58]  According to the DOJ, to date two individuals have pleaded guilty to criminal charges as a result of the Department’s ongoing investigation and prosecution of bid rigging and fraud at public foreclosure auctions in North Carolina.[59]

                              d.    Coastal Water Freight Transportation

Legal proceedings continue in both district courts and courts of appeal in the DOJ’s long-running investigation of collusion with respect to coastal water freight transportation between the continental United States and Puerto Rico.

In January 2013, a jury in Puerto Rico convicted Frank Peake, former president of Sea Star Line.   He was subsequently sentenced to five years in prison, the longest-ever sentence for an antitrust violation.[60]  On March 2, 2015, the United States Court of Appeals for the First Circuit heard argument on Peake’s appeal, in which he argued that the DOJ unfairly appealed to the jury’s sympathy by emphasizing the alleged effect of the conspiracy on Puerto Rico’s economy.  Peake also cited a number of other technical and procedural defects in the prosecution’s case.

Relatedly, on May 8, 2015, after hundreds of motions and briefs and a jury trial spanning more than three weeks, a jury in Puerto Rico acquitted Thomas Farmer of conspiracy charges for allegedly violating the Sherman Act in the same conspiracy.  Specifically, the DOJ accused the former executive of Crowley Liner Services, along with others including Frank Peake, of conspiring to fix and maintain rates, allocate customers among them, and rig bids for freight services in order to suppress natural price fluctuations.  The DOJ’s investigation concerning the price fixing conspiracy on ocean shipping routes between the United States and Puerto Rico resulted in Crowley, Sea Star Line and Horizon Lines paying more than $46 million in criminal fines.[61]

                              e.    Posters

On April 6, 2015, a former executive of e-commerce company Art.com, David Topkins, agreed to plead guilty to one felony charge for fixing the prices of certain posters sold online through Amazon Marketplace in late 2013.[62]  The case represents the DOJ’s first-ever criminal antitrust prosecution against a conspiracy specifically targeting e-commerce.  The DOJ alleged that Topkins and his co-conspirators used commercially available algorithm-based pricing software to coordinate changes to their respective prices and wrote code that instructed the software to set prices in conformity with their agreement.  Topkins agreed to plead guilty to violating the Sherman Act, pay a $20,000 fine, and cooperate with the ongoing investigation by the Department of Justice and the FBI.  The identity of other co-conspirators and the potential impact of the conspiracy have not been disclosed.

                              f.    Small Ball Bearings

In February, the Antitrust Division announced that it had reached an agreement with Minebea Co., Ltd. in which the company agreed to plead guilty for its role in conspiring to fix prices for small ball bearings and pay a $13.5 million criminal fine.[63]  Small ball bearings are used in numerous products across several industries and serve to reduce friction between parts rolling past each other.

                              g.    Government Contracts

In 2015, the DOJ continued to target potential antitrust violations in the context of government contracts.  Such prosecutions remain an Antitrust Division priority and have uncovered a multitude of crimes, including non-antitrust violations.

For example, the DOJ recently indicted several independent contractors for conspiracy to eliminate competition for municipal school bus operator contracts in Puerto Rico.[64]  The independent contractors allegedly rigged bids and strategically allocated the market for bus operator contracts .  In addition to the antitrust violations, the conspirators were also indicted for various other crimes, including conspiracy to commit mail fraud.

In other cases, these investigations led to the discovery of other wrongdoing beyond the initial antitrust concerns.  For example, while investigating bid rigging for government contracts in New York, a joint federal and state investigation uncovered a conspiracy to defraud the New York Power Authority (NYPA) on the part of the recipient of one of the NYPA’s contracts.[65]  In this case, the owner of a construction service company who had won a contract with the NYPA ultimately pleaded guilty to submitting fraudulent payroll statements in order to receive unearned refunds from the NYPA.  The individual has not yet been sentenced.

                              h.    State Investigations

In Michigan, the State Attorney General settled with Chesapeake Energy Corp. regarding allegations that the company colluded with Encana Corp. to keep the price of natural gas leases in the state artificially low.[66]  On April 24, 2015, Chesapeake agreed to pay $25 million and plead no contest to one count of criminal attempted antitrust violations and one count of false pretenses.  The money will compensate landowners, and once claims are paid out, $5 million will be given to Michigan’s Department of Natural Resources and state antitrust enforcement activities.

                    4.    Developments in the Antitrust Division

                              a.    Speeches by Key Division Personnel

In the first half of 2015, officials at the Antitrust Division delivered a series of policy speeches that focused on the Division’s coordination with other enforcement agencies in domestic and international cartel investigations.  Though consistent with past Division policies, the speeches signaled to businesses that their behavior across borders continues to be subject to vigorous scrutiny under the U.S. antitrust laws.  At the same time, the speeches referenced measures that would provide the business community with greater clarity surrounding the Division’s enforcement objectives and reduce certain burdens on companies facing international investigations into alleged price fixing.

In a speech delivered at the New York State Bar Association Antitrust Law Section’s annual meeting[67], Deputy Assistant Attorney General Brent Snyder announced that even though the Antitrust Division has so far only challenged foreign cartels that involved at least some direct imports into the United States, in its view, cases can be brought on the basis of foreign component sales where there were no direct sales of a price-fixed product in the United States.  If this approach is recognized by the courts, it could subject companies facing DOJ investigations to a more expansive view of what constitutes impermissible conduct under the antitrust laws as well as higher volumes of commerce for fine calculations.  Snyder also asserted that the Foreign Trade Antitrust Improvements Act (“FTAIA”), which limits the reach of the U.S. antitrust laws to foreign conduct that distorts competition in a U.S. market, should not be interpreted in a way that impairs the Division’s ability to obtain criminal sanctions sufficiently severe to deter cartels that harm U.S. consumers.  In his remarks, Snyder also confirmed that, when negotiating plea agreements, the Division has considered a company’s global sales in situations where there is a risk that the ordinarily-calculated penalty under the sentencing guidelines might significantly understate the harm to U.S. consumers.  At the same time, Snyder acknowledged the risk of duplicative sanction under the increasingly robust global competition regime.  Accordingly, Snyder said that international enforcers should avoid penalizing the same company for the same sales in multiple jurisdictions.  In so doing, he cautioned that such an approach was discretionary and not compelled by the U.S. Sentencing Guidelines.

In the same speech, Snyder reaffirmed the protections that the DOJ’s leniency policy affords those who cooperate with the DOJ’s investigative efforts.  While Snyder cautioned that the ringleader exclusion could apply under certain circumstances to deny leniency to organizers or ringleaders of cartels–if, for example, a company had significant market power and was the only player to take proactive steps to run a cartel or otherwise engages in acts of coercion as to other participants–he reemphasized the DOJ’s reluctance to deny leniency to a company that has voluntarily identified and implicated itself.

Assistant Attorney General Bill Baer delivered a speech at the Global Competition Review Fourth Annual Leaders Forum[68] in which he highlighted the Division’s engagement and coordination with other enforcement agencies as a “crucial” element of effective antitrust enforcement.  He noted that the DOJ works with the FTC, state attorneys general, fellow enforcers from other jurisdictions, and international organizations such as the International Competition Network and the Organization for Economic Cooperation and Development to share best practices and engage in international antitrust enforcement.  Baer also announced the Division’s intent to provide “meaningful, front-end guidance” to businesses about the Division’s enforcement priorities and current approach to antitrust analysis, revealing an effort to provide insight into the Division’s decision-making processes to allow businesses to compete vigorously without committing antitrust law violations.

Baer further signaled increased transparency surrounding the Antitrust Division’s enforcement goals and initiatives in remarks delivered before the Chatham House Conference on “Politicization of Competition Policy – Myth or Reality?”, in which he rearticulated the DOJ’s commitment to making antitrust enforcement decisions that are “fact-based, analytically sound, and legally grounded” and emphasized the importance of providing “actionable guidance to the broader business community” to instill confidence in corporate executives that they will receive a fair hearing before the antitrust enforcement agencies.[69]

In addition to recognizing that cooperation with other enforcement agencies aids the Division’s enforcement efforts, in a speech delivered at the Sixth Annual Chicago Forum on International Antitrust Issues at Northwestern University School of Law[70], Snyder advocated for antitrust enforcement agencies to synchronize numerous aspects of their investigations in order to limit the costs for companies to cooperate with worldwide cartel probes.  Snyder suggested that antitrust enforcement agencies: (1) coordinate dawn raids and searches; (2) use predictive coding to be more strategic in document requests; (3) have each enforcer focus on the parts of the cartel that had effects within its own borders; (4) harmonize timetables and deadlines; and (5) coordinate the timing and location of witness interviews to limit the demands on witnesses whose testimony is needed in multiple jurisdictions.  Snyder cautioned that the DOJ will not defer to other jurisdictions on sanctions, but said that enforcers should discuss how each jurisdiction plans to calculate fines to minimize the risk of overlap or double-counting and ensure a consistent approach across jurisdictions.  Snyder noted that in certain investigations the DOJ has coordinated with other jurisdictions to take into account foreign fines imposed for the same conduct, and has occasionally credited fines issued by other jurisdictions that it believes address some of the harm the cartel caused in the U.S.

Additionally, Snyder said that when calculating fines, the Division has been willing to give companies credit for extraordinary efforts to put in place a compliance program and change a corporate culture that allowed a cartel offense to occur.  He remarked, however, that “credit will require action and results, not just mere promises of future action.”  Snyder also warned that companies should be careful about arguing that their participation in a global cartel stemmed from a rogue employee, saying that he has never seen that prove true in an investigation and that the DOJ will take “frivolous” rogue employee arguments into account when deciding whether a company is truly taking responsibility during the plea process.  Finally, he cautioned that companies should be acutely aware that the DOJ will closely scrutinize the actions of senior executives when determining criminal penalties.

Despite the Division’s repeated pronouncements this year that it will continue to coordinate with other enforcement agencies, Snyder was careful to point out during remarks at the American Bar Association Antitrust Spring Meeting that U.S. prosecutors are not obligated to consider fines imposed by antitrust regulators in other jurisdictions when calculating their own criminal penalties.[71]  He explained that the DOJ calculates fines using direct U.S. imports and it would be rare for the Division to impose a fine that excludes price-fixed products directly imported into the United States.  He also noted that situations of true double-counting are rare.  As Baer remarked separately during the Meeting, the largest criminal antitrust fines in the United States have been imposed on foreign companies because the U.S. calculates fines based on the volume of affected commerce, and international cartels “inevitably” affect large economies.[72]

                              b.    Extradition for Targets of Antitrust Enforcement Actions

As discussed in more detail in the 2014 Year-End Criminal Antitrust Update, in 2014 the Antitrust Division of the DOJ successfully obtained extradition of two individuals.  First, in April 2014, Italian citizen Romano Pisciotti was extradited from Germany to Florida for fixing prices on the sale of marine hoses, marking the first time that a foreign national was extradited to the U.S. solely for an antitrust offense.[73]  Upon his extradition, Pisciotti pleaded guilty and was sentenced to serve a two-year prison sentence.[74]  Then, in November 2014, the DOJ obtained the extradition of Canadian businessman John Bennett, who is charged in New Jersey with non-antitrust violations related to the Superfund kickback scheme.[75]  Bennett arrived in New Jersey on November 14, 2014, and faces a maximum penalty of $250,000 and five years in prison for the fraud conspiracy.  Bennett’s trial is currently scheduled for November 9, 2015, in Newark, New Jersey.[76]

So far in 2015, Assistant Attorney General of the Antitrust Division Bill Baer has spoken out about the DOJ’s intention to aggressively pursue extradition of foreign nationals for trial in the U.S. on antitrust charges.  In a hearing before the Subcommittee on Regulatory Reform, Commercial and Antitrust Law on May 15, 2015, Baer stated that “[f]oreign nationals do not escape responsibility when they conspire to injure American consumers from afar.  We prosecute foreign companies and their executives, and seek extradition of foreign nationals who attempt to evade the jurisdiction of the U.S. courts.”[77]  That same day, in an interview with Law360, Baer highlighted that the use of Interpol Red Notices to arrest those seeking to evade charges by travelling abroad.  This program, he explained, imposes a “real cost to not coming to grips with antitrust misconduct even if you’re a foreign national and even if the country in which you reside does not have an extradition treaty with the United States.”[78]  According to Baer, this threat has “caused many individuals to agree to come to the United States, to plead guilty, to serve a sentence in a U.S. jail…because the costs of being a fugitive are very, very real.”

                    5.    International Cooperation

The Antitrust Division continues to prioritize building and maintaining constructive relationships with foreign competition authorities and enforcement agencies.  Assistant Attorney General Baer participated in numerous discussions around the world, signaling the Antitrust Division’s commitment to international collaboration.

The DOJ, along with 70 other jurisdictions, attended the annual International Competition Network (ICN) meeting held from April 28 to May 1, 2015 in Sydney, Australia.  Assistant Attorney General Baer emphasized that “[c]ooperation with other jurisdictions makes our own enforcement stronger, particularly in a globalized economy where the number of companies operating in multiple jurisdictions continues to rise and there is a greater risk that anticompetitive transactions or conduct in one jurisdiction will harm consumers in other parts of the world.”   The ICN was created in 2001 to encourage convergence towards best practices around the world.[79]

Notably, this year the DOJ co-chaired the Cartel Working Group (CWG) of the ICN together with the German Bundeskartellamt and the Netherlands Authority for Consumers and Markets (ACM).  The CWG discussed investigative powers to fight international cartels and sanctioning international cartels in the context of multi-jurisdictional investigations.  It also drafted a chapter of the Anti-Cartel Enforcement Manual on Cooperation with Procurement Agencies and updated the Anti-Cartel Enforcement Templates.[80]

On May 21, 2015, Baer met with the heads of antitrust agencies from Mexico and Canada in Mexico City to discuss antitrust enforcement cooperation in North America.  These annual meetings are designed to facilitate policy dialogue between the North American countries.  This year, the topics included discussions regarding the implementation of Mexico’s new competition law, enforcement priorities, and the use of technology.  Baer spoke about the importance of anti-cartel enforcement at the public conference.[81]

The continuing international reach of the Antitrust Division’s prosecutorial efforts and ongoing cooperation between the DOJ and other federal agencies were also demonstrated in Baer’s remarks at a press conference in May announcing guilty pleas by multiple international institutions in the Department’s investigation into collusion affecting foreign exchange markets, at which he commended the ongoing cooperation in financial services cases between the DOJ and the Commodities Futures Trading Commission.[82]

          B.    CANADA

In a decision with wide ramifications for Canadian leniency applicants, an Ontario judge ruled in February that factual information disclosed to the Canadian Competition Bureau (CCB) by a company seeking to qualify for immunity or leniency was subject to disclosure to criminal defendants.[83]  The decision came in the context of a longstanding investigation into price fixing in the chocolate market.  Cadbury Canada and Hershey Canada contacted the CCB in 2007 and self-reported collusion in exchange for immunity and leniency agreements.  In June 2013, the CCB announced charges against additional companies and individuals involved in the same alleged conspiracy.[84]  Two, Cadbury and Hershey, argued that the government could not disclose certain documents because they were protected by settlement privilege arising from immunity and leniency negotiations.  The court disagreed, finding that neither settlement privilege nor attorney-client privilege applied to factual information, although these protections could apply to legal opinions and information about the negotiations themselves.  Moreover, the court found that even if a privilege did apply, the applicants had waived it by agreeing to provide information that they knew could be used in subsequent criminal proceedings.  It is unclear whether this decision will alter the nature, quality or volume of information Canadian leniency applicants agree to provide, or whether it will dissuade future companies from doing so.  To the extent that it is consistent with the procedural protections in the U.S. and Europe, for example, its implications may be more significant for domestic than international cartel matters.

Ongoing investigations into domestic collusion have continued to be a core focus of Canadian enforcement in the first half of this year, including new fines in long running matters and the announcement of new investigations.  The CCB conducted dawn raids of over a dozen asphalt companies suspected of price fixing, market allocation, and bid-rigging in March.[85]  In April, the Ontario-based fuel company Les Pétroles Global, Inc., was ordered to pay a $1 million fine for fixing the price of retail gasoline in Quebec.[86]  The fines result from a long-running investigation of 39 individuals and 15 companies accused of price fixing between 2008 and 2012.  Les Pétroles was one of the first to be charged by the Bureau in 2008 and was found guilty of price fixing in August 2013. To date, 33 individuals and 8 companies have pleaded or were found guilty, resulting in over $4 million in fines.  Six of the individuals have received prison sentences.

The CCB suffered a defeat in April when a jury acquitted seven companies and several individuals  charged with bid-rigging.[87]  Specifically, the CCB charged several information technology companies with secretly coordinating bids for government contracts.  That loss has not, however, hindered the CCB’s efforts to address unlawful collusion for government contracts.  The CCB brought new charges in June against three companies and four individuals for allegedly rigging bids for water services in Quebec.[88]  That investigation addresses bid-rigging activity that allegedly dates back to 2005, and was initiated following a 2011 leniency application.  One company, Les Entreprises Paysagistes Gaspard Inc., has already pleaded guilty and has agreed to pay $117,000 for its role in the conspiracy.

In June, the CCB finalized its Corporate Compliance Programs Bulletin, which provides for a reduction in fines where a company has implemented a “credible and effective” compliance program.[89]  Even if the compliance program fails to completely prevent improper conduct, its existence will be treated as a mitigating factor in determining penalties.  Further, compliance policies implemented or strengthened after an offense occurs may also result in reduced fines, though to a lesser degree.  The Bureau’s newly-created “Compliance Unit” will be responsible for reviewing the credibility and effectiveness of a company’s compliance program.

Finally, Canada and the United States continue to address extradition matters.  A U.S. Magistrate Judge ruled in February that John Bennett, a Canadian citizen currently facing charges in the United States, would remain bound by his bail terms.[90]  The first Canadian to have been extradited to the United States on antitrust charges, Bennett is currently confined to house arrest while awaiting trial for rigging environmental cleanup bids.  As reported in our 2014 Year-End Criminal Antitrust and Competition Update, Bennett was charged in New Jersey for participating in a Superfund kickback scheme and extradited to the United States in November 2014.[91]  He faces a maximum penalty of five years imprisonment and a $250,000 fine.

Meanwhile, Canadian authorities are not working to extradite John Cassandra, a U.S. resident charged with rigging bids for information technology services awarded by Library and Archives Canada.[92]  Another individual implicated in the same conspiracy pleaded guilty in May, accepting a $23,000 fine and an 18-month conditional sentence.[93]  Although the Canadian Commissioner of Competition announced last May that the CCB planned to proceed with Cassandra’s extradition, Canada’s Public Prosecution Service (PPSC) has not begun formal extradition procedures.  If extradited, Cassandra would be the first person extradited to face antitrust charges in Canada.

          C.    BRAZIL

                    1.    Preliminary Considerations

June has just ended and it is already safe to say that 2015 will be an eventful year in Brazilian cartel enforcement.  More than half of the Commissioners and the General Superintendent were recently confirmed for crucial senior positions within Brazil’s Competition Authority, CADE (Conselho Administrativo de Defesa Econômica).  CADE continues to partner with Brazilian prosecutors in the highly-publicized “Operation Car Wash” investigation involving suspected bid rigging and corruption relating to Petrobras contracts.  News of the investigation has led to massive public demonstrations and has substantially raised the public profile of bid rigging conduct as well as of CADE and its leniency program.

The fines imposed by CADE during the first half of the year do not reach the historic record level of BRL 3.1 billion ($1.3 billion) imposed against cement producers in May 2014.  Nevertheless, CADE sanctioned a number of companies and individuals in domestic and international cartel investigations, with many of the cases resolved through CADE’s recently adopted settlement system.[94]  Notably, on July 3, CADE became the tenth competition authority, according to publicly available information, to open an investigation into suspected anticompetitive conduct involving the foreign exchange market.[95]  Lastly, CADE also continues to test the limits of Brazilian antitrust law by bringing new cases and imposing fines based on “invitation to collude” theories.  In the past six months, CADE brought its third invitation to collude case, and also imposed a fine on an entity based on an alleged attempt to collude.

                    2.    Brazil’s President Proposes and Brazil’s Federal Senate
Confirms New Commissioners and General Superintendent 

On June 2, 2015, a plenary session of Brazil’s Federal Senate confirmed the appointment of four new Commissioners and a new General Superintendent at CADE.[96]  The new appointees had been designated for these positions by the President of the Republic, Ms. Dilma Rousseff, at the end of April.[97]  The Federal Senate referred the names to the Presidency of the Republic to proceed with their formal designation.  The Brazilian competition bar has been widely reported to welcome the new appointments.[98]

                              a.    CADE’s New Commissioners

The Senate approved the appointment of João Paulo de Resende, Paulo Burnier da Silveira, Alexandre Cordeiro de Macedo and Cristiane Alkmin Junqueira Schmidt as Commissioners of CADE’s decision-making body, the Tribunal of Economic Defence (the “Tribunal”).  The Tribunal is composed of seven Commissioners, including its President, each appointed for a term of four years.  Its decisions are taken by majority vote.

Prior to his appointment, Mr. Burnier da Silveira led CADE’s international unit since 2011.  Mr. Paulo Resende headed a unit in charge of public-private partnerships at the Brazilian Ministry for Planning since 2012.  Mr. Cordeiro Macedo served as executive secretary of the Ministry of Cities and as an auditor at the Office of the Comptroller General.  Ms. Alkim Junqueira Schmidt was an economist for Itaú, an asset management company.  She holds a Ph.D. in Economics from the Postgraduate School of Economics of the Fundação Getúlio Vargas and worked in different positions at the Secretariat of Economic Affairs of the Ministry of Finance from 2000 to 2003, including the position of Deputy Secretary.

                              b.    CADE’s New Superintendent

Eduardo Frade Rodrigues was confirmed by the Senate as CADE’s General Superintendent for a term of two years.  The General Superintendence, which is CADE’s investigative arm, is led by a General Superintendent and two Deputy Superintendents.  Since June 2014, Mr. Frade Rodrigues has been the Acting General Superintendent of CADE, where he had previously worked as Deputy Superintendent (2012-2014) and as an advisor to CADE’s Commissioners (2007-2011).

In a joint interview of Mr. Frade Rodrigues and Mr. Vinicius Marques de Carvalho, the President of CADE, Brazil’s top two antitrust enforcers hinted that the new appointments were unlikely to dramatically change Brazil’s enforcement priorities.  Mr. Frade Rodrigues specifically included among CADE’s priorities strengthening Brazil’s leniency program, by “making the program […] more transparent and more predictable” and bolstering CADE’s ability to successfully discover and prosecute cartel cases without leniency applications.[99]

                    3.    Statistics

April 29, 2015 was the third anniversary of Brazil’s new Competition Act (Law no. 12.529/2011).[100]  In recognition, in the following month CADE published consolidated statistics on its activities under the Competition Act (the “May 2015 Statistics”).[101]  The May 2015 Statistics demonstrate that the new legislation has resulted in greater enforcement, with CADE issuing more than twice as many infringement decisions in the first half of 2015 alone than in the three years spanning 2010 through 2012.

According to the May 2015 Statistics, since the new law was adopted, CADE has issued decisions in 61 administrative infringement proceedings.  Of these, 46 have resulted in formal findings of infringement, 40 of which concern cartelistic behavior.

(*Through 5/29/2015)

The May 2015 Statistics also show that the number of dawn raids carried out by CADE has doubled since the new law was implemented in May 2012.  CADE carried out six dawn raids in the three-year period from 2009 to 2011 as compared with 11 under the new law.[102]

                    4.    Settlement Agreements (TCCs)

As described in our 2013 Mid-Year Criminal Antitrust and Competition Law Update, in March 2013, CADE introduced new rules governing settlement procedures in antitrust investigations, known as Cease and Desist Agreements (Termo de Compromisso de Cessação de Prática or TCC).[103]  Under the new procedures, parties to settlement agreements with CADE are required to admit to their participation in cartel conduct and collaborate with CADE’s investigation.  According to the May 2015 Statistics, since implementation of the new Competition Act, CADE has entered into around 120 settlement agreements, collecting approximately BRL 438 million ($143 million) in the so-called “pecuniary contributions” (i.e., fines) to the Diffuse Rights Defense Fund.[104]  CADE continues to see success in securing settlement agreements in 2015; it entered into 27 settlement agreements in the first five months of 2015, nearly equal to the 2014 total.

(*Through 5/29/2015)

Examples of settlement agreements entered into the first half of 2015 include:[105]

• On January 29, 2015, CADE settled with a hospital accused of jointly negotiating with health care plan operators to raise the prices charged for the provision of medical and hospital services.  The hospital agreed to pay a fine of BRL 4 million ($1.3 million).[106]
• On February 11, 2015, CADE approved six settlements in three separate investigations:  (i) tubes for colored displays for computer monitors (“CDT”); (ii) air and sea international services to and from Brazil and (iii) dynamic random access memory (“DRAM”).[107]  In addition, CADE collected a total of BRL 53.1 million ($17.2 million) from the settling companies and individuals.
• On March 25, 2015, CADE approved three settlements in a cartel investigation in the Brazilian market for meters of consumption of residential, commercial, and industrial electricity.  CADE collected a total of BRL 18.3 million ($ 6 million) from two settling equipment producers and one company executive.[108]
• On May 6, 2015, CADE signed separate settlements with two medical associations in an investigation relating to an alleged collective boycott of public hospitals and health insurance companies that did not adopt a scale of minimum prices for medical fees.  The settling associations agreed to pay a fine and committed not to “carry out boycotts or withdrawals, nor to encourage their associates to quit jobs from public hospitals, nor to give up public examinations from medical positions”.[109]

                    5.    CADE Continues To Push Legal Boundaries With “Invitation
to Collude” Cases

In an opinion published on April 17, 2015, CADE’s General Superintendence recommended to CADE’s Tribunal that a certain gas distributor be found guilty of an infringement for merely “influencing a uniform commercial behavior” in the market for distribution of liquefied petroleum gas in the state of São Paulo between 2010 and 2012.[110]  According to the Superintendence, the distributor encouraged its competitors to adopt a minimum price for the distribution of certain sized containers, which in its view qualified as an illegal “invitation to cartelization.”  The press release noted that this was CADE’s second investigation to lead to charges relating to an invitation to collude, following a 2010 decision imposing fines on a speedometer maker.

Later on June 10, 2015, CADE imposed a fine of BRL 350,000 ($113,352) on Brazil’s Federal Council for Auditing (Conselho Federal de Contabilidade), again based on the theory that it had tried to “influence the adoption of a uniform conduct.”  CADE found the entity responsible for issuing a decision to its members (i) establishing general parameters for setting the price of audit services; and (ii) making it an ethical breach for auditors to ignore these parameters.[111]

CADE’s ability to sanction a unilateral invitation to collude using the provisions of the law applying to actual collusion has been criticized and will likely face a court challenge.[112]

                    6.    Fines

CADE also issued a number of significant sanctions against companies and individuals.

On February 25, 2015, CADE imposed a total of BRL 13.5 million ($4.4 million) in fines on three companies, as well as against an individual, for their participation in the marine hose international cartel.[113]  Members of the cartel were previously prosecuted in multiple jurisdictions, including the United States, European Union and United Kingdom.  According to CADE, the collusion involved price fixing and market allocation between at least 1985 until 2007.  According to the reporting Commissioner Mr. Márcio de Oliveira Júnior, the “estimated damage resulting from the cartel activities […] was at least BRL 40 million” ($13 million).  The Tribunal also decided to close the cases (i) against an investigated company and four accused individuals due to insufficient evidence; and (ii) against two investigated entities and an individual as a result of the running of the statutes of limitation.[114]

On April 8, 2015, CADE imposed a total of BRL 19.6 million ($6.4 million) in fines on two companies and five of their executives for their participation in an alleged bid-rigging scheme targeting the public entity Basic Sanitation Company of the State of São Paulo.  The fines imposed on the individuals were approximately BRL 1 million ($320,000).  According to Reporting Commissioner Ms. Ana Frazão, one of the colluding companies deliberately missed a deadline established by SABESP, allowing the second colluding company to obtain a 23% premium when retained.[115]

On May 20, 2015, 27 gas stations and nine individuals were fined a total of BRL 65.7 million ($21.5 million) for their alleged collusion in the market for fuel in the metropolitan area of Vitória, in the Brazilian state of Espírito Santo.  According to reporting Commissioner Mr. Márcio de Oliveira Júnior, CADE relied on information obtained from wiretaps showing employees agreeing to set the same or similar prices.  In addition to the fines imposed, CADE announced its intention to recommend to the Brazilian tax authorities that tax incentives and subsidies be cancelled to the members of the cartel.  The conduct in question is alleged to have taken place between 2006 and 2007, nearly eight years before CADE’s decision.[116]

In addition, CADE has also imposed a number of other fines during the first half of 2015.  These appear to relate mainly, but not exclusively to the healthcare industry.  CADE’s attention to the healthcare sector was highlighted in a June 30, 2015 study it published of its enforcement actions.[117]  Fines imposed by CADE during the first half of 2015 include the following:

• A total of BRL 18,638,000 ($6 million) in fines were imposed on two hospitals for their alleged participation in a cartel in the market for hospital and health services in the D.F. (i.e., Brazilia).[118]
• Two associations and a union were fined a total of BRL 383,000 ($122,000) for allegedly fixing prices of medical and hospital services.[119]
• A total of BRL 14.6 million ($4.7 million) in fines for participating in a bid-rigging scheme on contracts for road maintenance and other services in the municipality of Jahu, São Paulo.[120]
• Five entities owning hospitals in the state of Bahía, along with a trade association for the hospitals and healthcare services in the state of Bahía and a trade union for hospital employees, were fined a total of BRL 10.9 million ($3.5 million) for their alleged participation in collusive conduct in the municipality of Feira de Santana.[121]

                    7.    Petrobras

As reported in our 2014 Year-End Update on FCPA[122], on December 11, 2014, Brazilian prosecutors charged 36 individuals with bribery, money laundering, and cartel-related offenses arising out of their highly-publicized “Operação Lava Jato” or “Operation Car Wash” investigation.[123]  Prosecutors allege that executives colluded to inflate the price of Petrobras contracts and channel kickbacks from Petrobras to Brazilian politicians and political parties, and have demanded the return of approximately 1.18 billion BRL (approximately $448 million).

The General Superintendence of CADE is coordinating with public prosecutors in conducting a parallel administrative investigation of the bid–rigging allegations.  On March 20, 2015, CADE’s General Superintendence announced that it had entered into a leniency agreement with two companies of the Setal Group.[124]  Notably, the agreement was also signed by the Federal Public Prosecutor’s Office in the state of Paraná.  The investigation started by the Federal Prosecutor’s Office has been named “Operation Car Wash” (after the network of laundry mats and gas stations used to move illicit funds).[125]  CADE also published a public document titled the “History of the Conduct,” which contains more details about the case: (i) summary description of the investigated conduct (ii) signatories of the leniency agreement; (iii) participants of the investigated conduct; (iv) competitors and clients in relation to the suspected conduct; (v) duration of the suspected conduct; (vi) detailed description of the conduct; (vii) documentary evidence in relation to the suspended conduct and (vii) acronyms and conclusions.[126]  Although CADE expressly noted that the leniency applicant had voluntarily waived the confidentiality of the agreement and its annexes, a number of commentators have indicated that the information revealed by CADE may facilitate private damage claims and potentially jeopardize the effectiveness of Brazil’s leniency program.[127]

                    8.    New Investigations Initiated by CADE

Since January 1, 2015, CADE has opened the following high profile investigations:

• On February 13, 2015, the General Superintendence opened three infringement proceedings to investigate alleged cartel practices in the Brazilian and international markets for auto parts.  The investigation into suspected price fixing and market allocation dating back to the 1990s and continuing until 2012 relates to: (i) clutch facings, (ii) thermal systems, and (ii) windshield wipers.
• On July 2, 2015, CADE announced that its Superintendence had initiated foreign exchanged related proceedings against fifteen financial institutions and thirty individuals. CADE noted that the scope of its investigation included the possible manipulation of FX markets.
• On July 6, 2015, the General Superintendence opened an investigation against two Brazilian companies in relation to their participation in an alleged cartel in the Brazilian market for seat belts, airbags, and other automobile safety devices. [128]
• On April 2, 2015, the General Superintendence opened infringement proceedings to investigate an alleged cartel in relation to public procurement for the acquisition of certain medicines in the Brazilian states of Minas Gerais, São Paulo, Bahía, and Pernambuco.  According to CADE, there is preliminary evidence that fifteen companies may have coordinated their bids for the sale of antidepressants, ansiolitics, pain relievers, sedatives, anticoagulants, and drugs for hypertension and coughing between 2007 and 2011.  The case was opened after the Office for the Public Prosecutor in the Brazilian state of Minas Gerais presented information to CADE resulting from siretaps.[129]

CADE also announced that it has initiated infringement proceedings in relation to (i) public tenders for garbage bags purchased by cities in the states of São Paulo, Minas Gerais, Paraná, Mato Grosso and Mato Grosso do Sul;[130]; (ii) the public procurement of school material and uniforms in the states of São Paulo, Rio de Janeiro, Santa Catarina and Goiás;[131] and (iii) the Brazilian market for silicate, a compound derived from silicon that, when added to other compounds, such as sodium and potassium, may have various usages in a multiplicity of sectors and industries, such as water treatment, the production of pigments and ink, the textile industry, the chemical industry, the production of detergent, adhesives, and cement, among others.[132]

                    9.    Cooperation Agreements Entered into by CADE

On February 13, 2015, CADE signed two Memorandums of Understanding with the Inter-American Development Bank (“IDB”) and the World Bank.  According to CADE, by virtue of the agreements “the agency and the institutions undertake to share information of mutual interest which may facilitate [the] identification and prevention of fraud, corruption and antitrust violations, such as cartels.”

          D.    CHILE

As discussed in the 2014 Year-End Criminal Antitrust and Competition Law Update, Chile has an increasingly high profile for anti-cartel enforcement. As set out below, Chile is poised to further enhance its anti-cartel regime with a draft bill that will introduce criminal sanctions for individuals, including custodial sanctions for individuals, increase administrative fines for companies, bolster Chile’s leniency program, and make it easier for the authority to prove cartel violations through the introduction of a per se offense.

                    1.    Policy Developments

From November 2014 to February 2015, the National Economic Prosecutor (Fiscalía Nacional Económica or FNE) held a public consultation process in relation to the revision of its “Internal Guidelines for Leniency in Collusion Cases.”[133]  Respondents identified a number of concerns relating to FNE’s draft Guidelines including:[134]

i.            The Draft Guidelines establish strict non-disclosure obligations on immunity and leniency applicants that go beyond what is required to protect the integrity of FNE investigations and may conflict with an applicant’s obligation to make public disclosures in securities filings.

ii.            The Draft Guidelines impose an unnecessarily high evidentiary threshold for obtaining a marker in leniency applications that may deter potential applicants from coming forward and reporting cartel behavior.

iii.            The Draft Guidelines require applicants to submit a detailed, written corporate statement in order to secure leniency.  This may increase the exposure of leniency applicants to private damages litigation in the United States and elsewhere.

iv.            The Draft Guidelines require that leniency applicants identify all employees seeking protection and to provide a ratification of their participation in the conduct.  These obligations could delay the granting of conditional leniency and could threaten the confidentiality and efficacy of the process.

v.            The Draft Guidelines are vague as to whether the FNE will continue to protect the confidentiality of leniency applicants and not share an applicant’s identity or the information provided unless the applicant voluntarily consents to the waiver of confidentiality.

vi.            The Draft Guidelines require more flexibility regarding the requirements for submitting documents, including translations.

The FNE has still not published the results of the consultation or its new Guidelines.

On March 16, 2015, a bill was submitted to the Chilean Parliament in order to amend the Chilean Law on the Defence of Free Competition.[135]  The bill proposes to make collusion among competitors a per se violation and to criminalize it with the introduction of custodial sentences of up to 10 years.  It would also raise the maximum administrative fine for collusive conduct to the greater of double the economic benefit obtained through the anti-competitive practice or 30% of the sales of the companies during the period of the infringement.  In addition to introducing a new criminal antitrust law in Chile, the draft bill would also ensure that a successful applicant to FNE’s leniency program receives protection from criminal sanctions and eliminates the uncertainty that currently exists as to whether leniency applicants in Chile may be criminally prosecuted under Article 285 of the 1874 Criminal Code.[136]

                    2.    Relevant Decisions

On the enforcement side, on January 27, 2015 the FNE lodged an application with the Chilean Competition Tribunal (Tribunal de Defensa de la Libre Competencia or TDLC), accusing six ocean shipping companies (including three Japanese companies, two Chilean companies, and one South Korean company) of rigging bids on multiple tenders for the oceanic transport of cars and heavy machinery since 2000.[137]  According to the FNE’s allegations, collusion among the shipping companies had the objective of enabling them to retain their clients, particularly when the latter had opened tender procedures to obtain better commercial conditions.  In its application, the FNE requested that the TDLC impose total fines of UTA 90,000 ($75 million) on five companies participating in the alleged collusive behaviour.  The FNE did not request the imposition of fines on a sixth company, CSAV, which secured immunity under Chile’s leniency program.  Chile is the third jurisdiction after Japan and the United States to bring charges against ocean shipping carriers:

As reported in the 2014 Year-End Criminal Antitrust and Competition Law Update, in September 2014 the TDLC upheld the imposition of a fine in the amount of UTA 30,000 ($25 million), the maximum fine currently possible under Chilean law, on poultry producers Agrosuper and Ariztía, and a fine of UTA 12,000 ($10 million) on Agrícola Don Pollo Limitada.  In addition, TDLC ordered the dissolution of the companies’ trade association, Asociación de Productores Avícolas de Chile.  The investigated entities filed an appeal of the decision.  Chile’s Supreme Court held hearings on this matter throughout the first half of 2015.[138]  As of the date of this Update, no decisions have been rendered.

          E.    MEXICO

                    1.    Legislative Developments

As reported in our 2014 End-Year Criminal Antitrust and Competition Law Update, the New Federal Law on Economic Competition (Ley Federal de Competencia Económica or the LFCE) entered into force on July 7, 2014.  The new law grants increased powers to the Mexican Federal Economic Competition Commission (COFECE), and strengthens the independence of Mexico’s investigative branch by creating a separate authority.[139] Mexico’s Federal Criminal Code was also amended in 2014 to make it a felony to violate Mexico’s antitrust provisions (e.g., through fixing prices, sharing markets or rigging bids) or to obstruct a COFECE investigation.[140]

In May and June 2015, COFECE adopted three Guidelines which cover: (i) the initiation of investigations for anti-competitive practices; (ii) the conduct of investigations for anti-competitive practices; and (iii) Mexico’s leniency program.[141]  The adoption of these Guidelines puts an end to the process initiated on December 19, 2014, when COFECE began a series of public consultations on these topics.[142]  In April 2015, once the consultation periods were closed, COFECE published reports which addressed the feedback received from commentators.  The final versions of the Guidelines aim to incorporate some of the comments submitted by contributors during the consultation period.

More specifically, Mexico’s new Guidelines on Immunity of and Reductions from Fines (“Immunity Guidelines“) cover COFECE’s acceptance, analysis and decisions on leniency and immunity requests.[143]  According to COFECE, this guidance has been designed to comply with international best practices.

The Immunity Guidelines will only apply to the so-called “absolute” anticompetitive practices (i.e., the Mexican equivalent to “hard-core” or per se restrictions) having effects in Mexico, including: (i) price fixing; (ii) output restrictions; (iii) market allocation; (iv) bid-rigging; and (v) anticompetitive information exchanges.  Under the Immunity Guidelines, a successful immunity applicant will face only a symbolic fine equal to the minimum general salary in the Federal District ($4.50 in 2015).  Subsequent leniency applicants are eligible for fine reductions of up to 50%, 30% and 20%.  In addition, the Immunity Guidelines indicate that the beneficiaries of the immunity and leniency program, irrespective of their place in the queue, will not be subject to criminal liability or to debarment or suspension from public procurement.

The Immunity Guidelines include a non-exhaustive list of the prerequisites to a successful application, including, inter alia, termination of participation in the reported conduct (unless otherwise indicated by COFECE) and cooperation with COFECE, e.g., by providing materials and making individuals available to COFECE.

Finally, the Immunity Guidelines also include certain amendments to the Draft Guidelines that were incorporated in light of the consultation process held by COFECE.[144]  These amendments include the establishment of a leniency procedure for applicants to be heard before their leniency is revoked for any reason.

As indicated above, in addition to the Immunity Guidelines, COFECE also adopted Guidelines on the Initiation of Investigations for Anti-Competitive Practices (“Initiation Guidelines”)[145] and Guidelines for the Conduct of Investigations for Anti-Competitive Practices and Illegal Concentrations (“Investigation Guidelines”).[146]

The Initiation Guidelines explain the means through which investigations, including cartel investigations, can be initiated (e.g., the lodging of complaints, requests from the Federal Executive power), and the conditions that need to be fulfilled before COFECE may initiate infringement proceedings.  These Guidelines will apply in those cases where an investigation has not been initiated further to the submission of a leniency application.

In the Investigation Guidelines, COFECE has provided detail on investigative procedure.  These include, in particular, the specific role of the Investigative Authority in determining the scope of an investigation and its investigative tools, which include dawn raids and interviews.  The Investigation Guidelines also address COFECE’s approach to confidentiality claims during an investigation.

Finally, Mexico continued its ongoing efforts to strengthen ties with other cartel authorities, particularly its North American counterparts.  As discussed above, see supra, § I.A.5., on May 21, 2015, COFECE hosted a tripartite conference with FTC Chair Edith Ramirez, Assistant Attorney General William Baer of the DOJ’s Antitrust Division, and Canadian Commissioner of Competition John Pecman.[147]  At the conference, the participants announced a staff exchange program that launched in March 2015.

                    2.    Relevant Investigations and Decisions

In February 2015, COFECE launched its first “barriers to competition” investigation by looking into the allocation of take-off and landing slots at Mexico City’s International Airport.[148]  In April 2015, COFECE launched another investigation into the air transport industry.[149]

On April 8, 2015, the Mexican Supreme Court (Corte Suprema de Justicia de la Nación) confirmed a decision adopted in 2010 by the former Mexican Competition Authority finding four pharmaceutical companies guilty of bid rigging in relation to Mexico’s Social Security procedure in relation to human insulin and serums.[150]  The ruling of the Supreme Court confirmed both the soundness of the investigation carried out by the Authority from a procedural perspective, as well as the Authority’s resort to economic analysis in order to prove the existence of the anticompetitive conduct.

In the agriculture sector, following recent price spikes, on March 26, 2015, COFECE opened an investigation into possible anticompetitive conduct in the egg market.[151]

          F.    COLOMBIA

Colombia has also seen further development in its enforcement of anti-cartel laws.

In March 2015, the Colombian competition authority, the Superintendencia de Industria y Comercio (SIC) announced that it had completed the investigative phase of an eight-year investigation in the cement industry and expected to announce its decision on the case later in 2015.[152]  The investigation encompasses Colombia’s three biggest cement producers, and some of the largest producers in Latin America.

On May 29, 2015, the SIC also completed a five-year investigation into the sugar industry.  In the report issued by the SIC, 12 sugar producers, three trade associations and 16 managers were identified as having engaged in price fixing and customer allocation.[153]

The head of the SIC, Pablo Felipe Robledo del Castillo, also announced the opening of a preliminary investigation into the rice industry following recent price increases in Colombia.[154]  This decision follows the opening of formal investigations into suspected price-fixing by private security firms and paper notebook producers earlier in the year.[155]  In the paper notebook case, the SIC announced in March 2015 the initiation of a formal investigation into suspected price fixing by three Colombian producers of school notebooks and 27 company employees accused of participating in the conduct.[156]  If found liable, the companies could face fines of up to $30 million per violation and the individuals could each face fines of up to $600,000.[157]

Moreover, del Castillo also announced plans to expand sanctions through legislative efforts.  Specifically, the head of the SIC indicated he would introduce a bill allowing for harsher sanctions in price fixing cases:  “This [regulation] will allow U.S. to increase the sanctions above the nominal amount of COL$65 billion (US$25 million), the current maximum, by adding percentages of a company’s revenues or equity, in order to [increase] the penalties,” he noted.[158]

Beyond its enforcement activities, Colombia also has been active in organizations dedicated to promoting international coordination and best practices in cartel enforcement.  The SIC, along with its counterparts from the Netherlands and South Africa, co-chairs the Cartel Working Group.[159]  The 2015 International Competition Network’s Cartel Workshop will be held in Cartagena, Colombia from October 18 to October 21, 2015.  In addition, Felipe Serrano, Chief Advisor to the Superintendent of the SIC was one of the panelists for “Hot Topics in Cartel Enforcement” at the Antitrust in the Americas Conference presented by the American Bar Association Section of Antitrust Law and IBRAC in Rio de Janeiro on June 11, 2015.  In this program, Serrano addressed two recurring issues for global cartel enforcement: the risk of double-counting and the value of compliance programs.  Serrano noted that the SIC does not consider sanctions imposed on a company in other jurisdictions because the Colombian penalty is based on Colombian commerce.[160]  However, Serrano noted the SIC would take into account penalties imposed on individuals in other jurisdictions. Finally, Serrano stated that Colombia does not currently reward companies for having compliance programs, but it may consider doing so in the future to encourage such programs.

          G.    EL SALVADOR

On June 11, 2015, the Directive Board (Consejo Directivo) of the Superintendence of Competition (Superintendencia de Competencia or SC) imposed a total of $3.5 million in fines on three insurance companies for their alleged participation in bid-rigging in relation to tenders organised by pension fund administrators from April 2008 to April 2012.[161]

On the procedural side, in April 2015, the SC filed an appeal before the Constitutional Chamber of the Supreme Court of Justice of El Salvador (Corte Suprema de Justicia) in order to revoke a ruling delivered by the Administrative Chamber (Sala de lo Contencioso Administrativo or SCA) in the context of an investigation into travel agencies.[162]

On July 7, 2009, the SC imposed fines on four travel agencies for their participation in an alleged cartel to fix prices and rig bids in relation to the services requested by El Salvador’s Ministry for the Economy and the Salvadorian Tourism Corporation.  On June 18, 2013, the SCA annulled the decision adopted by the SC on the basis that the rights of defense, including the right of the investigated entities to be heard, had been breached.  In its appeal, the SC argued that the SCA exceeded its mandate by ruling on matters not raised by the investigated entities in their appeal or during the previous administrative proceedings.  As of the date of this update, no ruling has been issued.

          H.    HONDURAS

On February 10, 2015, the Honduran National Congress approved a series of reforms to the Law for the Defense and Promotion of Competition (Ley para la Defensa y Promoción de la Competencia).  These reforms aim to provide the enforcer, the Commission for the Defesnse and Promotion of Competition (Comisión para la Defensa y Promoción de la Competencia), with greater investigative powers.  The reforms also foresee the future implementation of a leniency program.[163]

          I.    URUGUAY

In February 2015, Uruguay’s highest court for competition matters overturned a 2012 decision by Uruguay’s competition authority (the Comisión de Promoción y Defensa de la Competencia or CPDC) that barred professional organizations from posting lists of recommended fees.[164]  While the case focused on accountants, it also should apply to other professions.  Observers noted that the Decision showed Uruguayan courts’ willingness to take a closer look in these types of cases and to require from Uruguay’s competition authority a showing of actual anti-competitive impact in order for the court to find an infringement.

In addition, on May 30, 2015, the CPDC issued a decision on alleged bid rigging relating to the procurement procedures through which Uruguay’s Ministry for Defence buys “food-tickets” that allow the holder to buy a range of food in a network of affiliated distributors.  While the CPDC was of the view that there were indicia of an infringement, it determined that since food tickets constituted a part of the salary, they constituted a regulated payment system and that Uruguay’s Central Bank (Banco Central del Uruguay), and not the CPDC, should hear the proceedings.[165]

II.    EUROPE

          A.    EUROPE

                    1.    European Commission

                              a.    Fines

Compared to recent years, the Commission has imposed relatively few fines in the first half of 2015.  As it has many investigations ongoing, the year-end totals may be significantly higher than the mid-year mark suggests.

                                                  (i)    Yen Interest Rate Derivatives

On February 4, 2015, the Commission imposed fines totaling EUR 14.9 million ($19.87 million) on broker ICAP for its role facilitating bilateral collusion with respect to Yen interest rate derivatives (“YIRD”). The Commission had already imposed hefty fines on various banks and brokers in December 2013 as part of its settlement with those parties.[166]  ICAP did not settle with the Commission and was ultimately fined for facilitating collusion, including: (i) disseminating misleading information (marked as ‘predictions’ or ‘expectations’ of rates) to certain JPY LIBOR panel banks, and (ii) using  its contacts with certain JPY LIBOR panel banks not participating in the YIRD collusion in an attempt to influence their JPY LIBOR submissions.  In addition, the Commission found that ICAP had served as a channel for communication between one Citigroup trader and one RBS trader, thereby enabling their conduct.[167]

                                                  (ii)    Parking Heaters

On June 17, 2015, the Commission imposed a fine of EUR 68 million (approximately $90 million) in a settlement decision following its investigation into an alleged parking heaters cartel between Eberspächer and Webasto, two German producers of automotive parts. The Commission found that, between September 2001 and September 2011, the two companies coordinated prices and allocated customers in the market for fuel-operated parking heaters (to heat parked cars or trucks) and auxiliary heaters (to support the heating system of a running car or truck) across the entire European Economic Area (“EEA”). Eberspächer was fined EUR 68.18 million, after a reduction of 45% under the Commission’s Leniency Notice for cooperation during the investigation and a further 10% under the Commission’s Settlement Notice.  Webasto was granted full immunity from fines under the Commission’s Leniency Notice for informing the Commission of the existence of the conduct, thereby escaping a EUR 222.25 million fine (approximately $244 million).[168]

                                                  (iii)    Food Packaging Trays

Most recently, on June 24, 2015, the Commission imposed a fine totalling EUR 115.87 million (approximately $154 million) on eight manufacturers and two distributors of retail food packaging trays.[169]  In connection with its fine decision, the Commission announced that it had identified five separate cartels expanding into the majority of countries within the EEA between March 2000 and February 2008. The Commission found that the companies had fixed prices, allocated customers, engaged in bid-rigging, and exchanged commercially-sensitive information. Linpac received full immunity from fines under the Commission’s Leniency Notice and avoided a EUR 145.07 million fine (approximately $193 million). Other companies received a reduction on their fines for their cooperation in the investigation. Three of the companies claimed an inability to pay the fine, and having assessed those claims, the Commission granted reductions to two of the three companies.

                              b.    Ongoing Investigations

The first half of 2015 has seen some dramatic investigatory developments under new Competition Commissioner Margrethe Vestager.  This includes continuing to pursue hybrid settlement cases, a number of unannounced inspections (dawn raids) and the announcement of the Digital Single Market inquiry.[170]

                                                  (i)    Canned mushrooms

As reported in our 2014 Mid-Year Update, the Commission reached a settlement with several producers of canned mushrooms, for price fixing and market allocation, in June 2014.[171]  Almost a year later, on May 28, 2015, the Commission sent a Statement of Objections to Grupo Riberebro, the one undertaking that did not settle the case.[172]  This case is worth noting because it indicates that Commissioner Vestager is prepared to continue pursuing hybrid settlement cases, notwithstanding the fact that they can be procedurally burdensome for the Commission.

                                                  (ii)    Car battery recycling

On June 24, 2015, the Commission announced that Statements of Objections had been sent to five lead recycling companies relating to a suspected purchasing cartel for scrap lead-acid batteries, which are commonly used in cars.  Recycling companies buy scrap batteries, and then extract and reuse the lead.  The Commission alleges that, between 2009 and 2012, the companies in question fixed the prices for scrap lead-acid batteries in Belgium, France, Germany and the Netherlands.

                                                  (iii)    Bioethanol

As noted in our 2014 Mid-Year[173] and Year-End[174] Updates, the Commission has been engaged in an investigation into the pricing of oil and biofuels since 2013.  While there is little new in the public domain on the scope or progress of the investigation, the Commission confirmed on April 21, 2015 that it had recently undertaken unannounced inspections at the premises of more undertakings, including one thought to be located in Spain.

                                                  (iv)    Online electronics retailers

The Commission is understood to have conducted dawn raids on a number of electronics retailers and manufacturers in March 2015.  These raids are thought to be connected to those conducted in December 2013, as reported in our 2013 Year-End Update[175], and to form a part of the broader Digital Single Market inquiry, which was formally launched on May 6, 2015, in the context of the EU’s Digital Single Market Strategy.[176]  A sector inquiry allows the Commission to examine the functioning of a particular sector of the economy where the level of trade between Member States, rigidity of prices, or other circumstances suggest that competition is distorted.  If the Commission identifies specific concerns, it can open individual investigations into specific companies.  A sector inquiry may also eventually result in new legislative proposals.

The Commission is concerned that while 50% of the EU population shops online, only 15% of the population shops online across borders.  The inquiry will focus on the barriers to cross-border online trade in goods and services, with a particular emphasis on those areas where e-commerce is most widespread: electronics, clothing, and digital content.  It will examine a variety of issues, from contractual restrictions, “geo-blocking,” redirecting shoppers to their “home” website, language restrictions, payment facilities, licensing, legislative differences, and other regulatory barriers.

The Commission’s preliminary findings are tentatively scheduled for mid-2016.

                    2.    Significant Rulings by the European Courts

While fine activity has been slow to date in 2015, it has been a very busy year for the European courts. The first half of the year has seen a number of judgments on significant topics, such as dawn raid processes, the treatment of information exchanges, fining principles, and follow-on damages actions arising out of cartel infringements.

                              a.    LCD Appeals

Appeals against the Commission’s 2010 Decision in the TFT-LCD matter gave rise to two developments in the first half of 2015.

                                                  (i)    LG Display

In February 2014, the EU General Court (GC) had reduced the fine imposed on LG Display from EUR 215 million to EUR 210 million (approximately $236 million to $230 million) because the Commission had erroneously included an extra month of conduct in its original fine calculation.[177]  LG Display appealed to the EU Court of Justice (“CJEU”) hoping for a further reduction.  The CJEU upheld the GC’s judgment, however, and rejected LG Display’s arguments that it should also have benefitted from partial immunity thanks to evidence that it gave on the duration of the conduct.

LG Display also failed in its argument that the Commission’s fine calculation should not have taken into account “captive sales,” i.e., sales of affected panels that LG Display (a joint venture) made to its parent entities, LG Electronics and Royal Philips Electronics.  The CJEU held that these sales should be regarded as sales made to independent third parties.

                                                  (ii)    InnoLux

Taiwanese company InnoLux also appealed the Commission’s Decision.  The fines in the Decision were based (i) on sales of LCD panels from the participating entity directly to a third party in the EEA (“direct sales”), and (ii) on sales of finished products, which contained an affected LCD panel that had been sold to and incorporated by another member of the participating company’s group outside the EEA, to a third party within the EEA (“transformed product sales”).  InnoLux argued that the Commission had gone too far by taking into account transformed products.

On April 30, 2015, Advocate General Wathelet delivered an opinion in support of InnoLux.[178]  Despite this, on July 9, 2015, the CJEU denied InnoLux’s appeal, holding, like the GC before it, that the Commission was fully entitled to take into account the EEA sales of finished products incorporating the LCD panels up to the value of those panels.[179]  This was the case even regarding sales of transformed product sales that were previously the subject of internal sales outside the EEA.  The CJEU found that the Commission had jurisdiction because the conspiracy participants had implemented the conduct in the EEA by making direct sales in the EEA of LCD panels to independent third parties.

                              b.    Deutsche Bahn

In June 2015, the CJEU partially upheld an appeal by Deutsche Bahn arising out of three Commission inspection decisions in connection with 2011 dawn raids, and ruled that Commission officials can only seize documents relating to the subject-matter of the inspection decision, but that the lack of prior judicial authorization for inspections does not, in itself, render an inspection decision unlawful.[180]

In 2011, the Commission carried out three inspections into Deutsche Bahn group companies, the second of which involved Deutsche Umschlaggesellschaft Schiene-Straße (DUSS), one of the subsidiaries of the Deutsche group.  Before it carried out the first inspection, which was in relation to Deutche Bahn, the Commission had briefed its officials about the existence of suspicions concerning DUSS.  Deutsche Bahn brought three actions before the GC to annul all three inspection decisions, arguing, among other things, that (i) the Commission should not have briefed its officials prior to the first inspection about conduct that was unrelated to the subject matter of inspection decision, and (ii) the fact that the inspection decisions did not have prior judicial authorization constituted an infringement of the fundamental right of inviolability of private premises as enshrined in Article 7 of the Charter of Fundamental Rights of the European Union and Article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms (the “ECHR”).  The GC dismissed all three actions in their entirety, finding in favor of the Commission.[181]  Deutsche Bahn appealed the judgement, and in June 2015 the CJEU partially reversed the GC finding and upheld the Deutsche Bahn appeal.

The CJEU found that the rights of defense of the undertaking under inspection would be endangered if the Commission were able to rely on evidence obtained during an inspection unrelated to the authorized subject-matter.  Any information the Commission provides to its officials prior to an inspection should solely relate to the subject-matter of the inspection decision.  As a result, the CJEU held that the briefing of Commission officials about DUSS suspicions prior to the first inspection tainted that and all subsequent inspections by infringing the obligation of the Commission to state reasons as well as the rights of defense of Deutsche Bahn.

On the other hand, the CJEU confirmed that the Commission, when conducting its inspections, had guaranteed all safeguards required by the case law of the European Court of Human Rights (“ECtHR”) in connection with the protection against arbitrary interference by public authorities (e.g., reference to the subject matter, purpose of the inspection and penalties in the inspection decision).  Moreover, the ECtHR has previously acknowledged that the existence of post-inspection judicial review, which was afforded to Deutsche Bahn in the present case, is capable of constituting another fundamental guarantee in ensuring that an inspection decision without prior judicial authorization is compatible with Article 8 of the ECHR.

                              c.    EPH and EPIA

In a November 2014 judgment, the GC confirmed a number of important principles relating to the duty to cooperate during Commission inspections.[182]  The judgment was made in the appeal against a Commission decision imposing a fine of EUR 2.5 million ($2.8 million) on Energetický a průmyslový holding a.s. and EP Investment Advisors s.r.o., a wholly owned subsidiary of the former (together, the “EP companies”) for their alleged refusal to submit to an on-premises inspection.  This refusal took the form of (i) negligently allowing access by the IT director to a blocked e-mail account and (ii) intentionally withholding e-mails from the inbox folder of the relevant account holder, thereby reducing the scope of the inspectors’ access during a significant part of the inspection.

The GC rejected the EP companies appeal and upheld the Commission’s decision.  The GC also concluded that the fine imposed on the EP companies was proportionate in light of the gravity and duration of the infringement as well as the lack of mitigating circumstances.  Indeed, the GC confirmed the Commission’s conclusions that the two separate actions set out above constituted a serious infringement casting doubts on the “integrity of the evidence in the sealed room.”  Moreover, the GC stressed that the “the deterrent effect [of the fine] is all the more important in the case of electronic files since, having regard to their particular nature, they are much easier and quicker to manipulate than paper files.”

                              d.    Dole

In an important decision on the characterization of information exchange infringements, the CJEU in March 2015 confirmed the principle that “an exchange of information which is capable of removing uncertainty between participants as regards the timing, extent and details of the modifications to be adopted by the [entities] concerned in their conduct on the market must be regarded as pursuing an anticompetitive object.”[183]

The appeal arose out of the Commission’s 2008 decision finding that banana producers had engaged in bilateral pre-pricing communications during which they discussed banana price-setting factors relevant to the setting of prices for the forthcoming week.  The Commission found that these communications were likely to have influenced the pricing behavior of the entities in question, thereby amounting to collusion having as its object the restriction of competition within the meaning of Article 101 TFEU.  Dole appealed the decision.  Its appeal was rejected by the GC in 2013.[184]  The CJEU rejected Dole’s further appeal.

In rejecting Dole’s appeal, the CJEU confirmed a number of principles that had been laid down in the recent T-Mobile case, including that (a) in order to find that a practice has an anticompetitive object, there does not need to be a direct link between that practice and consumer prices; and (b) EU law will presume, subject to proof to the contrary, that the entities will take information exchanged between them into account when determining their conduct on the market.[185]

                              e.    Timab

On May 20, 2015, the GC handed down its first ruling on the European Commission’s cartel settlement procedure.[186]  The judgment makes clear that the Commission is not bound by the range of fines (or by positions) it indicates during the settlement procedure, and may ultimately impose a higher fine if a party withdraws from that process.

In the Animal Feed Phosphates investigation, settlement discussions were initiated with all defendants; later Timab decided to opt out of the settlement proceedings.  The Commission settled with the remaining defendants, and then brought standard infringement proceedings against Timab.  Timab eventually received a fine more than 25% higher than the settlements-process estimate, even though the Commission reduced its findings on the duration of Timab’s involvement, from 26 years (at the time of the settlement negotiations) to 11 years (in the final decision).

The GC found that Timab had not been penalized for withdrawing from settlement, the difference between the two amounts was because the settlement figure took into account reductions that the Commission was not required to apply as part of the standard fines procedure.

                              f.    Total

In an April 2015 judgment, the GC confirmed that the purpose of interest payments on fines is to compensate for delays in payment on the part of the undertaking paying the fine.  The Commission sought interest payments with respect to a fine it imposed on Arkema SA and its subsidiaries.  Total SA and Elf Aquitaine SA, the parent companies of Arkema SA during the period of the infringement, were held jointly and severally liable for liable for the payment of the initial fine.  The level of fine was appealed to the GC and was reduced.  Following the reduction, the Commission sought payment of the residual sum of the fine plus interest.  The GC held that the Commission could not rightly demand interest on the fine as Total and Elf Aquitaine had paid “the required amounts in the delays set out by the Commission.”[187]

                              g.    Versalis

In March 2015, the CJEU issued a judgment clarifying the availability of fines against parent companies for the anticompetitive conduct of their subsidiaries following corporate reorganizations.[188]  This case related to the Commission’s chloroprene rubber investigation.  In its original decision, the Commission had imposed a fine on Eni SpA (“Eni”) and its wholly owned subsidiary Versalis SpA (“Versalis”).  Eni is the ultimate parent company of the Eni group.  The company responsible for the chloroprene rubber business within the Eni group was previously EniChem Elastomeri, but that business was transferred to another group company, which was subsequently renamed Versalis.

In 2012, the GC reduced the amount of the fine imposed on Versalis and Eni, but confirmed that the Commission could impute liability to Eni for its subsidiary’s conduct.  The Commission and Versalis and Eni appealed.  The CJEU rejected both appeals.

In so doing, the CJEU confirmed that the applicability of the rules on imposition of fines should not be affected by organizational changes within an infringing group.  In the words of the CJEU “where two entities constitute one economic entity, the fact that the entity that committed the infringement still exists does not as such preclude imposing a penalty on the entity to which its economic activities were transferred.”  Thus, the CJEU concluded that the Commission had been right to impute liability to Versalis for the anticompetitive conduct of Enichem.

                              h.    Parker

In a similar ruling in December 2014, arising out of the Marine Hose cartel, the CJEU held that “when an entity that has committed an infringement of the competition rules is subject to a legal or organizational change, this change does not necessarily create a new [entity] free of liability for the conduct of its predecessor […] when, from an economic point of view, the two entities are identical.”  Otherwise infringing entities would be able to “escape penalties by simply changing their identity through restructurings, sales or other […] organizational changes.”[189]

That case involved the Parker Group, which had acquired the marine hoses business of ITR SpA in 2002.  The ultimate parent was fined for participation as of 2002, but the subsidiary that acquired the ITR business was fined for participation from April 1, 1986 to May 2, 2007.  Upon appeal, the GC annulled the decision in so far as it found the Parker subsidiary liable for the period before 1 January 2002.  The Commission appealed this decision and the CJEU referred the case back to the GC to decide on the merits, in light of the principles it had outlined.

                              i.    CDC 

In May 2015, the CJEU ruled on a number of questions relating to damages claims in connection with the 2006 hydrogen peroxide infringement decision.[190]  Following the 2006 decision, a number of companies operating in the industrial pulp and paper processing industry transferred their rights to damages suffered in connection with the alleged cartel to Cartel Damage Claims Hydrogen Peroxide SA (“CDC”), a Belgian company.  CDC brought an action for damages against six of the companies on which the Commission imposed fines before a Regional Court in Dortmund, Germany.  That Court referred a number of issues to the CJEU regarding civil damages actions.

The defendant companies were located in various Member States, and CDC argued that the German courts had jurisdiction to rule with regard to the defendants because one of them, Evonik Degussa GmbH, had its registered office in Germany.  It relied on Article 6(1) of the Brussels Regulation, which provides that, in cases involving multiple defendants, a person may also be sued in the courts of the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings in different Member States.

In September 2009, CDC withdrew its action against Evonik Degussa following an out-of-court settlement.  The other defendants in the action challenged the jurisdiction of the German court.  The CJEU held that, as a rule, companies that the Commission has found to have participated in an unlawful cartel must expect to be sued in the courts of any Member State in which one of them is domiciled.  However, Article 6(1) must not be abused, for example by voluntarily delaying the conclusion of an out-of-court settlement until an action had been brought for the sole purpose of giving the German courts jurisdiction over the other participants in the infringement.

The CJEU also held that jurisdictional clauses in contracts for the supply of goods referring to disputes concerning antitrust liability applied to actions for damages for breaches of EU Competition law, thereby allowing the parties to contractually derogate the rules on jurisdiction set out in the Brussels Regulation.

                              j.    Unión de Almacenistas de Hierros de España

In May 2015, the GC dismissed an action by a trade association, the Unión de Almacenistas de Hierros de España, seeking annulment of the Commission’s refusal to give it access to  documents exchanged between the Commission and the Spanish National Competition Authority in relation to two infringement proceedings opened by the authority under Article 101 TFEU.[191]  The Commission had relied on Article 4(2) of Regulation 1049/2001, which allows the institutions of the EU to refuse access to documents where (i) such disclosure would undermine, among others, “the purpose of investigations […] unless there is an overriding public interest in disclosure;” or (ii) where the disclosure would undermine the “commercial interests of a natural or legal person […] unless there is an overriding public interest in disclosure.”  The GC upheld the Commission’s decision and held that Article 4(2) applies not only to Commission investigations but also to investigations carried out by public authorities of the Member States.

                              k.    Evonik Degussa

In January 2015, the GC rejection an action brought by Evonik Degussa to prevent the Commission from publishing a more detailed version of its 2006 hydrogen peroxide decision.[192]  An initial non-confidential version of the decision was published in 2007, and the Commission informed Evonik Degussa in 2011 that it intended to publish a more detailed version.  The Commission rejected Evonik Degussa’s requests for confidential treatment of certain information that it had provided in its leniency application.

The GC found that, as the information was more than five years old, unless the requiring entity “exceptionally” established that it “still constituted an essential element of its commercial position,” it was to be considered as historic information, not benefitting from the protection of “current business secrets.”  The GC also found that decisions within the EU are to be adopted “as openly as possible.”  While the publication of a more detailed version could harm Evonik Degussa’s reputation by shedding more light on its role in the infringement and by facilitating follow-on damage claims, neither of these interests was “objectively worthy of protection” particularly in the right of “every person to obtain reparation for the harm caused by behavior likely to restrict competition” established by the CJEU at the Courage v Crehan case.  Evonik Degussa has appealed the judgment.[193]

                    3.    Legislative Developments:  Evaluation of cartel
policy enforcement

On June 10, 2015, the Commission published a staff paper reviewing the literature on ex post economic evaluation of competition policy enforcement, including cartel policy.[194]  According to the report, as many as four out of five cartels may remain undetected.  The report also concluded that the average overcharges resulting from cartels (i.e., the difference between the collusive and competitive price) are between 15% and 20% of the benchmark price, although overcharges achieved by cartels in Europe and North America remain lower than in the rest of the world, where cartel enforcement may be less strict.  The report determined that stronger enforcement and increased scope of cartel policies in both the EU and the U.S. have contributed to a decline in the overcharges obtained from collusive conduct.    

          B.    EU MEMBER STATES

                    1.    AUSTRIA

The Austrian Cartel Authorities have focused their activities in 2015 on the food and consumer goods sectors.  From the end of 2014 to date, the majority of cases have involved domestic conduct of a more limited scale.  For example, a fine of EUR 419,200 (approximately $461,000) was imposed for price fixing by four sport equipment retailers of ski equipment and related services.

The biggest fine imposed this year is a fine of EUR 17.5 million (approximately $19.2 million) imposed on 30 companies in December 2014 for price fixing activities in the transport sector.  This conduct occurred within the framework of an industry-wide forum, the so-called Speditions-Sammelladungs-Konferenz.  The conduct came to the attention of the Austrian Cartel Authorities after a leniency application was filed; the applicant was granted immunity from fines.

The Austrian Federal Administrative Court also delivered an important judgment on the legality of using forensic IT software during dawn raids.  The case concerned an appeal by a consumer goods trading company which claimed that the use of software to search databases and servers which are located outside the raided premises was not covered by relevant powers of inspection under Austrian law.  The court rejected that argument, taking what is essentially a pragmatic stance; it held that the decisive factor for the extent of enforcement powers is whether the information is within the scope of the search warrant and not where the data is located.

                    2.    BELGIUM

On June 22, 2015, the Belgian Competition Authority (the Belgische Mededingingsautoriteit or BMa) imposed significant fines as part of its settlement with companies charged with price fixing in the distribution of drugstore, perfumery, and hygiene products (“DPH products”).[195]  In total, 18 companies were fined EUR 174 million (approximately $191 million) for coordinating prices for DPH products between 2002 and 2007.  The companies include the major Belgian retailers (including Carrefour, Colruyt Cora, Delhaize, Intermarché, and Makro) as well as several of their suppliers.  According to the BMa, the infringement occurred at the retail level, where suppliers acted as intermediaries and facilitators, each for their respective products.  No direct contact between the distributors or the various suppliers involved was identified and the coordinated price increases yielded variable results.

Under the Belgian Leniency Procedure, Colgate-Palmolive received full immunity from fines for reporting the conduct to the BMa.  Also under the Leniency Procedure, GSK and Reckitt Benckiser (Belgium) were granted a reduction of fines of 50% and 25% respectively, for their cooperation during the investigation.  Furthermore, under the applicable rules for settlements, companies that acknowledged their involvement in the infringement received a 10% reduction of their respective fines.

At the end of 2012, the investigators submitted their reasoned report to the former Competition Council (now the Competition College of the BMa), accusing the 18 companies of restrictive practices in violation of Article 101 TFEU and Article 2 of the former Act on the Protection of Economic Competition (APEC) (now Article IV.1 of the Code of Economic Law).  Most of the 18 companies involved challenged the legality of the inspections carried out under Article IV.79 in 2007 before the Brussels Court of Appeal.  However, under the terms of the settlement agreement, the companies will now withdraw their appeal.

This settlement occurred under the new procedure used by the BMa pursuant to the new Code of Economic Law, which entered into force in September 2013.  The settlement cannot be appealed.

                    3.    CZECH REPUBLIC

In January 2015, the Czech Competition Authority (the Úřad pro ochranu hospodářské soutěže or UOHS) announced it had imposed fines totaling CZK 63.33 million (approximately $2.6 million) on HOSPIMED, spol. s.r.o. and PURO-KLIMA, a.s for entering into anticompetitive agreements to rig bids for public tenders of medical and other hospital equipment.  Both companies have appealed the decision.[196]

On April 20, 2015, the UOHS imposed fines totalling CZK 5.878 million (approximately $238,000) on construction companies BS Vsetín s.r.o. and NOSTA s.r.o. for collusion to divide contracts tendered by the Regional Police Directorate of the Zlin Region.  The UOHS conducted dawn raids at the companies’ premises and discovered communications in the form of emails and handwritten notes evidencing agreements as to tender participation.[197]

Finally, on June 8, 2015, the UOHS imposed a disciplinary fine of CZK 1.11 million (approximately $45,000) on CZECH FROST for not cooperating during a dawn raid.  In February 2015, the UOHS raided the premises of CZECH FROST in the context of its investigation in the sector of product handling, storage and protection.  During the dawn raid, the company’s director and other employees prevented UOHS officials from inspecting business records stored on the computer of the company’s director, even after being informed that the officials are allowed to conduct such inspections under the Czech Act on the Protection of Competition and of the possibility of disciplinary fines for refusing to cooperate.  This behavior was considered to cause an “irreversible prevention” of effective evidence collection and investigation.  Under the Czech law, such obstruction may be fined by up to CZK 300,000 or 1% of turnover.[198]

                    4.    DENMARK

In the first half of 2015, the Danish Competition Authority (Konkurrence-og Forburgerstyrelsen or KFST) continued to impose fines relating to its 2014 investigation in the construction sector.  Ultimately, seventeen companies and several of their senior employees settled bid-rigging charges and accepted fines totaling DKK 27.19 million (approximately $5 million) in connection with illegal price fixing agreements between 2007-2009 with regard to construction projects valuing approximately DKK  400 – 500 million (approximately $71 – $89 million).[199]

                    5.    FRANCE

The French Competition Authority (Autorité de la concurrence or ADCL) was very active in the first half of 2015 and imposed significant fines.

On March 12, the ADCL fined several companies a total of EUR 192.7 million (approximately $210.9 million) for practices between 2006 and 2012 relating to dairy products sold under retailers’ private labels.[200]  Specifically, ADCL found that the companies had concluded non-aggression pacts consisting of distributing volumes and freezing their positions in relation to each other.  The scope of the cartel was deemed very broad as (i) it covered the whole territory and (ii) the manufacturers involved represent more than 90% of the market in question.  The leniency applicant was granted full immunity and avoided a EUR 44.7 million (approximately $48.9 million) fine. Due to financial difficulties, another company, which faced an initial EUR 101.3 million (approximately $111 million) fine, benefited from a reduced sanction.  On the other hand, one undertaking’s fine was increased by 25% because it belongs to a large group.

On the legislative front, the French Assemblée Nationale approved a bill relating to growth, activity, and equality of economic opportunities (projet de loi pour la croissance, l’activité et l’égalité des chances économiques or loi Macron) without a vote.[201]  This bill will permit the ADCL to enter settlement agreements with undertakings.  Where the undertakings do not contest the allegations, the Authority will be entitled to propose a settlement agreement including a minimum and a maximum fine.  The bill also permits further fine reduction for commitments to establish antitrust compliance programs.  The bill should be approved by the French Senate during the summer 2015 and could enter into force before September 2015.

Finally, on February 27, 2015, the ADLC launched a public consultation on the revision of its procedural notice concerning the Leniency Program, which was introduced in 2001.[202]  Under the program, companies who self-report can benefit from total or partial immunity from fines, depending on (a) the order in which they approach the ADLC, (b) their cooperation in the investigation, and (c) the added value of the facts they provide to the ADLC.  To date, nine leniency decisions have been made by the ADLC in which some twenty companies have been fully or partially exempted from fines.  The revised notice should be released before the end of the year.

                    6.    GREECE

The Hellenic Competition Commission (HCC) has issued a number of decisions and actions during the first half of 2015.

In February 2015, the HCC imposed a limited fine on the Cretan association of dentists and dental technicians for determining its members’ pricing policy (together with an order to change the anti-competitive clause in its statute).[203]  Also in February, the HCC issued a statement of objections to companies active on the market for media measurement services alleging joint bidding and market sharing.[204]  The HHC followed this in April with a statement of objections to steel companies over allegations of excessive price increases and exchanges of information regarding their production levels, exports, and imports through a steelmakers’ association.[205]

On March 5, 2015, the HCC issued a Notice on the meaning and treatment of confidential information under the national competition rules, taking into consideration recent national and EU legislation and jurisprudence; the Notice also codified the HCC’s best practices.[206]  In addition to defining confidential and non-confidential information for purposes of competition regulations, the Notice also provides detailed guidance on the submission of non-confidential versions to the HCC.

                    7.    GERMANY

Following its record year in terms of fines imposed, the German Federal Cartel Office (the Bundeskartellamt or BKartA) was again active in the first half of 2015.

In June, the BKartA fined ten manufacturers of prefabricated car garages approximately EUR 11 million ($12 million) for price fixing.[207]  The prohibited activity mainly concerned agreements on minimum sales prizes for standard-sized prefabricated concrete garages in Southern Germany.  Additionally, the collusion involved a bilateral price fixing and a customer allocation agreement for Northern German Federal States.

With respect to vertical cases, the BKartA imposed a number of fines for vertical resale price maintenance (RPM), which is treated as a per se offense in Germany.  In February 2015, the BKartA fined Metzeler Schaum GmbH, a producer of mattresses, EUR 3.4 million (approximately $3.7 million) for imposing RPM restrictions on its retailers from 2007 to July 2011.[208]  In May, the BKartA also imposed a fine of EUR 300,000 ($331,000) on United Navigation GmbH for RPM restrictions relating to portable navigation devices.[209]  United Navigation reached a settlement agreement with the BKartA and also its limited financial capacity was taken into consideration for the purpose of fine calculation.  Finally, the BKartA is about to close its biggest ever RPM investigation, which concerns the food retail sector.[210]  So far, the authority has imposed fines totaling approximately EUR 151.6 million (approximately $167 million) on seven retailers and four brand manufacturers. All fines were imposed on the basis of settlements reached between the authority and the parties concerned. Most of the fines are final. The investigations involving the product categories pet food and body care products are now concluded. The BKartA expects to conclude the remaining proceedings against several companies or company groups relating to the product categories confectionary, coffee and beer in the coming months.

Most recently, the BKartA imposed a fine of EUR 75 million (approximately $83 million) on seven automotive parts suppliers.[211]  The parts suppliers were sanction for engaging in price fixing, including agreements on rebate restrictions and price surcharges due to raw material increases, during the period from 2005 to 2013.  The products concerned included various sound-proofing components such as carpets, foot mats, trunk linings, rear shelves, wheel-arch linings, and cladding around the engine.  The leniency applicant was granted immunity from fines, while the other infringers benefited from fine reductions due to a participation in the BKartA’s leniency program and settlement procedure.  Proceedings against one company are still pending.

In May, the Higher Regional Court in Düsseldorf (OLG Düsseldorf) imposed fines amounting to around EUR 42 million (approximately $46 million) on two manufacturers of clay roof tiles, concluding the BKartA’s proceedings against the members of the clay roof tile cartel.[212]  At the end of 2008 and in early 2009, the authority had imposed fines on nine manufacturers of clay roof tiles and some of the managers involved.  The companies concerned had agreed to add an energy cost surcharge to their prices for clay roof tiles.  Whereas five of the companies accepted the fines, four companies appealed the authority’s decision.  Two of the latter were sold or restructured during the appeal proceedings and so were able to benefit from a loophole in the German law on fines. As a reaction to the 2011 decision of the Federal Supreme Court in the Versicherungsfusion case[213] in 2013 the German legislator had amended the law on fines to introduce a new rule according to which an universal successor or partly universal successors of a company that was engaged in a cartel can be held liable for the fine imposed on the predecessor. Nonetheless, there is still a gap in the law that allows a group of companies under certain circumstances to restructure  and escape the payment of a fine, by dissolving the entity that was involved in the cartel (e.g., through certain types asset transfer within the group).[214]

                    8.    THE NETHERLANDS

While the Dutch Competition Authority (Autoriteit Consument en Markt or ACM) has not issued any decisions in the first half of 2015, several prior fines imposed by the ACM have been the subject of court rulings.

On January 15, 2015, the District Court of Rotterdam upheld the ACM’s 2009 infringement decision in relation to agreements between seven farmers of so-called “first-year onion sets” which sought to limit supply by destroying part of their onion harvest.[215]  According to the ACM, the agreements created scarcity in order to secure a higher price.

On April 30, 2015, the District Court of Rotterdam also handed down its judgment in a case involving an information exchange between two providers of domestic and home care service providers.  The exchange related to registration and pricing policies for five tenders by municipalities for domestic services.  At the time of the tenders, the two service providers were engaged in negotiations to create a joint venture, but no formal decision had yet been taken at management level.  Therefore, they were separate and competing undertakings for the purposes of EU and Dutch competition law. The Court upheld the ACM’s decision to impose a fine for infringing the cartel prohibition, but reduced the fine by EUR 15,000 (approximately $20,000) because of the very long duration of the procedure.[216]

                    9.    SPAIN

The Spanish Competition Authority (the Comisión Nacional de los Mercados y la Competencia or CNMC) has been very active in the first half of 2015, imposing a number of significant fines on companies active across different sectors.

On February 25, 2015, the CNMC imposed fines in excess of EUR 32 million (approximately $36 million) on oil companies Repsol, CEPSA, DISA, GALP and MEROIL for alleged price fixing and other unlawful coordination in relation to their gas stations.[217]  Of these companies, Repsol and CEPSA accounted for the vast majority of the total fines imposed (EUR 30 million and 33.9 million, respectively).

On February 26, 2015, the CNMC also imposed fines of EUR 88.2 million ($99.27 million) on nine dairy processors, including worldwide multinationals Danone and Nestlé, and two trade associations for their alleged involvement in buyer-side collusion.[218]    According to the CNMC, the entities involved colluded on the price paid to livestock owners for raw milk and to prevent farmers from switching between manufacturers.

On June 5, 2015, the CNMC imposed a fine of EUR 41.1 million ($45.7 million) on 95 car dealers, two consultancy firms, and two trade associations for adopting and implementing price fixing and other anti-competitive agreements in seven regions of Spain.[219]   This investigation arose out of an application under the Spanish leniency program, in force since 2008.

This year has also seen a number of important court judgments that will have a dramatic impact on the methodology for the calculation of fines imposed by the CNMC.[220]  In four rulings delivered in January by the Spanish Supreme Court (Tribunal Supremo or TS), the TS rejected the CNMC’s approach to the calculation of fine (as set out in its Guidance) of fines[221] which was strongly inspired by EU law and under which the CNMC applied a 10% cap or ceiling to the calculated fine.[222]   In doing so, the TS established a methodology based on Spanish Criminal Law (as opposed to EU Competition law).  The TS indicated that rather than being a “capping ceiling,” the 10% limit was an element that forms part of the methodology to set fines, since it establishes a “maximum figure for a scale of sanctions within which the fine has to be calculated individually.”  Insofar as the CNMC guidance on the calculation of fines departed from this principle and methodology, the TS concluded that it could not be applied.  The TS therefore annulled the four fines imposed by the CNMC.

Since the publication of these judgments, the CNMC has issued decisions in other matters that apply the new approach established by the TS.[223]    In these cases, the CNMC calculated the fine per company within the 0-10% of the total turnover range established by the Spanish Competition Act, as interpreted by the TS.  Working within this range, the CNMC applied the different criteria set out in Article 64(1) of the Spanish Competition Act (e.g., market shares of the companies involved, characteristics of the affected markets) to calculate the specific percentage (e.g., 3% of the total turnover) that should be applied to each company.

                    10.    SWITZERLAND

On February 23, 2015, the Swiss Competition Commission (ComCo) imposed fines amounting to CHF 161,000 (approximately $170,000) on three tunnel cleaning companies.[224]  ComCo found that, between 2008 and 2013, the companies coordinated and exchanged information on prices and tenders in order to allocate among themselves tunnel cleaning contracts with public authorities at the supra-regional level.  Over the course of the procedure, each of the companies voluntarily disclosed its involvement in the infringement and thus benefitted from a reduction of fines. ISS Kanal Services AG (first-marker) received total immunity, Franz Pfister Maschinelle Reinigungs AG (second company to cooperate) received a 50% reduction, and Besa Strassenunterhalt AG (third company to cooperate) received a 10% reduction.

On July 3, 2015, ComCo imposed fines amounting to CHF 80 million ($84.8 million) on nine companies active in the sale of bathroom and kitchen fixtures.[225]   The companies are leaders in the sanitary market and, according to ComCo, agreed on prices, quantities, and factors influencing prices such as profit margins, transport costs, rebates, and Euro exchange rates between 1997 and 2011.  ComCo launched its investigation of these companies following customer complaints.  None has acknowledged the violation, but several cooperated with the investigation by providing documents and other data and accordingly received fine reductions.  In setting the fines, ComCo took into account the long duration of the infringement and the number of repeat infractions.  Both factors, ComCo found, warranted a higher fine.  But ComCo also found reasons to exercise its discretion to lower the fines.  Specifically, several prior investigations in the relevant market were investigated only informally.  ComCo took this into consideration as a mitigating factor.

                    11.    UNITED KINGDOM

The U.K. Competition and Markets Authority (CMA) has had a busy but mixed start to 2015, with action to open new cases and a plan for upcoming legislative changes on the one hand and the failure of its latest prosecution for the criminal cartel offense on the other.

In terms of enforcement action, the CMA launched dawn raids in March 2015 in the clothing, fashion and footwear sectors, in relation to a civil investigation under the Competition Act 1998.[226]  The CMA is expected to make a decision on whether to proceed with the investigation in October 2015.

In March and April 2015, the CMA took a number of steps to ensure compliance with the competition rules in the estate agent sector.[227]  In March, it fined an estate agency trade association, three of its members and a newspaper publisher a total of £775,000 (approximately $1.2 million) for conduct involving an agreement to restrict the advertising of discounts or fees in the newspaper.  The parties admitted the infringement and entered into a settlement with the CMA, each receiving a 10% discount on the fine that would otherwise have been imposed.  Following this decision, in June 2015 the CMA issued an open letter to newspaper publishers and property companies highlighting important points from the case and reminding them of their obligations under the competition law.  It also sent letters to a number of estate and letting agents warning them that they might be at risk of breaching the law.  The letter was sent to those agents for whom the CMA had reasonable grounds to suspect that they might be involved in agreements to restrict the advertising of fees.  The CMA is also working with industry bodies to foster awareness and compliance in the estate agency sector.

On June 24, 2015, the CMA suffered a setback in terms of its prosecution of the criminal cartel offense when two defendants charged in relation to an alleged cartel in the galvanized steel tanks industry were acquitted.[228]  These were the first contested prosecutions brought under the criminal cartel offense in which the trial has been completed and a jury has rendered its verdict.  A third defendant had already pled guilty in June 2014 and is expected to be sentenced soon.  The charges brought against the defendants were that they dishonestly agreed with others to divide customers, fix prices, and rig bids with respect to the supply of galvanized steel tanks for water storage in the U.K.  The jury acquitted because it did not find that the defendants had acted dishonestly.  The CMA has stated that it accepts the jury’s finding but noted that this prosecution was brought under the old cartel offense, which required a finding of dishonesty.  For conduct occurring after April 1, 2014, it is no longer necessary for the CMA to prove individuals acted dishonestly to commit the cartel offense. The CMA has an ongoing civil investigation under the Competition Act 1998 into a suspected cartel with respect to the supply of galvanized steel tanks for water storage.

On the legislative side, the CMA is preparing for the introduction of collective redress schemes in the U.K.  The Consumer Rights Act 2015, which is expected to come into force in October 2015, will give parties to competition investigations who have breached the law the power to submit a voluntary redress scheme to the CMA for approval.  In March 2015, the CMA consulted on its draft guidance for the operation of this power, and the final version will be issued in due course.

Since April 1, 2015, the Financial Conduct Authority (FCA) has had concurrent powers to enforce the civil competition rules in the U.K.  The FCA cannot prosecute individuals for the criminal cartel offense but can investigate and sanction companies for breaches of the Competition Act 1998 or the EU competition rules.  The FCA consulted in March 2015 on draft guidance for how it will exercise its new powers.  The FCA has indicated that it intends to make full use of its new powers and to be an active competition enforcer in the financial services area.

The FCA has continued its enforcement action in relation to the foreign exchange and LIBOR investigations.  In November 2014, the FCA issued fines of £1.1 billion (approximately $1.5 billion)  against five banks for attempted manipulation of foreign-exchange markets.  The fines were imposed on Citibank (£225,575,000 (approximately $358 million)), HSBC (£216,363,000 (approximately $343 million)), JPMorgan Chase (£222,166,000 (approximately $352 million)), RBS (£217,000,000 (approximately $344 million)), and UBS (£233,814,000 (approximately $371 million)).[229]  On May 20, 2015, the FCA followed this up with a fine of £284,432,000 (approximately $439 million) on Barclays for its FX conduct, its largest fine ever.[230]  Separately, on April 23, 2015, the FCA fined Deutsche Bank £227 million (approximately $340 million) for LIBOR and EURIBOR conduct, the FCA’s largest fine in these cases.[231]

III.    ASIA AND THE PACIFIC

          A.    AUSTRALIA

                    1.    Enforcement

In 2015, Australia’s Competition and Consumer Commission (ACCC) has primarily pursued actions related to anti-competitive conduct in two domestic industries.  First, on April 13, 2015, the ACCC announced that it was launching a twelve-month public investigation into competition in the wholesale gas industry in eastern and southern Australia at the direction of the Australian government.[232]  In addition, on May 25, 2015, the ACCC initiated civil proceedings against eleven companies and individuals for alleged cartel conduct involving coal mining exploration licenses in New South Wales, Australia.  Specifically, the ACCC alleged that the respondents rigged bids in connection with the 2009 tender process conducted by the New South Wales Department of Trade and Investment.[233]  These proceedings are ongoing.

During 2015, the ACCC also concluded and announced its findings with respect to prior investigations into alleged anti-competitive conduct in the fuel and transportation sectors.  On May 18, 2015, the ACCC announced that it had concluded its investigation into alleged cartel conduct by fuel retailers in Armidale, Australia and found no evidence of agreements among competitors.[234]  Similarly, on June 16, 2015, the ACCC announced that it had concluded its investigation into alleged anti-competitive agreements between the Transport Workers Union of Australia (TWU) and Toll Holdings Limited.  The ACCC determined that the suspect provisions regarding annual payments between Toll and TWU were not intended to and were not likely to substantially lessen competition.[235]

                    2.    Legal Developments

In April 2015, the government’s Competition Policy Review Panel (Review Panel) issued its final report, which proposed several changes to the Competition and Consumer Act of 2010 (2010 Act) and the competition law enforcement framework in Australia.[236]  The recommendations contained in the final report largely mirror the draft report that the Review Panel published late last year, discussed in our 2014 Year-End Criminal Antitrust and Competition Update.[237]  The ACCC has continued to voice its opposition to certain recommendations by the Review Panel.  In particular, the ACCC expressed concern that the proposed changes to narrow cartel provisions “may have the unintended effect of undermining the ACCC’s ability to take effective enforcement action to address hard core cartel conduct.”[238]  The ACCC also said it disagreed with the Review Panel’s recommendation to remove certain regulatory functions from the ACCC and grant them to a new regulator that would be responsible for monitoring market access and pricing issues.[239]

In addition, on May 1, 2015, the full Australian Federal Court held that parties in civil prosecutions are prohibited from making joint submissions to the Court regarding appropriate penalties.[240]  The Court also determined that courts should disregard “the agreed figures in fixing the amounts of the penalties to be imposed, other than to the extent that the agreement demonstrates a degree of remorse and/or cooperation on the part of each respondent.”  Instead, the Court concluded that determining the appropriate level of penalties that a court may order remains a matter for the court to decide.  This decision effectively overturned more than twenty years of precedent and practice, according to which regulators and respondents in civil prosecutions had resolved disputes and made joint submissions to the court regarding the appropriate penalties to be imposed.  As a result, the decision is expected to significantly alter the operation of the ACCC’s Immunity and Cooperation Policy for Cartel Conduct.  Indeed, during the proceedings, the ACCC presented evidence that its ability to make joint submissions with respondents regarding penalties was essential to its capacity to conduct effective negotiations and that removing this power would hamper its ability to enter negotiated resolutions in the future.  We will monitor whether the number of leniency applications does indeed fall.

          B.    CHINA

After a banner year in 2014 investigating cartel activity and leveling significant fines,[241] the past six months have seen no significant cartel-related announcements in China.  Rather, China’s enforcement announcements shifted to abuse-of-dominance cases, with a massive CNY 6.088 billion (approximately $975 million) fine leveled in one such case[242] and a major ruling from the Chinese Supreme People’s Court in another.[243]  China’s enforcement authorities also continue to actively investigate a number of cartel-related cases,  including those regarding automobiles, pharmaceuticals, alcoholic beverages,[244] and capacitors,[245] and we can expect future developments in those investigations in the coming months.

In March, the National Development and Reform Commission (NDRC) appointed Zhang Hadong as its new director general of the NDRC’s price supervision and anti-monopoly bureau, the division that oversees the NDRC’s investigations into cartel activity.[246]  Zhang replaces the former head, Xu Kunlin, who will become the direct general of the NDRC’s price department.[247]  Given Zhang’s background, some speculate that Zhang’s appointment may foretell an increase focus on the health care and pharmaceutical markets.[248]

It is also expected the Zhang will continue Xu’s work to increase transparency and focus on rule of law at the NDRC,[249] continuing the NDRC’s response to criticism last year that China may be using its antitrust laws to promote the nation’s “industrial policy.”[250]  In April, senior officials from two of China’s antitrust agencies defended the nation’s antitrust enforcement.[251]  Liu Jian, deputy director of the anti-monopoly bureau of the NDRC, stated that China’s antitrust laws were “about fairness” and that they did “not set prices.”  He added, “NDRC is not concerned by the ultimate price of an end product, but the conduct that leads to such prices and whether it is anti-competitive.”[252]

          C.    HONG KONG

In March, Hong Kong’s Competition Commission (“Commission”) published Revised Draft Guidelines, continuing the progress towards implementing the new antitrust regime created by Hong Kong’s Competition Ordinance.[253]  The Commission’s revisions to the original Draft Guidelines, which were published in October 2014, came after considering the feedback from various stakeholders who submitted comments on the Draft Guidelines.[254]  In April, the Commission consulted with the Legislative Council Panel on Economic Development about the Revised Draft Guidelines.[255]  The Commission expects to complete all preparations by mid-2015 and will commence full operations under the Competition Ordinance at a date to be determined by the government.  Meanwhile, the Commission is also preparing a Leniency Policy and an Enforcement Policy and releasing other publications, such as practical guidance for trade associations.[256]

          D.    INDIA

On June 4, 2015, the Competition Commission of India (CCI) determined that Indian subsidiaries of two major pharmaceutical companies acted under an anti-competitive agreement to set the prices of meningitis vaccines sold to the Government of India for distribution to pilgrims traveling to Saudi Arabia for the Hajj.  CCI fined the two companies INR 635.3 million ($10 million), finding conduct by the two companies that “evidenced parallelism and collusive/concerted action.”[257]

In addition, on February 4, 2015, the Madras High Court rejected a challenge by automobile manufacturers to the Commission’s inquiry into their allegedly anti-competitive trade practices.[258]  The manufacturers (Hyundai Motor India Limited and BMW India Private Limited) contended that the complainant’s failure to name them in the complaint underlying the investigation deprived the CCI of statutory authority to proceed against them.  The court rejected that argument and concluded that the procedures met statutory requirements for expansion of the investigation to the conduct of companies not individually named in the underlying complaint.  Accordingly, the court authorized the agency proceedings to continue.

          E.    INDONESIA

In January 2015, the Commission for the Supervision of Business Competition (KPPU) fined six tire manufacturers for colluding during their trade association meetings to restrict production and increase the prices of tires. The six manufacturers were each fined 25 billion rupiah ($1.9 million), which is the maximum penalty available under Indonesia’s competition law.[259]  The KPPU cited hard evidence of cartel and price fixing arrangements in the minutes of presidential meetings of the Association of Indonesian Tire Producer in 2009 to 2012.[260]

In March 2015, the KPPU fined five companies for colluding on two tenders issued in 2013 for road improvement projects in the Ogan Ilir province of southern Sumatra.  The five companies were collectively fined 4.5 billion rupiah ($340,000) for jointly agreeing on their respective bids and conspiring with officials from the procurement committee to allocate the tenders.[261]

The KPPU also fined a construction company 332 million rupiah ($25,000) for conspiring with two competitors to rig bids for a new development in the West Nusa Tenggara province of Indonesia, and for securing the contract with the help of government procurement officials.[262]  In addition to the fines placed on the companies for bid-rigging, the KPPU also banned the companies from participating in any public procurement tenders in their respective provinces for one year.

          F.    JAPAN

2015 opened with a setback for companies who are the subject of investigations conducted by the Japanese competition authority.[263] A government advisory panel failed to endorse several proposed changes that would have reformed how the Japanese Fair Trade Commission (JFTC) conducts investigations, although it did suggest that the JFTC develop a set of best practices as it moves forward.  Even as the panel endorsed the JFTC’s current practices for the conduct of dawn raids, so far this year the JFTC has only utilized raids in two industries.  In one,  the JFTC raided twenty different roadbuilding companies over the course of two days in January amid accusations of bid-rigging in the wake of the 2011 tsunami.[264]  The JFTC later confirmed that it would refer the case for criminal charges.  In May, the JFTC conducted raids on five makers of wallpaper accused of price fixing; there is no word regarding criminal charges.[265]

To date in 2015, the JFTC has issued fines totaling ¥1.2 billion ($9.8 million).  The lion’s share of the fines–¥1.18 billion ($9.6 million)–were imposed in March on a series of agricultural cooperatives that engaged in bid-rigging for “country elevators,” which are akin to silos.[266]  In January, the JFTC had previously issued a cease-and-desist order to the JA Fukui Prefectural Economic Federation of Agricultural Cooperatives for similar conduct, but did not impose a fine.[267]

The remaining cease-and-desist orders were issued in three industries.  In January, the JFTC announced a fine of almost ¥5.9 million ($48,000) against the Abashiri Concrete Products Association for engaging in market allocation practices in the sale of molded concrete products.[268]  In February, the JFTC ordered an association of concrete manufacturers to cease anticompetitive conduct–such as punishing purchasers who buy concrete from manufacturers who are not members of the association–but did not issue a fine.[269]

In January, the JFTC slapped two companies, Narasaki Sangyo Co. Ltd. and Hokkaido Hitachi with fines totaling ¥16.55 million ($135,000) for rigging bids for construction services for agricultural air conditioners.[270]  Lastly, in April, the JFTC issued cease-and-desist orders to two pilots’ associations that allegedly restrained their members’ ability to enter into contracts.[271]

Finally, as we reported in our 2014 Year-End Criminal Antitrust Update, the trial of NTN Corp. for bid rigging in the bearings industry concluded in Tokyo District Court in November 2014.  On February 4, 2015, the court sentenced NTN to a fine of ¥400 million ($3.3 million) and sentenced two former executives to suspended prison sentences of 18 and 12 months.[272]  NTN appealed immediately.

          G.    MALAYSIA

The Malaysia Competition Commission (MyCC) had a busy first half of the year, announcing decisions or proposed decisions in three different price fixing investigations.

On March 3, 2015, MyCC announced a decision against twenty four members of the Sibu Confectionery and Bakery Association (SCBA), finding that fifteen members had engaged in price fixing.  Last year, the SCBA was found to have fixed prices of confectionary and bakery products in the Sibu area.  Most of the fifteen violators of the Act faced financial penalties, totaling RM247,730 (approximately $65,000), except one that “generated an insignificant amount of total turnover during the infringement period.”[273]

On March 6, 2015, MyCC announced that it had issued a decision against twenty five ice manufacturers who had agreed to fix prices of edible tube ice.  All twenty five manufacturers paid a penalty, with penalties ranging from RM1,200 (approximately $320) to RM106,000 (approximately $28,000).[274]

On June 21, 2015, MyCC announced that it had issued a proposed decision against four shipping container depot operators and an information technology provider for price fixing related to the provision of storage maintenance and handling services for empty containers in the port of Penang.  The targets are operators Ayza, ICS Depot Services, EAE Depot & Freight Forwarding, and Prompt Dynamics, as well as IT company Containerchain.  MyCC proposes to impose financial penalties and other remedies on each company, and may do so up to 10% of each company’s worldwide revenue.[275]

          H.    NEW ZEALAND

As previously reported in our 2014 Year-End Criminal Antitrust Update, New Zealand is considering amending its anti-cartel laws.  In March 2015, a Supplementary Order Paper was introduced that proposed a nine-month transitional period following the enactment of the proposed Bill, during which time the current rules regarding price fixing and exemptions will continue to be enforced.[276]

          I.    PAKISTAN

The Competition Commission of Pakistan (CCP) heightened its focus on anti-cartel investigations and enforcement of Pakistan’s Competition Act after the government appointed Chairperson Vadiiya Khalil and one other new member to the CCP in December 2014.  The CCP had previously consisted of three members rather than the legally-required five.[277]

In April 2015, the CCP fined the Pakistan Automobile Manufacturers Authorized Dealers Association PKR 140 million (approximately $1.4 million) for (1) setting prices for body repairs and paint jobs (a PKR 100 million fine), (2) prohibiting discounts for genuine spare parts (a PKR 25 million fine), and (3) limiting the job mobility of sales and technical employees (a PKR 15 million fine).  As we reported in our 2014 Year-End Criminal Antitrust Update, the CCP had issued show-cause notices regarding this conduct in October 2014.[278]

Earlier in April 2015, the CCP announced it had initiated ten cartel-related inquiries since the appointments to the CCP in December 2014.[279]  The CCP has disclosed investigations into possible cartels in markets for natural gas liquids, cement, poultry feed, broadcasting, and essential food commodities.[280]

          J.    PHILIPPINES

As we reported at the end of last year,[281] the Philippines is in the process of revamping its competition laws.  As of June 23, 2015, “the Philippines is expected to introduce a sweeping new antitrust regime with the ratification of a bill by Congress that implements formal competition safeguards, including criminalization, and creates an enforcer for the first time. . . . The new regime will also create the Philippine Competition Commission, a quasi-judicial body tasked with implementing and enforcing national competition policy.  The Commission will be led by a chairperson appointed on a six-year term, together with four commissioners.”[282]  The new law would also give the Commission powers to fine, imprison, and impose criminal and civil sanctions.

In January 2015, the Philippines Department of Justice announced that, in addition to facing an investigation into possible price fixing of the garlic industry, producers were suspected of manipulating onion prices.  The investigation into the garlic industry “began last summer when the Department of Justice’s office for competition was ordered by Filipino president Benigno Aquino to investigate the garlic industry after prices jumped to almost 300 pesos ($6.63) a kilo, a 74 per cent annual increase and more than a 100 per cent increase from the average price, according to several local press reports.”[283]  Notably, the former director of the Bureau of Plant Industry, Clarito Barron, and Vieva Phils. Chairman Lilia Cruz have been accused of participating in garlic-related collusion.  In addition to the ongoing competition law investigations, the National Bureau of Investigation has also filed criminal complaints against Cruz and Barron for violation of the Anti-Graft and Corrupt Practices Act.[284]

          K.    SINGAPORE

In May 2015, the Competition Commission of Singapore (CCS) issued a Proposed Infringement Decision (PID) against ten financial advisory companies for pressuring another company, iFAST Financial Pte. Ltd. (iFAST) to withdraw a consumer offering.  CCS provisionally found that the ten companies agreed to apply pressure on iFAST and were successful in getting it to withdraw its offering.  CCS is in the process of making its final decision on this matter, after considering the parties’ submissions.[285]  This is believed to be the first time the CCS has issued a PID against financial companies.

The CCS also launched two significant cartel investigations.  In February 2015, the CCS began reviewing petrol prices.  The CCS “ordered the country’s four petrol companies to give explanations for their most recent price increases.  The matter, which remains an informal study and is not an investigation, follows Shell, Caltex, ExxonMobil and Singapore Petroleum Company’s decisions to raise petrol prices above the government-mandated increase.”[286]

Also, in March 2015, the CCS began investigating poultry slaughterhouses for alleged price fixing.  Reportedly the CCS has contacted ten members of Singapore’s Poultry Merchant’s Association “to explain their pricing strategies.”[287]

          L.    SOUTH KOREA

In late 2014, as previously reported in our 2014 Year-End Criminal Antitrust and Competition Law Update, new Korean Fair Trade Commission (KFTC) Chairman Jeong Jae-chan vowed to increasingly target and punish international cartels with significant impacts on Korean markets.[288]  Thus far in 2015, Chairman Jae-chan has followed through.

The KFTC has also imposed large penalties for collusion in the automotive parts industry during the first half of 2015.  In late March, South Korean regulators fined two Japanese-based companies 3.5 billion won (approximately $3.1 million) for colluding to keep prices of exhaust gas temperature sensors at set levels.[289]  And in May, the KFTC set penalties of approximately 7.5 billion won (approximately $6.6 million) against German and Japanese auto bearing manufacturers for agreeing on prices from 2001 to 2008.[290]

The KFTC also recently joined the global probe into the alleged manipulation of certain foreign exchange markets.  In June 2015, Chairman Jae-chan announced to the Korean National Assembly that the KFTC was launching an investigation into potential harm to Korean markets caused by the alleged conduct.[291]  Though he did not name the banks specifically, according to press reports, they are believed to be JPMorgan, Barclays, Bank of America, Citigroup, the Royal Bank of Scotland, and UBS.[292]

The KFTC has also continued to aggressively investigate and sanction numerous companies for domestic bid-rigging, particularly in the construction industry.  In January, the KFTC issued a sanction of over 3 billion won (approximately $2.6 million) against five construction companies for bid-rigging in relation to the construction of a waste water discharging facility and an energy facility.[293]  In February, the KFTC imposed sanctions of over 7 billion won (approximately $6.2 million) against four construction companies for rigging bids for the construction of biomass energy and sewage disposal facilities,[294] and it imposed fines of approximately 12 million won (approximately $10,600) against two companies for bid-rigging with regard to insulation materials ordered by a power company.[295]  In March, the KFTC imposed fines of over 10 billion won (approximately $8.8 million) against three companies for setting pre-agreed bidding prices for the construction of a multipurpose dam.[296]  And in May, seven insulated pipe manufacturers were fined over 10.2 billion won (approximately $8.8 million) for agreeing in advance on bid prices in a total of 85 different tenders for various construction projects.[297]  Together these investigations resulted over 30 billion won (approximately $26.4 million) in fines.

In late December 2014, the KFTC updated its laws and guidelines with an eye toward compatibility with global markets and current enforcement trends.  In particular, the KFTC announced a draft bill to amend its Fair Trade Act to add provisions intended to enhance fairness and transparency in investigations while strengthening rights of defense.[298]

          M.    TAIWAN

In January, the Taiwanese Legislative Yuan approved significant amendments to the Taiwan Fair Trade Act, changing the country’s antitrust enforcement regime across a broad range of areas, including merger control, cartel enforcement, and unfair competition.  Most significantly, the Taiwan Fair Trade Act of 2015 states that, in the context of parallel business conduct, a conspiracy “may be presumed by considerable factors, such as market condition, characteristics of the good or service, cost and profit considerations, and economic rationalization of the business conduct[].”[299]

The amendments also increased penalties in cartel and anticompetitive practices cases, which may be punished by up to two years in prison and/or a fine of up to NTD50 million (approximately $1.6 million), though fines remain capped at 10% of the violating enterprises’ sales revenues for the last fiscal year.[300]  The statute of limitations for criminal violations was increased to five years.[301]

IV.    MIDDLE EAST

          A.    ISRAEL

In 2015, Israel has not seen any significant cartel-related announcements, potentially due to disagreements that ultimately resulted in changes in leadership at the Israel Antitrust Authority (IAA) this spring.  Specifically, in May 2015, the IAA’s Director General, David Gilo, resigned amidst internal disputes about the future of Israel’s natural gas market.[302]

The dispute stemmed from a 2014-15 IAA investigation into whether several natural gas companies’ regional market dominance constituted a restrictive arrangement under Israeli competition law.  Following the discovery of the Leviathan basin, Israel’s largest natural gas reservoir, several natural gas companies proposed a joint venture that would allow them to jointly develop the Leviathan basin without running afoul of competition law.  The draft agreement required the natural gas companies to downsize their other reservoir holdings, but permitted them to continue to cooperatively sell Leviathan gas at market.  Gilo opposed the deal, calling it “anticompetitive,” while threatening to declare the companies a cartel and pursue criminal sanctions.[303]  Rather than attempting to unilaterally impose competition sanctions against the government’s will, Gilo instead announced that he planned to leave his post of four and a half years.  Gilo’s resignation will take effect at the end of August 2015.[304]  Following that resignation announcement, the Israeli cabinet voted to exempt the joint venture from competition laws on national security grounds for a period of 15 years.  That decision must be approved by the Knesset.[305]

          B.    OMAN

In early 2015, the Sultan Qaboos bin Said publicly released a decree approving the Competition Protection and Monopoly Prevention Law.[306]  The terms of the new law address both cartel conduct and abuse of market dominance.[307]  Article 9 limits the types of restrictive agreements into which companies may enter.[308]  It forbids agreements that rig bids, allocate market or customer shares, fix prices, arrange group boycotts, or skew the supply of a given good, either by flooding the market or by restricting output.[309]  It also prohibits market-dominant companies from engaging in certain unilateral anticompetitive conduct.[310]  Under the new competition regime, violators face a range of penalties, including imprisonment up to three years and/or monetary penalties up to ten percent of the annual sales of the product in question.[311]  In addition, the Public Authority for Consumer Protection (PACP) may impose administrative fines of up to 5,000 Omani rials (approximately $12,000) with additional fines if the violation recurs.[312]  Finally, the law itself provides for the promulgation of related executive regulations, but these are still forthcoming.[313]  Soon after the law’s approval, the PACP held a two-day workshop on the new law to familiarize consumer protection departments and PACP employees with the way the law works.[314]  Participants at the workshop also discussed the future strategy of the Competition department.

          C.    SAUDI ARABIA

Last year, Royal Decree No. M/24 amended Articles 12 and 15 of Saudi Arabia’s Competition Law to impose harsher penalties, including fines based on the revenue of the offending business, disgorgement of profits obtained through illegal conduct, and suspension or revocation of business licenses of serial offenders.[315]

In June 2015, Saudi Arabia undertook further measures to enhance compliance with the Competition Law by unveiling new competition guidelines in the form of three guidebooks and four brochures.[316]  The first guidebook advises companies on how to comply with Saudi competition law.[317]  The second guidebook, drawing on material from the United Nations Conference on Trade and Development, provides case studies from Saudi Arabia and other similar jurisdictions to describe situations in which information exchanges between competitors may qualify as anticompetitive conduct.  The third guidebook, based on the OECD’s guidelines on bid rigging, instructs government officials on how to combat collusion and bid rigging in public procurement and government contracts.  The Saudi Council of Competition did not elaborate on the contents of the four brochures.[318]

          D.    TURKEY

Turkey aggressively enforced the Act on the Protection of Competition in the first three months of 2015 before the departure of three board members in April.  On January 14, 2015, the Turkish Competition Authority (TCA) concluded an investigation of nineteen driving courses accused of collusion and price fixing.[319]  After determining that twelve of the nineteen driving courses signed an agreement to fix prices, the TCA levied administrative fines pursuant to Article 4 of the Act on the Protection of Competition.  On April 10, 2015, the TCA completed a preliminary inquiry involving alleged price fixing among five ready-mixed concrete producers.[320]  The TCA concluded that the findings justified a formal investigation to determine whether the companies violated Article 4, which prohibits anticompetitive practices such as price fixing.

However, that strong start halted in April after the departure of three board members, which left the TCA without the necessary meeting quorum to issue final decisions on enforcement matters.[321]  The TCA did not fill the three vacancies until June 24, 2015, resulting in a three-month period during which the TCA was essentially defunct for the first time in its eighteen-year history.

We reported in our 2014 Mid-Year Criminal Antitrust and Competition Law Update the proposal of a draft law to amend Turkey’s twenty-year-old competition law.  That legislation would usher in significant changes to the Turkish competition regime.  However, due to the 2014 national elections, that bill continues to languish in Turkey’s Parliament.[322]  Now that those elections are complete, there is some hope that the new general assembly will take up the issue of modernizing Turkey’s competition regime.

V.    AFRICA

          A.    BOTSWANA

The first half of 2015 witnessed moderate activity from Botswana’s competition authorities.  Responding to a previous investigation finding the existence of an anticompetitive exclusive agreement between a shopping mall owner and an anchor tenant, the Competition Authority (CA), Botswana’s competition enforcement body, began a nationwide study to determine how shopping mall tenants obtain space, how owners set rental prices, the number of shops competing with anchor tenants, and other competition complaints or concerns.[323]  The CA hopes this market inquiry into the state of competition in the retail property market will ferret out illegal, anticompetitive contracts that allow anchor tenants to exclude competitors from opening businesses in the same shopping mall.

The CA also implemented education programs and deepened cooperation with South Africa’s Competition Commission.  In January 2015, as part of its Youth Development Fund, a government program that allocates funds for young people to start their own businesses, the CA spoke about how to recognize and report anticompetitive behavior, with a particular emphasis on price fixing, bid rigging, and market and customer allocation.[324]  In March 2015, the CA hosted South Africa’s Competition Commission in order to build rapport among staff and enhance cooperation on various matters such as post-merger impact assessments, cartel investigations, and evidence gathering techniques.[325]

On May 12, 2015, Botswana’s Competition Commission (CC), the adjudicatory body for competition cases, dismissed an ongoing case against Creative Business Solutions and Rabbit Group for the possible bid rigging of a 114 million pula (approximately $11.6 million) tender awarded by the Ministry of Local Government for the provision of sugar beans to schools across the country.[326]  The CA alleged that the two companies agreed to divide the bid between themselves, with one company supplying the north and the other company supplying the south.  In May, the CC dismissed the case on procedural grounds, finding that it lacked jurisdiction because the CA referred the case outside the prescribed time as outlined in the Competition Act.[327]

          B.    EAST AFRICAN COMMUNITY

As reported in the 2014 Year-End Criminal Antitrust and Competition Law Update, the East African Community (EAC) Competition Act of 2006 was slated to become operational in December 2014.[328]  The Act’s implementation, however, has again been delayed until at least July 2015.[329]  As of March 2015, the EAC member states are still drafting amendments to the EAC Competition Bill, though the contents of those amendments are unknown.[330]

          C.    KENYA

In April 2015, at the Ministry of Agriculture’s request, the Competition Authority of Kenya (“CAK”) began an investigation into alleged price fixing by maize traders and millers, after a sharp spike in flour prices.[331]  Both the Consumer Federation of Kenya and the Cereal Growers Association have expressed dissatisfaction with millers’ behavior, and have alleged that leading millers are manipulating the flour market.

Also in April, the CAK announced plans to crack down on anticompetitive practices in trade associations starting in June 2015, by requiring certain trade associations to hire third parties to examine their business practices.[[332]  This requirement–described as a Special Compliance Process by the Director General of the CAK–targets the agriculture, agro-processing, and financial sectors.  Those sectors were selected based on the number of trade associations in those areas and their importance to the nation’s GDP. Some of the targeted groups include the East African Tea Trade Association, the Cereal Millers Association, and the Kenya Bankers Association.  Groups who refuse to examine their practices will be subject to investigation and, if violations are discovered, potential criminal sanctions.[333]

          D.    MOROCCO

Events in 2014 purported to bring a sea-change to Moroccan competition law.  In July 2014, Morocco enacted Laws No. 104-12 and No. 20-13, which were expected to transform the Moroccan Competition Council (“CC”) from an advisory committee to an independent regulatory authority empowered to investigate and sanction anticompetitive practices.  The Laws permit the CC to criminally punish anticompetitive horizontal arrangements, including cartels, market sharing, bid rigging, and restrictions to market access or production.[334]

The Laws came into force in December 2014 when the primary implementing regulation was enacted and published.[335]  During the first half of 2015, however, the Laws remained essentially inoperative, as the five-year decree providing for the Council members’ appointment had expired in October 2013 and has not since been renewed.[336]  As a result, there is as of yet no meaningful progress to report in Morocco’s anti-cartel enforcement.

          E.    TANZANIA AND MALAWI 

In late December 2014, Tanzania’s Fair Competition Commission signed a Memorandum of Understanding with Malawi’s Competition and Fair Trading Commission in Dar es Salaam, Tanzania.  The two countries agreed to cooperate on competition policy, participate in staff exchanges, and share information regarding competition and consumer protection issues.[337]

          F.    SOUTH AFRICA

                    1.    Investigations

In March 2015, the Competition Commission (CC) raided six companies that sell fire control and protection systems as part of its investigation into possible industry-wide collusive conduct, including bid rigging.[338]  Two months later, in May, the CC launched a price fixing investigation related to alleged coordination of currency exchange rates involving the South African rand by a number of financial and banking institutions.  According to Competition Commissioner Tembinkosi Bonakele, “[c]onduct of this nature distorts the price of foreign exchange and artificially inflates the cost of trading in foreign currency paired with the South African rand.  Indications are that this conduct was prevalent offshore, but with this investigation we are sending a clear message that we will pursue cartels affecting South Africa wherever they take place.”[339]

                    2.    Charges

The CC remains aggressive in enforcing competition laws within South Africa.  This year has seen a spate of charges related to domestic collusion and, accordingly, the CC has referred multiple cases to the Competition Tribunal.  In February, the CC referred a complaint against a cement company for price fixing and market division following a five-year investigation of the country’s four main cement producers (the other three cement producers settled with the CC in 2011 and 2012).  The CC sought the maximum statutory penalty in its referral: 10% of the cement company’s annual turnover, plus an order from the Tribunal that the company contravened the Competition Act.[340]

A month later, in March 2014, the CC referred three cases to the Tribunal against a construction company.  The CC alleged that the charged construction company had entered unlawful agreements with other entities regarding the submission of bid prices, and again sought the maximum penalty of 10% of the company’s annual turnover for each of the alleged three infractions.[341]

In May, the CC referred four more cases to the Tribunal.  The first was against a pair of auto body repairers for price fixing, market division, and collusive tendering, following a year-long investigation which, among other things, involved raids on the companies’ premises.[342]  The second case charged a pair of curio stores with bid rigging.  In the third case, the CC referred a group of plastics companies to the Tribunal for alleged market division, and the fourth case involved a pair of furniture removal companies charged for collusive tendering following an investigation against 69 furniture removal companies.[343]

Most recently, in June, the CC referred a number of additional companies to the Tribunal.  The largest series of referrals addressed five additional furniture removal companies, each of which is accused of price fixing, division of markets, and collusive tendering.  The CC also referred a pair of safety training companies for alleged price fixing and a pair of metal-goods manufacturers for alleged collusion to divide markets and customers.[344]

No orders have yet been issued in connection with any of these referrals.

                    3.    Other Developments

At the end of March, the CC appointed Bukhosibakhe Majenge as the new Divisional Manager of Legal Services starting April 1, 2015.[345]  Mr. Majenge has worked for the CC for over seven years.  In June, the CC published “the draft Terms of Reference for [its] Grocery Retail Sector Market Inquiry for public comment” in the Government Gazette.  The Inquiry is expected to cover, among other topics, “the dynamics of competition between local and foreign owned small and independent retailers.”[346]