A sign advertising U.S. dollar, euro, pound sterling and swiss franc exchange rates on Tuesday, Dec. 27, 2016. Photographer: Akos Stiller/Bloomberg
A sign advertising U.S. dollar, euro, pound sterling and swiss franc exchange rates on Tuesday, Dec. 27, 2016. Photographer: Akos Stiller/Bloomberg

U.S. Bucked Rest of World on Antitrust Enforcement in 2016

It was a record year for antitrust cartel enforcement in 2016, with $6.7 billion in total fines levied — but not in the U.S., which had its slowest year in a decade, according to a new report.

Even as the European Union levied a record $4.1 billion in antitrust fines, the U.S. Department of Justice’s Antitrust Division’s total fines nosedived to $387 million in 2016 — down from a record $2.85 billion in 2015.

For context, that’s less than India’s $941 million, and less than South Korea’s $765 million.

The numbers come courtesy of Allen & Overy, which on Thursday released its annual report on global antitrust enforcement that looked closely at ‘cartel’ enforcement, or cases involving market manipulation and price-fixing — as opposed to antirust review of mergers.

One reason cited in the report for 2015’s spike in U.S. cartel enforcement related to the spate of foreign exchange, including LIBOR cases. Those cases involved the financial services sector and the money at stake was far larger than in other sectors, but they were resolved in 2015.

John Terzaken, co-head of Allen & Overy’s global competition practice, predicted U.S. antitrust enforcement is unlikely to surpass $1 billion in 2017.

Per U.S. Department of Justice policy, the antitrust division has prioritized cases against senior executives who condoned, participated in or directed cartel conduct; Terzaken predicted those cases — unlike a case against a corporate entity — create “protracted” litigation that consumes resources.

“When you indict an individual, normally you need to try that individual, which takes resources,” he said.

He added, “Corporations are unlikely to want to bring a case to trial, whereas an individual whose liberty is at stake will want to try the case.”

Looking ahead, Terzaken said the nationalism that brought President-elect Donald Trump to office and lead Britains to vote to exit the European Union could point to a change in antitrust enforcement. For the past eight years, there’s been strong international cooperation and countries could count on a coordinated approach by different antitrust authorities around the world, he said.

“What you might find is dis-aggregation,” he said. “Each country will do what it wants to do and focus less on coordination. It’s a much more difficult environment to navigate, because rather than having a [coordinated] global enforcement regime, you are now going to have to deal with each authority piecemeal.”

The Trump administration has not yet disclosed who it will choose to lead the DOJ’s Antitrust Division, but Hunton & Williams’ David Higbee, a former DOJ antitrust attorney, and George Mason University School of Law’s Josh Wright, a former Federal Trade Commissioner, are both on the transition team, according to news reports.

Elai Katz, head of Cahill Gordon & Reindel’s antitrust practice, predicted that change around cartel enforcement would be minimal under a new administration.

“It remains to be seen what they put in place,” said Katz. “While I anticipate some changes, certain aspects of antitrust enforcement like cartels will likely remain more or less the same.”

Katz said that many of the attorneys working on cartel investigations are civil servants and unlikely to leave with a new presidential administration. “The change I anticipate will be on the margins,” he said.

Around the globe, there could be some key changes in cartel enforcement.

Terzaken said the European Commission has been investigating the foreign exchange manipulation for several years, and could bring those cases in 2017.

There’s also a question about whether the U.K. will step up its own independent antitrust competition enforcement given the country’s exit from the European Union.

“My sense is that it’s highly likely that the UK plans to put in the resources … to become a very prominent enforcer,” said Terzaken.

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