Competition agencies must streamline probes as global leniency bids drop, officials say

11 May 2017 4:37pm

10 May 2017. By Leah Nylen.

The pace of leniency applications related to international cartels appears to be slowing, competition officials from Brazil, Japan, the EU and the US said today.

This might be due to the burden and costs associated with filings in multiple jurisdictions, they said, adding that agencies should do more to target their investigations and coordinate witness interviews and document requests.

Leniency programs give full immunity to the first company in a cartel to come forward and confess. The US Department of Justice was the first to offer leniency, which has since expanded worldwide, with 70 jurisdictions now having similar programs.

Swiss bank UBS was granted leniency or immunity from potential violations by some authorities because it cooperated in a probe into the manipulation of the London Inter-Bank Offered Rate. And Swedish-Swiss multinational ABB received full immunity from fines for its involvement in a cartel for gas-insulated switchgear projects under the European Commission's leniency program, because it was the first company to come forward with information about the cartel.

"There has been some concern that the pace of international cartel leniency is slowing down," Eduardo Frade Rodrigues, who heads the investigative unit at Brazil's Administrative Council for Economic Defense, said at a conference* in Portugal. "One of the reasons for that might be having leniency systems that are all very complex, and this might be altering the incentives for companies involved in cartels."

Andrew Finch, the acting assistant attorney general for antitrust at the US Department of Justice, agreed, citing his experience representing leniency applicants in private practice.

Leniency can be "very burdensome" and expensive, he said, adding: "If we can reduce those costs, we can have more effective leniency programs."

Finch assumed the helm of the antitrust division on a temporary basis last month. In private practice, he represented Deutsche Bank in the DOJ's inquiries into manipulation of the Libor and foreign exchange.

Today, Finch suggested that agencies try to target their probes more at the outset, and use tools including predictive coding — an e-discovery technique used on large volumes of data — to streamline and reduce the burden of document and data requests. Competition authorities could also seek to coordinate witness interviews better, he said, such as having a witness in one location for a week, during which investigators from various jurisdictions could take turns with questioning.

Johannes Laitenberger, the director-general of the EU's competition department, agreed that competition authorities should do more to coordinate among themselves, noting the bloc's efforts to work alongside national competition authorities.

"Proliferation of leniency programs might affect leniency-application incentives," Kazuyuki Sugimoto, the chairman of the Japan Fair Trade Commission, told the conference. "Convergence and cooperation among agencies are key factors for effective leniency programs in the future."

* International Competition Network 2017, Porto, May 10-12, 2017

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