1 Evidence Gathering in Cartel Evidence Gathering in Cartel Investigations Investigations IGE on Competition Law and Policy IGE on Competition Law and Policy 6th Session th Session 8- 10 10 November November 2004 2004 at Geneva at Geneva Tetsuji Tetsuji YOKOTE YOKOTE International Affairs Division International Affairs Division Fair Trade Commission of Japan Fair Trade Commission of Japan
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Evidence Gathering in Cartel Investigations1 Evidence Gathering in Cartel Investigations IGE on Competition Law and Policy 6th Session 8-10 November 2004 at Geneva Tetsuji YOKOTE International
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Evidence Gathering in Cartel Evidence Gathering in Cartel InvestigationsInvestigations
IGE on Competition Law and PolicyIGE on Competition Law and Policy 66th Sessionth Session
88--1010 November November 20042004 at Geneva at Geneva TetsujiTetsuji YOKOTE YOKOTE
International Affairs DivisionInternational Affairs Division Fair Trade Commission of JapanFair Trade Commission of Japan
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The nature of Hard Core CartelsThe nature of Hard Core Cartels
Hard Core Cartels Hard Core Cartels -- •• are difficult to detect because it is are difficult to detect because it is
conducted behind closed doors, andconducted behind closed doors, and
•• impose significant harm upon consumersimpose significant harm upon consumers..
==> Strong sanctions are imposed and > Strong sanctions are imposed and should be for the purpose of deterrenceshould be for the purpose of deterrence..
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Recent Trends in EnforcementRecent Trends in Enforcement ((legal actions onlylegal actions only))
•• A leniency program has been introduced A leniency program has been introduced in many jurisdictions, which uncovers hard in many jurisdictions, which uncovers hard core cartels that would otherwise go core cartels that would otherwise go undetectedundetected..
•• A leniency program has been successful A leniency program has been successful
and is one of the most useful tools to and is one of the most useful tools to detect hard core cartelsdetect hard core cartels..
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For jurisdictions without leniency For jurisdictions without leniency programsprograms……
•• For jurisdictions without leniency programs For jurisdictions without leniency programs ((including Japan currentlyincluding Japan currently)), how to obtain , how to obtain evidence that indicates conspiracy between evidence that indicates conspiracy between participants of cartels is quite important, participants of cartels is quite important, especially at the early stage of investigationsespecially at the early stage of investigations. .
==> Dawn raid is one of the very useful tools for > Dawn raid is one of the very useful tools for gathering evidence of cartelsgathering evidence of cartels..
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Dawn Raids Dawn Raids ((OnOn--thethe--Spot InspectionsSpot Inspections): ): Japanese ExperienceJapanese Experience
•• The JFTC can enter any place of businesses The JFTC can enter any place of businesses concerned with the case and other necessary concerned with the case and other necessary places, with a prior consent of a senior executive places, with a prior consent of a senior executive of the business or the person concernedof the business or the person concerned. .
•• In In 20022002 FY, the JFTC undertook about FY, the JFTC undertook about 2020 dawn dawn
raids by mobilizing approxraids by mobilizing approx. . 8080 staff per case staff per case ((Maximum approxMaximum approx. . 200200 staff staff.)..).
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Important Tips for Dawn RaidsImportant Tips for Dawn Raids
•• Unexpectedly and SurprisinglyUnexpectedly and Surprisingly
•• Simultaneously and ExtensivelySimultaneously and Extensively
•• Elaborate Preparation for Maximizing the Elaborate Preparation for Maximizing the Effectiveness of Dawn RaidsEffectiveness of Dawn Raids
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Dawn Raids Dawn Raids ((11):): Unexpectedly and SurprisinglyUnexpectedly and Surprisingly
•• Unexpected inspection of the offices of Unexpected inspection of the offices of businesses concerned with the case will deprive businesses concerned with the case will deprive them of the time to hide or destroy evidencethem of the time to hide or destroy evidence..
•• In Japan, the inspectors have to obtain consent In Japan, the inspectors have to obtain consent of a senior executive of business in advance to of a senior executive of business in advance to initiate inspectioninitiate inspection..
==> It is important to initiate inspections when > It is important to initiate inspections when
such a senior executive is in hissuch a senior executive is in his//her office her office –– right after the opening hour is idealright after the opening hour is ideal..
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Dawn Raids Dawn Raids ((22):): Simultaneously and ExtensivelySimultaneously and Extensively
•• Especially in cartel cases, there are many Especially in cartel cases, there are many businesses concernedbusinesses concerned..
•• Information that the JFTC initiated Information that the JFTC initiated investigation tends to spread throughout investigation tends to spread throughout the participants of cartel conduct in no the participants of cartel conduct in no timetime..
==> Dawn raids have to be initiated > Dawn raids have to be initiated
simultaneously against all participantssimultaneously against all participants..
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Dawn Raids Dawn Raids ((33--11):): Elaborate Preparation for Maximizing Elaborate Preparation for Maximizing the Effectiveness of Dawn Raidsthe Effectiveness of Dawn Raids •• Identify the followingsIdentify the followings:: ØØThe number of offices of businesses to be inspectedThe number of offices of businesses to be inspected ØØLocation, size and entrance of related offices of Location, size and entrance of related offices of
businessesbusinesses ØØName and title of a leading personName and title of a leading person ØØName and title of a senior executiveName and title of a senior executive
==> Compose inspection teams based on these > Compose inspection teams based on these informationinformation
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Dawn Raids Dawn Raids ((33--22):): Elaborate Preparation for Maximizing Elaborate Preparation for Maximizing the Effectiveness of Dawn Raidsthe Effectiveness of Dawn Raids •• Whenever dawn raids are undertaken, the Whenever dawn raids are undertaken, the
headquarter is set up and chief inspectors have headquarter is set up and chief inspectors have a close contact with the headquarter a close contact with the headquarter ((Additional Additional inspectors may be sent to the inspection team if inspectors may be sent to the inspection team if necessarynecessary.)..).
•• When a key evidence is found through the When a key evidence is found through the
inspection, the headquarter may instruct inspection, the headquarter may instruct inspectors to have testimony on the spotinspectors to have testimony on the spot..
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Improvement of Enforcement Improvement of Enforcement System in JapanSystem in Japan
•• In addition to introducing compulsory In addition to introducing compulsory measures for criminal investigationsmeasures for criminal investigations……
ØØIncreasing the surcharge rateIncreasing the surcharge rate
ØØIntroducing a leniency programIntroducing a leniency program
==> The JFTC will have> The JFTC will have stronger power to crack stronger power to crack down on cartelsdown on cartels..