The US Department of Justice recently announced that it had successfully extradited the first foreign national on antitrust (competition law) charges, indicating that the US government will continue its forceful approach to pursuing foreign executives who violate US competition laws.
On 4 April 2014, the DOJ announced that Italian national Romano Pisciotti had been extradited from Germany on cartel charges. The DOJ alleges that Mr Pisciotti participated in a global cartel arrangement relating to sales of marine hoses, which are flexible rubber hoses used to transfer oil between tankers and storage facilities. To date, nine individuals and five companies, including Mr Pisciotti’s former employer Parker ITR, have pleaded guilty to charges in the marine hoses investigation. In particular, Mr Pisciotti is charged with agreeing during meetings, conversations and communications to allocate shares of the marine hose market among cartelists, fix prices and rig bids.
The extradition follows prior unsuccessful attempts by the DOJ to extradite individuals on antitrust charges, including its 2004 attempt to extradite the former CEO of engineering firm Morgan Crucible, Ian Norris, from the UK on the basis of a price-fixing charge. After numerous appeals the House of Lords determined that:
- as price-fixing was not a criminal offence in the UK at the time the alleged offences were committed, it was therefore not an extraditable offence as it failed to meet the “dual criminality” requirement under the UK’s extradition regime; and
- participation in a price-fixing cartel as alleged, in the absence of aggravating conduct, did not amount to a conspiracy to defraud under the common law and therefore was not criminally punishable and not an extraditable offence (see our alert on the case here).
Nonetheless, the DOJ continued to pursue Norris’s extradition and in 2010 it managed to do so on the basis of a subsidiary obstruction of justice charge, for which there was a comparable criminal offence in the UK.
Only in America?
The “dual criminality” requirement is a feature of extradition laws in Australia under the Extradition Act 1988 (Cth), as well as the US and other countries. In the case of Mr Pisciotti, the “dual criminality” requirement was satisfied because bid-rigging is a criminal offence under the German Criminal Code.
Executives need to be aware that the barriers to extradition are weakening, having regard to:
- the fact that cartel conduct was criminalised in Australia in July 2009, and
- more countries are introducing legislation to adopt criminal competition laws.
Under Australian law, conduct of the nature alleged against Mr Pisciotti could be subject to a maximum 10 year jail term and/or a criminal penalty of up to $220,000.
Under the US Sherman Act, Mr Pisciotti faces a maximum penalty of ten years in prison and a fine equal to the greater of $1 million, twice the gain derived from the crime, or twice the loss suffered by the victims of the crime. Mr Pisciotti is reported to be appealing his extradition.