Cartel enforcement tops the antitrust agenda

Side view of people climbing a steep hill
Overall, global fines for cartel activity in 2023 (USD1.9 billion) were broadly in line with the 2022 total (USD2.1bn). However, regulators in the EU recorded significant drops in actual fine levels, and 2023 also saw a sharp decrease in the total number of cartel enforcement decisions, from more than 200 in each of the previous two years to just 163 in 2023.

Key statistics

Financial services: an area of continued interest for key regulators

The financial services sector has been a consistent area of focus for cartel enforcement over recent years. In 2023 there were just five enforcement decisions totaling USD32.9m (continuing the downward trend seen in 2022). However, financial markets look set to remain on antitrust authorities’ radars, and a key enforcement priority in certain jurisdictions.

The EC continued its enforcement against cartel activity in the trading of fixed income products, fining a bank EUR26.6m over a Euro-denominated bonds trading cartel, in which traders had exchanged commercially sensitive information and coordinated their trading and pricing strategies over a ten year period. The other participating bank avoided a fine of almost EUR156m, as it had revealed the cartel to the EC under its leniency program and received full immunity.

Fixed income has also been the subject of scrutiny in the UK. In May 2023, the UK CMA issued a statement of objections in its ongoing financial services sector cartel investigation, provisionally finding that five banks unlawfully exchanged sensitive information regarding UK government bonds in one-to-one online chats. The UK Financial Conduct Authority (FCA) also fined three money transfer firms GBP150,000 for fixing exchange rates and the transaction fee charged to consumers in Glasgow over a three-month period. This is just the second time the FCA has issued fines using its concurrent antitrust powers. With two further antitrust cases opened in 2023, we may see further enforcement action from the FCA in the coming months. 

In South Africa, there were a number of developments in the Competition Commission’s ongoing case against 28 banks accused of manipulating the USD/ZAR foreign exchange rate between 2007 and 2013. In November 2023, one of the banks reached a settlement agreement and agreed to pay an administrative penalty of USD2.3m. In January 2024, the Competition Appeal Court dismissed the charges against most of the remaining banks, leaving just five banks to face trial. The Commission announced in February 2024 that is has approached the Constitutional Court for leave to appeal the decision.

Finally, the 2023 developments in the ongoing FX litigation proceedings in the UK (see our damages article for more details) serve as a reminder that public enforcement decisions in the financial services sector are a prime candidate for follow-on damages claims in the courts.

Key themes in cartel enforcement

Bid-rigging: an enforcement target across multiple industries

For the third year running, bid-rigging was the most commonly enforced type of cartel conduct in 2023 (42% of decisions), with investigations progressed and concluded in a number of jurisdictions.

The construction industry continued to be the sector of focus. In the UK, the CMA fined ten construction firms a total of GBP59.3m for illegally colluding to rig bids for demolition and asbestos removal contracts involving both public and private sector projects. The CMA also secured the disqualification of four directors of firms involved in the unlawful conduct. Significant fines were issued elsewhere in Europe, with the French competition authority fining six companies EUR31.2m for bid-rigging in public tenders for decommissioning operations at the Marcoule nuclear power plant. In Austria, further fines were imposed in relation to an ongoing cartel probe targeting more than 40 construction companies; over EUR180.7m in fines have now been levied to date. In Germany, the Federal Cartel Office (FCO) fined 14 construction companies and 12 individuals a total of EUR4.8m for bid-rigging in industrial construction contract tenders awarded by three steel companies. The case marks the first time that the FCO has applied powers, introduced in 2017, to impose fines and liability amounts on parent companies to prevent avoidance of fines through restructuring.

Other sectors were the subject of bid-rigging enforcement elsewhere. In South Korea, the Korea Fair Trade Commission (KFTC) fined 32 vaccine companies USD32.5m for colluding to win public contracts for the government’s National Immunization Program. Penalties were imposed in Brazil in relation to pacemakers, in Chile in relation to fighting forest fires using helicopters and planes, in Spain in relation to military equipment for the Spanish Ministry of Defense, and in Slovakia in relation to electricity transmission.

Individuals also faced significant sanctions for bid-rigging conduct in 2023. In Japan, a district court found an ex-official of the Tokyo Olympics organizing committee guilty of rigging bids for “test events” related to the 2021 Games, sentencing him to a two-year suspended prison term. In the U.S., where individuals face a maximum penalty of ten years in prison and a USD1m criminal fine, 13 individuals were convicted of bid-rigging offences.

Extra-territorial enforcement was also pursued in 2023, as a U.S. district court ordered a Korean-based company to pay restitution and a USD8.6m fine for bid-rigging and fraud relating to U.S. military hospitals in South Korea. In March 2022, two officers of the company, both South Korean nationals, had been indicted by a grand jury in connection with the same conduct. An official at the U.S. Department of Justice Antitrust Division (DOJ) warned that the DOJ will continue to aggressively pursue bid rigging and other collusion that targets the U.S., even where such schemes are executed overseas. 

Spotlight on labor markets

Building on developments seen in recent years, 2023 saw enforcement action by a number of regulators against anti-competitive conduct in labor markets, with mixed results on opposite sides of the Atlantic. Investigations in particular targeted wage-fixing agreements (where employers agree to set or fix employee wages) and “no-poach” agreements (where employers agree not to hire each other’s employees). Outside of explicit enforcement action, antitrust authorities are also increasing their focus on labor markets in general, with non-compete clauses being a prime concern as authorities seek to curb practices that could limit labor mobility or reduce salary competition. 

A tough approach on no-poach

In Europe, sports leagues were again at the forefront of labor markets enforcement. The Polish competition authority imposed fines of USD1.2m on the Polish Automobile and Motorcycle Federation and the Speedway Extra-League for implementing regulations which provided for maximum remuneration rates that sports clubs participating in speedway racing league contests were allowed to pay their athletes during the 2013 season. In Italy, the competition authority (IAA) concluded its investigation against the Italian Volleyball Federation concerning the alleged anti-competitive nature of restrictions on the transfer of non-professional athletes between affiliated amateur sports clubs. The IAA accepted commitments proposed to remove the restrictions – the new bylaws for 2024 will provide athletes with the ability to switch clubs at the end of every season.

Authorities also targeted labor market violations in more traditional employment settings. In October, the Czech competition authority (UOHS) concluded an investigation into possible anti-competitive provisions in the ethical codes of the Association of Travel Agencies and Association of Used Car Dealers, which required association members to use non-compete clauses in their employment contracts where possible and potentially restricted the transfer of employees between them. Both cases were resolved by the association removing the problematic provisions from its ethical code and informing its members about the changes made. In August, the Turkish Competition Authority (TCA) issued its second no-poach sanction – a landmark USD6.3m cross-sector fine on 16 companies for a series of bilateral no-poach agreements. The companies involved were not all themselves competitors.

Overall data shows an increase in decisions and new cases in labor markets over the last three years with 13 labor market cartel investigations active across Europe as of the end of 2023. Enforcement action in Europe in particular looks set to continue into 2024, as the EC conducted its first-ever dawn raids in relation to alleged no-poach agreements in November, in connection with its online food delivery sector investigation. Meanwhile the French competition authority issued a statement of objections to companies in the engineering, technology consulting and IT services sectors, and the Belgian competition authority issued a statement of objections to private security firms. In the UK, the CMA has ongoing investigations into workers’ rates in sports and non-sports TV production and broadcasting and suspected no-poach arrangements in consumer fragrances, and is reported to have further labor markets investigations in the pipeline.

The enforcement picture was less successful for U.S. regulators. In April, the DOJ suffered its fourth consecutive loss in contested criminal labor collusion trials, as a federal judge acquitted six executives for allegedly conspiring to allocate the labor market for aerospace engineers. In November, the DOJ dropped its last remaining criminal no-poach prosecution.

New legislation and guidance on the cards

With new legislation in force or in prospect across several jurisdictions, labor markets look set to remain a focus for antitrust authorities in 2024.

The most high-profile new legislation is the U.S. Federal Trade Commission (FTC)’s proposed rule, announced in January 2023, to prohibit employers from imposing non-compete restrictions on their employees and require any existing non-compete agreements to be rescinded, with limited exception. The FTC is expected to vote in April 2024 on the final version of its proposal. By contrast, in a report published in January 2024 on competition in UK labor markets, the UK CMA indicated that non-compete clauses are typically a matter for employment law and do not generally breach UK antitrust rules (although noting the UK government’s announcement that it will legislate to limit post-term non-compete to three months). The Australian government is also reviewing the use of non-compete clauses and no-poach agreements as part of its review of Australian competition laws.

In Canada, a new offence for wage-fixing and no-poach agreements entered into force in June, prohibiting non-affiliated employers from entering into agreements to fix wages, fix terms or conditions of employment, or not hire or solicit each other’s employees. Notably, employers do not need to be competitors for the new provision to apply.

Authorities have also been updating their guidance documents to reflect labor market conduct. The EC added wage-fixing to the non exhaustive list of “by object” infringements in its revised horizontal guidelines, and the UK CMA published guidance for employers on how to avoid anti-competitive behavior in labor markets, as well as identifying labor markets as a key area of focus in its Annual Plan 2023/24 and hosting a roundtable on these issues in November 2023.


Global antitrust enforcement report 2024

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