The fight against financial crime: anti-trust/cartels

The rate of change in the law and its enforcement in financial crime has been dramatic and global in the past few years, resulting in a regulatory minefield for many businesses.

In this series of articles, we focus on different areas of financial crime, taking an incisive look at current regulation and what we can expect over the course of 2018. In this eighth edition we take a look at anti-trust/cartels, including how different jurisdictions are approaching anti-trust/cartel enforcement globally and what to expect in the near future.

The current position

We see a consistent picture of significant anti-trust / cartel enforcement in the UK, EU and globally and this is reflected in the following trends around the world:

  • from anti-trust authorities, increasingly aggressive enforcement strategies: companies being raided, individuals subject to criminal processes and larger and bigger fines, and
  • a general expectation that anti-trust compliance needs to reach all parts of the economy, not just those that have a “history” of issues (meaning regulators are willing to test “business as usual” for anti-trust infringements).

Those institutions in a position to facilitate co-ordination or unethical conduct are clearly in the authorities’ cross-hairs.

This has been seen most clearly with:

  • The European Commission imposing fines on ICAP for allegedly facilitating the manipulation of the London InterBank Offered Rate on interest rates derivatives denominated in yen. (The EU General Court annulled the Commission’s decision on grounds unrelated to the fact that ICAP was “merely” a facilitator; the case is currently pending before the Court of Justice).
  • The UK’s Financial Conduct Authority opening its first anti-trust case and carrying out dawn raids.
  • The German FCO is looking into new payment channels and methods which relate to the new Fintech industry. For example, paydirekt is a joint venture of leading private banks, German cooperative banks (Volks- und Raiffeisenbanken) and undertakings from the savings bank sector. The FCO has examined the project after the involved parties informed the authority.
  • In the Netherlands, the Dutch Competition Authority (ACM) is paying particular attention to the financial sector and has set up a so-called “Monitor Financial Sector” (or MFS).

Key issues to think about

The principal policy motivation for the antitrust authorities is to send out a clear message that antitrust compliance should be taken very seriously - indeed it should be a key risk area for companies.

There is a clear preference by the antitrust authorities to educate companies in compliance to avoid issues in the future.

This means a company should (at a minimum):

  • understand its own competition/antitrust law risk areas
  • train and educate staff on competition law compliance: making it one of the core areas for compliance, and
  • record and monitor competition law training to show any regulator that it has a clear track-record in this area.

In considering those issues, and devising their procedures, businesses should bear in mind that compliance programmes are increasingly being challenged by global antitrust authorities and that this brings with it reputational and litigation risks for those who get it wrong.

What’s next?

With respect to public enforcement, the UK’s CMA and FCA, the German FCO, the Dutch ACM and the European Commission in particular are likely to follow a programme of rigorous enforcement in the short and medium term.

In relation to private enforcement, the EU Damages Directive has now been implemented in virtually all EU Member States, which may result in an increase of follow-on damages claims in the immediate to near future. The development of new means of redress, such as the first form of “opt-out” class actions in the UK, reserved for competition claims, is likely to see a greater level of civil cases brought against those found to have infringed anti-trust laws.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.