The United Kingdom’s Department for Business, Innovation and Skills (BIS), has announced that the Government plans to introduce legislation that would lower the threshold for criminal prosecution in cartel cases.

Under the proposed law, the prosecution would no longer have to prove an individual’s dishonesty in entering into a cartel agreement.    

The cartel offense was introduced by the Enterprise Act of 2002.  Under the Act, a person is guilty of the cartel offense “if he dishonestly agrees with one more other persons” to engage in price-fixing, limitation of supply or production, market-sharing, and/or bid-rigging.  The Act does not define the term “dishonestly.”  However, the traditional test for dishonesty in English law is that an individual acts dishonestly if his conduct is “dishonest by the standards of reasonable honest people, and the defendant knew what he did was dishonest by those standards.”

Critics of the proposed removal of the dishonesty requirement argue that criminal liability and imprisonment should be reserved for persons that brazenly and actively engage in hardcore cartel activity.  They fear that this change could extend criminal enforcement to peripheral participants in a scheme whose conduct may have been more naive than it was cunning and calculated.

Supporters of the amendment reject this argument and counter that persons do not accidentally participate in a hardcore cartel.  They regard doing away with the dishonesty requirement as a necessity in order to achieve the deterrent effect of the cartel offense.  Indeed, many lament that the criminal enforcement of competition in the United Kingdom has failed to deliver in that respect.  Since its adoption in 2003, the only convictions under this law resulted from plea agreements in the United States, not any proactive enforcement by the Office of Fair Trading (OFT).  The Government expressly stated that one of its goals in proposing this change to the cartel offense is to obtain more convictions that would serve as cautionary tales for individuals.

In what may seem like a paradox, the reform proposed by BIS also contemplates that the cartel offense could be avoided if the parties agree to publish key details of their arrangements in an official newspaper of record such as the London Gazette before they are implemented.  Some have commented that this “publication exception” to the cartel offense could be exploited by cartel participants, who might publish only an innocuous description of their arrangements while concealing their nefarious aspects.  Some critics argue that while the Government is seeking to expand the scope of criminal liability in one aspect, it may also be giving a way out to the most sophisticated – and dishonest – violators of competition law.

The proposed amendments to the cartel offense are but one element of a wider reform of the United Kingdom’s competition law regime proposed by the Government, which includes the merger of the OFT and the Competition Commission, Britain’s two competition authorities.  The British Parliament will ultimately decide the fate of the reform. If adopted, the reforms are expected to come into effect in 2014.

Autorite de la Concurrence, the French competition authority, has fined French endive growers and trade organizations nearly 4 million euro ($5.2 million) for engaging in a 14-year price-fixing conspiracy that began in 1998.      

Endive (which is also known as chicory) is a bitter leaf vegetable that can be cooked or eaten raw.  While endive is not very common in the United States, it is the fourth most consumed vegetable in France.  France is the largest exporter of endive, producing nearly half of the world’s 450,000 tons. 

The conspiracy was carried out through regular minimum price instructions, management of sales and special offers, and mandated destruction of produce.  Growers also exchanged current prices through a computer system, which enabled the conspiracy to identify and punish rogues.        

The Autorite notes that growers knew their conduct was illegal.  In particular, the Autorite points to an email from a farmers’ union representative advising his colleagues that the government’s “instructions” were “clear” that they could have no written communication about prices.  However, the rep advised that to get around that problem, “[v]erbal communication between producers and shippers must therefore be organized.” 

The cartel apparently inflated wholesale endive prices, which rose 32% from 2000 to 2010, compared to 21.8% for vegetables overall.  However, its impact on consumer prices was limited, thanks largely to the retail grocers.  With 75% of France’s endive sales, retailers’ bargaining power was too strong for the conspiracy, and consumer prices remained relatively low.

The conspiracy’s limited ability to affect prices was a major factor in the Autorite’s imposition of a moderate fine on the growers and their trade organizations.

An alliance of European composers and songwriters is alleging that major broadcasters and production companies are threatening them with blacklisting if the artists don’t give up all the rights to their work in exchange for commissions.

Taking aim at the practice known as “coercive commissioning,” the European Composer and Songwriter Alliance (ECSA) has filed a complaint asking the European Union’s Directorate General for Competition to investigate.  ECSA represents more than 12,000 composers and songwriters across Europe.

Broadcasters and affiliated production companies cited in the complaint include: TF1, ZDF Digital Medienproduktion GmbH, RTL Group, SAT 1, ARD, Rat Pack Filmproduktions GmbH, The Studio Hamburg Group, Grundy UFA TV Produktions GmbH, Rai Radiotelevisione Italiana S.p.A., Mediaset S.p.A., NTR, RTL Netherland, DDB Amsterdam, British Sky Broadcasting Group plc, Sky1, ITV Studios Limited, ITV plc and Zodiak Media Group.

According to ECSA, composers will not be considered for commissions unless they assign the copyright to the works created to a publishing company owned by the production company or broadcaster – or one chosen by them (and from whom the publishers will have generally received an advance payment).

The composers and songwriters also allege that this practice of “coercive commissioning” siphons off a significant source of income for music creators – usually freelancers without access to legal counsel and with vastly inferior bargaining power in negotiations with large broadcasting corporations.

The European Commission (the “EC”) has announced an investigation into whether The MathWorks, a U.S. software company, abused its dominant position by preventing competitor interoperability with its products.

The EC is investigating whether MathWorks – a leading developer of mathematical computing software for engineers and scientists – violated Article 102 of the Treaty on the Functioning of the European Union.  This investigation represents one of the most high-profile investigations by the EC concerning software interoperability since its landmark enforcement action in the Microsoft case. 

The EC investigation was sparked by a complaint that alleges that MathWorks refused to provide a competitor with software licenses and interoperability information necessary to “reverse engineer” interoperability with MathWorks’s products.  Such a refusal could have restrained competition in the market for the design and simulation of commercial control systems.  European Directive 2009/24/EC authorizes reverse-engineering for interoperability purposes. 

In its announcement, the EC cited its decision in the 2004 case against Microsoft, which required the software company to disclose application programming interfaces for the Windows operating system.  In 2007, the Court of First Instance (which is now known as the General Court) confirmed the EC’s decision.  The EC again investigated and fined Microsoft in 2008 for non-compliance with the 2004 decision.

The EC’s investigation of MathWorks signals that the competition authority intends to use its Microsoft decisions as precedent for further enforcement actions and that the EC does not view the Microsoft case as a unique set of circumstances confined to a single company.

MathWorks and Microsoft do share some market similarities.  In particular, just as Microsoft dominated the desktop operating system market, MathWorks is a leader in mathematical computing and simulation software with products like MATLAB and Simulink, which are widely used by engineers and scientists around the world in both industry and academia.    

This isn’t the first time that MathWorks has attracted the attention of competition authorities.  The U.S. Department of Justice filed a civil lawsuit in 2002 against MathWorks for alleged market allocation with a competitor for designing dynamic control systems.  MathWorks settled with the Justice Department that same year.

The question of whether U.S. antitrust enforcement should emulate foreign whistleblower rewards programs as part of a crackdown on cartels is analyzed in a recent article by a Constantine Cannon attorney: Making it Easier to Whistle While You Work.

Cartel detection and prosecution are top priorities for the Antitrust Division of the U.S. Department of Justice (“Antitrust Division”) – regardless of which political party occupies the White House.  Given the often secretive nature of cartels, however, they can be hard to detect.  The Antitrust Division relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, by offering immunity and/or reduced sanctions.   

As important as leniency programs are, however, they are limited.  Given their narrow focus on those at the heart of the cartel, corporate leniency programs fail to offer people who are aware of, but not complicit in, cartel activity with any incentive to report illegal activity.  This absence of an antitrust informant rewards program undoubtedly means that much cartel activity victimizing U.S. consumers goes unreported. 

Over the past 10 years, four jurisdictions – South Korea, Pakistan, the United Kingdom and Hungary – have addressed the limitations of their corporate leniency programs by adding an antitrust informant, or whistleblower, rewards program.  Each jurisdiction noted that the aim of adding a rewards program was to increase reporting from those who are either uninvolved in, or on the periphery, of a cartel. 

The article, Making it Easier to Whistle While You Work, concludes that like the foreign jurisdictions mentioned above, the U.S. would benefit from a whistleblower reward program as part of a comprehensive and modern approach to aggressive antitrust enforcement.