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Ten Strategies For Winning The Fight Against Hardcore Cartels

Scott D. Hammond

Deputy Assistant Attorney General for Criminal Enforcement

Antitrust Division, U.S. Department of Justice

OECD Competition Committee

Working Party No. 3 Prosecutors Program

Paris, France

October 18, 2005

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1: Dedicate Sufficient Resources to Make Anti-cartel Enforcement a Top Priority

  • Detection and prosecution of hard core cartels is the highest priority of USDOJ Antitrust Division

  • Dedicated Cartel Units

  • Trained Investigators

  • Support proactive outreach efforts to assist in the detection of hard core cartels

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2: Treat Hard Core Cartels As Crimes, And Cartel Members As Criminals

  • In our experience, individual accountability through the imposition of jail sentences is the single greatest deterrent.

  • We have recently discovered numerous cartels that violated competition laws around the world but chose not to extend cartel activity to U.S. market, because they feared U.S. detection and sanctions.

  • The risk of under-punishment is that cartels will target your businesses and consumers.

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3: Use All Available Criminal Investigative Tools

  • Search Warrants

  • Use of Informants

  • Consensual Monitoring / Wiretap Authority

  • International Cooperation Agreements

  • INTERPOL Red Notices / Border Watches

  • Extradition

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4: Use Trained Investigators to Obtain Sworn Witness Statements

  • When No "Hot Documents" Are Uncovered by Investigators — a Frequent Event As Increased Deterrence Will Cause Cartels to Become More Sophisticated — Individual Admissions Are Needed to Prove Existence of Cartels

  • The Ability to Compel Testimony Under Oath and Under Penalty of Perjury Is an Invaluable Tool

  • Use Investigators Trained in Interviewing

You Can't Catch a Thief With an Economist

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5: Reward Cooperation and Penalize Those Who Fail to Accept Responsibility

  • Heightened importance of obtaining the cooperation of inside participants in cartel cases

  • Inducing self reporting by implementing an effective leniency program

  • Significant rewards for the second in the door

  • Using “the stick” on those who lose the race

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6: Maximize Transparency and Predictability Across Enforcement Policies

  • Prospective cooperating parties come forward in direct proportion to the predictability and certainty of their treatment following cooperation

  • Establish transparent standards also for:
    • opening “hard core” cartel investigations
    • deciding whether to bring charges
    • calculating and imposing sanctions

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7: Vigorously Prosecute Conduct Aimed At Obstructing An Investigation

  • Results of ICN cartel workshop survey

  • High incidence of document destruction, false statements, and witness tampering in cartel investigations
    • Highly sophisticated offenders with a lot to lose

  • To deter obstruction, punishment for obstruction needs to be on par with potential sentence if convicted of cartel offense

  • Proof of obstruction is the best evidence of consciousness of guilt

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8: Develop Cooperative Relationships With Other Law Enforcement Agencies

  • Cooperation and Coordination With:
    • Public Prosecutor
    • Other Domestic Investigative Agencies
    • Foreign Competition Authorities
    • Government Procurement and Debarment Agencies

  • Cooperative Relationships:
    • Generate New Leads
    • Assist Investigations

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9: Investigate Cartel Offenses Together With Other Related Offenses

  • Great source for leads and for creating “inducements” to cooperate
    • Exposure to sanctions for a collateral offense can lead to cooperation on the cartel offense

  • E.g., Kickbacks paid to purchasing agents in order to corrupt the competitive bidding process charged as fraud and/or bribery
    • Tax offenses for failing to report kickbacks as income


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10: Close The Information Gap

  • Take Proactive Steps to Change the Corporate Culture Towards, and Public Perception Of, Hardcore Cartels

  • Advocate Strong Anti-cartel Deterrent Message to the Media, Business Community, Consumer Groups, and Defense Bar

  • Engage in Outreach Efforts to Help Others Identify and Report Hardcore Cartel Offenses