¹ See, eg Address of M Angell to the National Press Club, Washington, DC (16 September 1997).

² See Sherman Act of 1890, 15 USC § 1.

³ See Fingleton, J, ‘Political Economy Insights from Competition Policy in Ireland 2001’ in Hawk, B (ed) Fordham Corporate Law Institute (2002) 569 Google Scholar, for a discussion of the evolution of competition policy, including criminal sanctions, in Ireland. Ireland first criminalised competition offences in the Competition Act, 1996. Like the Sherman Act, all breaches of the statute were criminal offences. Violations were punishable by fines of IR£ 3,000,000 and a two year term of imprisonment. Whether the Competition Act, 1996 was influenced by the American experience cannot be said with confidence. Fingleton, J notes ‘there is no evidence in the parliamentary debates, or elsewhere, as to why the legislation was amended. … The explicit rationale for criminal sanctions thus remains somewhat a mystery.’ Fingleton, J above 583.

Although the legislative history of the Competition Act, 1996 leaves much to the imagination, the record is much clearer with reference to the Competition Act, 2002, which importantly increased the severity of the criminal sanction and added significant investigatory powers to the Authority’s arsenal. An examination of some of the confidential briefing papers prepared for Government reveals substantial reliance on the US experience. As one paper prepared for Government states:

⁴ See Price Waterhouse Coopers Final Report to the Department of Trade & Industry, Peer Review of the UK Competition Policy Regime (2001), which concluded that consideration ought be given to the adoption of criminal sanctions based, in part, on its deterrent effect in the United States. This was followed by a joint report of DTI and Treasury, which relied on the Price Waterhouse study and concluded ‘the threat of imprisonment would act as a strong deterrent.’ It recommended consultation on a new criminal offence. See HM Treasury & Department of Trade & Industry, Enterprise & Productivity: The Government’s Strategy for the Next Parliament 24 (June 2001). This, in turn, was followed by a White Paper, Department of Trade & Industry, Productivity & Enterprise: A World Class Competition Regime 39 (July 2001), which concluded that the existing system of fines did not adequately deter cartel conduct and recommended the enactment of legislation that would criminalise cartel conduct. In its response to the consultation process the Government again noted that the criminal sanction would provide ‘real deterrence.’ See Department of Trade & Industry, Productivity & Enterprise: A World Class Competition Regime—Government’s Response to Consultation 24 (December 2001).

⁵ Cf Trade Practices Review Committee, Review of the Competition Provisions of the Trade Practices Act, January 2003 (‘the Dawson Report’); see also Commonwealth Government Response to the Review of the Competition Provisions of the Trade Practices Act 1974, Part 4, where the Australian Government ‘accepts, in principle, that criminal penalties may be more effective … in deterring people from engaging in serious cartel behaviour.’

⁶ The often-cited example of an American business executive who preferred suicide to serving even a short-term of imprisonment suggests the anathema with which incarceration is held by men (and now women). See Werden, G and Simon, M ‘Why Price Fixers Should Go to Prison’ (1987) 32 Antitrust Bulletin 917, 936CrossRefGoogle Scholar.

⁷ OECD Council Recommendation Concerning Effective Action Against Hard Core Cartels, C(098)35/FINAL. See also OECD Competition Committee, Report on the Nature & Impact of Hard Core Cartels and Sanctions Against Cartels under National Competition Laws, DAFFE/COMP (2002) 7.

⁸ OECD Competition Committee Second Report on Effective Action Against Hard Core Cartels, DAFFE/COMP (2003) [hereinafter ‘OECD Second Report’] 2.

⁹ OECD Second Report at 19. A working paper prepared for Working Party No 3 puts it more strongly: ‘The prospect of spending time in jail will be the most powerful deterrent for business executives considering entering into a cartel arrangement.’ OECD Competition Committee Working Party No 3 Discussion Paper, Sanctions Against Individuals, Including Criminal Sanctions, in Prosecuting Cartels 3 (August 2003) [emphasis added].

¹⁰ OECD Second Report. The Committee qualified its recommendation by limiting it to where it would be consistent with social and legal norms. OECD Competition Committee Working Party No 3 Discussion Paper, n 9, above, at 2.

¹¹ For a well reasoned presentation of the case for custodial sentences, see Wils, W ‘Does Effective Enforcement of Articles 81 & 82 EC Require Not Only Fines on Undertakings but also Individual Penalties, in Particular Imprisonment?’ in Ehlermann, C (ed) Effective Private Enforcement of EC Antitrust Law (Oxford, Hart Publishing, 2002)Google Scholar. Wils, W quotes Liman, A:

Ibid. quoting Liman, A ‘The Paper Label Sentences: Critique’ (1977) 86 Yale Law Journal 619, 630-;1Google Scholar. See also Baker, D ‘The Use of Criminal Law Remedies to Deter & Punish Cartels & Bid-Rigging’ (2001) 69 George Washington Law Review 693, 694-6Google Scholar.

¹² OECD Competition Committee Working Party No 3 Discussion Paper, n 9, above at 2.

¹³ Ibid.

¹⁴ Some support the case for criminal custodial sanctions for individuals arguing that fines are a less than optimal sanction. They reason that it may not be possible to impose sufficient fines to deter corporate violations, and that—in any event—determination of the optimal fine is difficult. See generally OECD Competition Committee Working Party No 3 Discussion Paper, n 9, above. Of course one can argue that determination of the optimal criminal custodial sanction is no less easy. It is further argued that individual fines are less than optimal because of the possibility of direct or indirect corporate reimbursement. See generally OECD Competition Committee Working Party No 3 Discussion Paper, above n 9, at 4. Of course it is possible for corporations to engage in some ‘rough’ reimbursement of individuals for time served. Indeed, this author wonders whether ‘reimbursement-plus’ has been the motivation for some individuals to voluntarily subject themselves to US jurisdiction to serve terms of imprisonment.

¹⁵ Address of Assistant Attorney General J Klein before American Bar Association Antitrust Section Meeting, Washington, April 6, 2000.

¹⁶ The Government of New Zealand concluded that higher standards associated with criminal prosecutions would lead to fewer cases and less deterrence. See, OECD Competition Committee Working Party No 3 Discussion Paper, above n 9, at 9.

¹⁷ Some will note that the conviction rate following trial of antitrust defendants in the United States and Canada leaves something to be desired. Such criticism misses the boat. Rather the comparison should take into account the number of guilty pleas since one would normally expect only the toughest cases to go to trial.

¹⁸ See, eg Posner, R Antitrust Law 2nd ed (Chicago, London, University of Chicago Press, 2001) 266 ffGoogle Scholar. Breit, W and Elzinga, K The Antitrust Penalties: A Study in Law & Economics (New Haven, Yale University Press, 1976)Google Scholar; cfBecker, J ‘Crime & Punishment: An Economic Approach’ (1968) 76 Journal of Political Economy 169 CrossRefGoogle Scholar; Posner, R ‘Optimal Sentences for White Collar Criminals’ (1980) 17 American Criminal Law Review 409 Google Scholar. But see Werden, G & Simon, M above n 6, who argue that custodial sentences are efficient.

¹⁹ Wils, W correctly observes that the fine (properly adjusted for the probability of detection) must exceed the gain in order to deter. Wils, W above n 11, at 20. Using somewhat dated data two investigators posit that the probability of successful prosecution for price fixing in the United States ranges between 13-17%. See Bryant, P and Eckard, E ‘Price Fixing: The Probability of Getting Caught’ (1991) 73 Review of Economic Statistics 531 CrossRefGoogle Scholar. Assuming a 10% increase in price (predicated on a now dated and not terribly sophisticated American data set), an increase in profitability of 5%, a conspiracy duration of five years and a 16% probability of detection, Wils, W concludes that fines below 150% of annual turnover will not deter.

Wils, W above n 11 at 23; see also Werden, G & Simon, M, n 6, above, 923-30. Obviously such a fine would often exceed the ability of the defendant to pay. Indeed one study suggests that close to 60% of firms would not be able to survive the imposition of an optimally deterrent penalty without bankruptcy. See Craycraft, K, Craycraft, C and Gallo, C ‘Antitrust Sanctions & A Firm’s Ability to Pay’ (1997) 12 Review of Industrial Organisation 171 CrossRefGoogle Scholar.

²⁰ Eight countries impose criminal liability on both individuals and companies (Austria, Canada, Ireland, Israel, Japan, Korea, Norway and the United States), while three others (France, Greece and Switzerland) impose criminal sanctions on individuals but not companies. Baker, D, above n 11, 710).

²¹ See OECD Second Report 19.

²² Some have cited the absence of recidivists as evidence of the deterrent power of custodial sentences. The more interesting and important question involves general, not specific, deterrence.

²³ See eg United States v Taubman, No 02-1253 (2nd Cir; filed April 20, 2002).

²⁴ For a short history of the American experience with criminal antitrust prosecutions, see Baker, D above n 11.

²⁵ I remember many years ago seeing a large number of cars parked in a country field while travelling between Nashville, Tennessee, and Birmingham, Alabama, and inquiring what was ‘going on’. My father-in-law responded saying it was a prayer meeting, a cockfight or road pavers fixing prices. Nothing out of the ordinary.

²⁶ See United States v Blankenship, No CR–74–182—CBR (ND Cal, filed Nov 1, 1974). For a discussion of the sentences from the perspective of the judge, see Renfrew, B ‘The Paper Label Sentences: An Evaluation’ (1977) 86 Yale Law Journal 590 CrossRefGoogle Scholar. For a critique of that decision, see Baker, D and Reeves, B ‘The Paper Label Sentences: A Critique’ (1977) 86 Yale Law Journal 619 CrossRefGoogle Scholar, where the authors conclude that ‘[t]he only suitable punishment for price fixing … is a prison sentence.’ See also Dershowitz, A ‘The Paper Label Sentences: A Critique’ (1977) 86 Yale Law Journal 626 Google Scholar, where he argues that the substitution of speech-making in lieu of a statutory penalty was an inappropriate use of judicial discretion, and Liman, A above n 11, where the author concludes that ‘[i]f the … penalty for price fixing were a fine and an obligatory speech, then the antitrust laws would be as forbidding as the village parking ordinance.’

²⁷ Cf Baker, D above n 11, 693, 694–6. See generally Calvani, T ‘US & Them’ (2003) 97 Law Society Gazette 28 Google Scholar, for a short comparison of the American and Irish experiences with criminalisation from which some of this discussion is taken.

²⁸ See 15 USC §1 (2000).

²⁹ See Comprehensive Crime Control Act and the Criminal Fine Improvement Act, 18 USC §§ 3551–86 (2000), which provides that a fine may be increased to twice the gain from the illegal conduct or twice the loss to the victims. On 22 June 2004, President Bush signed into law HR 1086 which increased the maximum custodial sentence from three to ten years’ imprisonment.

³⁰ In the last fiscal year, defendants in Division prosecutions received more than 10,000 days of jail time—a record high—with convicted individuals receiving sentences averaging more than 18 months, another record high average that is continuing thus far in the current fiscal year. Testimony of Assistant Attorney General R Pate before Commission on Judicial, House of Representatives, 24 July 2003.

³¹ See Address of J Griffin, Deputy Assistant Attorney General, before American Bar Association Section of Antitrust Law, March 2001, Washington, DC.

³² The Corporate Leniency Policy was promulgated by the Department of Justice in 1978 and later revised in 1993. See Antitrust Division, US Department of Justice, Corporate Leniency Program (10 August 1993), reprinted in 4 Trade Reg Rep (CCH) 13, 113. An immunity program for individuals was established the following year. See Antitrust Division, US Department of Justice, Individual Leniency Program (10 August 1994), reprinted in 4 Trade Reg Rep (CCH) 13,114.

³³ See, eg Address of Deputy Assistant Attorney General G Spratling, formerly, ‘Making Companies An Offer They Shouldn’t Refuse’, before Bar Association of DC, Feb 16, 1999, Washington, DC.

³⁴ See generally Address of Hammond, S, Director Criminal Enforcement, Antitrust Division, ‘A Review of Recent Cases & Developments in the Antitrust Division’s Criminal Enforcement Program’, before The Conference Board, 7 March 2002, New York, NY. For an economic analysis of immunity programs generally, see Motta, M and Polo, M ‘Leniency Programs & Cartel Prosecutions’ (2003) 21 International Journal of Industrial Organisation 347 CrossRefGoogle Scholar.

³⁵ See Sentencing Reform Act of 1984, which requires that courts apply the Sentencing Guidelines to antitrust offences, 18 USC §§ 3551–86 (2000).

³⁶ See generally Competition Act, 2002.

³⁷ Competition Act, 2002 § 8.

³⁸ See Address of Fingleton, J ‘On Commencement of the Competition Act of 2002’ 1 July Dublin.

³⁹ Cartel Immunity Program, The Competition Authority, 20 December 2001, available at <http://www.tca.ie>.

⁴⁰ Applicants are entitled to qualified grant of immunity from criminal prosecution by the Director of Public Prosecutions. An applicant (or his legal advisors) seeking to avail themselves of the programme must contact the Authority’s designated Immunity Officer. The applicant must present an outline of the facts, but may do so through legal advisors in hypothetical terms. The Immunity Officer will place a ‘marker’ in the queue, which will hold the place for the applicant for a period determined by the Immunity Officer.

The applicant must then complete the application with a sufficient description of the illegal activity. If satisfied, the Authority will then present the application to the Director of Public Prosecutions (DPP) seeking a written grant of qualified immunity. If the DPP concurs, the applicant must then satisfy both the DPP and the Authority that it has satisfied the requirements for immunity to attach.

The requirements for full immunity are:

1. (1)

   (1) The applicant must take effective steps, to be agreed with the Authority, to terminate its participation in the illegal activity.

2. (2)

   (2) The applicant must do nothing to alert its former associates that it has applied for immunity under this programme.

3. (3)

   (3) The applicant, including all its relevant past and present employees, must satisfy the Authority that they have not have coerced another party to participate in the illegal activity and have not acted as the instigator or played the lead role in the illegal activity.

4. (4)

   (4) Throughout the course of the Authority’s investigation and any subsequent prosecution, the applicant must provide complete and timely co-operation. In particular the applicant must (a) reveal any and all offences under the Competition Acts in which it may have been involved; (b) provide full, frank and truthful disclosure of all the evidence and information known or available to it or under its control, including all documentary and other records, wherever located, relating to the offences under investigation with no misrepresentation of any material facts; and (c) co-operate fully, on a continuing basis, expeditiously and at its own expense throughout the investigation and with any ensuing prosecutions.

5. (5)

   (5) In the case of corporate undertakings, the application for immunity must be a corporate act. While applications from individual directors or employees will be considered, they will not be regarded as made on behalf of the undertaking in the absence of a corporate act. Corporate undertakings must take all lawful measures to promote the continuing co-operation of their directors, officers and employees for the duration of the investigation and any ensuing prosecutions.

If the first applicant to request immunity fails to meet these requirements, a subsequent applicant that does meet these requirements, can be considered for immunity. If a corporate undertaking qualifies for a recommendation for full immunity, all past and present directors, officer and employees who admit their involvement in a cartel as part of the corporate admission, and who also comply with the requirements discussed above will also qualify. Applications for immunity for an individual employed by an undertaking involved in a cartel will be considered, even where the employer undertaking does not apply or otherwise cooperate under the Programme.

⁴¹ The OECD Competition Committee reaches the same conclusion. See OECD Second Report 15.

⁴² This writer chaired the original ABA Antitrust Section Task Force devoted to the subject. Its conclusions were anecdotal. While the substance of antitrust law has received a lot of attention from scholars, there has been a dearth of empirical work addressing this important topic.

⁴³ Translated: The proof of the pudding is in the taste. Given that the phrase comes from Cervantes and was translated from Spanish into English into Irish, the phrase would not likely be uttered in Irish at all. ‘They’ would probably have said: ‘is i ndeireadh na smorabhán bhíon’s an teas,’ which, of course, translates: ‘it’s in the last of the cinders that the heat is.’