RegionsEEAAnti-cartel fines ‘hit nearly US$6.7bn in 2016’

Anti-cartel fines ‘hit nearly US$6.7bn in 2016’

Global fines relating to anti-cartel activity rose by 28% last year, with the EU pushing the figure higher.

Higher penalties imposed by the European Union (EU) pushed the global total for fines imposed on cartels to US$6.68bn (£5.5bn, €6.34bn) last year, up 28% from the 2015 figure of US$5.2bn according to an estimate from law firm Allen & Overy.

Of the 2016 total, US$4.09bn related to penalties for cartel involvement imposed by the European Commission (EC), which drove the figure higher despite a sharp drop in fines imposed by the US Department of Justice (DoJ).

Most of the EC figure came from a US$3.2bn penalty imposed on a group of five truck producers – Iveco, DAF, Volvo/Renault, Daimler and MAN – which allegedly collaborated for 14 years in fixing prices and passing on the cost of environmental compliance to consumers.

Brussels also imposed fines totalling US$$521m on Crédit Agricole, HSBC and JP Morgan Chase to settle charges that they manipulated the Euro Interbank Offered Rate (Euribor).

By contrast, the US DoJ’s antitrust division imposed total fines of just US$387m in its 2016 financial year, an 86% drop from US$2.85bn in 2015, when the department imposed major fines for foreign exchange (FX) fixes.

Allen & Overy expects cartel activity fines to increase further in 2017, with major contributions from Brazil, South Korea and the European Union (EU). The prediction for Brazil is based on a recent flurry of investigations, including probes linked to the corruption scandal at state-owned oil producer Petroleo Brasileiro, aka Petrobras.

South Korean regulator the Korea Fair Trade Commission (KFTC) has recently  increased its monitoring of cartel-related activity, while the EC still has a number of open cases to conclude, especially in the area of financial services.

However, the law firm notes that shifts in the political landscape in 2016 could create obstacles for regulators seeking to work together across borders to stop cartels.

“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,” said John Terzaken, partner and head of the cartel enforcement practice at Allen & Overy.

“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.

“If history is any guide, the next US administration will likely continue the trend of aggressive enforcement of the criminal antitrust laws, including the emphasis on pursuing individual executives.

“What may change given the more nationalist agenda proposed by the next US administration, however, is the amount of energy and resources that will be committed to cooperation efforts with authorities in international cartel enforcement cases. Such a shift would pose new challenges for multinationals navigating global cartel investigations.”

Whitepapers & Resources

2021 Transaction Banking Services Survey

Banking 2021 Transaction Banking Services Survey

CGI Transaction Banking Survey 2020

CGI Transaction Banking Survey 2020

TIS Sanction Screening Survey Report

Payments TIS Sanction Screening Survey Report

Enhancing your strategic position: Digitalization in Treasury

Payments Enhancing your strategic position: Digitalization in Treasury

Netting: An Immersive Guide to Global Reconciliation

Netting: An Immersive Guide to Global Reconciliation