Report

Global Cartel Enforcement Report 2022

March 2023
2022 Cartel Report Cover

With a couple of notable exceptions, cartel fines were lower in most jurisdictions in 2022 than in the prior year—and well below historical norms.

Fines in the United States—long the leader in cartel enforcement—were lower than any time in the last 20 years. The low fine totals, however, belie the intensity of global cartel enforcement efforts. Overall global fines decreased 70% over last year.

Infographic - Datasource Item: 2022 Cartel Report - 2

Infographic - Datasource Item: 2022 Cartel Report - 1

Other Notable Jurisdictions

 

2022

2021

2020

Japan

$19.3m

$0

$40k

Australia

$3.1m

$33.4m

$0

South Africa

$1.6m

$1.2m

$543k

United States

$1.5m

$153.5m

$639m

Taiwan

$633.6k

$51.8m

$97m

Mexico

$0

$80m

$32m

Canada

$0

$0

$2.2m

* Select fine totals reflect enforcement activity from January 1–December 31, 2022. Figures are based on publicly available information and may not be exhaustive.

Cartel enforcement remains a central priority for governments around the world, and cartel enforcement authorities have been active in developing new investigative programs, building new cases, and pursuing new enforcement actions.

Key Trends

The US Department of Justice (DOJ) reported that in 2022 it had the most active grand jury investigations in its history. The European Commission also reported a substantial uptick in leniency applications and increased enforcement activity resulting from its whistleblower program. Cartel charges were filed, and litigated, in courts around the globe. In 2022, there was a substantial uptick in dawn raids, particularly those involving domestic premises given the increase in remote work as a result of the COVID-19 pandemic.

A change in the mix of cartel cases brought explains, in part, the lower fine levels in 2022: There were significantly fewer large international cartel enforcement actions. The majority of these large international cartel cases were brought to light, and enforcement spurred, by leniency applications. But there are widespread reports that leniency applications are down in many jurisdictions, particularly for international cartel cases where the proliferation of overlapping enforcement authorities and remedy regimes globally have affected the cost-benefit calculus of seeking leniency.

Most 2022 enforcement actions focused on domestic cartels, with a particular focus on bidding cartels in public procurement and “no poach” cases addressing agreements between employers about hiring or compensation. No-poach cases in particular were a new area of focus, with major precedent-setting cases brought in the United States, new guidance released in a number of jurisdictions, and the first enforcement actions concerning “employment cartels” brought in others. These cartel cases are a species of buyer cartel—where employers are essentially purchasers of employment services—which are receiving enforcement attention for essentially the first time.

One of the few international cartel enforcement actions in 2022—which produced among the highest fines of any cartel enforcement action—challenged a different type of buyer cartel: one among purchasers of styrene monomer.

Most of these trends are expected to continue in 2023.

Cartel Fines Down in Aggregate

Aggregate fines imposed by the most significant cartel enforcement agencies were lower in 2022 than in prior years, and substantially lower than historical baselines. The United States had particularly low cartel fine totals, lower than at any point in (at least) 20 years.

The trend was not limited to the United States. Other jurisdictions, including the Japan Fair Trade Commission and European Union, also imposed lower fines in 2022. This may in part result from the effects of the pandemic, which complicated efforts to investigate cartels—particularly international cartels—for several years. But those difficulties are largely historical at this point. As discussed below, many cartel enforcement authorities were extremely active in pursuing investigations in 2022, which also saw the return in force of dawn raids.

The lower aggregate fine levels also reflect a difference in focus. In many years, global cartel fine totals are driven by a small number of large international cartels, with large fines imposed by multiple countries or authorities around the world. The only significant international cartel fines in 2022 either related to fines imposed by certain jurisdictions against international cartels that had been prosecuted in other jurisdictions several years ago (e.g., Roll-On, Roll-Off Shipping) or arose from investigations that started long ago (e.g., the Styrene Monomer Investigation).

There were outliers to this general trend. Korea prosecuted and secured significant fines in several cartel matters. Brazil’s fines were at or above its historical levels. But overall, the trend from the last several years of lower aggregate cartel fines continued through 2022.

Enforcers Remain Active

Notwithstanding these relatively low cartel fines, enforcers around the world remained actively engaged in pursuing cartel enforcement and investigations. There was a significant uptick in dawn raid activity, returning to levels not seen since before the pandemic.

In 2022, the US DOJ reported the largest number in its history of open grand-jury investigations of cartel conduct. And multiple enforcers around the world debuted new investigative techniques focused on, among other things, data analysis to develop new cases and new matters.

There was a change, however, in the types of matters that were the focus of cartel investigations in 2022, and we expect that trend to continue into 2023 and beyond.

Domestic Cartels

Enforcers throughout the world focused more attention on domestic cartels in 2022. This focus is, in part, driven by the widely reported decrease in leniency applications in international cartel cases.

The causes of those decreases are heavily debated, with some contending that the proliferation of cartel enforcement authorities, leniency programs, and (in particular) private damages regimes have shifted the calculus for companies considering seeking leniency in international cartel matters. Others have contended that structural changes in the way leniency programs are operated—such as the focus on what constitutes “prompt” reporting of cartel violations in the United States—have made the benefits of seeking leniency less obvious. Whatever the cause, several enforcement authorities have acknowledged that they are seeing fewer leniency applications in international cartel cases, and many enforcement authorities are actively considering what steps they can take to reform the system and restore the trust necessary for the system to work.

For example, the European Commission published guidance to clarify and modernize its leniency notice to companies seeking immunity from cartel behavior to encourage applicants to come forward, particularly in the case of “atypical” cartels such as those involving facilitators or no-poach conduct. Specifically, the guidance provides for companies to be able to make inquiries on a “no names” basis from a newly appointed “Leniency Officer” as to whether they may be able to qualify for leniency. This will be beneficial for companies involved in conduct outside the European Commission’s traditional enforcement areas, such as no-poach or other novel conduct. In addition, both the European Commission and the Bundeskartellamt in Germany are reportedly working on proposals to protect leniency applicants from the threat of multiple private damages actions in Europe.

In January 2023, the US DOJ adopted a new system for self-reporting violations of various laws that are within the prosecutorial authority of the DOJ. That system applies across the entire DOJ, not just the Antitrust Division, which is charged with enforcing the antitrust laws. The new system is largely modeled on the Antitrust Division’s leniency program, which has been in place for 30 years, but the Antitrust Division did issue some updated “Frequently Asked Questions” guidance designed to bring the Antitrust leniency program into conformity with the overarching DOJ policy.

A focus on domestic cartels has helped fill the void left by the decrease in international cartel leniency applications. Two areas of primary focus regarding domestic cartels were consistent among enforcement authorities around the world.

Public Procurement

Bidding cartels in public procurement matters have always been at the heart of cartel enforcement, and there have been many large and important cartel enforcement actions in this space in the past. But the focus has increased in recent years, with 2022 showing the results of that increased focus.

The US DOJ launched a cross-agency Public Procurement Strike Force (Strike Force) in 2019, designed to uncover and prosecute anticompetitive behavior relating to procurement by US government agencies and instrumentalities. The Strike Force has increased in size, scope, and reach in subsequent years, and it has included education of procurement officials (instructing them how to recognize patterns of illegal anticompetitive behavior) as well as a prosecutorial focus from DOJ divisions not traditionally involved in antitrust enforcement.

As part of the Strike Force, the United States engaged in active outreach to enforcement authorities throughout the world, focusing on investigative techniques and prosecution of public procurement antitrust violations. Many enforcement authorities were also independently working to develop new investigative tools and focus their investigative resources on procurement cartels.

Most cases the DOJ filed in 2022 arose from the work of the Strike Force and focused on domestic procurement issues. Many of those cases ended up being prosecuted not just as antitrust crimes, but also as other crimes (e.g., fraud or violations of the False Claims Act). Many of the matters involved relatively small fine amounts—which in part drove the United States’ low fine totals in 2022—but these matter were numerous and important.

Other jurisdictions, such as Korea, uncovered and prosecuted very large public procurement bid-rigging matters, which drove the large fine totals in that country. And many other countries highlighted that procurement bidding will be a key focus of their enforcement agendas moving forward.

Labor Markets

The other area of increased focus regarding domestic cartels is labor market collusion, in the form of either “no poach” agreements (i.e., agreements between employers not to hire from or solicit employees from one another) or wage-fixing agreements.

All the prosecutions announced by the US DOJ in 2022 that were not public procurement matters involved allegations of either wage-fixing or no-poach agreements between employers. The prosecution of those types of agreements as antitrust crimes remains relatively novel, and there were fewer pretrial resolutions of such agreements than have historically been the case in cartel enforcement matters. The first two cases charging criminal antitrust violations involving alleged labor market collusion were tried to jury in 2022, with juries acquitting defendants in both cases. But in October 2022, the DOJ secured its first guilty plea and fine in one of those cases. The amount of the fine was small (less than $300,000), but the precedent had been set. It will remain a focus of enforcement going forward, with several more cases set for trial in 2023.

The Biden administration continues to focus on labor mobility issues. In 2021, the Executive Order on Promoting Competition in the American Economy highlighted labor mobility issues and encourage the Federal Trade Commission and DOJ “to strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another.” More recently, on February 7, 2023, President Joseph Biden noted labor mobility issues in his State of the Union address, and on March 1, 2023, Attorney General Merrick B. Garland testified before the Senate Judiciary Committee about “vigorously enforcing our antitrust laws.” The enforcement efforts and focus indicate that the Antitrust Division will continue to be active on labor mobility issues.

The same is true outside the United States. More and more authorities have devoted resources to pursuing and prosecuting labor market collusion cases, with a few (e.g., Portugal) announcing fines and prosecutions in 2022. Other authorities (e.g., in the United Kingdom) issued guidance to employers on how to avoid engaging in unlawful conduct in this area.

Criminal Monopolization

The other major development in 2022 was a new focus on criminal monopolization matters in the United States.

Historically, at least in the last 50 years, the United States has only pursued criminal prosecutions of collusion matters, i.e., typical cartel matters. Those matters generally involved alleged violations of Section 1 of the Sherman Act. The other major provision of Sherman Act Section 2, which prohibits monopolization, includes authority for criminal penalties, but that authority has historically not been exercised, in part because the conduct that may violate the monopolization provisions of the Sherman Act are less clear cut.

In 2022, however, the US DOJ announced that it was prepared to start pursuing criminal “cartel” prosecutions of monopolization violations. It brought its first two cases in this area toward the end of 2022.

The first involved an agreement that, if it had been completed, would have been a clear market allocation agreement, which is a traditional violation of Section 1. But the agreement was not completed, and an “attempted” violation of Section 1 is not a cognizable antitrust offense. “Attempted monopolization,” by contrast, is well recognized as an offense violating Sherman Act Section 2. Use of monopolization, therefore, allowed the DOJ to pursue a prosecution of conduct that typically would be considered a cartel violation but would not be allowed as a violation of Section 1 in the typical context.

The second filed monopolization “cartel” case involved allegations that a group of competitors offering cross-border services relating to transport between the United States and Mexico undertook various actions—including some violent actions—to exclude other competitors. The violation here is more akin to what has historically been prosecuted as a “racketeering” offense in the United States, but there is some precedent in the relatively distant past for using the antitrust laws to challenge such conduct.

It remains to be seen what other types of conduct the DOJ might focus on in exercising its authority to criminally prosecute “monopolization” offenses, but this too is a new and likely continuing area of focus in the United States’ cartel enforcement toolbox.

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