International Competition Network meets in Morocco

The International Competition Network‘s 13th annual conference — being hosted by Morocco’s King Mohammed VI at the “Palmeraie Golf Palace” — concludes today.  It is the second ICN event in recent memory to take place on African soil since the October 2013 ICN Cartel Workshop in Cape Town, South Africa.

The conference web site’s headline points out, somewhat vaguely, that the event is “more than a meeting, it’s our future“, perhaps implying that competition law is essential to this African nation’s future economic growth — a fact that bodes well for the enforcement activities of the thus-far largely dormant Moroccan Conseil de la Concurrence, an agency that has notably seen its budget slashed by over a quarter to a mere $1.74m in 2012 (last available year of its annual reporting).

Moroccan ICN conference site

Substantively, one of the key topics discussed at the event is the question how antitrust enforcers should deal with state-owned enterprises (SOEs).  Especially in emerging ICN member countries (including many African nations with relatively young competition-law authorities), this topic is hotly debated, as their economies are transitioning from a largely SOE-dominated environment to a more open and competitive one.  The Moroccan Conseil has therefore created a “Special Project” on the issue, including a survey to be distributed to members, outlined as follows:

The Moroccan Conseil de la Concurrence (MCC) wishes to address the issue of competition enforcement in relation to State Owned Enterprises (SOEs) as the Special Project for the 2014 ICN Annual Conference. The MCC wishes to address this issue not only because it is a hot-topic in developing economies, but also because of the liberalization of markets, this may lead to the revocation of exemptions for certain SOEs and subsequent investigation of competition infringements as an issue of interest for all ICN members.

One of the biggest economic dilemmas is how far a government should supply goods and services. In many developing economies, government intervention and the creation of public enterprises is a common way to cope with the need for economic and social development in key sectors. However, once a sector has reached sufficient maturity, the need for a SOE often decreases.

Many jurisdictions face the legacy of SOEs, some of which are entirely exempted from the ambit of competition enforcement. Once the economy is ripe for private sector entrants, it can be difficult to dislodge SOE supported monopolies. It is noted  that this situation has created shortcomings in performance, competitiveness and operating systems in some sectors.

Looking at Morocco as an example, the country adopted in 1989, a law pertaining to the privatization of SOEs and started to implement a liberalization process of an important part of its economy. In 2000, this whole process culminated in the adoption of a law on freedom of prices and competition, thus marking the end of a long period of price control and restriction of competition.

All these elements lead Morocco naturally to question the position of SOEs relating to competition rules, especially in the current context of the reform of Moroccan competition law.

So what do we mean by SOEs in the context of this project? In our opinion, SOEs are those publicly owned enterprises created to ensure that a public need for a product and/or service is fulfilled and universally accessible.

Generally, a SOE must provide coverage to all consumers, irrespective of geographical location at regulated prices. As the Moroccan government has deemed that the service which the SOE provides is necessary for the well-functioning of the state, a SOE must be in a position to guarantee consistent supply, which includes a requirement to have reserve/standby capacity available at all times for possible peaks.

There are also SOEs that may have purely commercial activities without any goal of general interest satisfaction.

Although most jurisdictions assess SOEs under competition law, there are often a few exemptions for certain sectors or businesses. These SOEs are then exempted from falling under competition law and potentially other national laws (sovereign immunity). When the exemption is created, the purpose is generally to ensure that a nascent industry has enough financial (and political) backing to survive.

SOEs are generally put in place where the provision of essential goods or services may be at risk. In some sectors, the market may fail to provide essential goods or services as a result of a private enterprises’ inherent desire to minimize risks, for example, risk selection which might otherwise occur in the health care or education sectors and in other markets, based on infrastructure networks, the incentive (or means) to carry out the initial investment may be lacking or may lead to natural monopolies (telecom, post, rail, gas, electricity)

One of the issues this Special Project wishes to address is whether (and to what extent) an exemption which excludes a SOE from the purview of competition enforcement is appropriate in view of the public interest objective. SOEs that do not face free competition may lack an incentive to be innovative or to be efficient, for example to search for the cheapest – yet most effective materials or means of production to provide a certain good. This is linked to the question of how (or to what extent) governments and competition authorities can (re)introduce a certain sector, or business, to the forces of competition. A related issue is the question of whether competition authorities can have a role to play in encouraging a sector, or a SOE within that sector, to evolve in such a way as to ensure the eventual maturity of the market so that a SOE or an exemption for a SOE from competition law is no longer necessary to provide the state with the needed services/products.

A further issue this Special Project wishes to address is the potential difficulty in ensuring that competition enforcement involving SOEs is effective. For example, how do members deal with political and social pressure; and what can members do to ensure that sanctions serve a deterrent purpose.

This brings us to the final issue the MCC wishes to address within the ambit of this Special Project, namely, advocacy and guidance efforts. How can a competition authority best explain to the government why the inclusion of SOEs within the jurisdiction of competition rules will lead to better conditions for consumers?

The MCC wishes to gather information on this topic for the purposes of an information sharing experience among ICN members on the more practical aspects of investigating SOEs. It is thought that the discussions which spring from this Special Project will help all ICN members in understanding regulated sectors and their advocacy efforts.

The three core issues identified above are vital to the daily work of many newer competition authorities and of mature competition authorities in emerging economies. Although many excellent papers have been written by the ICN Unilateral Conduct Working Group, the Organisation for Economic Co-operation and Development and the World Trade Organization, as well as several academics, very few of these articles touch upon the above mentioned practical implementation issues.

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Emerging markets & anti-corruption / anti-fraud issues

ICC FraudNet Spring 2014 conference

AAT editor John Oxenham of Nortons Inc. is an invited speaker on current trends in African anti-corruption and anti-fraud enforcement.  See more details on the conference and FraudNet here.

The emerging overlap of antitrust and anti-corruption issues – including significant efficiencies from combining preemptive internal audits as well as corporate compliance programmes in these two respects – presents a natural synergy for legal departments, allowing them to economise outside-counsel spend whilst at the same time enhance the rigour and comprehensiveness of their compliance and audit programmes.

Please contact the authors for more information on the services we can provide in Africa, the U.S., in Europe and Asia.

John Oxenham, editor

COMESA Competition Commission: first hacked, now out-of-service

COMESA out of service

The COMESA Competition Commission’s web site (http://www.comesacompetition.org/) has suffered yet another setback, only a month after AAT’s prior investigation into the apparent hacking of its online resources — it has been out of service as of 23-April-2014 (through at least the 25th), showing up as a mere white blank page.

Subordinate pages, such as the extranet page containing sensitive party information from ongoing investigations or merger reviews (http://www.comesacompetition.org/documents/private), are likewise blank.

As before, where we pointed out that the Commission’s hacking event constituted “evidence of a real risk that highly confidential party information (stemming from COMESA merger reviews or other competition investigations) may be vulnerable to accidental or intentional disclosure to unauthorized third parties,” we are alerting current or potential future parties to CCC merger reviews regarding the deficiencies in the competition enforcer’s electronic systems.  These may impact the timetable and resulting deadlines of pending merger investigations, and we advise all such interested parties to enquire with the Competition Commission about the procedural effect of the outage.

Antitrust sectoral healthcare inquiry

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Clarification of scope and timetable of sector investigation

According to official statements by the South African Competition Commission (“Commission”), the agency has clarified the administrative guidelines, administrative timetable, and statement of issues.  AAT has reported previously on the sectoral healthcare inquiry by the Commission, critically noting the apparent exclusion of the public healthcare segment, to the detriment of the private care providers.

Theories of harm – “just” theories

The Commission’s main document on the “stakeholder engagement meeting last week states as follows regarding its theories of harm:

[I]n order for the market inquiry to make determinations, it has developed a set of ideas or hypothesis about how harmful competitive effects might arise in the relevant markets under consideration. These ideas are generally referred to as “theories of harm”.
‘It is important to emphasise that these theories of harm are simply hypotheses, or tools, that will enable us to identify whether there are features or a combination of features that may prevent, distort, or restrict competition in the private healthcare markets. Theories of harm are not findings of harm; but are simply analytical tools to guide our analysis. They will be deepened and revised as the inquiry’s thinking develops,’ adds former Chief Judge Ngcobo.

Public comments, and timetable

The agency is “inviting stakeholders to make further comments” on its theories of harm, noting that:

The inquiry is set to follow a very precise and tight administrative timetable which is mindful of the timelines for gathering information including an invitation for written submissions, public hearings, site visits, seminars, and workshops and conducting surveys. Broadly, key milestones will include the issuing of information requests no later than 01 August 2014. The first round of public hearings will take place between 01 March 2015 to 30 April 2015 then from May 2015, the inquiry will analyse and review the information gathered. Presently, the panel aims to make provisional findings and recommendations available for public comment in October 2015.

healthcareinquirytimetabl

Commissioner calls agency’s work “reactive”, will appeal SABMiller case, counters “toothless dog” moniker

South Africa Flag

Revelations from Bonakele’s interview with CNBC Africa

South African interim Competition Commissioner Tembinkosi Bonakele called his agency, the Competition Commission (“Commission”), a “kind of reactive” enforcement body, aiming primarily to uncover cartel conduct.  In an interview with CNBC Africa‘s “Beyond Markets” segment, journalist Nozipho Mbanjwa asked the acting Commissioner tough questions on the Commission’s enforcement tactics, legislative mandate, fines imposed, the adequacy of the Commission’s capitalization, and whether the South African antitrust watchdog was, in fact, a “toothless dog.”

Bonakele held his ground, referring multiple times to the Commission’s recent successes, including the construction cartel, the bread case, cooking oils, and other “basic products” matters on which he said his agency would place the largest focus going forward.

The Acting Commissioner

The Acting Commissioner

Some of the highlights from the interview:

  • Bonakele is “quite satisfied” with the agency’s funding and performance of its 180 staff, but may ask for “more funding” specifically for the Commission’s sectoral health-care inquiry.
  • The Commission will focus its cartel-busting efforts on sectors in the basic products category such as foods and health-care.
  • The Commission will “definitely appeal” its loss of the SABMiller abuse-of-dominance matter, a “very tricky kind of offence in terms of competition law” according to Bonakele.  He said he did “not like” the 7-year long duration of the SABMiller saga, but felt compelled to extend the matter by bringing the case before the Competition Appeal Court.
  • “No comment” on the “classic” Unilever investigation.
  • On the much-maligned MultiChoice broadcaster, Bonakele called the company a “monopoly created by legislation” in a regulated market, and deferred to parliament to rectify the situation.
  • The Commission receives approximately 30% of its funds from revenues that are the result of merger filing fees.

Competition Law in Cameroon: Prof. Tchapga

Professor Flavien Tchapga, AAT contributor and associate economics professor at Université de Versailles Saint-Quentin-en-Yvelines (France), recently published an UNCTAD paper on Competition (Law) in the Cameroonian Economy (“La concurrence dans l’économie du Cameroun”).

Prof. Tchapga’s research focuses on the market-institutions gap in the economic liberalization process in sub-saharan African countries, aiming to bridge the gap for efficient markets, private-sector development and poverty reduction.

His excellent paper is available here in PDF United Nations; in French).

Below is a succinct abstract of the paper (again, in French):

La complexité d’une politique de la concurrence est généralement reconnue, que ce soit dans la phase de conception que dans celle de la mise en oeuvre. Il est aussi admis que le développement d’une telle politique et son efficacité sont des travaux de longue haleine, en particulier dans des pays n’ayant pas traditionnellement une approche libérale en matière de gestion de l’économie. C’est pour cette raison qu’un accompagnement par des programmes de renforcement des capacités dans le domaine du droit et de la politique de la concurrence, est généralement proposé à ces pays par des institutions comme la CNUCED. Ainsi, l’évaluation des progrès réalisés s’inscrit dans la recherche de l’efficacité souhaitée pour la mise en oeuvre d’une politique de la concurrence dans un contexte donné.

Afin d’établir un bilan d’étape sur la mise en oeuvre de la politique de la concurrence au Cameroun, la CNUCED a commandité cette étude d’orientation institutionnelle et organisationnelle, présentant un diagnostic stratégique du dispositif camerounais de promotion et de surveillance de la concurrence. L’objectif de l’étude est de formuler, sur la base du diagnostic stratégique réalisé, des propositions nécessaires pour le renforcement de l’efficacité de la politique de la concurrence au Cameroun, cette efficacité étant mesurée à l’aune de la capacité du dispositif à constituer une voie de progrès pour le consommateur camerounais, et plus généralement pour l’économie camerounaise.

Pour ce faire, le consultant mandaté a participé aux réunions et échanges organisés à cette fin par la CNUCED. L’orientation institutionnelle et organisationnelle souhaitée pour l’étude ne rendait pas indispensable un déplacement au Cameroun afin de rencontrer les principaux acteurs de la concurrence. Au demeurant, le budget alloué à l’étude ne l’aurait pas permis. Aussi, le présent rapport se fonde sur les ressources documentaires disponibles et accessibles à savoir, les rapports et travaux de la CNUCED, ceux des autorités camerounaises ou de leur démembrement. Ces deux sources documentaires sont complétées par des ressources bibliographiques universitaires spécialisées.

La politique de la concurrence est un moyen au service d’une fin qui elle-même dépend des orientations des politiques économiques et sociales définies par les pouvoirs publics dans un contexte et à un moment donnés. Ainsi, l’étude met en évidence, dans un premier temps, les spécificités du contexte socioéconomique camerounais, explique ensuite la nécessité de promouvoir les marchés concurrentiels et d’encadrer le déroulement de la concurrence, et relève enfin les défis auxquels est confrontée la mise en oeuvre de la concurrence avant de formuler, pour terminer, des recommandations.

 

Television antitrust saga continues, MultiChoice in the cross-hairs again

Interest group seeks antitrust investigation in free-to-air channels

According to a press release by the Independent Communications Authority of South Africa (ICASA), the organisation proposed last Friday a Competition Commission investigation into purportedly horizontal agreements between the South African Broadcasting Corporation (SABC) and MultiChoice.  “This follows an agreement entered into between the two parties in July 2013 whereby the SABC would have to provide a 24-hour news channel on MultiChoice’s DSTV platform,” spokesman Paseka Maleka said.

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MultiChoice in the Cross-Hairs

AAT had reported previously on MultiChoice’s competition woes, including its Botswana Pay-TV and Kenya sports broadcasting headaches, as well as the original post on the S.A. sports-TV rights complaint by rival On Digital Media (“ODM”), which resulted in a referral to ICASA.

The South African publication The Citizen also reported the most recent ICASA attack, noting the alleged “restrictive horizontal practices involved collusion and certain competitor agreements and practices, while restrictive vertical practices involved certain customer or supplier arrangements.”

The full text of the ICASA statement follows:

Johannesburg – The Independent Communications Authority of South Africa has recently requested the Competition Commission to investigate a possible restrictive horizontal practice between the South African Broadcasting Corporation (SABC) and MultiChoice. This follows an agreement entered into between the two parties in July 2013 whereby the SABC would have to provide a 24-hour news channel on MultiChoice’ DSTV platform.

News reports at the time indicated that the agreement also contained an obligation relating to set-top-box control in which the SABC is alleged to have agreed that it will transmit its free-to-air channels without encryption.

In the context of the ongoing public dispute between e.tv and MultiChoice over whether free-to-air TV services should utilise set-top-box control, the question arises as to whether the agreement between the SABC and MultiChoice, as it affects the issue of set-top-box control, may constitute a form of restrictive horizontal practice in the television market.

ICASA has requested both the SABC and MultiChoice to provide a copy of the agreement but both parties have failed to honour that request. This failure has made it difficult for the Authority to verify the claim put forward by MultiChoice that `any contractual obligation upon the SABC to continue to transmit its free-to-air channels in the clear (i.e. without encryption) is an incident of the distribution arrangements agreed upon by the SABC and MultiChoice. Such obligation, as indicated forms part of an agreement between parties in a vertical relationship and is not, as alleged, a horizontal restrictive practice’.

As the issue of restrictive horizontal practices falls within the scope of Section 4 of the Competition Act, the Authority has requested that the Competition Commission open an investigation into this matter.

Executives Beware: The Long-Arm of the U.S. Government Strikes Again

Following up on our initial DOJ extradition victory post last week, here is a more in-depth look at the recent developments in worldwide criminal antitrust cases, and notably their overlap with parallel corruption / fraud / FCPA investigations.  Paul Hastings and Nortons Inc. – jointly covering North America, Europe, Asia, and Africa – have extensive experience handling the defense of competition-law and FCPA-based investigations into multi-national corporations and individual executives.  The piece below was written by Jeremy Evans, partner in Paul Hastings’ D.C. office, and AAT editor Andreas Stargard, in Brussels.

Jeremy P. Evans Andeas Stargard

The long-arm of the U.S. government and its increasing willingness to pursue foreign nationals for alleged violations of U.S. law was further in evidence last Friday when the Antitrust Division of the U.S. Justice Department announced (press release here) that it had extradited Romano Pisciotti, an Italian national, from Germany to the U.S. on a charge filed more than 3½ years ago that he participated in a price-fixing cartel involving the sale of marine hose.

(Full PDF of article )

Ian Norris, then-CEO of Morgan Crucible, sentenced to serve 18 months in federal U.S. prison

Ian Norris, then-CEO of Morgan Crucible, sentenced to serve 18 months in federal U.S. prison

Source: BSO / via CBS Miami

Pisciotti is the first foreign national to be extradited to the U.S. purely for an antitrust charge, although he joins a large number of foreign nationals in recent years to have been charged criminally by the Division in cartel cases, many of whom have agreed to plea deals requiring them to serve time in U.S. prisons. The Antitrust Division is not alone in its pursuit of foreign nationals; the Fraud Division of the Justice Department has also pursued extraditions of foreign nationals for violations of the Foreign Corrupt Practices Act (“FCPA”) in recent years. Indeed, Pisciotti follows his countryman Flavio Ricotti, who, in 2010, also was arrested in Germany and extradited to the U.S. following his indictment on an FCPA charge. It is clear that in both antitrust cartel and FCPA investigations, the U.S. government is growing ever-confident in its power and ability to bring uncooperative foreign executives to the U.S. to face criminal charges in the U.S., even for conduct that occurred outside the U.S.

The Marine Hose Investigation

Pisciotti’s extradition is the latest chapter in the long-running marine hose cartel investigation. In May 2007, the Antitrust Division arrested eight foreign nationals traveling on business in the U.S. and charged them for their roles in an antitrust conspiracy involving the sale of marine hose used to transport oil. The Division’s investigation was part of a multi-national law enforcement effort that included the European Commission and the U.K.’s Office of Fair Trading and much of the conduct at issue was alleged to have happened overseas. In the years that followed, the Antitrust Division secured over $54 million in fines from five companies, and nine individuals served jail time arising from their alleged involvement in the cartel. Two of these dispositions are worth particular note. The first involved the separate plea agreements by Bridgestone Corporation and Misao Hioki, a Japanese executive, each of which agreed to plead guilty to both an antitrust charge for involvement in the alleged conspiracy, as well as an FCPA charge relating to corrupt payments to government officials in various Latin American countries. These appear to be the only instances in which either a company or an executive has pled to both antitrust and FCPA charges arising from the same investigation. The second involved three British executives arrested in the U.S. at the onset of the investigation. Under a unique arrangement, the three were charged and sentenced by authorities in both the U.S. and the U.K., but the U.S. plea deals permitted them to return to the U.K. where they served their prison sentences concurrently.

Prior to Pisciotti’s extradition, the last criminal disposition involving an executive in the marine hose investigation occurred in 2009. But, what was not publicly known until recently is that the Antitrust Division had secured a sealed indictment of Pisciotti in August 2010 alleging that he rigged bids, fixed prices, and allocated markets in the sale of marine hose. It was this indictment that led to Pisciotti’s arrest in Germany last June and the subsequent extradition proceedings. The Division likely followed the same procedure that it did with Ricotti in the earlier FCPA case, using Pisciotti’s sealed indictment to obtain an Interpol red notice, effectively an international arrest warrant. Under the principle of reciprocal or dual criminality, countries often will only extradite individuals to the U.S. if an extradition treaty exists between the two countries that requires a person’s conduct to be a crime in both countries. Bid rigging is a criminal offense in Germany, thus ensnaring Pisciotti transiting through Germany on business travel and leading to his arrest in a country prepared to extradite him. Pisciotti was flown to Miami on Thursday and arraigned in federal court the following day. He now faces charges that could result in a maximum of 10 years in prison and $1 million in criminal fines.

The U.S. Government and the Ever-Shrinking World

AAG Bill Baer

Bill Baer, the assistant attorney general of the Antitrust Division, heralded Pisciotti’s “first of its kind extradition” as a “significant step” in the Division’s cooperation efforts with foreign antitrust enforcers. And, while it marks a new frontier for the Division, it can also be viewed as merely the latest example of the aggressive approach taken by the U.S. government in recent years toward foreign executives in international cartel and bribery cases. A little over a decade ago, the Division agreed to permit foreign executives in cartel cases to plead guilty and serve prison sentences of just a few months. But the more recent plea deals announced in seemingly ever-expanding auto parts cartel cases have seen well over twenty foreign executives face up to two years in jail.

Our experience in these and other cases also teaches that the Antitrust Division will routinely seek U.S. prison terms for conduct that occurred not merely partially or largely outside the U.S., but indeed was wholly undertaken on foreign soil. The example of Pisciotti’s extradition powerfully reaffirms that executives now must worry about the possibility of being extradited to the U.S. if they refuse to cooperate with the Antitrust Division and plead guilty in a cartel investigation, even in situations where the conduct at issue occurred exclusively or mostly overseas. This is in part because an increasing number of countries have criminalized antitrust conduct, or are in the process of doing so, meaning that there are now more jurisdictions than ever willing to extradite an executive for cartel offenses, either at home or when traveling abroad, even in situations where a sealed indictment may leave the executive ignorant of any potential risk.

These same government tactics exist in bribery and FCPA cases. Flavio Ricotti and Ousama Naaman are but two examples of foreign nationals who were extradited to the U.S. in the last five years to face FCPA charges, each apprehended overseas after the U.S. government obtained an indictment in federal court, and each charged based on conduct outside of the U.S. It appears that the U.S. government will continue to take an aggressive enforcement approach toward uncooperative executives, further highlighting the concern for senior foreign executives and their companies caught up in cartel and FCPA investigations.

Price-fixers beware: U.S. DOJ scores first-ever pure antitrust-based extradition from E.U.

From DOJ: First-Ever Pure Antitrust Extradition

In what may well affect African and other international price-fixers going forward, the spectre of U.S. extradition for criminal antitrust charges has been reinforced by the recent successful DOJ extradition request in the “Marine Hose” cartel.  An Italian national was extradited from Germany to face bid-rigging charges.

Ian Norris, then-CEO of Morgan Crucible, sentenced to serve 18 months in federal U.S. prison

Ian Norris, then-CEO of Morgan Crucible, sentenced to serve 18 months in federal U.S. prison

“First-ever”?! Some readers may recall the carbon products cartel and a certain Mr. Ian Norris, the then-Morgan Crucible chief executive, who had been extradited from the U.K. to the United States back in 2010.  Yet, that seven-year long procedure was based not a pure antitrust charge — rather, he was extradited on a technicality, if you will, namely the “obstruction of justice” charge, given the lack of reciprocal or dual criminality of the underlying price-fixing offense in the two countries at the time the competition offense had been committed in the early 1990s.  Norris’ 1 1/2 year prison sentence ended in November 2011.

The Marine Hose cartel extradition is different: In this case, the DOJ succeeded, for the first time ever, in securing an extradition solely on a competition-law offense being charged.

Source: BSO / via CBS Miami

What follows is the DOJ press release text (with added links):

WASHINGTON — Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to suppress and eliminate competition by rigging bids, fixing prices and allocating market shares for sales of marine hose sold in the United States and elsewhere, the Department of Justice announced today. This marks the first successfully litigated extradition on an antitrust charge.

Pisciotti, a former executive with Parker ITR Srl, a marine hose manufacturer headquartered in Veniano, Italy, was arrested in Germany on June 17, 2013. He arrived in the Southern District of Florida, in Miami, yesterday and is scheduled to make his initial appearance today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale, at 11:00 a.m. EDT.

“This first of its kind extradition on an antitrust charge allows the department to bring an alleged price fixer to the United States to face charges of participating in a worldwide conspiracy,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “This marks a significant step forward in our ongoing efforts to work with our international antitrust colleagues to ensure that those who seek to subvert U.S. law are brought to justice.”

Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. During the conspiracy, the cartel affected prices for hundreds of millions of dollars in sales of marine hose and related products sold worldwide.

According to a one-count felony indictment filed under seal on Aug. 26, 2010, and ordered unsealed on Aug. 5, 2013, in U.S. District Court in the Southern District of Florida, Pisciotti carried out the conspiracy by agreeing during meetings, conversations and communications to allocate shares of the marine hose market among the conspirators; use a price list for marine hose in order to implement the conspiracy; and not compete for customers with other marine hose sellers either by not submitting prices or bids or by submitting intentionally high prices or bids, all in accordance with the agreements reached among the conspiring companies. As part of the conspiracy, Pisciotti and his conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. That coordinator acted as a clearinghouse for bidding information that was shared among the conspirators, and was paid by the manufacturers for coordinating the conspiracy. The department said the conspiracy began at least as early as 1999 and continued until at least May 2007. Pisciotti was charged with joining and participating in the conspiracy from at least as early as 1999 until at least November 2006.

Pisciotti is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

As a result of the department’s ongoing marine hose investigation, five companies, including Parker ITR; Bridgestone Corp. of Japan; Manuli SPa of Italy’s Florida subsidiary; Trelleborg of France; and Dunlop Marine and Oil Ltd, of the United Kingdom, and nine individuals have pleaded guilty.

The investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation. The U.S. Marshals Service and other law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter. The Criminal Division’s Office of International Affairs provided assistance.

South Africa: Surprise search and seizure visit at Unilever and Sime Darby

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Dawn Raids Rattle South African Consumer-Goods Brands

The South African Competition Commission (“Commission”) has confirmed that it has conducted such a dawn raid operation at Unilever South Africa (Pty Ltd) (“Unilever”) and Sime Darby’s respective South African offices during the morning of 03 April 2014.

Unilever is one of the largest fast-moving consumer goods companies in South Africa. Unilever’s business activities include laundry, skincare and cleansing, margarine, deodorants, household care, tea, hair care and ice cream. Household names which form part of the Unilever group include Sunlight, Knorr, Lipton, Ola and Omo.

Sime Darby is a Malaysia-based multinational company involved in sectors such as plantation, industrial equipment, motors, property and energy & utilities, with operations in more than twenty countries. It is the world’s top palm oil planter. Its South African operation, namely Sime Darby Hudson & Knight (Pty) Ltd, is located in Boksburg and it produces and sells premium fats and oils to bakery, food service industry and food manufacturers predominantly in South Africa.

“The Commission believes that the information that will be obtained from today’s operation will enable the Commission to determine whether or not Unilever SA and Sime Darby have indeed engaged in collusive conduct,” Acting Commissioner Tembinkosi Bonakele said.

The Commission has indicated that this raid forms part of an ongoing investigation into collusive conduct in the product markets for the manufacture and supply of edible oils and baking fats to both wholesale and retail customers. The Commission has further indicated that it has reasonable grounds to believe that employees of Unilever and Sime Darby have information which is relevant to the investigation.

The last dawn raid was conducted on 06 May 2010 at the premises of four electrical cables manufacturers and suppliers based in Gauteng province, South Africa. The various premises were searched by the Commission on suspicions of price fixing, market allocation and collusive tendering. This was done subsequent to a complaint initiated by the Commissioner on 16 March 2010 against Aberdare Cables (Pty) Ltd, Alvern Cables (Pty) Ltd, South Ocean Electric Wire Company (Pty) Ltd and Tulisa Cables (Pty) Ltd.

Sections 46 to 49A of the South African Competition Act of 1998 (“Competition Act”) empowers the Commission to conduct surprise search and seizure visits and to carry out so-called “dawn raids” to a firm’s business premises in order to inspect documents and interview staff where an infringement of competition law is suspected.

The Commission is empowered to enter any such premises when a judge or a magistrate has issued a warrant. Although a warrant is usually an essential requirement to ensure that a dawn raid is conducted in accordance with the law, the Competition Commission does have the power to enter and search a premises without a warrant, in exceptional circumstances.

If the Commission has reason to believe that a firm is in contravention of provisions of the Competition Act, or is in possession of information relating to a matter that is under investigation, the Commission’s investigators have the authority to enter into the firm’s premises in order to inspect and request copies of documents, ask for information in relation to any documents, take notes and interrogate employees, search and examine computer data and remove evidence from the premises. In particular, officials may examine files, reports and emails. The Competition Commission is entitled to confiscate computer hard drives. They may also take copies of documents.

UPDATE: 23-April-2014:

Based on reporting in a BDLive story, the Commission has said that it “is too early for the commission to say what data or documents were seized. Information and data are being analysed,” noting that it “believes that information that will be obtained from (the) operation will enable (it) to determine whether or not Unilever SA and Sime Darby have indeed engaged in collusive conduct,” acting commissioner Tembinkosi Bonakele said. “However, as part of any investigation, we also wish to urge anyone, be it business or individuals, with further information to come forward and assist the commission in concluding this investigation.”

Acting competition commissioner Tembinkosi Bonakele. Picture: FINANCIAL MAIL