Cartel crackdowns: are you on top of the latest enforcement trends?
In response to the decline in leniency applications and cartel cases worldwide, competition authorities are becoming more aggressive in investigating cartels. This article examines the trends and emerging areas of antitrust enforcement that businesses need to be aware of, as well as what is expected to happen in 2023.
The carrot and the stick: trends in regulation and enforcement
As leniency applications continue to decline, several jurisdictions have stepped up their leniency offerings in 2022: the European Commission (EC) has updated its online leniency tool; Hong Kong has published its revised leniency policy with improved incentives for individual whistleblowers; and Cyprus revised its leniency policy.
Many jurisdictions also proactively expanded the investigative and enforcement powers of their competition authorities. In 2022 Greece amended its competition law, strengthening the ability of the Hellenic Competition Commission to issue interim measures, request information and explanations and penalize non-cooperation.
Meanwhile, in the United States, the Department of Justice’s (DOJ) Antitrust Division has expanded its litigation capacity and is pursuing a record level of grand jury investigations. However, success has been mixed, with several high-profile losses including two court cases in a poultry sector price-fixing case.
Private litigation has been on the rise across Europe: in 2021 Italy introduced new rules to encourage class action lawsuits and in 2022 a Spanish court saw a record lawsuit for €500 million in damages. This trend follows a series of penalties against the truck Cartel: The UK Competition Appeal Tribunal recently ordered truck manufacturer DAF to pay £17.5 million in damages.
The changing digital landscape: new opportunities for cartels and enforcers
Digitization has opened up new avenues of collusion for businesses and authorities are beginning to take action. Article 9 of China’s recently amended Antimonopoly Law prohibits the use of algorithms to facilitate antitrust activities. Canadian officials have also indicated their intention to investigate algorithmic behavior and other digital-related issues.
However, authorities are also looking for digital solutions for investigation and enforcement. In February 2023, the US Federal Trade Commission (FTC) announced its new Office of Technology, which will support the FTC’s antitrust enforcement efforts by providing technological expertise, developing investigative techniques, analyzing data, and more.
Digital screening tools are expected to become more popular and integrate new technologies such as artificial intelligence. Australia, New Zealand, South Korea and Singapore, among others, use bid-fixing detection programs in public tenders, while the European Commission has hired data scientists to analyze data for indicators of cartel activity.
Areas to watch in 2023
2023 will see regulatory reforms taking a more stringent approach in several jurisdictions. The Indian government is currently considering the Competition (Amendment) Bill 2023: Proposals include expanding the scope of cartel prosecutions to non-participants who “were intended to participate” and imposing penalties based on global sales.
The European Commission has resumed its dawn raid following its COVID-19 shutdown and expects more activity in the future, according to Competition Commissioner Margrethe Vestager. In 2023, it will be crucial for companies to be aware of the risk of home raids and to develop a coordinated strategy.
Horizontal agreements in the labor market are an emerging focus. In late 2022, the US Department of Justice saw its first successful prosecution over a wage-fixing United States v VDA OC, LLC and law enforcement agencies have indicated that employment contracts remain a high priority. Canada is on the same page as new bans on wage setting and non-solicitation agreements come into effect in June 2023.
Sustainability agreements are another area of development, with the European Commission currently working on draft horizontal guidelines that will include antitrust exceptions for certain agreements. There is no such exception in the US, and Republican-led scrutiny of sustainability agreements is increasing. However, horizontal agreements to limit environmental, social and governance (ESG) measures have also been penalized: in 2021, the EU fined a group of automakers €875 million for delaying the development of emissions-reducing technology so as not to compete with each other.
For an in-depth analysis of trends and developments in antitrust regulation and enforcement, see our recently published Antitrust and leniency checks.
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