ANTI-CARTEL ENFORCEMENT MANUAL - gov.ruen.fas.gov.ru/netcat_files/Analitical materials/MKS... · A...
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4ANTI-CARTEL ENFORCEMENT MANUAL
CARTEL ENFORCEMENT Subgroup 2 ICN cartels working group
May 2007
Chapter
Cartel case initiation4
ICN manual cover 4.indd 1 27/04/2007 3:02:11 PM
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Contents
1 INTRODUCTION 1
2 DEFINITIONS 22.1 Complainant 22.2 Informant 22.3 Leniencyapplicant 22.4 Pre-investigatoryphase 22.5 Thirdparty 22.6 Whistleblower 2
3 METHODSOFDETECTINGCARTELSANDLAUNCHINGANINVESTIGATION 33.1 Introduction 33.2 Reactivemethodsofdetectingcartelsandlaunchinganinvestigation 3 3.2.1 Complaints 4 3.2.2 Whistleblowersandinformants 5 3.2.2.1 Whistleblowers 5 3.2.2.2 Informants 5 3.2.3 Leniencyapplicants 6
3.3 Proactivemethodsofdetectingcartelsandlaunchinganinvestigation 6 3.3.1 Otherleniency/settlementstrategies 8 3.3.2 Useofeconomics 8 3.3.2.1 Existenceoffactorsfacilitatingcartelbehaviour 9 3.3.2.2 Empiricalapproaches 9 3.3.2.3 Industryormarketstudies 9
3.3.3 Analysisofpreviouscartelcases 10 3.3.4 Analysisofothercompetitionwork 10 3.3.5 Monitoringofindustryactivity 10 3.3.6 Trackingofindividuals 10 3.3.7 Liaisonwithothercompetitionagencies 11 3.3.8 Liaisonwithotherdomesticlawenforcementagencies 11 3.3.9 Monitoringoftradepressandtheinternet 11 3.3.10 Infiltrationandothercontactwithindustryrepresentatives 12 3.3.11 Educationandoutreach 12 3.3.11.1 Internaleducation(informationsharingwithintheagency) 13 3.3.11.2 Externaleducation 13
3.4 Summary 14
4 CARTELCASESELECTIONANDPRIORITISATION 154.1 Introduction 15 4.1.1 Terminology 15 4.1.2 Context 16
4.2 Selectionandprioritisationcriteria 174.3 Criterion 1:publicinterest 17 4.3.1 Extentofpotentialconsumerdetriment 17
4.4 Criterion 2:agencypriorities 18 4.4.1 Prioritiesofparticularmarketsorsectors 18 4.4.2 Availabilityandstrengthofevidence 18
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4.4.3 Availabilityofresourcesfortheinvestigationandadjudicationofthecartel 19 4.4.4 Anynovellegaloreconomicissues 19 4.4.5 Possibilityofdifferentactionresolvingtheproblem 19 4.4.6 Cooperation,coordinationandobligationstootherauthorities 20 4.4.7 Cooperationfromleniencyapplicants,informantsorwhistleblowers 20
4.5 Criterion3:economicconsiderations 20 4.5.1 Industry-wideconductorlikelihoodofconductspreading 20 4.5.2 Volumeofcommerceandmarketpowerofcompanies(abilitytoaffectprice) 20 4.5.3 Durationofcartelconduct 21
4.6 Criterion4:generalandspecificdeterrence 21 4.6.1 Potentialforeducationandpromotionofgeneralcompliance 21 4.6.2 Recidivism 21
4.7 Criterion5:legalconsiderations 224.8 Makingadecision 224.9 Summary 23
5 PRE-INVESTIGATORYPHASEOFCARTELALLEGATIONS 245.1 Introduction 245.2 Categorisationofcartelallegationsinapre-investigatoryphase 245.3 Receiptandscreeningofcartelallegations 25 5.3.1 Methodsforcomplaintsanddisclosuresbythepublic 25 5.3.1.1 Complaintsmadeinperson 25 5.3.1.2 Telephonecomplaints 25 5.3.1.3 Writtencomplaints 26 5.3.2 Complaintsreceiptandreviewprocedures 26 5.3.3 Agencyproceduresforscreeningandtrackingcomplaints 28 5.3.4 Disposingofmattersthatrequirenofurtheraction 28 5.3.5 Specialconsiderationsforwhistleblowersandinformants 28 5.3.6 Leniencyapplicants 29
5.4 Evaluatingcartelallegations 29 5.4.1 Obtainingandverifyinginformationofcartelviolations 30 5.4.2 Informationfromthesourceoftheallegations 30
5.5 Otherinformationsources 30 5.5.1 Publicsources 31 5.5.1.1 Mediareports 31 5.5.1.2 Internetresearch 31 5.5.2 Professionalassociationsandtradegroups 31 5.5.3 Thirdpartysources 31 5.5.4 Involvementofotherenforcementagencies:parallelinvestigations andinformationsharing 32 5.5.5 Paperordigitalevidence? 33
5.6 Decisiontoundertakeafull-scaleinvestigation 335.7 Summary 34
APPENDIXI:INFORMATIONFROMTHESOURCEOFTHEALLEGATIONS 35
APPENDIXII:GOODPRACTICESRELATINGTOCARTELCASEINITIATION 37
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1 INTRODUCTION
Cartelsaretypicallyshroudedinsecrecyandtheirinitialdetectionandthestrategiesusedbyacompetitionagencywithintheinitialinvestigatoryperiodareoftheutmostimportancetoeffectiveenforcement.Thechallengetoenforcementisto:
• increaseinvestigativecapacitytodetectcartels
• initiaterobustinvestigationsand
• prioritisemultipleenforcementmatterstomakethebestuseofavailableresources.
Thischapterdrawstogetherselectedkeypracticesusedintheinitiationofacartelinvestigation,andidentifiessomestrategiesthatmaybeappliedinthedetectionstageandthroughouttheearlydevelopmentofacase.Itwillalsohighlightsomeofthemoreestablishedpracticesusefultocartelcaseinitiation.
Therelevanceandadoptionofparticularpracticesoutlinedinthisdocumentwilllargelybedeterminedbythelegalenvironmentineachjurisdictionthatgovernsanagency’senforcementactivities.Insomejurisdictions,certainpracticesmaynotbefeasibleduetolegislativeorpolicyconstraints.Forexample,intermsoftriagepractices—somecompetitionagencieshavereporteddedicatingalargeamountoftimetothepre-investigationstage,usuallybecauseoflegalpre-requisitestotheuseofinvestigativepowersthatrequiretheagencytomeetcertainthresholdsintheinvestigation.
Thechapterisdividedintothreeparts.
1. � exploresvariousmethodsacompetitionagencymightemploytodetectevidenceofcartelactivityandsubstantiatethebasisforthesubsequentlaunchofaninvestigation.
2. illustratesthefactorsthatmayinformdecision-makingastowhichcartelcasesanagencymaypursue,andhowcasesmaybeprioritised.Fivecriteria,includingarangeofobjectiveandsubjectivefactorsarelistedbywayofexampleandforconsiderationbyagencieswithintheirownpolicyorapproachforcaseselectionandprioritisation.
3. seekstopresentarangeofapproachesandtoolsthatcompetitionagenciesmayuseatthepreliminarystagesofaninvestigation.
Eachpartofthischapterincludessuggested‘goodpractices’whichsummariseandhighlighttechniquesacknowledgedfortheirusefulnessineffectiveenforcementbyanumberofmemberagencies.Theunderlyingcautionisthatnosingleapproachanswerstheneedsofeveryenforcementsituation.Effectivecomplaint-screeningandtimelyevaluationofmarketplaceactivitiesareindispensablewhenusingscarceagencyresourcestomaximiseanti-cartelenforcementresultsandincreasepublicawarenessandreportingofcartelactivity.
TheICN anti-cartel enforcement manualremainsaworkinprogress.ThesourcesconsultedtocreatethischapterincluderelevantreportsfromtheOrganisationforEconomicCooperationandDevelopment(OECD),proceedingsfromvariousinternationalcartelconferencesandworkshops.Mostimportantly,thetextreflectsthecontributionsofInternationalCompetitionNetwork(ICN)memberagencies.Asfaraspossible,thesecontributionsandtheoverallcommentsfrommemberagencieshavebeencapturedinthetext.Referencestoagenciesengaginginanyparticularpracticeorprocedureshouldnotbetakenasareflectionoftheexperienceofalltherespondingagencies.Insomeinstances,agenciesprovidedspecificadditionalinformationandwherepossible,thisadditionalinformationisincludedinthechapter.
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2 DEFINITIONS
Thedefinitionsappliedtothetermsusedinthischapterdonotnecessarilyrepresentthedefinitionsusedbyallmemberagenciesinthecourseoftheirdailywork.Thetermsmayholddifferentmeaningsdependingonthejurisdictionandlegalcontextinwhichtheyareused,andarethusmeantaspointsofreferencetohaveacommonunderstandingamongagenciesforthepurposesofthischapter.
2.1 ComplainantApersonorgroupofpersonswhomakeacomplaint,verballyorinwriting,toanagencyaboutallegedcartelconductinviolationofthelaw.
2.2 InformantAperson,sometimesaparticipantinthecartel,whovolunteersmaterialinformationtoanagencyaboutcartelconductinviolationofthelaw.Informantstypicallyrequireaguaranteeofconfidentialityandanonymityandmayworkundercoveronbehalfofanagency.Insomecircumstances,informantsmaybewillingtoprovideinformationasawitnessduringthecourseoftheinvestigationandtogiveawitnessstatement.
2.3 LeniencyapplicantAcartelmemberwhoreportsitscartelmembershiptoanagencyandundertakestosatisfycertainconditions,includingfullcooperationwiththeagencytoobtainpartialortotalexonerationfrompenaltiesthatwouldotherwisebeapplicabletoacartel(seechapter2).
2.4 Pre-investigatoryphaseThefirstactionstakenbyacompetitionagencyafterreceivinginformationaboutanillegalcartelmaybecategorisedbytitlessuchas‘preliminaryinquiry’,‘preliminaryinvestigation’,‘preliminaryexamination’and‘firstlook’,tolistafew.Althoughmanydifferentjurisdictionsusethesametitle,theactivitiesdenotedandlevelofinquirypermittedvarywidely.Thismanualusestheterm‘pre-investigatoryphase’tocoveractivitiestakenwhenacompetitionagencyisinitiallyinformedofpotentialcartelactivitiesanduptothetimeadeterminationismadetoundertakeafull-scaleinvestigationintotheallegations.
Afull-scaleinvestigationisoftentriggeredbyanofficialagencyaction.Suchactionsincludeconductingasearch,raidorinspection,issuingasubpoena(oranalogousorderforproductionofdocuments),orcompellingattendanceataverbalexamination.Theseactionshavetheeffectofpubliclydisclosingtheexistenceoftheinvestigation.
Thestepsundertakenbytheagencyleadingtosuchactionsareaimedatevaluatingtheallegationsandmeetinglegalthresholdsfortheuseofinvestigatorypowers.
2.5 ThirdpartyAnindustryormarketparticipant,includingcustomers,suppliersandrepresentativesofassociations,whohaveknowledgeabouttheindustryormarketandmayhaveknowledgeaboutthecartel.
2.6 WhistleblowerAninsider,typicallyacurrentorformeremployee,whoreportscartelconductinviolationofthelawtoanagency.Suchanindividualalmostalwaysrequiresaguaranteeofconfidentialityandanonymity.Somejurisdictionsprovidewhistleblowerswhodiscloseinformationwithlegalprotectionfromvictimisationanddismissal.
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3 METHODSOFDETECTINGCARTELSANDLAUNCHINGANINVESTIGATION
3.1 IntroductionThissectiondiscussesthevariousmethodsbywhichacompetitionagencymightdetectsignsofcartelactivityinanindustryandproceedtolaunchaninvestigationtobringthecarteltoahaltandpunishthecompaniesand/orindividualsinvolved.Itbeginswithabriefsummaryoftheprincipalmethodsofdetection,followedbyadiscussionofeachmethodinmoredetail.
Beforedefininganddetailingtherangeofproactiveandreactivedetectionmeasuresavailable,itisusefultosetthecontextforthissection.Cartelsarebytheirnaturehiddenandsecret.1Wherethereisalowriskofdetectionbyanagency,companiesparticipatinginacartelhavelittleincentivetoreporttheirbehavioursincethebenefitsderivedfromparticipationcanbeextensive.Conservativeestimatesassumethatpricesinacartelisedindustrytendtobeatleast10percenthigherthantheywouldbeifnocartelexisted.2Itfollowsthatprofitswillalsobesubstantiallyhigher.
Oneoftheprincipalmethodsofcarteldetection,leniency,isdiscussedinchapter2.Agenciesneedtohaveavarietyofeffectiveinvestigativetoolsandapproachesattheirdisposaltodetectcartelsandcannotrelyononetoolorapproach.Theextenttowhichthereisaperceivedriskofdetectiondependsonmanyfactors,includingahistoryofagencydetectionandabeliefthattheagencyhasstrongtoolstouse.Ifanagencydoesnothavesufficientcapacityormeanstodetectcartels,itsleniencyprogramislikelytobeineffective.Tooptimiseitslevelofdetection,anagencyneedstofind,amongotherthings,therightcomplementofreactiveandproactivedetectionmethods(asdefinedinsections3.2and3.3).
Thissectionbeginswithanoverviewofreactivemethodsofdetectingcartelsfollowedbysomespecificexamplesofhowanagencymightapplythosemethods.Theroleofwhistleblowers,informantsandleniencyapplicantsarealldiscussed,withthecaveatthattheuseofsomereactivestrategies(suchasaffirmativeamnesty)may,incertainjurisdictions,giverisetoconcernsregardingfairnessandequalityoftreatment.
Anoverviewandspecificexamplesofproactivemethodsofdetectingcartelsarethenprovided,includingtheuseofeconomicanalyses,monitoring,liaison,educationandoutreach.Throughoutthesection,goodpracticesfordetectingcartelsandlaunchinganinvestigationareidentified.
3.2 Reactivemethodsofdetectingcartelsandlaunchinganinvestigation
Reactivemethodsofdetectiontypicallyrelyonsomeexternaleventtotakeplacebeforetheagencybecomesawareofanissueandcanlaunchaninvestigation.Reactivemethodsofdetectionoftenincludereceivingaleniencyapplicationorthepresenceofawhistleblowerorinformant.
1 Seethe1998OECDreport,Recommendation of the council concerning effective action against hard core cartels)(www.oecd.org),andtheICNSG1report,Defining hard core cartel conduct.
2 See,forexample,US sentencing guidelines(2R1.1,Applicationnote3)(www.ussc.gov),whichstatesthat‘Itisestimatedthattheaveragegainfromprice-fixingis10percentofthesellingprice’.However,otherstudieshaveshownaverageoverchargestobeevenhigher—see,forexample,JohnMConnorandCGustavHelmers,Statistics on modern private international cartels,1990–2005,AAI(www.antitrustinstitute.org),andJohnConnorandRobertLande,How high do cartels raise prices? Implications for reform of sentencing guidelines,AmericanAntitrustInstituteworkingpaper04-01(3April2005)(www.antitrustinstitute.org).
Itisconsideredgoodpracticeforagenciestouseavarietyoftechniquesandmethodstodetectcartels,includingamixofbothreactiveandproactivemethodsthatwillincreasetheopportunitiesfordetectingcartelsandhelpdemonstratetheagency’senforcementcapacity.
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Thereisalwayssomeriskofdetection.Thelosersincartelisedindustriesarethebuyersofthecartelisedgoods,theircustomersandultimatelyconsumers.Anyofthesewrongedgroupsmaybecomeawareofthecartelactivityandreportittotheagencybywayofacomplaint.Alternatively,adisgruntledemployee(orex-employee)ofacartelparticipantmaychoosetoactasawhistleblowerandreportthecartelactivitytotheagency.Theserisksaffectthe‘probabilityofdetection’assessmentsmadebycartelparticipants.Acartelparticipantmayconcludethattheriskofdetectionisuncomfortablyhighandmaythereforedecidetoapplyforleniencyandreportthecartelbeforeanyoneelsereportstheconduct.
Agencieshavesoughttoincreasetheincentivetoreportbyintroducingleniencyprogramsthatprovidepartialortotalexonerationfrompenalties,suchasfinesandimprisonment.Thesignificantdetectionbenefitsofaleniencypolicy,andtheessentialconstituentpartsofaneffectiveleniencyprogram,arediscussedinchapter2.
Someagenciesalsooperateotherincentiveprogramstoencouragethirdpartiestobringrelevantinformationtotheirattention.Atleastoneagencyhasacartelinformantrewardprogramwhichoffersamonetaryrewardforinformationreceivedfromthird-partyinformantsnotformingpartofthecartel.
3.2.1Complaints
Anagencycanfirstlybecomeawareofcartelactivitythroughacomplaint,typicallyfromadirectorindirectpurchaserofthecartelisedgoods,orfromacompetitorwhomaybeexcludedfromthecartelarrangements.Alternatively,complaintsmayoriginatefromanymemberofthegeneralpublicwhomaybecomeawareofanissueorbesuspiciousofcartelactivities.
Agenciesalsotendtoreceivealotofcomplaintsaboutsuspectedcartelbehaviourfromconsumers.Througharigorousfilteringprocessmanyofthesecomplaintsarefoundrelativelyquicklytobewithoutlegalfoundation.Thishelpsavoiddiversionofvaluableresourcesawayfrominvestigationsintogenuinecartelbehaviour.Unfoundedcomplaintsgenerallyarisebecauseofconfusionbetweenillegalcartelbehaviourandlegitimateactivitiessuchasprice-fixing.Inrareinstances,complaintsmaybemadeaspartofanattempttocausetroubleforacompetitor.Itisimportanttokeepallpossibilitiesinmind,particularlyduringtheearlystagesofacaseasmoreinformationisobtainedaboutthebehaviourandthepartiesinvolved.
Genuinecomplaintsmaytaketheformofcustomerscomplainingthattheyhavebeenallocatedorarelockedintoaspecificsupplierandareunabletogoelsewhere.Alternatively,thecustomermayhavebeentoldbythesupplierthathisbusinesswaswoninsomesortofbackroomtransactionwithanothersupplier,orthatthesupplierwas‘owed’somebusinessbytheothersupplier.Procurersmayspotunusualbiddingpatterns,suchasrotationofbidsbetweencompetitors.
Agenciesmayusevariousmeasurestoinfluencethefocus/natureofcomplaintsbysettingoutatthebeginningoftheyearwhichsectorstheyaremostconcernedabout3bypubliclyidentifyingspecificsectorstargetedforenforcementfocus.Inadditiontoencouragingcomplaintsorleniencyapplications,agenciesmayencouragecompaniestocomplywiththejurisdictions’lawsandregulationsandmayevenhaveaformontheirwebsiteforprocurementauthoritiestocompleteiftheysuspectthatbid-rigginghasoccurred(seesection3.3.11.2).
Itwillusuallybenecessarytoprotecttheidentityofacomplainantthroughoutthelifetimeofacasetoavoidthepossibilityofreprisals,particularlyifthecomplainantisarivalcompetitor.Inatleastonejurisdiction,awrittencomplaintwillnotformpartofthefile,insteadonlyanoteforthefileisprovidedwithdetailsofthecomplaintwithoutreferringtothenameofthecomplainant.Oneconsequenceofnot
3 Basedonidentifieddeficienciesintheoperationofmarketsandindustries.
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revealingtheidentityofacomplainantisthatinformationprovidedbythecomplainantcannotbeusedinevidencebutonlyasintelligenceinthesearchforevidence.Someagenciesrecogniseacomplainantasbeingathirdpartytothecase,withtherighttomakerepresentationsonkeydocuments.
3.2.2Whistleblowersandinformants
Agenciesmayalsobecomeawareofcartelactivitythroughinformationreceivedfromeitheraninformantorawhistleblower(seesections2.2and2.6).
3.2.2.1Whistleblowers
Awhistleblowerisaninsider,typicallyacurrentorformeremployee,whoreportscartelconductinviolationofthelawtoanagency.Suchanindividualalmostalwaysrequiresaguaranteeofconfidentialityandanonymity.Somejurisdictionsprovidewhistleblowerswithlegalprotectionfromvictimisationanddismissal.
Awhistleblowertypicallyisanemployeeorex-employeewhoresentshisemployerforsomereason,suchasademotionoradismissal.Whistleblowersareinpracticeoftenex-employeesandafairamountoftimemayhavepassedsincethewhistleblowerbecameawareofthecartelactivity,sothatanyincriminatingdocumentsmaynolongerexist.
3.2.2.2Informants
Informantsoftenhaveinformationobtainedfromwithinthecartelwhichcouldnotbeobtainedfromsourcesotherthanthetargets.Theymayagreetoworkundercoverandmaybedirectedtoundertakefurtherresearchintheformofcovertintelligencegatheringonbehalfoftheagency.Infiltrationbyanundercoverinformant,whereauthorisedbytheagency’slawsorregulations,canbeapowerfulinvestigativetool,butaveryonerousregulatoryregimesettingoutstrictrightsandobligationsfortheinformantandagencywillnormallyapplyduetothepersonalrisksofdiscoverythatmaybeincurredbytheundercoverinformant.Forexample,authorisationmightonlybegivenwheresuchactionisnecessaryandproportionate,andcollateralintrusioniskepttoaminimum.Allinformanthandlersmustbespeciallytrained,andtominimisetheriskofdiscovery,anyinformationreceivedfrominformantswilloftenbeimpartedtoacaseteamonlyasbackgroundintelligencewiththeoriginalsourceoftheinformationkeptconfidential.Insomejurisdictions,whistleblowersmaybetreatedbytherelevantagencyasaconfidential,undercoverinformant.
Atleastoneagencyoperatesacartelinformantrewardprogram.Thisprovidesfinancialincentivestothirdparties(i.e.thosenotactuallyinvolvedintherelevantcartel)inexchangeforinformationorevidenceprovidedaboutthecartel.Suchprogramscanfacilitatethegatheringofevidenceorinformationaboutcartelswithminimaleffortandcost,andcanalsohelptodetercartelbehaviour.
Providingfinancialincentivestoinformantsalsohavepotentialrisks.Providingmonetaryincentivesandrewardsforinformationwillnecessarilyraiseadditionalquestionsabouttheindividual’smotivationforprovidingtheinformation,aswellasraisequestionsaboutthequalityofevidenceprovided.
Itisconsideredgoodpracticeforagenciestohaveaformalcomplaintsysteminplaceforreceiving,handlingandrespondingtocomplaintsfromthegeneralpublic.
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3.2.3Leniencyapplicants
Manyagenciesthroughouttheworldhaveintroducedleniencyprogramsasanincentiveforcarteliststoreporttheirbehaviourinexchangeforpartialortotalexonerationfrom,orasubstantialreductionin,finesorimprisonment.
Leniency4isagenerictermtodescribeasystemofpartialortotalexonerationfromthepenaltiesthatwouldotherwiseapplytoacartelparticipantwhoreportsitscartelparticipationtoacompetitionenforcementagency.Inaddition,agencydecisionsthatcouldbeconsideredaslenienttreatmentincludeagreeingtopursueareductioninpenaltiesornottoreferamatterforcriminalprosecutionforthatparticipant.
Leniencyisgenerallyareactivestrategyinwhichtheagencywaitsforcompaniestocomeforwardandapply.Itispossibleforleniencytoconstituteamoreproactivetool.Oneexampleofthis,usedbytheDepartmentofJustice(DoJ)intheUnitedStatesofAmerica,isaffirmativeamnesty.5Whereacartelissuspectedandleniencyisstillavailable,butnoleniencyapplicanthascomeforwardtoreporttheconduct,theDoJsometimesproactivelyapproachesoneofthesuspectedcompaniestoclearlysetoutthebenefitsthatleniencywouldgivetothecompany.Thismayoccasionallypromptacompanytoapplyforleniency.However,thereisthealternativepossibilitythatthecompanycoulddecidenottocomeforwardandinstead,havingbeenalertedtothepossibilityofasearch,raid,inspectionorotherinvestigativeaction,destroyanyincriminatoryevidenceinitspossession.6Insomejurisdictions,suchactscouldpotentiallybeprosecutedasobstructionofjustice.Itshouldbenotedthattheuseofsuchastrategymay,incertainjurisdictions,giverisetoconcernsregardingfairnessandequalityoftreatment.
3.3 ProactivemethodsofdetectingcartelsandlaunchinganinvestigationThemethodsofdetectiondiscussedthusfararereactiveinnature,sincetheyrelyonsomeeventexternaltotheirowninitiativetotriggeranagencyinvestigativeresponse.Forsomeagencies,particularlythosethathaveleniencyprogramsinplace,itmaybesufficienttorelyonreactivemethodsofdetectionastheseprovideasufficientsupplyandvarietyofgoodqualitycasesforinvestigation.However,thiswillnotusuallybethecaseandevenforsomeofthebusiestagenciestherecanbepeaksandtroughs.Agencieswillusuallywanttoalsousemoreproactivemethodsofcarteldetection.Proactivemethodsofdetectionareinitiatedfromwithintheagencyanddonotrelyonanexternalevent.Proactivemethodsofdetectionmayincludeanannouncementofleniencyperiod,theuseofeconomicsandmarketstudies,trackingofindividualsandmedia,liaison,infiltrationandeducation.
Agenciesmaychoosetouseproactivemethodsofdetectionforavarietyofreasons:
• Leniencyprogramsmayatsomestagestopprovidingagencieswithsignificantcases.Inthisrespect,thereisaneedforagenciestoshowabilitytopursuecasesproactivelysothatdeterrenceremainsacrediblethreat.Successfulleniencyprogramsdependontheexistenceofacrediblethreatofdetectionandpunishment,evenifnooneshouldapplyforleniency.
• Anagencymightcometotheendofastringofconcurrentinvestigationsintothesameindustry.
• Anagencymayhaveacquirednewpowersandbelookingtoputtheseintopracticetounderlinetheirdeterrenteffect.
4 Thetermsimmunity,leniencyandamnestyareusedinvariousjurisdictionstodescribepartialortotalexonerationfrompenaltiesbutarenotsynonymousinalljurisdictions.Thesignificantbenefitsofaleniencypolicy,andtheessentialconstituentpartsofaneffectiveleniencyprogram,arediscussedindetailinchapter2ofthismanual.
5 Formoredetails,seewww.usdoj.gov.
6 SeeSG1paper,Obstruction of justice in cartel investigations(www.internationalcompetitionnetwork.org).
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• Theagencymayseektoincreasethevarietyofitscasesmoregenerally(eitherintermsofthesizeofcompaniesinvestigated,typeofconductorthetypeofindustryinvestigated)toimprovethedeterrenteffectofitsactivities.
Thefirstproactivemethoddiscussedinthissectionisamoregeneralleniency/settlementstrategy(tobedistinguishedfromleniencyprograms).Whenanagencyisconcernedaboutpossibleendemiccartelconductwithinaparticularindustry(e.g.oneagencyeffectivelyusedthismethodtocombataproblemwithbid-riggingintheconstructionindustry),itmaybeappropriatetoconsidersomemoregeneralleniency/settlementstrategiesunderwhichtheagencyinvitesimplicatedcompaniestocomeforwardunderconditionsakintoleniencybutwithanevengreaterdegreeofcertaintyandfinality.
Whenanagencyhasnodirectevidencetosupportasuspicionthatcartelconductmaybepresentinagivenmarket,itmayreferto:
• theeconomicmarketanalysesoftherelevantsector
• previousenforcementactivitiesbyotheragencies
• thesystematicmonitoringofindustryactivity—e.g.lookingatthepotentialofbid-rigginginpublicsectorprocurement
trackingindividualsthroughtheirdirectorshipsofaseriesofcompanies—andthiscanbeparticularlyusefulgiventhatrecidivismisoftenobservedincartelbehaviour.
Itisoftenthecasethataparticularindustry,and/orindividualswithinthatindustry,willexhibitanumberofillegalactivitiesindifferentareas.Forexample,theremightbeabusesofcompetitionlawaswellasexploitationofconsumersthroughunfaircontractsorsubstandardworkandevasionoftaxes.Forthisreason,liaisonwithotherdomesticlawenforcementagenciesmaygenerateusefulleads.
Aspartofanagency’sroleinmaintaininganoverviewofindustries,andinparticularwhenoneormoreoftheabovemethodshasgivenrisetoparticularconcerns,itcanbeusefultomonitor:
• therelevanttradepress
• internetchatroomsand/or
• thepubliclyvisibleactivitiesoftradeassociations
tosearchforsignsofcartelactivity.Thiscanbedonebywayofdesktopresearchorbyattendingpublicindustryevents(suchassalesconferences)andtalkingtokeyindustryfigures.
Finally,theimportanceofcompetitioneducationandoutreachinraisingawarenessabouttheillegalityofcartelconduct,theharmitcausesandhowtodetectitshouldnotbeunderestimatedasatooltogeneratesignificantleads.Anagencywillgenerallyseektopubliciseitsworkthroughvariousmethods,suchasgeneralandtradepressarticles,itsownwebsiteandbygivingspeechesatconferences.Whenthereisasuspicionofcartelactivityinaparticularindustry,itisworthconsideringtargetingparticularindividualsorgroupsforeducation(e.g.targetingauditorsinthepurchasingdepartmentsofthecustomerssothattheycanlookoutforsignsofsuspiciousactivitysuchasunusualbiddingpatterns).
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3.3.1Otherleniency/settlementstrategies
Thefirstproactivemethoddiscussedinthissectionisamoregeneralleniency/settlementstrategy(tobedistinguishedfromanagency’sleniencyprogram).Whenanagencyhasfoundacartelproblemtobeendemicwithinaparticularindustry,itmaybeappropriatetoconsidersomemoregeneralleniencystrategytosecurebothapunishmentandadeterrentwithouttheneedtofullyinvestigateunmanageablylargenumbersofpartiesand/orcases.
Atleastoneagencyadoptedastrategyinwhichitannouncedthattherewouldbealeniencyperiodforcompaniesadmittingparticipationinacartel.Companiesmakingadmissionswithinthegivenperiodweregivenmorelenienttreatmentthanthosecompanieswhichdidnotmakeanyadmissionandweresubsequentlyfoundguilty.Insomeinstances,companiesmaybetreateddifferentlyinthefutureregardingtenderingforpublicsectorprocurementcontractsand/ortheymayfacearelativelylowlumpsumfinancialpenaltyfollowingashortandresource-lightinvestigation.
3.3.2Useofeconomics
Someagenciesmayuseanalyticaltoolssuchaseconomicstudiesandanalysisofpreviouscasestotryandidentifypossiblecartelsmarkets.
Whethereconomicsareusedatallandtheweightplacedontheoutcomesofanyeconomicstudiesundertakenwilldifferbetweenjurisdictionsandwillalsobeinformedbythelegalsysteminthatjurisdiction.Mostagencies,includingmanywell-establishedagencies,donotuseeconomictoolsordatatodetectcartels,relyinginsteadonothertoolsthattheyconsidermoreeffective.7
Eachagencydeterminesthebestpracticefortheirjurisdictioninthecontextoftheirlegalregime.
Ontheirown,economicstudiesareunlikelytoprovidesufficientinformationtopassanythresholdforcommencingafullinvestigation.Instead,theyaremoresuitedtoidentifyfactorsthatcouldbeindicativeofcollusionormarketsthatmayberipeforcollusion.
Economicstudies8aregenerallybasedononeormoreofthefollowingapproaches:
• areviewofeconomicliteraturetoassesswhatfactorshaveprovedusefulinaccuratelymodellingtheformationandstabilityofcartels
• anempiricalapproachusingrecentevidenceofpublicinfringementdecisionsandeconomicdatatoidentifyfactorsthatarerelevantinidentifyingcartels
• economicmodellingtoprovidepredictionsoftheprobabilityofcartelswithinvariousindustrytypesand/or
• anumberofindustryormarketstudiesdirectedtoestablish,forexample,whethertheseprovideadditionalinsightintotheeconomicunderstandingofcartels.
Thecostofeconomicstudieswillalwaysbeassessedagainstanylikelybenefitsandmayinsomecases(particularlyforsmalleragencies)beprohibitive.Nevertheless,withinformation-sharingacrossagenciesitispossibleforbenefitstobemorewidelyrealised.
7 Forexample,theAntitrustDivisionoftheUSDOJdoesnotuseeconomictoolsordatatoattempttodetectcartelactivity.SucheffortsinthepasthavenotprovenfruitfulandtheUSDOJdoesnotbelievethatsucheffortsareagooduseofitsresources.
8 See,forexample,anOfficeofFairTrading(UnitedKingdom)economicdiscussionpaper(2005),Predicting cartels(www.oft.gov.uk).
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3.3.2.1Existenceoffactorsfacilitatingcartelbehaviour
Asshown,economicliteraturehasidentifiedseveralfactorswhichfacilitatecartelbehaviour.Thesefactorsmayalsoprovideagencieswithsomeindicatorsofcartelconduct.Factorsidentifiedincludethefollowing:
• smallnumberoffirms—easiertomanagecovertrelationshipsandagreements
• highentrybarriers—preventsnewcomersfromdisruptingorundercuttingthecartel
• excesscapacityandstocks
• shrinkingmarketsanddecliningindustries—thedifficultcircumstancesencouragefirmstocolludetosurvive
• stablemarketconditions(evenwithinshrinkingmarkets)—makescheatingonthecarteleasiertodetect
• frequencyofinteractionthroughtradeassociations—e.g.peoplemovingbetweencompanies
• closegeographicallocation—e.g.wherearawresourceisbeingextractedandrefined
• markettransparency—e.g.inbid-riggingwhereopennessmakesiteasiertomonitorforcheating
• homogenousorfungibleproductssuchaschemicalproducts,vitaminsandfoodadditives
• endingofapricewar—concertedmoveto‘disciplinethemarket’
• existenceofjointventures
• commonalityofcosts
• maturetechnology.
3.3.2.2Empiricalapproaches
Empiricalapproachesoftenuseeconomicevidence(modelscontainingrelevanteconomicvariables)frompreviouscases(seesection3.3.3)topredicttheindustriesinwhichfuturecartelsmaybediscovered.Industrieswherecartelshavenotpreviouslybeendetectedmaybeidentifiedasbeingsusceptibletocartelactivitybymeansofsuchapproaches.Patternsofcartelisationobservedfromsuchstudiesincludetheimportanceofdemandfactorssuchasscale(intermsofturnover)andalackofvariabilityingrowthofdemand.Strongpositivecorrelationshavealsobeennotedbetweencartelisedindustriesinsomejurisdictions.Itshouldbenoted,however,thatsuchstudiesmaysufferfromsampleselectionproblemsduetothefactthatmanycartelsareyettobedetectedandinfactmayneverbedetected.9
3.3.2.3Industryormarketstudies
Industryormarketstudiesmaybeconductedintoparticularindustrieswherecartelsarehistoricallymostprevalentandsuchstudieshaveidentifiedanumberofcommonthemes.Forexample,cartelsmaybepromptedbyadeclineinpricesorbyintensecompetitionfollowingtheexpansionofanincumbentoralargenewentrant.Destabilisationofacartelmaybeencouragedbyentryorthethreatofpotentialentry,andthismayincreasetheincumbents’needtocoordinatetheiractivities,therebymakingthecollusiveagreementmoreexplicitandeasiertoprove.Thelikelihoodofcollusioncanbeinverselycorrelatedwiththenumberoffirmsandthedegreeofconcentrationinthemarket.
9 JHarrington,Modelling the birth and death of cartels with an application to evaluating antitrust policy,workingpaper532,JohnHopkinsUniversity,2006,pp.1–29.Thepapernotesthatthecartelpopulationislargelyunobservableandwecanonlyobservethepopulationofdiscoveredcartels.
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Suchstudiesaregenerallybasedonlyonpubliclyavailableinformation.Alternatively,somejurisdictionsmayconsiderseekinginformationfromothergovernmentalentitiesorrequestinginformationonavoluntarybasis.Thederivationoftheinformationmayhaveimplicationsfortheuseoftheinformation—itwilloftenbepossibletoonlyuseitasgeneralintelligence,ratherthanasspecificevidenceformingpartofasubsequentinvestigation.Further,inacriminalcontextagencieswillusuallyneedreasonablegroundstoseekinformationfrompotentialtargets.
3.3.3Analysisofpreviouscartelcases
Analysisofpreviouscasesisarelativelylow-costmeasurewhichmayhelpanagencytofocusitseffortsoncartelbehaviourinparticularindustries.Theagencymightexamineitsrecordsofsuccessfulcartelcasesandalsoofthosecaseswhichultimatelydidnotgoanywhere,perhapsbecausetheydidnotreachaparticularthresholdforinvestigation(formoreinformation,seesection4‘Caseselectionandprioritisation’).Furtheranalysisofpreviouscasesmayeitherreinforcetheoriginalsuspicionsorshedlightondifferentcartelactivityexistingwithintherelevantindustry.
Asanalternative,theagencymightundertakeananalysisofcasesconductedbyotheragencies.Casesthathaveariseninotherjurisdictionswilltendtoactasausefulpointertolikelycartelisedindustriessincecartelshavehistoricallygenerallytendedtoariseinsimilarindustries,mainlybecauseoffacilitatingfactorssuchasthosesetoutinsection3.3.2.1.Thiswillparticularlybethecasewherethereissomelinkbetweenthecompaniesoperatingindifferentjurisdictions.
3.3.4Analysisofothercompetitionwork
Marketanalysesundertakeninnon-cartelareaswithinacompetitionagency(e.g.inmergersorabuseofdominancematters)maydiscloseacartelorprovideimportantbackgroundinformationonaparticularindustry.
3.3.5Monitoringofindustryactivity
Someagenciesundertakesystematicmonitoringofindustryactivity.Forexample,someagencieshaveintroducedasystemtoanalysethepotentialforbid-rigginginthepublicsector.Publicprocurementagenciesareaskedtocompleteabiannualreturnwithdetailsofprocurementactivitiesintheprecedingtwoyears,includingexpectedbidvalue,namesofbiddersandbidssubmitted,anddecision-makingmethods.Theresultsareanalysedandinvestigationslaunchedwherethegreatestsymptomsofbid-riggingarepresent.Suchmethodsarealsohighlyusefulfromaneducationalperspective,sincetheydrawprocurers’attentiontothepotentialforbid-rigging.
3.3.6Trackingofindividuals
Theemploymenthistoryofmanagersinvolvedincartelsmaybeusefulassimilarconductmayhavetakenplacewithintheothercompaniesforwhichtheyhavepreviouslyworked.Someagenciesfollowthecareerprogressionofcertainindividualsfromcompanytocompanyquitecloselyandrecordthesedetailsonadatabase.Cartelshavebeenuncoveredasaresult.Otheragencieshavecitedbarrierstothecollectionofsuchinformation,suchasstrictprivacylegislation.
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3.3.7Liaisonwithothercompetitionagencies
Cooperationwithotheragenciesisanaturalpartofmostagencies’work,andtheexperienceofotheragenciescanbehighlybeneficial.However,therearewaystoincreaseandvarysuchcooperationtoimprovethesuccessofcarteldetectionandcasegeneration,suchas:
• agenciesinformingeachotherwhentheyuncoverevidenceofapossiblecartel—atitsmostextreme,thiscouldbedonebeforetheagencyreacheditsthresholdforopeninganofficialinvestigation10
• visitsbetweenagenciestoshareexperiencesof,andsolutionsto,cartel-relatedissuesand
• specificone-offdiscussionswithnamedindividualsatotheragenciesregardingparticularissuessurroundingcarteldetectionandcasegeneration.
3.3.8Liaisonwithotherdomesticlawenforcementagencies
Itisoftenthecasethataparticularindustryand/orindividualswithinthatindustrywillcarryoutanumberofillegalactivitiesindifferentareas.Forexample,theremightbeabusesofcompetitionlawaswellasexploitationofconsumersthroughunfaircontractsorsubstandardserviceandevasionoftaxes.Forthisreason,liaisonwithotherdomesticlawenforcementagenciessuchastradingstandardsauthoritiesandtaxcollectionauthoritiesmaybringforthusefulleads(seesection5.5.4).
3.3.9Monitoringtradepressandtheinternet
Aspartofanagency’sroleinmaintaininganoverviewofindustries,andinparticularwhenoneormoreoftheabovemethodsraisesuspicions,itoftenwillbepossibletofindadditionalinformationonpotentialcartelbehaviourinanindustrybytargetingtradepressandonlinetradeinformationsuchaschatroomsandbulletinboards.Thefollowinglistillustratesthetypesofinformationthatmightbefound:
• allegationsofprice-fixing,marketsharing,non-competing,bid-riggingand/orexchangeofpriceinformation(e.g.amagazineinterviewsacompanywhichallegesthatothersareengagedinsuchactivities—ormaybecontainsaletterfromadisgruntledcustomerwhothinkshe’sthevictim)
10 Referto2005OECDpaper,Best practices for the formal exchange of information between competition authorities in hard core cartel investigations(www.oecd.org).
Itisconsideredgoodpracticeforagenciestodevelopgoodworkingrelationshipswithinternationalcounterpartstoencourageandfacilitatethesharingofinformation,aspermittedbyapplicablelaws,treatiesoragreements,thatmayprovideasourcefortheinitiationofcartelinvestigations.
Itisconsideredgoodpracticeforagenciestohaveregularcontactswithotherdomesticlawenforcementagenciestodevelopanunderstandingofthepossiblelinkswithcompetitionlawenforcementtodevelopgoodworkingrelationshipsandtodrawontheirsourcesofinformationasameansofgeneratingleadstodetectandinvestigatecartelconductandpromotecooperationandcoordinationforfurtherinvestigations.
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• onecompanyputtingpricesup(orperhapsdown)andother(s)doingexactlythesamearoundthesametime
• acompanylosingbusinesstoothers,combinedwithsomethingsuspiciousthatisindicativeofcollusiveactivity(theothercompaniesmaybeengaginginconcertedaction)
• apparentlycoordinatedrestrictionsofsupply(thiswilldriveuptheprice)
• coordinatedortemporallysuspicious(i.e.aroundthesametime)activitiessuchasintroductionofsimilardiscountsand/orincentiveschemes
• signalssuchaspublicisedstatementsorinterviewsincludingthingslike‘It’stimetheindustrytookactiontoincreaseitsmargins’
• peoplesayingthattheyhavebeentoldbyasupplierthatnoonewillquoteadifferentprice
• regularintra-industrycontactbetweenkeyindustryfigures
• industryjournalistswhomightbeopentoanapproachfromtheagencyforinsideindustryinformation
• industryconferences/meetingsthattheagencymightbeabletoinfiltrate(seesection3.3.10).
Difficultiesmaybeencounteredwithmonitoringwebsitesbecausethemostrelevanttradeinformationiskeptonsecuresitesaccessibleonlybypassword.Theremayalsobelimitsontheagency’spowerstosetupanonymousaccountstoaccesssuchsitessothemonitoringoftradepressmaythereforeprovemoresuccessful.
3.3.10Infiltrationandothercontactwithindustryrepresentatives
Afurtherstepthatmaybetakenintheinvestigationofanindustryisinfiltrationoftheindustryinsomeway.Thefirstexampleofthisisinfiltrationbyagencystaffattendingsalesconferencesandtalkingtokeyindustryfigures.Secondly,itmaybepossible(dependingonthecircumstancesofthecaseandontheagency’spowers)todoavarietyofthings,suchasestablishingcontactswithintheindustryortradebodiesusinginformantsfromwithintheindustryorevenconductingalong-termexerciseusingpeopleasundercoverinformants(seesection3.2.2.2).Suchactivities,mustbetightlycontrolledtoguaranteecompliancewiththejurisdiction’slegalrequirementsandthesecurityandpersonalsafetyofthoseparticipating.
Itmayalsobepossibletoencouragepre-emptiveactionbywritingletterstocompaniesorconductingvoluntaryvisitstoaskquestionsandobtaininformation.Thepurposeofsuchquestionswouldbetodestabiliseanyexistingcartelandencourageanapplicationforleniencyand/orawhistleblower.Articlesmaybeplacedinthetradepressexpressingconcernsaboutparticularsectorstopromptwhistleblowerstocomeforwardtojournalistsortheagency,orthatsomeonetakespre-emptiveactionandappliesforleniency.Thismay,however,carrythepotentialdisadvantageoftippingoffoffendersandpromptingthemtodestroyevidence.
3.3.11Educationandoutreach
Theimportanceofeducationandoutreachshouldnotbeunderestimated.Anagencywillgenerallyseektopubliciseitsworkthroughvariousmethods,suchasgeneralandtradepressarticles,itsownwebsite,andthroughspeechesatconferences.Wherethereisasuspicionofcartelactivityinaparticular
Itisconsideredgoodpracticeforagenciestoregularlyandconsistentlymonitorrelevantindustryandtrademedia,internetsitesandotherpubliclyavailableindustryandtradeassociationsourceswhichcanprovideanindicationandearlywarningsignofcartelactivity.
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industry,itisworthconsideringtargetingparticularindividualsforeducation.Forexample,theauditorsinthepurchasingdepartmentsofcustomerscanlookoutforsignsofsuspiciousactivitysuchasbiddingpatterns.Educationandoutreachtypicallycomesintwoformats:internalandexternal.
3.3.11.1Internaleducation(information-sharingwithintheagency)
Beforeincreasingtheawarenessoftheillegalityandpotentialharmofcartels(andthemethodsusedtoidentifythemamongindustrybodiesandauthorities,itisimportanttoensurethattheagencyismaximisingtheopportunitiesforcooperationbetweenitsowndepartments.Otherdepartmentsarenodoubtalreadybroadlyawareoftheworkofthecartelsdepartment,butthisawarenesscanbemaximisedbyholdingseminarsoncasestudies,economicsandotherissues,andbyforgingcloserlinkswiththosepeopleworkingonparticularareasandindustriesthatarelikelytobethesubjectofcartelactivity(see,forexample,sections3.3.9and3.3.10).
Itmightbeparticularlybeneficialtoshareinformationbetweencartelsandmergersdepartments,sincethelatteroftenperformavaluablemarket-monitoringfunction,particularlyinjurisdictionswithmandatorymergernotificationregimes.Hovevertheremaybeissuessurroundingtheinternaldisclosureofinformation—e.g.theinformationmaybeuseableasintelligenceonlyifitcanbereliedonforthepurposeforwhichitwascollected.
3.3.11.2Externaleducation
Themainfocusofeducationwilltendtobeonexternalorganisationsandindividuals,toincreaseawarenessofthepotentialforcartelactivity(e.g.intheformofbid-rigging)sothattheindicators11canberecognised.Individualsmaythenbecomecomfortablewithapproachingarecognisedcontactattheagencywiththeirsuspicions,evenifthesedonotinitiallyappeartoconstitutestrongevidence.Otherproactivemeasurescanthenbeemployedtotargettheareainquestionandinvestigatewhetheritisasituationthatislikelytoreachtherelevantevidentialthresholdforstartinganinvestigation.
Someexamplesofeducationstrategiesthatmightbeadoptedinclude:
• Raisingawarenessamongpublicprocurementagencies—wherelargefunds(orrepeatbusiness)areavailableforprojects,collusivetenderingandothercartelactivitiesareattracted.Thismightbebywayofpresentations—e.g.apresentationonbid-riggingforprocurementofficers(principallylocalauthoritypublicpurchasingofficersandauditors).Presentationslidescanbeusedinitiallyasaspeakeraccompanimentandsubsequentlydesignedtobeself-standingsothattheycanbeemailedtoinquirerswitharequesttorespondtotheagencywithanysuspicions.
• Distributionof‘model’letterstolocalauthorities,throughlocalgovernmentassociations,forthemtosendtocontractedsuppliers.Thelettersshouldstatethattherelevantlocalauthorityisworkingwiththeagencytoraiseawarenessofcartelsandtoimprovetheflowofinformationbetweenthelocalauthorityandtheagencywherebreachesofcompetitionlawaresuspected.Thelettersshouldsetoutthedetrimentaleffectofcartelsonconsumersandotherbusinesses,thepotentialpenaltiesforcartelparticipants,detailsandbenefitsoftheagency’sleniencyprogram,andadescriptionofbid-rigging.Contactdetailsshouldbegivenforthosewantingtoreportacartel.
11 Examplesofsuchindicatorsaresetoutinsection3.3.2.1.
Itisconsideredgoodpracticeforagenciestopromoteandengageinopenandactivecommunicationswithintheirorganisationsandacrossworkunitsinordertofacilitatetheexchangeofinformationaboutredundantcasesthatmaysignalpossiblecartelconduct.
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• Dispatchofnotesdescribingbrieflytheworkoftheagency(includingitsleniencyprogram)andnotifyingthesendingofthe‘model’letterdiscussedabovetothelocalauthoritycoordinatorsofregulatoryservices,toincludeintheirregularpublicationswhichmaybecirculatedtootherbodiessuchastradingstandardsauthorities.Suchnotesmightincludeastatementtotheeffectthattheagencyissteppingupitseffortstoworkwithlocalauthoritiestodetectandtakeactionagainstsupplierswhocollaboratewitheachotherwhensubmittingtendersforlocalauthoritycontracts.
• Certificatesofindependentbiddeterminationtobeusedforgovernmentandlocalauthoritybids.Thesewouldrequireadeclarationonthepartofthebiddertotheeffectthatitsbidhasbeenpreparedindependentlyandthatithasnotengagedinanyformofcollusion.However,thediscoverythattheregularuseofsuchformswheneverbid-riggingtakesplaceindicatesthattheymaynotbeaseffectiveasagencieswouldwish.
• Encouragingcomplianceprogramsamongprivatecompanies.Proactiveinvolvementinsuchprogramscanalsoencourageearlyinformingofbreachesoftheprogrambyresponsibleofficersofthecompanies.Itmayevenbepossibletoassistwithauditingandmonitoringofemployeeconduct.
3.4 SummaryThispartofthechapterhasdiscussedavarietyofreactiveandproactivemeasuresthatagenciescanusetoassistthemindetectingacartelandinitiatingasubsequentcartelinvestigation.Asnoted,theuseofsomestrategies(suchasaffirmativeamnesty)may,incertainjurisdictions,giverisetoconcernsregardingfairnessandequalityoftreatment.Onceacartelhasbeendetected,anagencywilltypicallyneedtomakedecisionsaboutthecasesitwillselecttopursue,aswellasthecriteriathatmaybeconsideredwhenprioritisingoneinvestigationoveranother.Thisinformationisdetailedwithinthenextpartofthischapter.
Itisconsideredgoodpracticeforagenciestoengageinoutreachprogramstoraiseawarenessaboutanti-cartellawsandtheharmfuleffectsofcartels—inordertoeducatepeopleabouttheoperationofthelawandthetypicalsignsofcartelconduct,andtogenerateleadsaboutcartelactivitythatcanbesourcesofinformationleadingtotheinitiationofformalinvestigations.
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4 CARTELCASESELECTIONANDPRIORITISATION
4.1 IntroductionOnceacartelhasbeendetected,itisessentialforcompetitionagenciestomakeinformeddecisionsregardingcaseselectionandprioritisation.Beforedetailingthecriteriaformakingdecisionsoncaseselectionandprioritisation,itisusefultosetthecontextwithinwhichagenciesinvestigateandadjudicatecartels.Avarietyoffactorsimpingeonthedecisionsthataremadeaboutcartelinvestigationsincluding:
•availableresources(bothfinancialandhuman)
•relevantlegislation
•thecurrentregulatory,judicial,politicalandeconomicenvironments
•internationaldevelopments
•governmentpriorities
•activitiesundertakenbyotherdomesticandinternationalagencies.
Allthesefactorscreateaneedforconsistentandcoherentprocessesthroughwhichtheselectionandprioritisationofcartelcasesaremanaged.
Theaimofthispartofthechapteristoraiseawarenessofsomeofthefactorsthatmayimpingeonthedecision-makingsurroundingcaseselectionandprioritisation.Thispartofthechapterintroducesthecontextwithinwhichagenciesinvestigateandadjudicatecartels.Thefivecriterialistedwithinthispartexplorearangeofobjectiveandsubjectivefactorsthatagenciesmaywishtoincorporateintotheirownframeworkforcaseselectionandprioritisation.Thesecriteriaaddressissuesrangingfrompublicinterestconcerns,agencyprioritiesandeconomicconsiderationstodeterrenceandlegalrequirements,beforethepartconcludeswithasummaryofgoodpractices.
4.1.1Terminology
Caseselectionisanenforcementthresholdtoolthatoccursbeforeprioritisation.Thethresholdiscreatedthroughasetofcriteria.Ifapotentialinvestigationisfoundtomeetcertaincriteriaorhavecertainattributesandthereforepassesthethresholdpoint,adecisionwillbemadetoproceedtoprioritisation.Criteriaorattributesfoundwithinacaseselectionthresholdmightincludeenforcementparameters,thelikelihoodofsuccessfuladjudicationorthepotentialforevidencetobeobtained.
Prioritisationoccursonceadecisiontoconductsomelevelofinvestigationhasbeenmadeandconsistsofweighingavarietyoffactorstoadvancesomeinvestigationswhileatthesametimedevotingfewerresourcestootherinvestigationsorperhapsevenabandoningthemaltogether.Prioritisationofonematteroveranothermayoccurforavarietyofreasons,includingstrategy,toceaseconductthatmaybeconsideredofgreaterdetrimentand/orlegalrequirementssuchastheimpendingpassageofalimitationperiod.
Theterms‘caseselection’and‘prioritisation’maybeusedsomewhatinterchangeablyandthismakesdefiningeachtermalittleambiguous.Thispartofthechapterusesbothtermsascomplements.Insomeinstances,itmaybedifficulttomakeaninformeddecisiononcaseselectionandprioritisation,particularlyasthefullextentoftheallegedconductmaynotbecomeevidentuntilaftertheinvestigationhasstarted.Further,prioritisationfollowingthecommencementofaninvestigationmightresultwherecertainparametersaresettomaximisethelikelihoodofsuccessfuladjudicationand/ortouseavailableresourcestotheirgreatestextent.
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4.1.2Context
Eachjurisdictionwillchoosecasesdifferentlyandwillhavevaryingpriorities,investigationstrategiesandresources.Insuchanenvironment,theissueforthecompetitionagencyiswhichcartelinvestigationitprioritisesoverothers.Makingthesedecisionsinaninformedmanner,throughwhichparticularcriteriaaremeasuredandanalysed,willgosomewaytoensuringthatlimitedresourcesareusedinthebestpossiblewaytoenforcethelaw.Ideally,informeddecision-makingaboutcaseselectionandprioritisationmayalsoresultinsuccessfuladjudicationofoutcomes,leadingtoeducation,deterrenceandareductionincartelformation.
Therearenumerousapproachestocaseselectionandprioritisation,whichdependsomewhatonthelegal,economic,politicaland/orregulatoryenvironmentsinwhichthecompetitionagencyisworking.Itisnotuncommonfortheretobelargedisparitiesbetweentheenforcementresourcesandprioritiesindifferentjurisdictions12,orforinvestigationstobedelayedbecauseofresourceconstraints.13Thedecisionregardingwhethertoinvestigateacasecanbeheavilyinfluencedbytheresourcesavailable.Decisionsmaybemadewithconsiderationforthepossibilityofcostsbeingawardedagainsttheinvestigatingauthority.
Inlightoftheseconsiderations,itcanbeusefulforacompetitionagencytohavespecificselectioncriteriainplacetoassesswhichelementsofapotentialoffenceandthesurroundingcircumstancesaremostimportanttotheagency,itsenforcementprioritiesanditsavailableresources.Casesmaythenbeweightedagainstsuchcriteriatodeterminewhichmatterswillwarrantinvestigation,or,alternatively,movebeyondaninitial‘threshold’investigation.(Theremayevenbejurisdictionswhereinvestigationstriggerappealmechanisms).Objectivecriteriamaybeusefulinassessingavailableinformationtoenabledecisionstobemadeonwhetherornottoinstigateaninvestigationwithoutsettingoffanysuchtriggers.
12 GSpratling,‘Detectionanddeterrence:rewardinginformantsforreportingviolations’,George Washington Law Review, 69(5/6),2001,798–823.
13 PMassey,Using immunity to fight criminal cartels–new strategies that can help win the war against cartels,2000,retrieved6March2006fromwww.tca.ie/home/index.aspx.
Itisconsideredgoodpracticetohaveageneralpolicyorapproachsettingoutthestepsintheagency’sinvestigativeprocess,tohaveinaplaceamethodtoassessandweightherelativemeritsofcartelmattersandtofacilitatedecision-makingregardingtheselectionandprioritisationofcases.
Itisconsideredgoodpracticeforinvestigatorstohaveagoodunderstandingoftheobjectivesofthepolicyorapproachandtobewelltrainedinitsuseandapplicationoftheframework.
Itisconsideredgoodpracticeforagenciestohaveapolicyorapproachwitheasilymeasurableobjectivecriteriathatalsoreflecttheparticularpolitical,economicandregulatoryenvironmentwithinwhichtheagencyinvestigatescartelconductandenforcesitscompetitionlaw.
Itisconsideredgoodpracticeforagenciestoassigndifferentweightstothecriteriainthepolicyorapproachtoreflecttherelativeimportanceofeachcriterion.
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4.2 SelectionandprioritisationcriteriaCompetitionagencieswilloftenbecomeawareofmorecasesofcartelbehaviourthanavailableresourceswillenableittoinvestigate.Itisthereforeusefultohaverobustcriteriatoevaluatemattersbroughttotheattentionoftheagencytodetermineinanobjectiveandconsistentmannerwhichinvestigationstopursue.Applicationofsuchcriteriatoeachcasereceivedbytheagencyisconsiderednotonlyresource-efficientbutisalsodefensiblyfair.Publishingsuchcriteriamayfurtherdemonstrateopenness,objectivityandaccountability.Insomecircumstances,anagencymaychoosenottoadoptaweightingsystemwithformalselectioncriteria,yetitisstilllikelythatcaseswillbeselectedbasedonassessingamatteragainsttheagency’sgeneralpriorities.Includedinthispartarefivesuggestedcriteriaforcaseselectionandprioritisation.
4.3 Criterion1:publicinterestCartelsareusuallyofmajorpublicinterestorconcernduetotheextensiveharmcausedtoconsumersaswellaslocal,nationalandinternationaleconomies.Conductsuchasprice-fixing,market-sharingandbid-rigginggenerallyincurheavypenalties(includingsubstantialfines)forbusinessesandindividuals.Insomejurisdictions,cartelconductisconsideredsodamagingthatcriminalsanctionshavebeenintroducedthatincludejailsentencesforindividualsinvolvedincartels.Factorstoconsiderwhenassessingthepublicinterestofaparticularinvestigationincludetheextentofpotentialconsumerandmarketdetriment.
4.3.1Extentofpotentialconsumerdetriment
Studiesintocartelsestimatethattheaveragelengthofacartel’soperationissixyears,andduringthattimethepriceofaffectedcommoditiesusuallyrisesbyatleast10percent.ItisestimatedthattheworldwideeconomiccostofcartelsexceedsmanybillionsofUSdollarseveryyear14andcausesextensiveharmtolocal,nationalandinternationaleconomies.
Agencieswillmostlikelyprioritiseacartelmatteroverothertypesofanti-competitivebehaviourduetotheknowneconomiceffectofcartelconduct.Inprioritisingonecartelinvestigationoveranother,agenciesmaytakeintoaccounthowwidespreadtheeconomicimpactmaybeandthevolumeofcommercethatisaffectedandthedurationoftheconduct.Inassessingthefactors,theagencymayallocatealesserprioritytothosecaseswheretheeffectisnotasgreat.
Theharminflictedbycartelsontheeconomyandthegeneralpublicmayinclude:
• consumersbeingforcedtopayhigherpricesforgoodsorservices—alternatively,consumersmaybeunabletoaffordtheproductsatall
• businessesbeingforcedtopayhigherpricesorhavingtopassthiscostontotheircustomers
• governmentagenciespayinghigherpricesforgoodsandservicesandpassingthesecostsontotaxpayers
• businessesinvolvedincartelshavinglessincentivetoinnovateoroperateefficiently.15
Insomejurisdictions,consumerdetrimentmaybemeasuredprincipallybythelevelofpricechangesforconsumers.Thatis,weightmaybegivenaccordingtothepercentageofthepricechangeaffectedbytheoffendingconductovertimewheremoreweightisgiventosituationsinvolvingahighpricechange
14 ThesecondOECDreport,Report on the nature and impact of hard core cartels and sanctions against cartels under national competition laws, states ‘Theworldwideeconomicharmfromcartelsisclearlyverysubstantial,althoughitisdifficulttoquantifyitaccurately.Conservatively,itexceedsmanybillionsofU.S.dollarsperyear’,2002,p.7.
15 OrganisationforEconomicCooperationandDevelopment, Report on the nature and impact of hard core cartels and sanctions against cartels under national competition laws,2002(www.oecd.org).
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overashortperiod.Suchcalculationsmayoftenprovedifficultandmayrequiretheengagementofexperteconomicadvicetocalculatetheextentoftheconsumerdetriment.Thisneedistypicallybroughtaboutduetothecomplexityofseparatingelementsofpricerisesthatareduetonaturalchangessuchasincreasesincostofrawmaterialsorlabour.Itshouldalsobenotedthatwhenproductsareessentialcommodities,theeffectofcartelbehaviourcanbeconsiderable.
4.4 Criterion2:agencyprioritiesItisnotuncommonfordecisionsoncaseselectionandprioritisationtobemadeinlightoftheoverarchingagencyprioritiesthatarepre-determinedbyanagency’smanagementgroup.Someagenciesissueanannualdeclarationoftheindustryorsectorsthatareofparticularinterest.Forexample,someagenciespublishannualcorporateplansandprioritieswhichsetouttheconduct,orparticularsectorsoftheeconomy,inwhichenforcementofthelawisapriority.Suchplansthenenableeasycomparisonsbetweenthemattersathandandtheoverarchingagencyprioritiestoassistinmaximisingthecaseselection.Otherfactorsthatimpingeondecisionsmadeunderthiscriterionincludetheprioritiesofparticularmarketsorsectors,thestrengthofevidence,availabilityofresources,novellegaloreconomicissues,alternativeactionandtheavailabilityofreceivinginformationfromanotheragency,leniencyapplicant,informantand/orwhistleblower.
4.4.1Prioritiesofparticularmarketsorsectors
Agenciesmayquestionhowrelevantagivenindustryorsectoristotheprioritiesoftheagency.Someagencieswillundertakeadetailedanalysisofvariousindustrieswhentryingtodetectcartels.Thismaybeasaresultofintelligenceindicatingthatparticularindustriesaremorelikelytogeneratecartelbehaviour,oralternatively,secondaryindustriesidentifiedbycartelparticipantsinotherinvestigationsorthroughaleniencyapplication.
Mostagenciesinvestigatethescopeofcartelconductinthecontextofthemarket(s)inwhichthecarteloperates.Identifyingamarket—includingidentifyingthesellersandbuyerswhopotentiallyconstrainthepriceandoutputdecisionsoftheplayersinthatmarketisanintegralpartofacartelinvestigation.Itisimportanttoestablishhowlargethemarketis—specifically,whetheritissubstantialenoughfortheallegedcartelconducttohaveasignificanteffectonbusinessesandconsumers.Thelargerthemarket,themoredetrimentislikelytooccurandthemorelikelyitisthattheagencywillprioritiseonecaseoveracaseconcerningasmallermarket.Agenciesmayalsoconsiderwhethercartelbehaviourisendemicinaparticularindustryandwhetherthisisanothercaseinapatternofcasesaffectingthatindustry.Thismaymeanthatmoreneedstobedonetoeducateandmonitoraparticularindustry.
4.4.2Availabilityandstrengthofevidence
Thestrengthoftheavailableevidencewillbeasignificantfactorinanagency'sdecision-makingprocess.Whiletheremaybeaverystrongsuspicionthatacartelisoccurringinaparticularmarket,itisnotworthcommittingresourcestoamatterthatdoesnothavestrongevidenceandthereforeisnotlikelytobeasuccessfulcaseinsubsequentlitigationorappeal.
Differentagencieswillusedifferentmethodsfordeterminingtheavailabilityandstrengthofevidence.Insomeagencies,anevidencematrixiscreatedtosetouttheevidencetrail.Thepurposeofusinganevidencematrixtoplananinvestigationinitsformativestagesistodeterminewhethertheevidenceobtainedsofarislikelytosustainadjudicativeproceedings.16Inothersituations,moreweightwillbegiventoamatterifthereis‘directevidence’(e.g.documentsorwitnesses)andlessweightgiventomatterswithcircumstantialevidence.
16 ILawrence,‘Evidencegatheringtechniques’,workshoppresentedtoparticipantsattheICNCartelWorkshop,Sydney,Australia,2004.
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Decisionsregardingthestrengthandavailabilityofbothdirectandcircumstantialevidencenecessarilyinvolveaprocessofongoingandregularassessment.Therefore,anyinvestigationplansorevidencematrixescanbeviewedas‘living’documentsthatenabledecision-makerstoassesstheappropriateprioritylevelofanyparticularmatterastheinvestigationproceeds.
4.4.3Availabilityofresourcesfortheinvestigationandadjudicationofthecartel
Oncethestrengthoftheevidencehasbeendetermined,thenextissuetobefacedbyanagencyistheresourcesithastoinvestigateandadjudicateacartel.Theseresourcesincludestaff,travel,expertsandlegalservices.Someagenciesmayhavelimitedbudgetsandcanonlyundertakeafewcasesatatimeormakedecisionsaccordingtosetratios(e.g.oneinvestigationperyear).Insomeagencies,staffundertakingcartelinvestigationsmayworkacrossanumberofareasthatdealmorebroadlywithcompetitionmatters,suchasmergersanddominanceissues.Agenciesmayweightmattersaccordingtothefinancialandhumanresourcesrequiredtopursuethecasetoresolutionandthismaysomewhatdependonthetypeofevidenceneededaswellasthecomplexityofissuesstilltoberesolved.
4.4.4Anynovellegaloreconomicissues
Anagency’sdecisionmayalsobeinfluencedbyitsneedsanditsassessmentofthebenefitsthatmayflowfromanyaction.Forexample,adevelopingagencymayoptforasimpler,shortercasetobuildcredibilityandexpertise,andtodemonstrateitseffectivenesstopoliticians,policy-makersandothersofinfluence.Prioritymaythereforebegiventomatterslikelytoleadtonewcompetitioncaselaworonthepoliciesandpracticesoftheagency.Someagenciesmayhavetotesttheextentofjurisdictionorobtainajudicialinterpretationoflegalprovisions,andaparticularcasecouldbepursuedwiththisasamajorobjective.
4.4.5Possibilityofdifferentactionresolvingtheproblem
Someagenciesmayconsiderwhetherinvestigationandadjudicationisthebestwaytoresolveaparticularcartelproblem.Somecartelsarebroughttoanendnaturally,perhapsbecausetheindustryispronetocompetitionorbecauselargebusinesscustomersareabletodestabilisethemthroughtheexerciseofbuyerpower.17Theuseofalternativecaseresolutionstrategiesmaydependontheparticularlawsgoverningcartelconductinthejurisdiction.Inothercases,differentactionsuchaseducation,encouragementofprivateenforcementorthecommencementofawiderinvestigationmaybeequallyormoreeffectiveand,insomecases,mayevenusefeweroftheagency’sresources.
17 See,forexample,JBraithwaite,‘Rewardsandregulation’,Journal of Law & Society,29(1),2002,pp.12–26,2002;andalsoJClarkeandSEvenett,‘Thedeterrenteffectsofnationalanticartellaws:evidencefromtheinternationalvitaminscartel’,Antitrust Bulletin,48(3),2003,pp.689–727.
Itisconsideredgoodpracticeforthegeneralpolicyorapproachtobeappliedconsistentlytoallcartelmattersatthepre-investigativestagethatmayrequiresignificantagencyresourcesduringtheinvestigativestage.
Itisconsideredgoodpracticetoreviewtheapplicationofthepolicyorapproachatpre-determinedtimeintervalstoensurethattheresultsarestillvalidanddetermineiftheapproachtakenregardingaparticularcartelmatterneedstoberevised.
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4.4.6Cooperation,coordinationandobligationstootherauthorities
Competitionagenciesmayturntootherlawenforcementoradministrativeagenciesforinformationthatcouldfurtherinformthedecisionsaboutcaseselectionandprioritisation.Whereassistanceiseitherrequiredorprovidedbyotherinvestigatoryoradministrativeagencies,approvalprotocolsattheproperlevelsbetweenboththerequestingandassistingagencyshouldbeclearlyestablishedandfollowed.
Adecisiontoproceedwithaninvestigationandsubsequentadjudicationofacartelmattermayalsoresultinanexpectationand/orobligationfromotherdomesticorinternationalauthoritiesthatcooperationandcoordinationwillbeforthcoming.Suchexpectationsandobligationsmayaffectthelimitedresourcesavailabletothecompetitionagency,butthebenefitsofsuchrelationshipsarebelievedtofaroutweighthedisadvantages.
4.4.7Cooperationfromleniencyapplicants,informantsorwhistleblowers
Thepresenceofaleniencyapplicant,informantand/orwhistleblowermayaffectanagency’sdecisionsregardingcaseselectionandprioritisation.Typically,aninvestigationwithaleniencyapplicant,informantand/orwhistleblowerfeaturessubstantiallevelsofevidentiarymaterialandcooperation.Giventhistendency,theremaybeanassumptionthatmattersfeaturingaleniencyapplicant,informantand/orwhistlebloweraresomewhat‘easier’.Thismayormaynotbethecaseandshouldnotdetractfromrigorousinvestigations.
4.5 Criterion3:economicconsiderations
4.5.1Industry-wideconductorlikelihoodofconductspreading
Cartelconductwillalmostalwayshaveasignificanteffectontherelevantindustryandsometimesevenassociatedindustries.Itisalsolikelythat,forothercompetitorsinthemarket,reprisalmaybeusedtoencouragethemtojointhecartel.Therefore,ifthereisnointerventiontostopthecartelconduct,itislikelytheconductwillbecomeevenmorewidespread.
Underthesecondpartofthiscriterion,cartelsaremorelikelytobetreateddifferently.Caseshavingabroadergeographic(i.e.national)effectmaybeweightedmoreheavilyduetoanassumptionthattheywillhaveagreaterimpactonthepopulationandeconomythanonewithmorelimited(typicallyregionalorlocal)impact.
Inassessingthemarket,agencieswillgenerallyallowadegreeofflexibilitytoaccountforbothqualitativeandquantitativeaspectsofaparticularmarket.Forexample,aproductorservicemaynotbelargeintermsofitstotalmarketorintermsofthepercentageofinputintoparticulardownstreamoperations,butmaybeessentialintheproductionprocesswithanimpactonproductsorservicesthatinturnaresubstantialmarkets.
4.5.2Volumeofcommerceandmarketpowerofcompanies(abilitytoaffectprice)
Someagenciesmaysetacertainminimumlevelofcommercialvolumethatneedstobeaffectedbeforethematterisprioritisedoveranother.Alternatively,agenciesmayhaveageneralpolicythatthehigherthevolumeofcommerce,thegreatertheprioritygiventothatmatter.Whilecartelarrangementsthataffectlargevolumesofcommercemaybemoreofapriorityforsomeagencies,itisimportanttokeepinmindthatcartelsdonotjustaffectmulti-milliondollarcontracts.Insomecircumstances,cartelscanariseatamorelocallevelandbeonasmallerscaleyetcanstilldamagetheeconomyandbusinesses.Mostagencieswillaimtoinvestigateabroadrangeofcartelsinvolvingcompaniesofdifferentsizesandwithdifferentvolumesofturnovertobalancethedeterrenceofcartelbehaviouracrossallpartsoftheeconomy.
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Inadditiontothevolumeofcommerceaffected,theagencymayalsolookatthemarketpowerofthecompaniesinvolved.Thehigherthecombinedmarketshare,thegreatertheweightthatmaybegiventothatparticularcasebytheagency.Careshouldbetakeninapplyingthiscriteriaastheremaywellbestrongdeterrentvalueinbringingactionincaseswheresmallercompetitorscollude,forexampleinattemptingtocombatalargercompetitor.
Themarketpowerofthecartelists’businesscustomersmayalsobeimportant(providedthecostofthatinputisnotinsignificant).Ifthosecustomersareabletoexertsignificantbuyingpowerthecartelmaybeunderminedand/ordestroyedthroughnaturalmarketforces,enablingtheagencytodevoteitsvaluableresourcestoothercases.Aswithmanyothercriteria,thismaydependlargelyontheprohibitionsgoverningcartelconductinparticularjurisdictions.Forexample,theextenttowhichthe‘puttingintoeffect’ofanagreementisanintegralpartofthelegislativeregime.
4.5.3Durationofcartelconduct
Theaveragelengthofacartelissixyears,thoughitisnotuncommonforcartelstoexistformorethan20years.18Giventhepreviouslymentionedeconomicdamagecausedtoconsumersandeconomiesasaresultofacartel’sexistence,thedurationofthecartelmaybeafactorthatcouldleadtoonecartelbeinginvestigatedinpreferencetoanother.
4.6 Criterion4:generalandspecificdeterrenceThepreventionofharmbeinginflictedonconsumersandgeneraldeterrenceshouldbetheprimarygoalsofanycompetitionlegislationoranti-cartelprogram,andthesegoalsareachievedbydetecting,adjudicatingandpenalisingthosefoundengagingincartelconduct.19Bothgeneralandspecificdeterrencewillresultifothersarediscouragedfromcommencingorcontinuingtoengageintheillegalbehaviour.Whenconsideringcaseselectionandprioritisation,thereisanopportunitytoassessthepotentialforeducationandanypossiblepromotionofgeneralcompliance.Otherrelevantfactorsmayincludeanyblatantdisregardofenactedlawand/ortheoccurrenceofrecidivistbehaviour.Onthisnote,cartelsareseenasoneofthemostserioustypesofanti-competitivebreachesand,inmanycases,cartelconductconstitutesablatantdisregardofthelawandisthereforeahighpriorityforacompetitionagencytoinvestigate.
4.6.1Potentialforeducationandpromotionofgeneralcompliance
Agenciesmayprioritisematterswhereitisanticipatedthattheresolution(i.e.fines,imprisonment,undertakings,privatelitigationand/orpublicity)willhaveasignificanteducativeanddeterrenteffectonfirmsinthatindustryandonpotentialcartelistsinotherindustries.Thismayalsoassistwithrepeatoffenders.
4.6.2Recidivism
Ifanallegedcartelparticipantisarecidivist(i.e.eitheranindividualoracompanyisknowntotheagencyand/orhasahistoryofpreviouscontraventions),itismorelikelytheagencywouldwanttopursuethatindividualorcompany.Anagencywilltendtoconsiderwhether:
• thepartiesarelikelytobepartytoothersimilararrangements
• theissueconsideredaffectsthewholeindustryandnotjustthepartiesbeinginvestigated
18 WWils,‘DoestheeffectiveenforcementofArticles81and82ECrequirenotonlyfinesonundertakingsbutalsoindividualpenaltiesinparticularimprisonment?’,paperpresentedattheEuropeanUnioncompetitionlawandpolicyworkshop.SeealsoCVeljanovski(2006),‘Penaltiesforpricefixers:ananalysisoffinesimposedon39cartelsbytheEUCommission’,European Commission Law Review(9),2001,pp.510–13.
19 PMassey,Using immunity to fight criminal cartels—new strategies that can help win the war against cartels,2000;retrievedfromwww.tca.ie/home/index.aspx.SeealsoMDelrahim,‘Thebasicsofasuccessfulanti-cartelenforcementprogram’,paperpresentedattheSeoulCompetitionForum,RepublicofKorea,2004.
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• itisawiderissueaffectingotherindustries
• otherrecentcaseshavecoveredthesameindustryorissues.
Higherfinesorlongerimprisonmentmayactuallybesoughtand/orimposedincasesofrecidivism,particularlyifrecidivismisviewedintheadjudicationprocessasanaggravatingfactor.
4.7 Criterion5:legalconsiderationsCompetitionagenciesshouldbemindfulofanylegalrequirementsorconsiderationsthatmayimpingeontheirabilitytodecideoncaseselectionandprioritisation.Examplesofsuchrequirementsmaybetheimpendingpassageofalimitationperiod,whetheracompanyevenexistsanymore(orhasperhapsbeenliquidated)and/orwhetherthereareanytargetswithinagivenjurisdictiontoadjudicateagainstshouldaninvestigationproceed.
4.8 Makingadecision
Dependingontheinternalprocessesofanagency,therelevantstaffmaydeterminethe‘weight’or‘score’ofpotentialmattersagainstthecriteriaorprioritiessetbytheagency.Adecisioncanthenbemadeastowhichmattersmeetthecriteriamostsuccessfullyandshouldthereforebepursued.Particularagenciesmaycreatespecialcommitteesofseniormanagerswhoseroleitistoassessstaffrecommendationsbasedontheagency'sprioritiesandpolicysettings.Alternatively,assessmentcanbereviewedbysomeonenotworkingonthematter.
Theuseofestablishedandwell-developedselectionandprioritisationcriteriainprioritysettingshouldgreatlyenhanceanindividualagency’seffortstobringafocused,strategicapproachtocartelinvestigations.However,whileobjectivecriteriaareessentialtoanagencybeingabletorightlyarguethatitisselectiveandconscientiousinitstargetingofallegedanti-competitiveconduct,theexperienceandexpertiseofdecision-makersandinvestigatorsremainsafundamentalstrengthofanyagency.Thereisnoall-encompassingtemplatefordeterminingwhatasignificantmatteris,butratherarangeofcriteriathatcanbeusedtoguidedecision-makers.Caseselectionisbynecessityamatter-by-matterissuewherebythedecision-makers’discretionisguidedbyexperienceandinformedbytheevidencebeforethem,thereforemakingtheprocessacombinationofobjectiveandsubjectivefactors.
Theapplicationofsubjectivefactorsmayimpingeontheperceivedopennessandobjectivityofthecaseselectionandprioritisationprocess.Forexample,somejurisdictionsdifferentiatebetweenhard-corecartelsandthosethatmaybelessegregiousbasedonmoresubjectivefactors,suchasthedegreeofculpabilitythelevelofunderstandingorseriousnessoftheactionsbythepartieswhethertheactionswereconspiratorial(demonstratingacontemptfortheantitrustlawsandbusinessnorms)thedegreeofsecrecy,andtheextenttowhichcoercionhasbeenbroughttobearonanyoftheparticipants.
Itisconsideredgoodpracticetodocumentandsourcetheassessmentofthecriteriawhenapplyingthepolicyorapproachtoaparticularcartelmatterandtohavetheassessmentreviewedbysomeonenotworkingonthecartelcase.
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Althoughthesefactorsmaybebetterconsideredatthepenaltystage,itmayalsobeworthnotingthemduringthecaseselectionandprioritisationstage,astheymayinfluenceinitialdecisionsandrecommendationsrelatingtotheinvestigationoftheconduct.Thismaybeespeciallysoinjurisdictionsusingdiscretionregardingwhethercriminalorcivilproceedingsarepursued.
Asnotedinsection4.1.2,incertainjurisdictionsthedecisionnottoproceedtoadjudicateacomplaintmaybeopentochallenge—oratleastconsideration—byadministrativeauthorities.Decision-makersandagencystaffmaythereforenotbeasfreetousethecriteriatodecidewhetherornottoproceedtoamoreformalinvestigationstageastheyaredeemedtohavebeguntheinvestigationbyvirtueofgatheringinitialinformation.Eveninthesesituations,thecriteriapresentedinthispartmaystillberelevantandmayevenassistinreviewsofdecisionsbydemonstratingthatthosedecisionsaremadewithinadefensibleandsoundframework.Ifitisdecidedthatthecomplaintdoesnotwarrantfurtheraction(forwhateverreason),thereportanddecisionshouldbeformalisedandarchivedinamannerthatwillfacilitateeasyretentionandaccessinthefuture(seesection5.3.4).
Itisalsolikelythatjurisdictionswithleniencyprogramswillplaceahighpriorityoninvestigationsinitiatedthroughthoseprograms.Thesecriteriamaystillbeofvalueastheymaybeusedtoassesswhetheraninvestigationshouldbecontinuedand,ifso,thelevelofresourcesthatshouldbemadeavailabletoit.Whereitisdecidednottoinvestigateamatterfurther,itispossibleforalternativeremedialorcorrectiveactionstobetaken.Suchactionmaytaketheformofanadministrativeresolutionorevenundertakingsnottoengageinsimilarbehaviouragain.Individualagenciesmaychoosetheextenttowhichdecisionsnottopursueamatterarepublicised,andfurtheractionmayresultdependingonwhetherthedecisioncanbeappealedorchallenged.
4.9 SummaryThispartofthechapterhasintroducedamixtureofobjectiveandsubjectivefactorsthroughwhichagenciescandevelopapolicyorapproachtomakedecisionsaboutcaseselectionandprioritisation.Publicinterestconcerns,agencypriorities,economicconsiderations,deterrencefactorsandlegalrequirementshaveformedthebasisofthefivecriteriapresentedwithinthispart.Oncedecisionsregardingcaseselectionandprioritisationhavebeenmade,theagency'snextstepistoembarkonthepre-investigatoryphaseofthecartelallegations.Thisissueisaddressedinthenextpart.
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5 PRE-INVESTIGATORYPHASEOFCARTELALLEGATIONS
5.1 IntroductionInformationconcerningcartelactivitiescomestotheattentionofcompetitionagenciesfromavarietyofsources.Theearlystagesfollowingreceiptofinformationaboutanallegedcartelareparticularlydelicate,andactionstakenatthebeginningcaninfluencetheultimatesuccessofaninvestigation.Timelyscreeningandearlyevaluationofallegationsisnecessarytoassignresourcesappropriatelytotakefurthersteps.Itisrecognisedthatdifferenttypesofevaluationmayberequiredinjurisdictionsthathavecriminalenforcementforcartelviolations.Toalargeextent,however,thetypesofinquirytakenduringapre-investigatoryphasearethesamewhethercartelenforcementproceedsoneitheracriminalorcivilbasis.
Systemsdesignedtoresponsivelydealwiththepublicarecritical.Development,articulationandapplicationofclearstandardsfordealingwithcartelallegationscanincreasepublicconfidencethatviolationswillbepursued.Establishingmethodologiesforearlyverificationandassessmentwillassistcompetitionagenciestomakedeterminationsaboutthelikelihoodofdevelopingtheallegationsintosuccessfulcases.
Thissectionpresentsamenuofapproachesandtoolsthatcompetitionagenciesmayuseatthepre-investigatoryphase.Whilenosingleapproachanswerstheneedsofeverysituation,thegoalsofcomplaintscreeningandearlyevaluationaretoassignscarceagencyresourcestoenhanceanti-cartelenforcementandtoincreasepublicwillingnesstoreportcartelactivity.
5.2 Categorisationofcartelallegationsinapre-investigatoryphase
Apre-investigatoryphaseshouldenableacompetitionagencytoplaceallegationsofcartelactivitiesexpeditiouslyintooneofthefollowingthreegeneralcategories:
CategoryI:fast-trackmatterswhichrequirenoagencyactionandwillbedealtwithsummarily.
CategoryII:uncertainmattersthatrequirefurtherevaluationtodeterminewhetheragencyactionisrequired,orcontainallegationsofanti-competitivebehaviourotherthancartelconductthatwillbereferredtoothersectionsoftheagencyforevaluationandpotentialenforcement.
CategoryIII:plausiblecartelallegationsthatrequirefurtherinformationorverificationbeforeafull-scaleinvestigationisinitiated.
Withregardtoeachcategoryofallegations,theagencyshoulddevelopclearproceduresthatmaybeuniformlyappliedbythosehandlingcomplaintsintake,screeningandpre-investigatoryphases.
Itisconsideredgoodpracticeforagenciestoestablishmethodologiesfortheearlyverificationandassessmentofallegedcartelsduringthepre-investigativephase.
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5.3 ReceiptandscreeningofcartelallegationsCartelsaredifficulttodetect.Theexistenceofillegalcartelactivityishiddenandcartelparticipantsrelyonsecrecytofurtherandpreservethebenefitsoftheiranti-competitiveagreements.Toencouragedisclosureofcartelactivities,agencieswidelypublicisemethodsforpubliccomplaints.Whenacartelisbroughttotheattentionofanagency,itisimportanttoensurethatitishandledappropriately.Earlyinteractionbetweenacomplainantandthecompetitionagencymaydeterminefuturesuccess.
5.3.1Methodsforcomplaintsanddisclosuresbythepublic
Cartelallegationsmaybereceivedbythecompetitionagencyinperson,bytelephoneandthroughwritten(includingelectronic)correspondence.Agencieswillwishtoestablishanduseeffectivesystemstodealwitheach.
5.3.1.1Complaintsmadeinperson
Individualswhomakecomplaintstotheagencyinpersonarestronglymotivatedtodoso:ittakesmoreefforttocometotheagencyandmakeacomplaintinpersonthantopickupthetelephoneorsendanemail.However,thesecomplainantsmaynotnecessarilyhaveinformationthatisinherentlybetterormoreusefulthantheoneprovidedbytelephoneorbyemail.Drop-incomplainantsmaybeserialcomplainantswhohavemadetheroundstootheragenciesandwhoseallegationshavenorelationshiptocompetitionviolations.Suchindividualsneverthelessmustbedealtwithprofessionallyandassistedwherepossible.
Occasionallyadrop-incomplainantwillarrivewithinformationofgreatinteresttotheagency.Suchanopportunityshouldbeseized.Sufficientresourcesattheappropriatelevelwithintheorganisationshouldbedevotedtosuchacomplainant,recognisingthatthefirstmeetingmaybethebestopportunitytoobtainalltheinformationthecomplainantwishestoimpart.Thereforeagencystaffshouldbealerttoaskingthecomplainantasmanyquestionsfromthelistbelowaspossible(seesection5.4.2andappendixI).Itisimportantinthefirstmeetingtolistencarefully,thinkaboutwhatissaidandaskfollow-upquestions.
5.3.1.2Telephonecomplaints
Respondingtocomplaintsmadebytelephonerequiresparticularthoughtonthepartoftheagency.Evenwhencomplaintsaredirectedtoaspecificintakepoint,telephonecomplaintsmaybereceivedbyalmostanyoneintheagency.Itis,therefore,importantthatclearproceduresareestablishedandallstaffareinformedaboutthemandtrainedonhowtoapplythem.
Telephonecomplainantsoftenpickupthetelephonebasedonimpulseoremotion.Onceincontactwiththeagency,theymaybecomereticentorhavedifficultyarticulatingtheinformationtheypossess.Nonetheless,suchcomplainantsmaypossesssolid,verifiableinformationthatisextremelyvaluableandwhichmayformthebasisforveryfruitfulinvestigations.
Telephonereceptionistsandotherswhosetelephonenumbersarereadilyaccessiblebythepublicshouldhavecleardirectionsabouthandlingtelephonecomplaints.Evenifcallswillimmediatelybeforwardedforinitialscreening,basicinformationsuchasthenameofthecallerandacall-backnumberincaseofadisconnectionshouldbeobtainedandrecorded.Becausereceptionistsarelikelytobeinterruptedbyothercalls,complaintsscreenerstowhomthecallmaybeforwardedareagooduseofresources.
Somelargeragenciesalsohaveestablishedphonebanksforcomplaints,includinganonymouscomplaints,tobetaken24hoursaday.Thesemaybemonitoredbypersonnelespeciallycontractedforthatpurpose.Agencieswithoutthesizeorresourcestojustifysuchphonebanksmaywishtohavewell-publicisednumbersthatallowforafter-hourscallerstoleaveamessageandwhichincludeanout-goingmessagetothepublicencouragingthecallertoleaveinformationonthesystem.
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Someagencieshavedeterminedthattheywillnotacceptanonymouscomplaints.Suchapolicydoesnotmean,however,thatananonymouscallershouldbedealtwithsummarilyordiscouragedfrommakingafullairingoftheirallegations.Insomeinstances,withproperencouragementovertime,suchcallerswilldisclosenotonlytheiridentities,butalsoprovidevaluableinvestigativeleads.Sometimesthisrequirestheagencytofieldmultiplecallsfromthesameanonymouscalleroveraperiodofmonths.Accordingly,itisimportanttoelicitasmuchinformationfromtheanonymouscalleraspossibleduringtheirfirstcall.Detailedinformationaboutagencyproceduresshouldbesupplied.Todeveloparapport,theanonymouscallershouldbesuppliedwithdirectdialnumberstothescreenerforfuturecalls.
Iftheinformationprovidedbyanonymouscallerscanbecorroborated,itmayprovidesufficientbasisforanagencytolaunchaninvestigationwithoutknowingtheidentityofthecomplainant.Indeed,ifsufficientresourcesareavailabletotheagency,suchanonymouscallsmaybegroundsforinitiatingsomemarketinquiriesortheapplicationofaproactivemeasuresuchasaffirmativeamnesty(seesection3.2.3above).Alternatively,corroborationmayprovideforcontinueddialoguewiththecaller,whichovertimemaycreatesufficientconfidenceintheagency’sprocessesandconfidentialityprotectionstoenablethemtorevealtheiridentity.
5.3.1.3Writtencomplaints
Fromthestandpointofreceiptandreviewprocedures,writtencomplaints,receivedeitherbyletterorelectronically,aregenerallyeasiertoprocessbecausetheytypicallyprovidespecificinformationrelatingtoconductand/orcompanies.Someagencieshaveapolicyofnotprocessingcomplaintsotherthanthosemadeinwriting.Whensuchproceduresareadopted,thosereceivingverbalcomplaintsmustensurethatitiscleartothecomplainantwhatactionisrequiredforacomplaintfiletobeopenedandforacomplainttobeinvestigated.Undersuchcircumstances,telephonecomplainantsshouldbegiveninstructionsaboutwhatinformationisrequiredandmethodsforsubmittingwrittencomplaints.
Emailprovidescomplainantswithareadilyaccessiblewayofputtingtheircomplaintsinwriting.Agencywebsitesshouldcontainclearproceduresandeasy-to-useprocedurestomakeelectroniccomplaints.
5.3.2Complaintsreceiptandreviewprocedures
Itisconsideredgoodpracticeforagenciestoestablishproceduresanddeadlinesforthepre-investigativephaseofacomplaintregardinganallegedcartel.
Itisconsideredgoodpracticeforagenciestoestablishclearandstandardproceduresfordealingwithcomplainantsregardinganallegedcartelinthepre-investigatoryphase.
Itisconsideredgoodpracticeforagenciestoprovideongoingtrainingtotheirofficersaboutmethodologiesandtechniquesforconductingapre-investigationphaseincludingproceduresfordealingwithcomplainants.
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Itisimportantforagenciestostandardisetheproceduresforthepublictomakecomplaintsandusefultotrainallstaffaboutthoseproceduresandtheirapplicationsinpractice.Thepublicshouldreceiveconsistentinformationregardlessofwhomtheyspeaktowithintheagency.Proceduresshouldbeestablishedforrecordstobemadeofallcontactswiththepublic.Someagencieshavedevelopedandappliedwrittenstandardsfordealingwiththepublicwhichrequirestaffto:
• treatmembersofthepublicwithcourtesyandconsideration
• attendpromptlytopeoples’questionsandneeds
• exercisetheutmostintegrityinprovidingservices
• refrainfromdisclosinginformationacquiredincarryingouttheirfunctions,exceptaspermittedbylaw.
Ingeneral,informationaboutcomplaintsproceduresshouldbereadilyavailableinwrittenformonwebsitesandinagencypublications.Complainantsshouldbegivenclearinformationaboutwhattheymayandmaynotexpectfromtheagencyregardingtheircomplaint.Complainantswillbeconcernedaboutthelevelofconfidentialityanddisclosureprotectionsaccordedbytheagencytotheircomplaint.Agencieswillwishtomakecertainthattheseprotectionsareclearlyarticulatedtocomplainants.Complainantsmaycontinuetohavequestionsaboutagencyproceduresafterthefirstcontact.Ifdocumentdisclosuresarepartofthecomplaint,thesemaypresentadditionalquestionsthatneedtobethoughtaboutinadvance(seesection5.5).
Someagenciesconfirmreceiptofacomplaintinwriting,whileothersmakenosuchprovision.Insomeagenciesthecomplainantmayexpecttobeapprisedoftheprocessingofthecomplaintandtheprogressoftheinvestigation,whileotheragenciesmakeitapracticeattheoutsettoinformthecomplainantthatnofurtherdisclosureonthecourseoftheinvestigationmaybeexpected.Someagenciesviewthecomplainantandthirdpartiesaspotentialstakeholdersintheprocess.Otheragenciestaketheview,basedonpolicyorbecauseoflegalorothernon-disclosurerequirements,thatcomplainantswillbeprovidedwithnoinformationconcerningtheprogressoroutcomeoftheirallegationsapartfromthosegiventothegeneralpublic.Whateverapproachanagencyadoptsshouldbeclearlystatedandwidelypublicised.
Generallynoviewsshouldbegivenonthevalidityofacomplaint.Someagenciesmayfinditappropriatetoinformcomplainantsabouttheprivaterightsofaction,orotherroutesforself-helpthattheymayavailthemselvesof,particularlyinthosesystemswherepublicenforcementconfersnorightsorstatusonthecomplainantandwhereseparateprivaterightsofactionmayexpireorbecomejudiciallytime-barred.
Complainantsshouldbegivenaclearunderstandingof:
• theproceduresthatwillbefollowedregardingtheircomplaint
• theagency’sexpectationsofthemintermsofprovidingadditionalinformation(inthecasewhereacomplainantcomesforwardvoluntarily)
• thelevelofinformationthattheagencywillimparttotheminthefutureaboutthestatusof theircomplaint.
Someagenciesmakeitapracticeofinformingacomplainantwhenaninvestigationiscompletedorclosed,whileothersexplicitlydonot.
Itisconsideredgoodpracticeforagenciestoprovideinformationtocomplainantsoutlininghowtheircomplaintwillbeevaluatedandtheagency’sexpectationsofthem.
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5.3.3Agencyproceduresforscreeningandtrackingcomplaints
Allagencieswillhaveestablishedproceduresforinitialscreeningandprocessingofcomplaints.Theobjectistodeterminethevalidityofthematter,disposingofthosethatdonotdiscloseacartelissueandreferringthosethatrequirefurtherevaluationtotherelevantdivision.
Someagencieshavescreeningcommitteesthatmeetonaregular(weeklyorbi-weekly)basistoscreencomplaintsexpeditiouslyandinaroutinemannerandtodisposeofcomplaintsthatrequirenofurtheraction.Otheragenciesrelyontheindividualcomplaintsscreenerstoassessthecomplaintstheyreceiveandtodisposeofthosecomplaintsforwhichnofurtheractioniswarranted.Someagencieshavedevelopedstandardisedresponseletters,whicharetobepersonalisedtothespecificsofacomplaintand,insomeinstances,sentoutwithinaprescribedtimeafterthecomplaintisreceived.Theseagenciesuseformlettersintheinterestofadministrativeefficiencyanduniformtreatmentofthepublic.Otherstakealessuniformapproach.
Electronicdatabasesandsearchablefilesareparticularlyvaluabledevicesforagencies.Suchtools,ifconscientiouslyemployed,allowagenciestoassociatemultiplecomplainantsorsourcesofevidenceconcerningaparticularcartel.Robusttrackingsystemsprovideresourcesforlarge,geographicallydiverseagencystafftodrawoninstitutionalexpertiseorpriorcasestoassistinassessinganddevelopingnewcomplaints.
5.3.4Disposingofmattersthatrequirenofurtheraction
Totheextentpossible,agencieswillfinditusefultoestablishtighttimeframesfortheinitialscreeningandreviewofcomplaints,particularlythosethatfallintocategoriesIandII(seesection5.2).Eachagencyisbestplacedtoestablishitsowntimeframes,butasageneralruleofthumb,categoryIandIIdecisionsmaybemadewithinaperiodofafewdaystoafewweeks.Ifitisdecided(forwhateverreason)thatthecomplaintdoesnotjustifyfurtheractionatthattime,thereportanddecisionshouldbeformalisedandarchivedinamannerthatwillfacilitateeasyretentionandaccessinthefuture.CategoryIIIcomplaints,whichrequiremoreverification,maytakelonger,althoughsomeagencieshavetightdecisiontimeframes.
Electronicdatabasesandinformationretrievalsystemscanassistindevelopingso-calledinstitutionalmemoryconcerningindustries.Individualswithintheorganisationwhohavepreviouslydealtwithallegationsorcasesinanindustrycanbereadilyidentifiedandmayprovidevaluableearlyassistanceinevaluatingallegations.Insomeinstances,multiplecomplaintsconcerninganindustry,madeseparatelyandoveraperiodoftime,whicharenotindividuallysufficienttojustifyfurtherinquirymay,whenevaluatedtogether,provideabasisforafruitfulinvestigation.
5.3.5Specialconsiderationsforwhistleblowersandinformants
Whistleblowersandinformantsgenerallypossessvaluableinformationthattheyareeagertosharewiththeagency.Theyareoftenindustryinsiderswhohavedecidedtocomeforwardwithcarteldisclosuresdespiteriskstotheircontinuedemploymentorreputationsshouldtheybeidentified.Becauseofthenatureoftheirdisclosures,theyoftenviewthemselvesasstakeholdersintheprocessandmaywantspecialconsiderationbyagencies.Agencypoliciesfordealingwithwhistleblowersandinformantsrequirecarefulthoughtandwhistleblowersandinformantsshouldbeclearlyinformedaboutthosepoliciesatallstagesoftheprocess.
Itisconsideredgoodpracticetoimplementinternalprocedurestoassessandevaluateinformationandcomplaints.
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Somejurisdictionshavewhistleblowerprotectionstatutes,whileothersdonot.Agenciesshouldbepreparedtoinformwhistleblowersoftheleveloftheirownandancillarywhistleblowerprotectionlegislation.Itisimportanttoensurethatexpectationsareproperlymanagedaboutthelevelofinformationandinvolvementthatthewhistleblowermayexpectintheagencyinvestigation.Iftherearealternativeroutesthatwhistleblowersmaypursue,itisusefulfortheagencytoinformthewhistlebloweraboutthoseoptionsattheoutsetsothattheyarenotlaterforeclosedbecauseoftimebarsfromself-helporprivaterightsofaction.
5.3.6Leniencyapplicants
Whenacomplainantisanindividualorarepresentativeofacompanythatisseekingleniency,additionalconsiderationswillapplytotheintakeofthecomplaint.Leniencyprogramsandsuggestedproceduresaredealtwithinchapter2oftheICNanti-cartelenforcementmanualandwillnotbereiteratedhere.Whereleniencyisanoption,agencieswillhavewell-publicisedrequirementsandproceduresforleniencyapplicants.Beforemakinganydisclosures,thecomplainantwillwanttoknowwhetherleniencyisavailableandtheagencywillwanttoencouragedisclosuretobeabletoassesstheallegationsadequatelyandanswerthequestion.
Someagencieshaveadoptedproceduresthatpermitdisclosureofallegationstobemadeinthefirstinstancebymeansofahypothetical,oftenpresentedbylegalcounsel,whichprovidesforsomemeasureofprotectionandanonymityforthecomplainant,butallowstheagencytoassesstheallegationsanddeterminewhetherleniencyisavailable.Likewise,someagencieshavenowadoptedproceduresthatallowverbalstatementsofallegationstobemadebyleniencyapplicants.
Injurisdictionswherethereisthepotentialformorethanonegrantofleniency,itisimportantforagenciestoadoptclearmethodsforestablishingthepriorityofleniencyapplicantsandinformpotentialleniencyapplicantsoftheiroptions.Theeaseofmakingleniencydisclosuresandtheconfidencecreatedbyagencyproceduresfordealingwithleniencyapplicationsmaysetthestageforthesuccessoftherelationship.Whereproceduresaretransparentandagenciescreateconfidenceamongleniencyapplicants,thosefactorscanleadtotheon-goingsuccessoftheleniencyprogram.
5.4 EvaluatingcartelallegationsWhenthescreeningprocessestablishesthatthecomplaintcontainscartelallegationssufficienttorequirefurtheraction(i.e.allegationsofcategoryIII),itisthennecessarytoevaluatethecomplaintwithreferenceto:
• credibility/accuracyofcomplaint/complainant
• possibilityoffurtherpersonswithknowledge
• identityofpossible/potentialwitnesses
• possibleextent/seriousnessoftheillegalactivity
• previousorsimilarcomplaintsregardingthesector
• structureofthesectorormarket,andthepositionoftheallegedcartelwithinthatmarket
• anyinternationaldimensiontocomplaint/thosecomplainedof.
Theresultsofthoseinquirieswillformthebasisfordeterminingwhetheramattershouldprogresstothenextinvestigativelevelandwhetherafull-scaleinvestigationintotheallegationsisundertaken.Suchadeterminationwillnecessarilybeevaluatedin-house,andsomeagencieshaveestablishedwrittenformatsandformaldecisiontreestocarryoutthisevaluation.
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Eveninjurisdictionswithoutformalpublishedcriteriaforcaseselectionandprioritisation,agencyresourcesarescarceandmustbeassignedforthemaximumpublicbenefit.Agencieswillwishtoensurethattheirpracticesforassigninginvestigatoryresourcestoallegationsareinkeepingwithcaselaw(seesection4above).
Itisimportantthatagencieswhichpursuecartelallegationsaseithercriminalorcivilcasesdeterminethetheoryofharmandtheirinvestigativerouteasearlyaspossible.Thisearlydeterminationmaycarryadditionalobligationsandprohibitions.Cleardecisioncriteriaandproceduresshouldbeestablishedwithintheagencytoassistsuchdeterminations.
5.4.1Obtainingandverifyinginformationofcartelviolations
Duringthepre-investigatoryphase,theagencywillbeobtaininginformationaboutthecartelallegationsandassessingthequalityoftheallegationsandofthecomplainant.Itisdesirableatthisstagefortheagencytoobtainasmuchdetailaspossibleabouttheoperationofthecartelandtheindustryfromthecomplainant.Thetimingoftheinterview(s)andtheextenttowhichtheagencywillbeabletocontroltheflowofinformationdependsonthecomplainantandthequalityofinformationtheypossess.
Theamountofinformationavailablewillvarywidelydependingonthesourceofthecomplaint.Unlikeleniencyapplicants,publiccomplainantsandwhistleblowersperipheraltotheindustrymaypossesslessknowledgeandtheirallegationsmayrequiremoreverification,whichwillcreatechallengesfortheinquiry.Attheearlystagesofverifyingacomplaint,whenthecartelmaystillbeinoperationandtheparticipantsunawarethatdisclosureshavebeenmadetotheenforcers,secrecyabouttheinquiryisextremelycritical.Theelementofsurprisemustbepreserveduntiltheappropriatemoment.
Thefollowingconsiderationsaredesignedtohelpthepre-investigatoryphaseofcartelallegations.Theyarenotmeanttoformanexhaustivelistanditwouldbeneithernecessarynordesirablethatallareansweredbeforedeterminingwhethertoinstituteafull-scalecartelinvestigation.Theyareofferedonlyassuggestions.Obtaininganswerstotheseconsiderationswillrequirestrategicthoughtandwillinvolvetakingthespecificpracticesoftheindividualenforcementagencyintoaccount.
5.4.2Informationfromthesourceoftheallegations
Agenciesshouldverifyinformationaboutthecomplainant,itscredibility,generalandspecificinformationaboutthecartel,theindustryandmarketsectorsconsiderations.SuggestionsforundertakingthisverificationarecontainedinappendixI.
5.5 OtherinformationsourcesVerificationoftheallegations,evenifsuchverificationisextremelylimited,isnecessarytodeterminewhethertoinitiateafull-scaleinvestigationandthemannerinwhichsuchaninvestigationwillbelaunched.Verifyingallegationsfromsourcesofinformationwithoutriskingdisclosureandprematurelygivingtheindustrynoticeaboutaninvestigationmaybeextremelydelicate.Evenseeminglynon-publicsourcesofinformation,suchastheinternet,mayactualltytipoffthecartelparticipantstoaninvestigation.Thereforetheuseofthird-partysources,evenpublicagencies,meritssomerisk/benefitassessmentbeforebeingusedatthepre-investigatoryphaseandshouldbedeterminedonacase-by-casebasis.
Itisconsideredgoodpracticeforagenciestoverifyandcorroborateallegationsbeforeproceedingtotheinvestigatoryphase
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5.5.1Publicsources
5.5.1.1Mediareports
Mediareportsmayprovideausefulsourceforverifyingcomplaints;conversely,theymaybethesourceofinformationinthefirstinstanceabouttheexistenceofacartel.Investigationsthathaveresultedinmulti-hundredmillion-dollarfinesandjailtermshavesometimescometolightthroughthepublicmedia.Althoughsuchinstancesareunderstandablyrare,thepublicmediaareaveryusefulsourceofinformationaboutindustriesandfromwhichthedetailsassociatedwiththeexistenceofacartelmaybeverified.
5.5.1.2Internetresearch
Internetresearchcanprovideaninexpensive,quickandrobustsourceofinformationaboutindustries,individualsandsectorsoftheeconomy(seesection3.3.9).Theuseofsearchengines,industry-specificwebsites,pressreleasesandproduct/serviceinformationareveryusefulinassessingthebonafidesofcomplaints.However,becausetheyarepublicandcanbereadilymonitoredandminedbythosewhooperatewebsites,informationtechnologytoolsthatblockthetakingof‘cookies’andothertoolsthatwillnotdisclosetheidentifyoftheagencysearchshouldbeused.Someagenciesinstallsecuresitesthatcanbeusedforinternetsearcheswhileotherswillusealiasesorothertoolstoavoiddetection.
5.5.2Professionalassociationsandtradegroups
Professionalassociationsandtradegroups,alongwithindustryjournalsandtradepublicationssupportingindustryactivities,canbeextremelyvaluablesourcesofinformationabouthowindustriesoperate.Suchgroups,whicharecomposedofmembersoftheindustry,havelargerisksassociatedwiththem.Thesegroupsmaybeactivelyinvolvedinthecartel,complicitincartelbehaviourormerelyawareofsuchactivities.Obtaininginformationfromprofessionalgroupsandtradeassociationsalmostalwaysrisksdetectionwiththeconsequencethattheoffenderswillbetippedoff.Publicationsmayalsoprovideessentialinformationaboutproductpricesandpricetrends.However,complainantsactivelyinvolvedinsuchgroupsmaybewellawareofhowtheyareusedtoadvancethecartel.Publicationsmayprovideinformationaboutindustryparticipantsandhowthecarteloperates.
5.5.3Thirdpartysources
Amongthepossiblethirdpartysourcesofinformation,particularlyusefulwhenassessingbid-riggingallegations,arefundingsources,estimators,publicofficialsandprocurers.Eachofthemhasthepotentialforbothknowledgeofthecartelandcomplicityinit.Accordingly,theextenttowhichanagencywillusesuchsourcesbeforetheinvestigationbecomespublicwilldependonacase-by-caseassessment.
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5.5.4Involvementofotherenforcementagencies:parallelinvestigationsandinformation-sharing
Duringthepre-investigatoryphaseitmaybecomeapparentthattheallegations:
• arecompetitionallegationsbestsuitedtoinvestigationbyanotheragencywithinoroutside thejurisdiction
• involvewrong-doingoutsideofthecompetitionlawthatshouldbeinvestigatedbyanotherenforcementagencyor
• includebothcartelviolationsandothercriminalviolationsthatareancillarytothecartel,suchasfraud,tax-evasion,perjuryorobstruction.
Agenciesshouldhaveclearreferralmechanismsinplaceformattersthatarebestplacedoutsideoftheagency.Similarly,competitionagenciesmayturntootherlawenforcementoradministrativeagenciesforinformationthatwouldfurtherorassistevaluationoftheallegationsortheinquiry.Clearchannelsandmechanismfordisclosureapprovalofsuchinformationshouldbeestablishedandstaffshouldbetrained.Theuseofsourcesshouldbecarefullydocumented,withkeenappreciationfortheprivacyandotherrightsofindividualcitizensassociatedwithinformationinthepossessionofotheragenciesandlegalprohibitionsonsharinginformation.Whereinformationhasbeenimproperlyobtainedithasthepotentialtotaintallinvestigatoryleadsflowingfromit.
Whereassistanceisrequiredfromotherinvestigatoryoradministrativeagencies,approvalsattheproperlevelswithinboththerequestingandassistingorganisationsshouldbeclearlyestablished.Statutoryrequirementsandproceduresformeetingthemshouldbeclearlyidentifiedtowithstandlegalchallenges.
Certaintypesofinvestigationsmaybesufficientlysensitivetorequirehigherlevelsofapprovalbeforetakingevenpreliminaryinvestigativemeasures.Forexample,insomejurisdictions,investigationsthatrequirethesubpoenaingofmembersofthemediaorinvestigationsthatinvolvelawyersturningovermaterialabouttheirclientsareconsideredsufficientlysensitivetorequireadditionalapprovals.Whereinvestigationsinvolvethoseoutsideofthejurisdiction,otherconsiderationswillnecessarilycomeintoplay.
Whereviolationsinadditiontocartelviolationsarediscoveredinthecourseofapre-investigativephase,adeterminationshouldbemadeonhowtoproceed.Someagencieshavetheauthoritytoinvestigatecrimesancillarytocarteloffences,suchasfraud,falsestatements,taxandrevenueviolations,perjuryandobstruction,whileotheragenciesmustreferevidenceofsuchviolationstootherbranchesoflawenforcement.
Somejurisdictionsprovideforthepossibilityofjointorparallelinvestigationsoftheadditionalcriminalallegations,whileinotherjurisdictionsthecompetitionagencymustwhollydivestitselfofsuchmattersandrelyonotherlawenforcementtopursuethoseleads.Wherethelatteristhecase,itisparticularlyimportantforthecompetitionagencytodevelopopenlinesofcommunicationsothatneitheragencyjeopardisestheinvestigationsoftheother.
Itisconsideredgoodpracticeforagenciestoestablishclearreferralmechanismsandclearproceduresforinter-agencyassistanceandinformationsharingduringthepre-investigatoryphase.
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Bothformalandinformalmeansforintra-agencyassistanceandinformation-sharingshouldbeclearlyestablishedwithinandamongjurisdictionsandtheappropriatelevelsofapprovalsanddocumentationshouldbesetoutinadvancetoenhancethelevelsofassistanceandavoidunnecessaryduplicationofeffortandthewastingofpublicresources.
Ataninternationallevel,awidevarietyofinformation-sharingprotocolsandproceduresareinplacetofacilitateinformation-sharing.Caseofficersandcomplaintscreenersshouldbeknowledgeableabouttheseregimes.Manycountries,regionsandagencieshaveinplaceformalorinformalmechanisms—includingnotices,regulationsandbilateralormultilateralagreementsorarrangements—forsharinginformation.
5.5.5Paperordigitalevidence?
Complainants,whistleblowersandinformantsmaypossessevidence(includingpaperordigital)thatcorroboratestheirallegations.Attimestheyrightfullypossessevidence;inotherinstances,evidencehasbeenobtainedawaythatcouldpotentiallysubjectthecomplainant,whistleblowerorinformanttolegalconsequences.Somejurisdictionshavelawsgoverningthedisclosureofconfidentialinformationbyinformantsandwhistleblowers;inothers,theprotocolsandlegalrequirementsareuntested.
Beforeagenciesacceptevidencefromcomplainants,informantsorwhistleblowerstheyshould,ataminimum,determinethesourceofthedocumentsandcircumstancesunderwhichtheywereobtained.Theanswertothesequestionswilldeterminewhatstepsaretakenregardingthedocuments.Ininstanceswherethecomplainant,informantorwhistleblowerisstillemployedatthefirmagainstwhichallegationsaremade,agenciesshouldensurethattheyarenotcreatingarelationshipwiththecomplainant,informantorwhistleblowerthatmightlaterimplicatethecompetitionagencyinwrongfullyobtaininginformation.Forexample,anagencyshouldhaveclearproceduresinplacesothatitdoesnotinadvertentlyturnawhistleblowerintoanagentofthegovernment.
Inthesamewayasanagencywouldcreateclearprotocolsandlegalchecksbeforeusinganinformantorwhistleblowertoundertakevoluntarilytoobtaininformationaboutanongoingcartelthroughtheuseofsurveillanceandconsensualmonitoringtechniques,itshouldgiveextrathoughttothetreatmentofevidenceobtainedfromcomplainants,informantsorwhistleblowers.Anagencyshouldensurethatlaterinvestigatoryandenforcementstepsarenotcompromisedandevidencepotentiallyexcludedbecauseofafailuretoadheretorequiredlegalprocedures.
5.6 Decisiontoundertakeafull-scaleinvestigationSomecompetitionagencieshavespecificcriteriathatmustbemetbeforeafull-scaleinvestigationcanbeinitiated,whileothershavemoreinformalcriteria.Agenciesthatdonothaveformallypublishedcriteriaforcaseselectionandprioritisationgenerallywillhavedevelopedinformalmeansforprioritisinginvestigatoryactivitiesandassigningcases.Thosecriteriaarediscussedatsection4.2ofthischapter.
Itisconsideredgoodpracticeforagenciestoclearlyidentifycriteriaandestablishproceduresfordecidingwhetheramatterbeingexaminedshouldproceedtotheinvestigatoryphase.
Pre-investigatory Phase of cartel allegations ��
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Eachagencywilldeterminewhatevidenceissufficientandwhatstepsmustbetakentojustifyactivitiesthatwillmaketheinvestigationpublic,suchasasearch,raidorinspectionorsubpoenasorordersforproduction.Whereauthorisationtoconductasearch,raidorinspectionistobeobtainedtolaunchthefull-scaleinvestigation,theagencywillhaveclearwrittenprocedures.Itmaybeparticularlyimportanttorelyoninformationobtainedfromcomplainantsandothersourcesinsupportoftheauthorisation.Accordingly,thereisnosubstituteforkeepingmeticulousrecordsofstatements,investigatoryleadsandotherinformationobtainedfromcomplainants.
Wherehard-corecartelbehaviourisallegedandthereissufficientcorroboration,thedecisiontoproceedtofull-scaleinvestigationmaybeswiftlytaken.Insituationswhereajurisdictionisunsurewhethertheinvestigationshouldproceedasacivilmatterorcriminalinvestigation,legalconsiderationsmaydeterminehowtoassignthematter.Insomejurisdictionsthecourtsandotherauthoritiesmayprohibitsharinginformationbetweencriminalandcivilinvestigations.Inotherjurisdictionstheconsiderationsaremoreinformalandinvolvetheburdenofproof—forinstance,whether,foraspecificjurisdiction,itiseasiertoconvertacriminalinvestigationwherecrimesaretobeprovedbeyondareasonabledoubtintoacivilcaseinvolvingalesserstandardofproof,ortheotherwayaround.
5.7 SummaryThispartofthechapterhasaddressedsomeoftheapproachesandtoolsthatcompetitionagenciesmayuseduringthepre-investigatoryphaseofacartelinvestigation.Thekeymessagefromthispartisthatearlyinteractionbetweenacomplainantandthecompetitionagencyisaparticularlydelicateandimportantphasebecauseitmaydeterminetheultimatesuccessofaninvestigation.Inaddition,timelyscreeningandearlyevaluationofallegationsisnecessarytoappropriatelyassignresourcestotakefurthersteps.Thereforeestablishingmethodologiesforearlyverificationandassessmentofcartelallegationsarecrucialforcompetitionagencies.
Thissectionhaspresentedvarioustoolsandapproachesthatcompetitionagenciesmayuseatpreliminarystages:systemsdesignedtohandlecomplaintsreceivedundervariousforms(inperson,byphoneorinwrittenform),proceduresforreviewandscreeningofcomplaints,trackingmethods,procedurestodealwiththepublic,checklistforearlyverificationofcartelallegation,and,finally,mechanismsforinter-agencyassistanceandinformation-sharing.
Thesectionhasalsopointedouttheimportanceforcompetitionagenciestoprovideongoingtrainingtotheirinvestigatorsaboutmethodologiesandtechniquesforearlyassessmentofcartelallegations,includingproceduresfordealingwithcomplainantsandthepublicingeneral.
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APPENDIXI:INFORMATIONFROMTHESOURCEOFTHEALLEGATIONS(a)Thecomplaint
• Originofthecomplaint.
• Arethecomplainedeventsillegal/withintheambitofcompetitionlaw/appropriate forinvestigation?
• Doanywaivers,exemptionsorexoneratingdecisionsapply?
• Issuggestedscenariocredible?
• Isitpractical—whataretheadvantagestothecartelparticipants?
• Degreeofdetail—istheresufficientdetailinit?
(b)Credibilityofthecomplaint
• Background—whistleblower,customer/client,concernedcitizen.
• Isthisaserialcomplainant?
• Iscomplaintvexatious?
• Degreeofknowledgeofevents.
• Degreeofinvolvementinevents.
• Benefittocomplainant.
• Doesthecomplainanthaveanexpectationofsomepersonalreward—financial,etc.?
• Doesthecomplainantanticipatepotentialbusinessadvantagefromoutcome?Coulditberevenge/retribution?
• Willthecomplainantbackuptheallegationswithspecificevidence—statement,documents,names,locationsofmeetings?
• Isthecomplainantwillingtogoontherecord?
• Assessmentofcomplainantaspotentialwitness.
• Protection/anonymity.
(c) Informationaboutthecartel
• Howandwhendidthecartelstart?
• Whatisthelevelofinvolvement,awarenessandsupportfromseniormanagement(includingfromregional/headofficeswhichmaybeoverseas)?
• Isthecartelstillactive?
• Howdoesthecarteloperate?
• Whoaretheparticipants/ringleaders?
• Howisthecartelpolicedandarethereanyindividualswhohaveleftthecartelandcancorroboratethestory?○ geographiclocation/proximity○ existenceoftradeassociation
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○ inter-partymovementofpersonnel○ uniquenessofservice
- limitedavailableexpertise- highdegreeofspecialisation
○ individualparticipantshistory- involvementinpreviouscontraventionsofcompetitionorconsumerlaws(recidivism)- involvementinviolationsotherthancompetitionviolations(e.g.fraud)- involvementinshoddyservice
○ Supplylines.○ Management/administration/salesunitsize.
(d)Theindustryandmarketsectorconsiderations
• Structureofsector.
• Background—sales,marketshare,location,capacityandsizeofplants,otherlinesofbusiness,etc.
• Listofcustomers—top25customers(name,address,telephonenumberandcontactperson).
• Otherproducersandestimatedsalesandmarketshares.
• Plaindescriptionoftheproblemandcustomers'harm.
• Whatisrelevantproduct/geographicmarket?
• Anynewentrantsintothemarketinpastfewyears?
• Marketbuoyancy(abuoyantmarketcanmoreeasilyabsorbhighercostspassedonfrom cartelactivity).
• Degreeofdemandfluctuation.
• Evidenceofbidrotation.
• Recentsectorhistory,fromcompetitionperspective.
• Experienceinotherjurisdictions.
• Overspillintoothersectors.
• Geographicareacoveredbytheallegations.
• Howpervasiveistheallegedcartelactivity/howlonghasitbeeninoperation?
• Horizontalandverticalissuesinvolvedintheallegations.
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APPENDIXII:GOODPRACTICESRELATINGTOCARTELCASEINITIATION
METHODSOFDETECTINGCARTELSANDLAUNCHINGANINVESTIGATIONItisconsideredgoodpracticeforagencies:
• Touseavarietyoftechniquesandmethodstodetectcartels—includingamixofbothreactiveandproactivemethods—whichwillincreasetheopportunitiesfordetectingcartelsandhelpdemonstratetheagency’senforcementcapacity.
• Tohaveinplaceaformalcomplaintsystemforreceiving,handlingandrespondingtocomplaintsfromthegeneralpublic.
• Todevelopgoodworkingrelationshipswithinternationalcounterpartstoencourageandfacilitatethesharingofinformation,aspermittedbyapplicablelaws,treatiesoragreementsthatmayprovideasourcefortheinitiationofcartelinvestigations.
• Tohaveregularcontactwithotherdomesticlawenforcementagenciestodevelopanunderstandingofthepossiblelinkswithcompetitionlawenforcementandwiththeirinternationalcounterparts.
• Todevelopgoodworkingrelationshipswithotherdomesticlawenforcementagenciesandtodrawupontheirsourcesofinformationasameansofgeneratingleadstodetectandinvestigatecartelconductandpromotecooperationandcoordinationinfurtherinvestigations.
• Toregularlyandconsistentlymonitorrelevantindustryandtrademedia,internetsitesandotherpubliclyavailableindustryandtradeassociationsources,whichcanprovideanindicationandearlywarningsignofcartelactivity
• Topromoteandengageinopenandactivecommunicationswithintheirorganisationsandacrossworkunitstofacilitatetheexchangeofinformationaboutredundantcasesthatmaysignalpossiblecartelconduct.
• Toengageinoutreachprogramstoraiseawarenessaboutanti-cartellawsandtheharmfuleffectsofcartels,whichwilleducatepeopleabouttheoperationofthelawandthetypicalsignsofcartelconductandwillgenerateleadsaboutcartelactivitythatcanbeasourceofinformationfortheinitiationofaformalinvestigation.
CARTELCASESELECTIONANDPRIORITISATION
Itisconsideredgoodpractice:
• Tohaveageneralpolicyorapproachsettingoutthestepsintheagency’sinvestigativeprocess.
• Tohaveinaplaceamethodtoassessandweightherelativemeritsofcartelmattersandtofacilitatedecision-makingregardingtheselectionandprioritisationofcases.
• Forinvestigatorstohaveagoodunderstandingoftheobjectivesofthepolicyorapproachandtobewelltrainedintheuseandapplicationoftheframework.
• Foragenciestohaveapolicyorapproachwitheasilymeasurableobjectivecriteriathatarealsoreflectiveoftheparticularpolitical,economicandregulatoryenvironmentwithinwhichtheagencyinvestigatescartelconductandenforcesitscompetitionlaw.
• Foragenciestoassigndifferentweightstothecriteriaintheframeworktoreflecttherelativeimportanceofeachcriterion.
• Forthegeneralpolicyorapproachtobeappliedconsistentlytoallcartelmattersatthepre-investigativestage,whichmayrequiresignificantagencyresourcesduringtheinvestigativestage.
• Toreviewtheapplicationofthepolicyorapproachatpre-determinedtimeintervalstoensurethattheresultsarestillvalidanddeterminewhethertheapproachbeingtakenregardingaparticularcartelmatterneedstoberevised.
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• Todocumentandsourcetheassessmentofthecriteriawhenapplyingthepolicyorapproachtoaparticularcartelmatter,andtohavetheassessmentreviewedbysomeonenotworkingonthecartelcase.
PRE-INVESTIGATORYPHASEOFCARTELALLEGATIONSItisconsideredgoodpracticeforagencies
• toestablishmethodologiesfortheearlyverificationandassessmentofallegedcartelsduringthepre-investigativephase
• toestablishproceduresanddeadlinesforthepre-investigativephaseofacomplaintregardinganallegedcartel
• toestablishclearandstandardproceduresfordealingwithcomplainantsregardinganallegedcartelinthepre-investigatoryphase
• toprovideongoingtrainingtotheirofficersaboutmethodologiesandtechniquesforconductingapre-investigationphaseincludingproceduresfordealingwithcomplainants
• toprovideinformationtocomplainantsoutlininghowtheircomplaintwillbeevaluatedandtheagency’sexpectationsofthem
• toimplementinternalprocedurestoassessandevaluateinformationandcomplaints
• toverifyandcorroborateallegationsbeforeproceedingtotheinvestigatoryphase
• toestablishclearreferralmechanismsandclearproceduresforinter-agencyassistanceandinformation-sharingduringthepre-investigatoryphase
• toclearlyidentifycriteriaandestablishproceduresfordecidingwhetheramatterbeingexaminedshouldproceedtotheinvestigatoryphase.