A recent report from Biglaw firm Allen & Overy has highlighted a substantial increase in global cartel fines during 2016, driven in no small part by ‘vigorous’ enforcement efforts in the European Union. Last year, the European Commission handed down US$4.09 billion worth of enforcement penalties – the largest ever total recorded by the historically hardline antitrust watchdog. Elsewhere, the Korea Fair Trade Commission came out swinging with $764.81 million worth of fines, the largest amount collected by any national watchdog in the Asia-Pacific, while the South African Competition Commission handed down the single largest cartel fine in its history – a $110.7m settlement with the South African arm of Luxembourg-based steel manufacturer ArcelorMittal. Worldwide, the total value of cartel fines has lifted from $5.2bn to $6.7bn year-on-year.
Globalisation vs. nationalism
Allen & Overy global head of co-trust John Terzaken points out the continued commitment to cooperation between enforcement agencies across the globe as one of the driving factors behind the growing zeal and effectiveness of enforcement actions. However, with both Europe and the United States caught up in ‘swirling political winds that warn of more inwardly-focused, nationalistic times to come,’ Allen & Overy has predicted that an accelerating backlash against globalisation may in-turn have implications for global antitrust enforcement efforts in 2017. ‘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 coordinate, and thus for companies trying to navigate, global cartel investigations.’
In-house lawyers warned
With shifting political landscapes likely to shake-up antitrust regulation and enforcement around the globe, and with enforcement agencies handing down larger penalties than ever before, only the most watertight compliance efforts will suffice. ‘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,’ Allen & Overy APAC competition head Peter McDonald told Australasian Lawyer. ‘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.’