Aggressive EU Enforcement Drives Increase in Global Cartel Fines Total for 2016

The European Commission imposed $4.09 billion in fines in 2016 – its largest total ever – driving up overall global cartel fines figures by over a billion dollars for the year compared with 2015, according to Allen & Overy’s Global Cartel Enforcement Report, published today. Despite the lowest annual fine levels in a decade from the US, total global fines for 2016

Despite the lowest annual fine levels in a decade from the US, total global fines for 2016 totaled $6.68 billion, compared to $5.2 billion in 2015.

After a slow start to 2016, the European Commission went on to levy a record fine for cartel activity in the auto sector for a combined total of $3.2 billion.

Other key enforcers contributing to the overall increase in fine totals include the Korea Fair Trade Commission, which topped APAC enforcers with $765 million in fines for manufacturing-related cartels, and the South African Competition Commission which levied its largest-ever single fine of $111 million for cartel activity in the steel and scrap metal industries.

In contrast, the fine total from the Department of Justice’s Antitrust Division in the US dropped significantly in FY2016 to $387 million from the high of $2.85 billion in FY2015. (2016 US statistics are for the US fiscal year to date, which began 1 October 2015. All other countries’ statistics cover the 2016 calendar year.)

FY2015, however, was a particularly high total attributable to the conclusion of the FX market investigations. Another modest enforcement year is expected from the Antitrust Division in 2017, as its public investigations focus on more tailored markets and it faces the prospect of engaging in protracted litigation in connection with recently indicted cases.

John Terzaken, partner and head of the cartel enforcement practice at Allen & Overy, said: “Once again, prosecutions across the globe were the overarching theme of cartel enforcement in 2016.

“Mature and developing competition authorities alike demonstrated an appetite for substantial fines and aggressive enforcement, leading to a 20% increase in the total fines levied this year compared to last.

“But 2016 comes to a close among swirling political winds that warn of more inwardly focused, nationalistic times to come. The new political headwinds against globalisation suggest that co-operations could be scaled back, which could change strategic decision-making for multinationals. And cartel enforcement is likely to be no exception. While any changes are unlikely to result in less cartel enforcement, evolving views on jurisdiction, comity and adequate deterrence will no doubt pose new challenges for authorities seeking to co-ordinate, and thus for companies trying to navigate, global cartel investigations.”

“While any changes are unlikely to result in less cartel enforcement, evolving views on jurisdiction, comity and adequate deterrence will no doubt pose new challenges for authorities seeking to co-ordinate, and thus for companies trying to navigate, global cartel investigations.”

An overall increase in cartel enforcement activity is expected in 2017, most notably in Brazil, South Korea and the EU.

Brazil’s Council for Economic Defense is expected to post substantial fines in 2017 following reports of a heavy on-going case-load, which includes 30 active investigations linked to Operation Car Wash, the investigation and prosecution of corruption and collusion in Petrobras contracting, and an anticipated 300% increase in leniency applications in 2016 compared to 2015.

Furthermore, the Korea Fair Trade Commission is also expected to continue its aggressive fining streak – which resulted in a 55% increase in fines imposed this year – with the authority vowing to increase monitoring of cartel-related activity, particularly in the intermediary goods, commodities and public sectors.

Finally, in the EU, significant fines from the European Commission are anticipated again in 2017. This is likely to be the result, in large part, of the Commission’s numerous reported but as yet unresolved financial services investigations.

(SOURCE: AllenOvery)