Companies operating multi-jurisdiction beware on competition law extradition reach against senior executive: US court enforced extradition against senior executive while he was in transit in Germany for cartel charges. Interesting article on APAC laws on competition against key executives
The extending reach of competition law against key executives
Singapore August 14 2015
Introduction
On 4 April 2014, the United States Department of Justice (“DOJ”) announced its first ever successful extradition of an individual to the United States solely on an antitrust charge. According to the DOJ, Romano Pisciotti (a former executive of Parker ITR S.r.l.) had participated in a cartel involving the distribution of marine hose in the United States, which involved criminal bid rigging, price fixing and market allocation. On the facts of this case, Romano Pisciotti was arrested by the German Authorities while he was in transit in Germany, while travelling from Nigeria to Italy. For playing an instrumental role in the marine hose cartel, the DOJ imposed on Romano Pisciotti a 2 year jail term and a fine of US$50,000.
Drawing broadly on this case, this Article discusses the risks of extradition of key business executives in the context of Singapore’s Competition Act (Cap 50B) and the corresponding legislation in other ASEAN member states. In particular, this Article will show that where companies have operations in a number of jurisdictions, the key executives of such companies will be subject to the competition law regime of these jurisdictions, and may be punished in a jurisdiction where the executive is not located. Hence, it is important that key executives have an appreciation of and ensure compliance with the competition regimes in the countries that their employers operate in.
Extradition Law in Singapore
In Singapore, the extradition of an individual to and from Singapore is governed primarily by the terms of the Extradition Act (Cap 103) (“EA”). On this, as a general rule, an individual can only be extradited to and from Singapore if the following two conditions are met:
- Singapore has in place an extradition treaty or arrangement with the applicable requesting state; and
- the offence constitutes an extradition crime as defined by the EA.
In relation to the first requirement, the applicable requesting states include Malaysia, United States, United Kingdom, Germany, Hong Kong Special Administrative Region of the People’s Republic of China, and a number of declared Commonwealth Countries, which includes Australia, Canada, India, New Zealand and Sri Lanka. At this juncture, it is also pertinent to point out that depending on whether the request is made by a foreign state (as defined by the EA), a declared Commonwealth Country or Malaysia, different frameworks will be applicable.
On the second requirement, there must be dual criminality, i.e. the alleged conduct must be punishable both in Singapore and the requesting state. On this, the alleged conduct must, if it took place within Singapore, constitute an offence against the law in Singapore that is described in the First Schedule of the EA. This includes offences like cheating, murder, money laundering, forgery, malicious damage to property, and various offences under company law. In addition, offences which are construed as conspiring to defeat the course of justice may also fall within the ambit of being an extradition crime. Further, if the extradition country is a declared Commonwealth Country, the offence must generally be punishable with maximum penalty of death or minimum penalty of 12 months’ imprisonment.
In addition to the above statutory requirements, depending on the terms of the extradition treaty or arrangement, Singapore may refuse to surrender its nationals to a requesting country, and vice versa. As an example, in the extradition agreement between Singapore and Hong Kong SAR, each party reserves the right to surrender its own nationals. This is an important point, as in the case of Romano Pisciotti, the German Authorities would have been statutorily prevented from surrendering him if he had been a German national. Given this, assuming the legislative requirements for extradition are satisfied, a Malaysian business executive travelling through Singapore may be extradited to Hong Kong, notwithstanding the fact that Singapore may refuse to surrender its own citizen in a similar situation.
Competition Law & Extradition from Singapore
Under the provisions of Singapore’s Competition Act, a breach of the prohibition against anti-competitive agreements and the prohibition against the abuse of a dominant position does not attract individual liability, nor does it attract any criminal liability. On this, the Competition Act provides that where the Competition Commission of Singapore has made a decision that there had been an infringement of the key provisions of the Competition Act, the Competition Commission of Singapore may issue directions or impose financial penalties on the infringing parties. However, such penalties are non-criminal in nature.
Given that an infringement of the key provisions of the Competition Act would not constitute an offence that is described in the First Schedule of the EA, an extradition request from a foreign country for breach of their corresponding competition regime is unlikely to be acceded to. Further, it may also be argued that the requirement for dual criminality is not satisfied here. However, this does not necessarily mean that the key executive is completely immune from extradition. As in the case of Romano Pisciotti, there remains the possibility that the key executive may be extradited when he / she is travelling to a country where the infringement of Competition Laws would amount to an extradition crime. In other words, a business executive of a Singapore company travelling through Germany could possibly have been subjected to an extradition as well.
Hence, it is important that companies operating within the ASEAN region, and in particular, the key executives of such companies, be aware of the competition regime in each of the countries that have criminal implications for Competition Law violations so as to avoid the risks of being extradited when travelling to these countries.
ASEAN Competition Regime
In the ASEAN region, in addition to Singapore, countries with a national competition law are Malaysia, Indonesia, Thailand, Vietnam, Myanmar, Brunei and the Philippines. We briefly look at the competition regime in each of these countries and highlight which countries view an infringement of competition law as a criminal offence:- Malaysia – Under Malaysia’s Competition Act 2010, the infringement of the prohibition against anti-competitive agreements or the prohibition against the abuse of a dominant position is punishable with a financial penalty and / or other directions issued by the Malaysian Competition Commission. In short, as in Singapore, the infringement of the key provisions of the Competition Act 2010 is not a criminal offence.
- Indonesia – Under Indonesia’s Law Number 5 of 1999, the infringement of the provisions related to prohibited agreements, prohibited activities and abuse of a dominant position is punishable with a civil fine of up to IPR 25 billion. However, certain conduct, including cartels, are viewed as being criminal in nature and is punishable by a criminal fine or an imprisonment term of 6 months1. Given this, depending on the applicable extradition laws in Indonesia, a business executive of a company found to have infringed the prohibition against cartels in Indonesia may be liable to extradition.
- Thailand – Under Thailand’s Trade Competition Act 1999, an infringement of the prohibition against monopolistic practices and the prohibition against anti-competitive agreement may result in a civil order issued by the Thailand Competition Commission. The infringement of the above prohibitions will also give rise to criminal penalties, i.e. a fine not exceeding 6,000,000 Baht or an imprisonment term not exceeding 3 years. Consequently, as in Indonesia, a business executive of a company found to have infringed the Trade Competition Act 1999 may be extradited to a requesting country which has in place such extradition arrangements with Thailand.
- Vietnam – Under Vietnam’s Law on Competition 2004, the infringement of the prohibition against agreements in restraint of competition and the abuse of a dominant position is punishable by a penalty or a fine. However, the penalties are purely administrative and are not criminal in nature. Hence, given that the key requirement of dual criminality is not satisfied, a business executive of a company which has infringed the Law on Competition 2004 will unlikely be extradited from Vietnam to a requesting country.
- Myanmar – Myanmar’s Competition Law 2015 was signed into force by the President on 24 February 2015. Under the Competition Law 2015, an infringement of the prohibition against acts restricting competition. Monopolies and unfair competition practices would result in an administrative action. In addition, the authority may also impose a criminal fine or term of imprisonment of up to 2 or 3 years, depending on the infringement being committed. Depending on the applicable laws on extradition in Myanmar, the business executive of a company that is found to have infringed the Competition Law 2015 may be extradited from Myanmar.
- Brunei – Under Brunei’s Competition Order 2015, the infringement of the prohibition against anti-competitive agreements or against the abuse of a dominant position is punishable with an administrative penalty imposed by the authority. In short, the infringement of the key prohibitions in the Competition Order 2015 is not a criminal offence. This means that a business executive of a company which has infringed the Competition Order 2015 will unlikely be extradited from Brunei as the requirement of dual-criminality is, without more, not fulfilled.
- Philippines – Under the Philippines Competition Act2, the infringement of the prohibitions against anti-competitive agreements or against the abuse of a dominant position is punishable by an administrative fine. In addition, where the infringement involves a hardcore cartel, a criminal penalty or an imprisonment term of between 2 to 7 years may be imposed. Further, where an entity is found to have infringed such hardcore cartel prohibitions, the term of imprisonment will be imposed on the officer, director or manager of the entity who knowingly and wilfully participated in the infringement. Therefore, in the event that his / her employer is found to have infringed the Philippines Competition Act, the business executive may risk being extradited from the Philippines.
Given the above, and drawing from Romano Pisciotti’s case, a business executive of a company who is found to have infringed the key prohibitions in Singapore’s Competition Act is not totally immune from extradition. The business executive still risks being extradited when he travels to Indonesia, Thailand, Myanmar or the Philippines, depending on the extradition arrangements between these countries and the requesting countries.
In addition, subject to the corresponding laws on extradition in Indonesia, Thailand, Myanmar or the Philippines, the business executive of a company with operations in these jurisdictions may risk being extradited if their employers have been adjudged to have infringed the applicable legislation in these countries.
Ancillary Offences Under Singapore’s Competition Act
While the infringement of the key prohibitions under Singapore’s Competition Act is not an offence, a business executive is not totally immune from being extradited from Singapore. In another case which concerned the extradition of an individual, a British national, Ian Norris, was extradited to the United States from the United Kingdom in 2010 for obstruction of justice offences under the corresponding competition legislation in the United Kingdom. This is notwithstanding the fact that there were no criminal sanctions against price fixing in the United Kingdom at the time..
In addition to Singapore, Malaysia’s Competition Act 2010 also contains similar offences which relate to the obstruction of justice. Hence, depending on the applicable extradition regime in Malaysia, an individual, while unlikely to be extradited for infringements of the key prohibitions, may still be extradited for such offences.
Conclusion
Following from the above, it becomes clear that business executives are not totally immune from infringements of Competition Law by their companies. In short, owing to the willingness of competition authorities to take a stricter stance against Competition Law infringements and the willingness to go after individuals who play an instrumental role in such infringements, business executives can no longer hide behind the corporate veil of their employers.
Hence, it is important that business executives have an in-depth understanding of the Competition Law regimes in the jurisdictions that their companies have operations in. This is to ensure that they do not – advertently or inadvertently – act in violation of such laws.
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