Germany won’t join jurisdictions with criminal competition penalties

The head of the federal cartel office, the Bundeskartellamt’s Andreas Mundt, reportedly dismissed the idea of introducing criminal sanctions for competition-law offences.  Speaking at the GFR Society for Law and Policy’s event, he called imprisonment a “severe weapon” that had no place in the “rarely [] crystal clear matter” of cartel violations, where “the lines are often blurred.”

Among the countries that do have a criminal antitrust regime (usually only for “hard-core” offences, such as price-fixing or bid-rigging and market allocation among horizontal competitors), the most well-known is of course the United States, whose Sherman Act made cartel violations a criminal felony as far back as 1890.  Among the more recent acolytes of criminal penalties are newer competition-law jurisdictions, such as South Africa and Kenya.

International precedent-setting institutions and enforcers’ recommendations tend towards identifying the positive effect of criminal antitrust penalties:

OECD, 3rd Hard-Core Cartel Report (2005):

• Recommends that governments consider the introduction and imposition of criminal antitrust sanctions against individuals to enhance deterrence and incentives to cooperate through leniency programmes.

U.S. Department of Justice, Tom Barnett (2008):

• “Jail time creates the most effective, necessary deterrent.”
• “[N]othing in our enforcement arsenal has as great a deterrent as the threat of substantial jail time in a United States prison, either as a result of a criminal trial or a guilty plea.”

Cornerstones of a successful criminal antitrust regime commonly include the following:

• Crystal-clear demarcation of criminal vs. civil conduct
• Highly effective leniency policy also applies to individuals
• Standard of proof must be met beyond a reasonable doubt
• No blanket liability for negligent directors – only actors liable
• Plea bargaining to be used as an effective tool to reduce sentence
• Clear pronouncements by enforcement agency to help counsel predict outcomes