Global firm urges in-house teams to be alert as cartel fines rise worldwide

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A global law firm is urging in-house legal teams to be more vigilant as cartel fines rose worldwide in 2016.

Peter McDonald, partner and head of the Asia-Pacific (APAC) competition team at Allen & Overy, told Australasian Lawyer that burgeoning penalties and possible jail time mean in-house legal teams have to step up.

“Aggressive cartel enforcement is not new, but the fines are ever increasing and risks of criminal allegations and jail time means a strong compliance culture is critical,” McDonald said.

A report from the top firm notes that APAC cartel enforcement – buoyed by a substantial upturn in fines levied by the Australian, Japanese and South Korean authorities – is contributing to the global trend of higher fines.

The firm sees Australia getting ready to impose higher cartel fines this year as the country displayed more aggressive enforcement last year. From no court-imposed fines in 2015, the Australian Competition and Consumer Commission (ACCC) obtained four fines last year for a total of US$39 million. Furthermore, last year saw the first criminal cartel cases – expected by the firm to become a regular occurrence in Australia – brought to court in the country.

Global fines totalled US$6.68 billion last year, up 20% from US$5.2 billion the previous year. European authorities levied the most with US$4.09 billion in fines imposed, followed by India with US$941 million, South Korea with US$765 million, the US with US$387 million, Brazil with US$231 million, South Africa with US$111 million and Japan with US$84 million.

“In-house legal teams should make sure they have undertaken a considered risk assessment, looking at which parts of the business have contact with competitors or where other aspects of industry structure could give rise to material concerns,” McDonald said.

“Tailored compliance efforts and systems can then assist key individuals in reducing the risks.  An ‘off the shelf’ or ‘tick a box’ approach to compliance is probably not sufficient,” he added.

The whole Asia-Pacific region is expected by the global firm to continue to push for a more stringent approach to cartels.

“In APAC we are seeing more mature authorities like the ACCC and KFTC pushing for significantly higher penalties and pursuing criminal prosecutions. At the same time, developing APAC competition authorities in Indonesia, Singapore and Pakistan are becoming more active, while new enforcement regimes in Hong Kong and the Philippines are preparing to cut their teeth in cartel actions,” McDonald said.

He added that an overall global increase in cartel enforcement activity is expected again this year.

"The scene is set for APAC enforcers to play an even larger role,” he said.
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