About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

EU RAIDS AUTOMOTIVE EXHAUST COMPANIES

exhaustOn 25 March 2014, the European Commission announced that it had conducted dawn raids at the premises of a number of car exhaust companies, based in several EU Member States. A full list of the companies has not been released, however, French company Faurecia, US company Tenneco Inc. and German company Eberspächer confirmed that they had been raided. Reports have suggested that Tenneco Inc. has also received a sub poena from the US Department of Justice, Antitrust Division.

The raids appear to relate to suspicion that the companies may have violated EU rules on cartel activity and restrictive business practices. Faurecia, which is 52% owned by PSA Peugeot Citroen, has confirmed that it is fully cooperating with the Commission.

In a statement, the Commission emphasised that “the fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.”

As reported in an earlier blog, the car industry faces numerous antitrust investagations globally, with as many as 70 companies involved.

PROPOSED EU DIRECTIVE AIMS TO HELP CARTEL VICTIMS

almuniaOn 18 March 2014, MEPs and European Council representatives agreed on the terms of a new proposed directive on antitrust damages. The measure, which is expected to become law before the European elections in May 2014, is intended to make it easier for victims of cartel activity to claim compensation.

The main changes to the law will be that:

  • Decisions of national competition authorities will constitute full proof before civil courts that the infringement occurred.
  • Clear limitation period rules will be established.
  • Victims will be able to obtain full compensation for lost profits as well as actual loss suffered.
  • A rebuttable presumption that cartels cause harm will be established, and
  • Victims will have easier access to evidence to pursue cases.

Joaquín Almunia, the European Commissioner for Competition, said: “This directive will remove the barriers that currently prevent the victims of antitrust infringements in the EU from obtaining effective compensation. At the same time, it will ensure an adequate and balanced interaction between actions for damages and the effective public enforcement of competition law by the Commission and national competition authorities.”

ITALIAN COMPETITION AUTHORITY LAUNCHES BID-RIGGING PROBE

On 18 March 2014 Italy’s Competition Authority, the Autorità Garante della Concorrenza e del Mercato (“AGCM”), announced the launch of a bid-rigging investigation into Chef Express S.p.A. and My Chef Ristorazione Commerciale S.p.A. Both companies manage motorway service restaurants.

The independent company managing the submission process for tenders drew the attention of the authorities to evidence of collusion. According to the AGCM, evidence indicated that the two companies had colluded on bids for 16 of the 43 licences available. It has been alleged that they intended to take 8 licences each.

The investigation is the latest in a series of probes into bid-rigging in Italy. The rail sector is one of the more prominent recent investigations. For the last 15 years, Italy’s motorway service restaurants have been controlled by Autogrill, which is majority owned by the company that runs Italy’s motorways, Autostrade. Both are controlled by the Benetton family.

EU FINES EUROPEAN AND JAPANESE AUTOMOTIVE BEARINGS PRODUCERS

car plantOn 19 March 2014, the European Commission announced the imposition of fines totalling € 953 306 000 on two European companies (SKF and Schaeffler) and four Japanese companies (JTEKT, NSK, NFC and NTN with its French subsidiary NTN-SNR) for participating in a cartel in automotive bearings market from April 2004 until July 2011.

The Commission found that the companies coordinated the passing-on of steel price increases to their customers, colluded on Requests for Quotations and for Annual Price Reductions from customers and exchanged commercially sensitive information.  This occurred through multi-, tri- and bilateral contacts.  The size of the EU market for automotive bearings is estimated to be at least € 2 billion a year.

 Japanese company JTEKT was not fined as it benefited from immunity under the Commission’s 2006 Leniency Notice for revealing the existence of the cartel to the Commission.  NSK, NFC, SKF and Schaeffler received reductions of their fines for their co-operation in the investigation under the Commission’s leniency programme. Since all companies agreed to settle the case with the Commission, their fines were further reduced by 10%.

 Commission Vice President in charge of competition policy, Joaquín Almunia, said: “Today’s decision is a further milestone in the Commission’s ongoing effort to bust cartels in the markets for car parts, after the sanctions we imposed on producers of electric wires and of foam used in car seats. It is incredible to see that one more car component was cartelised. I hope the fines imposed will deter companies from engaging in such illegal behaviour and help restore competition in this industry.”

 The decision is part of a major investigative effort into suspected cartels in the automotive parts industry.  The Commission has pursued cartel activity in several sectors of the industry, including wire harnesses in cars (IP/13/673) and flexible foam used in car seats (IP/14/88).

 The Commission announced on 19 March 2014 that it is investigating more products, such as airbags, safety belts and steering wheels (see MEMO/11/395), air conditioning and engine cooling products (see MEMO/12/563) and lighting systems.

KFTC FINES SUPPLIERS OF AUTO PARTS

Flag_of_South_Korea_svgOn 23rd December 2013, the Korean antitrust regulator, the Korea Fair Trade Commission (“KFTC”), imposed fines of 114.6 billion won (approximately US$108 million) on a number of auto parts suppliers, including Japan’s Denso Corporation and Germany’s Bosch and Continental AG.  The charges related to the fixing of prices for car instrument panels and wipers, in particular those sold to Hyundai and its affiliate, Kia Motors.  The FTC has estimated that price collusion has affected the cost of around 11 million units.  The parts in question account for approximately 0.5% of the price of the car.

The largest fine, 63 billion won, was imposed on the Denso Corporation, which was accused of fixing prices between January 2008 and March 2012, initially with Continental AG and then with Bosch.  The FTC found that price collusion led to a sharp increase in price estimates provided by the suppliers.  Continental AG and Bosch have been fined 46 billion and 5.6 billion won respectively.

Shin Dong-kwon, Head of the Cartel Investigation Bureau at the KFTC, said, “We collaborated with antitrust regulators from the US and the EU to crack down on price collusion among auto parts makers.  And we will closely monitor international cartels targeting the Korean market in the future.

The U.S. Justice Department and antitrust enforcers worldwide have been investigating price-fixing by around 20 companies and 21 executives in the automotive industry.  To date, the corporations in question have agreed to pay $1.6 billion in fines.

LONGEST SENTENCE IN US HISTORY HANDED DOWN IN FREIGHT CARTEL CASE

shipOn Friday 6th December 2013 Judge Daniel R. Dominguez of the US District Court of Puerto Rico in San Juan handed down the longest sentence in US history for a single antitrust charge.  Frank Peake, the former president of Sea Star Line LLC, was sentenced to serve five years in prison and to pay a $25,000 criminal fine for his participation in what the indictment described as a conspiracy to fix rates and surcharges for freight transported by water between the continental United States and Puerto Rico.

The prison sentence was far shorter than the 87 months sought by prosecutors from the Antitrust Division of the US Department of Justice.  The prosecuting attorney in the case was reported to have said that the record sentence was intended to “get the attention of companies and executives around the world.”

Reports have quoted the Department of Justice as asserting that Peake and his co-conspirators conspired to fix, stabilise and maintain rates and surcharges for Puerto Rico freight services, to allocate customers between them and to rig bids submitted to customers.  Peake was involved in the conspiracy from at least late 2005 until at least April 2008.

As a result of an ongoing Department of Justice investigation, the three largest water freight carriers serving routes between the continental United States and Puerto Rico, including Peake’s former employer Sea Star, have pleaded guilty and been ordered to pay more than $46 million in criminal fines for their roles in the conspiracy.  Sea Star pleaded guilty on 20th December 2011, and was sentenced by Judge Dominguez to pay a $14.2 million criminal fine.  Sea Star transports a variety of cargo shipments, such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico.

Custodial sentences have been handed down to five other individuals.  Additionally, Thomas Farmer, the former vice president of price and yield management of Crowley Liner Services, was indicted in March 2013 for his role in the conspiracy and is scheduled to go to trial in May 2014.

US SENATE PASSES CRIMINAL CARTEL WHISTLEBLOWER PROTECTION MEASURE

us senateOn 4th November 2013, the US Senate unanimously passed legislation to extend whistleblower protection for employees providing information to the Department of Justice relating to criminal antitrust violations.

The Criminal Antitrust Anti-Retaliation Act was jointly introduced by Senator Patrick Leahy (Democrat, Vermont) and Senator Chuck Grassley (Republican, Iowa), chairman and ranking member of the Senate Judiciary Committee.  The Senators were the authors of previous whistleblower provisions within the 2002 Sarbanes-Oxley Act, passed in the aftermath of the collapse of Enron.  Senator Grassley was reported as commenting that “Too often whistleblowers who risk their careers to expose waste, fraud and abuse are treated like second-class citizens.”

The recent Bill was based on a report released in July 2011 by the US Government Accountability Office.  It adds a civil remedy for those who have been fired, or otherwise discriminated against, after blowing the whistle on criminal antitrust activity.  Employees who believe they are victims of retaliation may file complaints with the Secretary of Labor.  The new Act provides for those employees to be reinstated to their former status if the Secretary of Labor finds in their favor.  Senator Leahy commented that “The Criminal Antitrust Anti-Retaliation Act does not provide employees with an economic incentive to report violations. The legislation simply makes whole employees who have been fired or discriminated against for blowing the whistle on criminal conduct.”  Critics of the measure have pointed to the absence of an economic incentive as an obstacle to the effectiveness of the legislation.

Commentators have pointed to the case of Marty McNulty as exemplifying the kind of injustice that Leahy and Grassley’s Bill is intended to eliminate.  In 2005, McNulty claimed to have discovered that his employer, Arctic Glacier International, had agreed with Home City Ice to keep the prices of its packaged ice artificially high.  He repeated the allegation to the FBI.  Both companies were ordered to pay $9 million in fines.  McNulty was fired and claimed to have been blackballed within the industry.  Supporters of the new measure point out that McNulty would have both kept his job and been able to claim for damages suffered in the process.