'...But how are secret cartels uncovered by the authorities?'
After the customary awkward five minute conversation explaining to puzzled acquaintances what it is that a competition lawyer actually does for a living, we are usually confronted with the above question after explaining the cartel work we do.
Our answer is that corporate whistleblowers continue to be very much en-vogue.
Many competition regulators undertake a large proportion of cartel investigations as a result of a company whistleblowing on its fellow cartelists. This immunity/leniency process is an effective tool in uncovering secretive cartels in a myriad of sectors. Competition regulators explain that price fixing, market sharing, customer allocation and bid rigging are among the hard core cartel offences which disadvantage businesses and consumers alike.
The upside for companies 'dishing the dirt' on their former corporate cartel friends can be complete immunity or a significant discount from any subsequent fine imposed. The risk is that full immunity may not even be on offer from a regulator if someone else has beaten them in the evidence race to uncover the cartel's existence.
Such immunity and leniency processes are prevalent across the globe. There are more and more pro-active competition regulators, from Australia to Japan (JFTC) to the high profile US Department of Justice (DoJ), providing incentives to cartelists to come forward. It can mean cartel offences are often multi-jurisdictional.
By way of illustration, car part manufacturer Sumitomo recently received full immunity from the European Commission for revealing the existence of its wire harness cartel and avoided a €291m fine. Another cartelist Yazaki was not so lucky and was fined €125m. This follows on DoJ and JFTC action.
This week the UK Office of Fair Trading published new guidance on the leniency principles and process, which includes its £100,000 informant reward and clarification on legal privilege. The incentives on offer for immunity and leniency applicants will mean as long as cartels persist, a regulator's policy objective of rewarding cartelists to help bring such illegal activities to an end will also continue.