The Socio-Legal Studies Association (SLSA) Annual Conference 2011 was held at the Sussex Law School, University of Sussex, Brighton, UK, and the Cartel Project team organised one of the major themes of the conference. The SLSA aims to advance education, learning, research, teaching and the dissemination of knowledge in the field of socio-legal studies and its annual conference is a key way to achieve these aims.
Professor Christine Parker and Associate Professor Fiona Haines were the convenors of the theme 'Criminalising Commerce?' and the team organised five panels within the theme for the Conference. The papers presented in the five panels concerned the use of criminal and regulatory law to attempt to regulate business conduct, as well as research papers on compliance and deterrence in business regulation more generally.
The Cartel Project team presented on aspects of their own research on cartel criminalisation and a number of scholars from other jurisdictions also presented.
The first panel, Holding a Mirror to Society: Learning Lessons from Attempts to Criminalise the Harms of the Powerful Part 1, was convened by Associate Professor Fiona Haines.
Panel abstract: Wilhelm Aubert argued over 50 years ago that white collar crime told us more about the struggles for power within a particular society than it did about the character of the criminal. Since he wrote, there have been significant changes in what is considered a 'crime of the suites' and concerted efforts have been made by diverse groups aimed at the criminalisation of business behaviour. These span attempts in several jurisdictions to criminalise deaths in the workplace through the introduction of Industrial Manslaughter offences (a demand often driven by unions) to the criminalisation of cartel conduct where the regulatory bureaucracy (in some jurisdictions at least), has been at the forefront of demands for law reform. This diversity is both intriguing and important, since the behaviour to be criminalised in some settings appears emblematic of the rise in importance of the value of human life (arguably a collectivist ethic) whilst others, such as the criminalisation of cartel conduct, arguably symbolise the rise in importance of the capitalist competitive market as the subject who is harmed. Arguably, too, the demand for criminalisation may also reflect growing challenges of legitimacy for the state with criminalisation an attempt to assuage public concern about the harms wrought by business particularly in the wake of the Global Financial Crisis. This panel explored the push to criminalise business behaviour in diverse settings and across disparate harms and teased out the lessons that can be learnt from research about the changing structure and dynamics of contemporary societies.
The papers in this panel included:
Fiona Haines and Caron Beaton-Wells, Law and order in the suites? Insights from cartel criminalisation in Australia
Abstract - Criminalising the harms of the powerful has considerable appeal for those who desire a more tractable, ethical and sustainable business sector. Yet, the establishment of criminal offences applicable to society's corporate elite faces perennial challenges. This paper analyses these challenges through an analysis of the recent reform initiatives criminalising ?hard core' cartel conduct in Australia. The case study reveals three particular challenges. The first arises from the inherent ambiguity that accompanies business harm. This ambiguity encompasses economic, legal and moral dimensions where clear lines between degrees of harm and harm and benefit; between legality and illegality and illegality and criminality; and between morality and immorality and immorality and criminality are difficult, if not impossible to draw. Such ambiguity provides ample room for those with access to the ear of government to prosecute the case against criminalisation for fear of governments losing investment or precipitating an economic crisis of some sort. The challenge of surmounting political risk is the second challenge that we identify, that is the risk which is contoured by the need for government to simultaneously nurture the conditions for a productive economy whilst reassuring the citizenry of their safety and security. In the face of ambiguity and political risk, criminalisation, if it is successful, will tend towards the most expedient legal formulation where competing interests are appeased. The third challenge discussed in the paper is the challenge of ensuring that expediency does not result in incoherent, ineffective or even counterproductive law. We suggest that these three interrelated challenges of ambiguity, political risk and expediency are likely to arise in any attempt to criminalise harms of the powerful. However, the way in which they are played out will differ depending on the content of the harm and the context for its criminalisation - in this instance, the collusive practices of business and in the context of the capitalist democracy of Australia.
Paul Almond, Communication and Social Regulation: The Criminalization of Work-Related Death
Abstract - This paper will address the movement towards the use of the criminal law as a tool for the regulation of work-related deaths, both in the United Kingdom and elsewhere, which has occurred in the last twenty years. It will seek to argue that the introduction of the Corporate Manslaughter and Corporate Homicide Act 2007, and the liberalisation of modes of attribution of criminal fault to corporate bodies in other jurisdictions, can be understood as a coherent trend, and that the reasons for this trend can be traced to the role and nature of regulatory law within those societies. This is a topic of interest given that it brings together two (apparently inconsistent) concerns of criminology; a desire to achieve ?justice' in relation to wrongdoing which avoids criminalisation due to power inequalities, and a concern over the potentially damaging implications of extending criminal liability into new areas. The law has typically struggled to impose criminal liability here, preferring instead to conceptualise these cases as ?quasi-crimes' rather than mainstream forms of offending. The desire to break down this distinction reflects some of the limitations inherent in regulatory systems, specifically, their instrumental, rational and juridified nature. Following Habermas (1973; 1988), it will be argued that the advances in instrumental attainment achieved by regulators have been offset by a breakdown of normative legitimacy. Health and safety law, as a social entity and a legal institution, is downgraded and objectified, resulting in both a loss of effectiveness and a loss of public confidence. It will be argue that the turn to the criminal law as a regulatory tool reflects this lack of normative weight, and also the impact of social and cultural contexts upon health and safety regulation, for it is in jurisdictions with liberal market economies and majoritarian, centralised political systems that the use of criminal law in this context is most pronounced. The criminal law is a mechanism to ?re-norm' the regulatory law, but in many ways, it is a crutch to offset the limitations of the regulatory law and its political context. Corporate manslaughter reforms aim to communicate loudly in contexts where regulation is constrained to 'speak softly'.
Michael Levi, Criminalising Financial Crime: Some Lessons for Coherence
Abstract: The term 'financial crime' has come into increasing use in official discourse. This paper unpacks what it means and examines the diverse ways in which different sub-sets of activity have been criminalised in law and in practice, and what this tells us about media imagery, resource constraints and political power. Within this framework, the impact of the Global Financial Crisis on this criminalisation process is explored.
Nancy Reichman, Beyond the Reaches of the Criminal Law? The case of low waged women workers
Abstract: Low waged women workers constitute a significant proportion of workers in the hospitality and healthcare industries. Not only are the wages and conditions associated with this work difficult, with low pay combined with long working hours and high intensity of demands, but breaches of these conditions by employers (i.e. non payment of wages) common. The negative impact of both 'legal' and 'illegal' elements of low waged work on the women concerned can be considerable. Despite this, sanctioning of breaches by employers through criminal law for even the most egregious breach by employers is absent. This paper analyses the challenges for women in these sectors and explores the reasons why criminalisation of harmful conduct in this area is not used.
The second panel, Holding a Mirror to Society: Learning Lessons from Attempts to Criminalise the Harms of the Powerful Part II, was convened by Associate Professor Fiona Haines. The papers included:
Laureen Snider, Regulation and Resistance: The Technologiocal Arms Race
Abstract: This paper examines regulation and resistance, specifically the technological "arms race" that has developed through High Frequency Trading (HFT) and other technologically-assisted forms of "innovation". It argues that constantly evolving surveillance technologies such as HFT constitute a strategy of resistance that puts state regulators as well as small retail investors at a serious disadvantage. It examines the history and potential of the technologically-enabled resistance that is deployed by deep pocketed, dominant financial players, those able to purchase the most powerful, fastest computers and the algorithmic gurus who devise the formulae and programmes, giving them an enormously profitable advantage over regulators, who have neither the expertise nor the budgets to compete. In conclusion, it argues that the root of regulatory incapacity lies neither in the technologies themselves nor in regulators' lack of access to them, but in the political, economic and cultural advantages of financial capital and its centrality in a globalized neo-liberal world.
Nicholas Dorn, A Dream Come True for Some: Financial Services, Crisis, Capture, Consolidation
Absrtract: The financial crisis and policy responses to it entail a shift of resources from the public sector to the private sector. This paper tries to theorise how bailouts and other crisis-management actions have arisen in forms that protect bondholders while shifting losses and liabilities onto
public budgets. However is more at stake here than a shift of liabilities. Crises are game-changing moments, in which opportunities can shift to the advantage of the largest and most political agile of international firms.
Both the crisis per se, and policy and regulatory responses to it, provide opportunities for firms to expand in size through takeovers and mergers. Further regulatory harmonisation favours large firms' cross-border activities, winkling out local firms. For some players, then, a crisis is not a nightmare, it is a dream come true. The question arises, what are the specific political tactics, and what are the general social conditions, which make this possible? This paper explores the above in terms of two theorists of conflict and cooperation, the rightist economist Joseph Schumpeter and the leftist sociologist Pierre Bourdieu.
Joe McGrath, Confronting the Continuing Failure to Prosecute Respectable Wrongdoers in Ireland
Abstract: In 1958, the Cox Report on corporate compliance concluded that some companies in Ireland exhibit "a complete disregard of the requirements of the Companies Acts." Forty years later, the McDowell Report concluded that Irish company law "was characterised by a culture of non-compliance" and
"those who are tempted to make serious breaches of company law have little reason to fear detection or prosecution." The Honohan Report of 2010 stated that the regulation of the financial sector was characterised by "inconclusive engagement ... and a lack of decisive follow through." The Regling Report
of the same year concluded that regulators were too deferential to regulated institutions, "moving very far in the direction not just of principles-based but of light-touch supervision." The evidence suggests that regulators' inability to enforce corporate and financial laws has a long pedigree in Ireland.
This paper shows that recent revelations of high profile financial irresponsibility in Ireland's banking sector are part of a longer trajectory of regulatory failure, and are a result of the failure to learn from past lessons. It also considers the apparent policy currently advanced by corporate and financial regulators to only sanction wrongdoers where all other techniques of achieving compliance have failed. Non-legal techniques of enforcement and civil orders have the benefit of being cost-effective and efficient ways of enforcing corporate obligations. Regulators avoid lengthy and costly criminal trials which they cannot afford while also avoiding the difficulties of onerous criminal law procedures, like proving intent to commit the wrong beyond a reasonable doubt. These sanctions can be particularly useful for regulators and politicians who want to get results and be seen to be tough on corporate misconduct, especially in a climate where the electorate are clamouring for corporate accountability.
Nevertheless, it is difficult to escape the conclusion that the compliance-orientated approach has created a two-tier legal system privileging elites in the corporate and financial sector. Political rhetoric on corporate accountability rings hollow when the public has lost its most powerful weapon of censure. It is argued that serious cases of corporate wrongdoing must be regularly prosecuted. Corporate criminals must be publicly shamed to make it easier for the public to identify corporate crimes as wrongs against society, to blame corporate criminals for their actions, and to reinforce the common sense of right and wrong. If this does not occur then 'crime in the suites' continues to be of a different character to 'crime in the streets' and we cannot claim we live in a society where all citizens are equal before the law.
Siobhan McConnell, Criminalising Commerce - the Impact of the Bribery Act 2010 on corporate hospitality
Abstract: The Bribery Act 2010 (Act) came into force in April 2011. It will replace the current outdated laws on bribery and establish offences for individuals and commercial organisations. The Act applies across the United Kingdom and appears to be the Government's response to the global threat
to business posed by bribery.
Section 7 of the Act creates an offence where a commercial organisation fails to prevent persons associated with it from committing a bribe on behalf of that organisation. A commercial organisation has a defence where it can show it had in place adequate procedures designed to prevent associated persons from committing bribery. Section 9 of the Act obliges the Secretary of State to publish guidance on the procedures a commercial organisation can employ to prevent associated persons from bribing others. The Ministry of Justice is undergoing a consultation on these procedures.
The area explored is how corporate hospitality will be dealt with under the Act and the associated guidance. Corporate hospitality is critical in many businesses and there have long been concerns about the circumstances in which corporate hospitality could amount to bribery. Key questions are:
- what types of corporate hospitality will be acceptable? Will the guidance clarify this or will the courts be left to decide on a case by case basis?
- what kind of procedures will a commercial organisation need to have in place to establish a successful defence?
Ursula Kern, Criminalising annual accounts - A way to transparency and trust?
Abstract: The trustworthiness of financial statements is crucial for economic behaviour of all actors involved. Without the presumption of a true and fair display of a company's financial situation trade is made more and more difficult as - especially when liability is limited - (potential) creditors and investors are more likely to enter and continue a business relationship with a solvent company. Therefore, and to avoid additional charges for risk compensation, it is necessary for the company to present its performance in the best possible way. Though, there is only a thin line between the use of allowed options in financial statements and deceit. The paper analyses the possible responses in case this border is crossed and false or misleading statements in bookkeeping and accounting are used. However, the reality is even more complicated than saying that all misconduct needs to be penalized with the consequence that the main question is if criminalisation is necessary to secure transparency and trust. Hence, the question is raised if criminal sanctions are an efficient instrument of deterrence in the context of accounting and auditing. Moreover, the economical consequences of penalisation and non-penalisation are contrasted and it is explored if criminalisation of false statements in accounts can even work in a preventive way with the aim that subsequent misbehaviour like corruption or tax fraud can be detected more easily or even circumvented. Furthermore, the methods of criminal sanctions in the UK and Germany are briefly contrasted in terms of point in time, responsibilities and consequences. These results are particularly interesting in conjunction with the possibility of harmonisation in the area of criminal law through the Treaty of Lisbon and may lead to a common European approach on financial crime.
The third panel, Cartel Criminalisation: Part II, was convened by Associate Professor Caron Beaton-Wells.
Panel abstract: The last decade has seen an emerging consensus in favour of tougher laws and more punitive approaches to the sanctioning of cartel conduct (price fixing, market sharing, bid rigging, etc) around the world. However, there remains considerable debate concerning the justifications for treating such conduct as criminal. The justifications offered by criminalisation advocates range from utilitarian arguments about deterrence and the effectiveness of leniency programs to more philosophical (or even ideological) concerns with the morality of 'stealing' from consumers. More pragmatic or political justifications based on harmonisation, whether on a regional or international basis, have also been offered, amongst others. This panel will explore these various dimensions of the case that is being made for criminalization of cartel conduct. Arguments will be made both for and against the reform. At the same time there will questions posed regarding the deeper implications of the criminalization movement and what it reveals about the growing expansion of competition policy and the empowerment of competition enforcers.
The papers in this panel included:
Christopher Harding, A Theoretical Framework for the Assessment of Cartel Criminalisation
Significant theoretical and practical questions have arisen in recent years concerning the policy of criminalisation of business cartels in an increasing number of jurisdictions outside North America. It is important to gain an understanding of the origins and dynamic of this legal development. Studies of cartel criminalisation require a theoretical framework which enables a clear and usable collection of data and organisation of argument. This paper sets out such a theoretical framework which may be used for critical and comparative study across jurisdictions. It is proposed that a viable critical assessment of cartel criminalisation should be constructed around the following elements of analysis:
(a) The aims of the legal control of cartels, and routes of enforcement, in particular: elimination of cartels; compensation; penalty; economic justice; management of power relations.
(b) Agency - the subject of legal control: human individuals, corporate actors, and the cartel as an organisation.
(c) Victimhood: the damage inflicted by cartel activity, and the distribution of that damage.
(d) The nature of cartel delinquency, as a justification for legal (and especially criminal) sanctions.
(e) The balance between retributive and utilitarian components of legal control (in particular, the retributive deficit arising from leniency programmes, and the commitment to deterrence as an enforcement objective).
(f) Penal expansion as a feature of legal control (increase in the quantum of sanctions, their distribution, and their diversity).
The above elements of analysis may be used as a measure in the assessment of criminalisation as a route of legal control. Taken together, they provide a structure for legal and institutional debates on the reasons for and likely consequences of criminalisation in this context.
Bruce Wardhaugh, A Normative Approach to the Criminalization of Cartel Activity
Paper abstract: Although cartel behaviour is almost universally (and rightly) condemned, it is not clear why cartel participants deserve the full wrath of the criminal law and its associated punishment. To fill this void, I develop a normative (or principled) justification for the criminalization of
conduct characteristic of "hard core" cartels.
The paper opens with a brief consideration of the rhetoric commonly used to denounce cartel activity, e.g. that it "steals from" or "robs" consumers. To put the discussion in context, I briefly present first a precise definition of "hard core" cartel behaviour, and second a microeconomic analysis to identify the damages associated with this activity. The damages identified are: welfare losses in the form of appropriation (from consumer to producer) of consumer surplus, the creation of deadweight loss to the economy, the creation of productive inefficiency (hindering innovation of both products and processes), and the creation of so-called X-inefficiency.
As not all activities which cause damage ought to be criminalized, I develop a theory as to why certain harms in a liberal society can be criminalized. It is based on J.S. Mill's harm to others principle (as refined by Feinberg) and on a choice of social institutions using Rawls' "veil of ignorance." The theory is centred on the value of individual choice in securing one's own well-being, with the market as an indispensible instrument for this. But as applied to the damage associated with cartel conduct, this theory shows that none of the earlier mentioned problems associated with this activity provide sufficient justification for criminalization. However, as the harm from hard core cartel activity strikes at an important institution which permits an individual's ability to secure their own well-being in a liberal society, criminalization of hard core cartel behaviour can be normatively justified on this basis. .
Debra Wilson, Cartel Criminalisation: A New Zealand Perspective
In late 2010 the New Zealand Government announced its intention to amend the Commerce Act 1986 to add criminal liability to the existing civil penalties for engaging in cartel conduct. The proposed amendment appears to be motivated by two factors. The first is the desire to harmonise New Zealand laws
with those of Australia and with international standards. The second is to alter public perceptions of acceptable business conduct. The New Zealand public appears not to presently regard engaging in cartel conduct as being morally culpable and/or deserving of punishment, and it is thought that the imposition
of criminal sanctions might alter this perception.
This paper describes the background to the proposed cartel amendment, and considers the validity of the justifications for its introduction. It suggests that New Zealand's haste to enact legislation is unwarranted, and that it may be more beneficial to business regulation in New Zealand to delay the amendment in order to observe the experience and effectiveness of criminal cartel laws in the UK and Australia. In the interim, the public perception can be addressed through public education and through the courts increasing the level of civil penalties imposed from current levels to amounts closer to the maximum permitted under the Act.
Angus MacCulloch, Cartels: A 'Moral Space' within Economic Regulation?
Paper abstract: The debate leading up to the criminalisation of cartels in both the UK and Australia was highly focussed on the economic harm caused by cartel activity and the regulatory need to enhance the deterrence of an effective enforcement regime. That debate is well rehearsed, well established,
and highly convincing; but, it only takes us part of the way towards successful cartel criminalisation. That debate explains why various regulators and legislatures sought to criminalise the most serious, and least justifiable, form of competition violation, but it does little to elucidate or explain
how to successfully criminalise. The design and definition of the offence itself, and its associated enforcement practice, should follow a very different debate. It is that debate which has not been so well rehearsed in contemporary competition policy circles.
One of the key distinctions between a criminal cartel offence and the majority of administratively enforced competition law is that it occupies a very different 'space' than other competition enforcement. The criminal trial, and all the important cultural and legal trappings that go with it, is a very different environment to the SOs and Hearings that competition lawyers find much more familiar. The criminal trial is inherently a 'moral space' where guilt and innocence are established, and the guilty are punished because of their wrongdoing. The harm caused is not the key to a criminal trial: it is the actions of the accused, their wrongdoing, which is judged.
When one considers how cartel criminalisation fits within this 'moral space' you begin to see why the offences themselves are problematic. The definitions of cartel activity draw heavily on the economic harms felt on the marketplace, but are less clear as to why the actions of the accused are 'wrong' in and of themselves. Does the offence demonstrate why those particular acts, in that particular circumstance, are inherently wrong? Why are they singled out for punishment, when other acts are not? What is the 'wrong' that we are seeking to punish these individuals for, and why are they being held personally responsible?
By looking again at a cartel offence from this new perspective can we attempt to ensure that it truly belongs within that 'moral space'? If we are clear about the wrong we can clarify the offence and design it in a way which best captures only that behaviour. Investigations into potentially wrongful acts will be more straightforward. The investigatory tools employed by the authorities can be more focused. At trial the prosecutor will have a clearer task to convince the jury of the need to punish the accused for that wrongdoing. But, should we be unable to clearly establish a 'wrong' that requires correction, does that not suggest that the 'moral space' of the criminal trial may not be the best space to deal with such behaviour.
The fourth panel, Cartel Criminalisation: Part II, was convened by Professor David Round.
Panel abstract: To date the international movement in support of criminalisation of serious forms of cartel conduct has been promoted largely by enforcement agencies and their networks. The case made for criminalisation has portrayed criminal enforcement techniques and sanctions as the most effective arsenal against cartel activity. This panel will examine the role of enforcement agencies in the cartel criminalisation movement. Papers will address the reasons why enforcers have been effective in making the case for this reform, the challenges posed by criminalisation for enforcement agency operating capability and culture, and the wider implications for relationships between enforcement agencies, governments, the business community and other constituencies. Papers will draw principally on the experiences in the United States, the United Kingdom and Australia. However, insights from the panel discussion are likely to be generalisable, at least at a theoretical level, to other jurisdictions.
The papers in this panel included:
Caron Beaton-Wells and David K Round (with Fiona Haines), Cartel Criminalisation and the Competition Authority: Public Value, Authorising Environment, Operational Capability
Paper abstract: The role played by an independent competition authority in the introduction and enforcement of criminal sanctions for cartel conduct is both significant and complex. The authority may actively promote criminalisation, or it may passively accept a government-led change in policy. Criminalisation may have significant operational and strategic advantages for the authority, or it may result in a high risk drain on limited resources, or, worse, re-allocation of prosecution and enforcement powers at the expense of the agency. This paper will adapt an existing conceptual framework, previously applied to competition law enforcement generally, so as to provide a theoretical tool for analysing cartel criminalisation specifically, and its impact on the operations of a competition authority. The framework revolves around three particular concepts. First, the paper will examine the notion of 'public value' as a means of understanding and testing the case made by enforcement agencies and governments for criminalisation. Second, through the concept of 'authorising environment', the paper will explore the formal and informal government, bureaucratic, legal and commercial constraints on a competition authority in pursuing criminalisation and enforcing cartel offences. Third, the paper will highlight the importance of 'operational capability', both in relation to the decision to criminalise and in relation to the implementation of the criminal regime. Each of these three concepts has its own significance. However, the interactions between them are also revealing of the complexities of cartel criminalisation from the competition authority's perspective. Drawing on a series of interviews conducted with enforcement agency personnel and other stakeholders in Australia and the United Kingdom in 2009 and 2010, the paper will use the different experiences of the competition authorities in these two jurisdictions to illustrate the analytical power of the framework.
Stephen Wilks, The Criminal Cartel Offence and proposals for reform of UK competition enforcement
The Coalition Government has announced that it plans to merge of the Office of Fair Trading and the Competition Commission. The OFT is likely to lose most of its consumer protection powers. Consultation on the proposals is expected in February and government is considering various options for organising
and resourcing the operation of the key competition powers. The organisational choices are crucial for the fair and effective enforcement of UK and European competition law.
Reform will provide an opportunity to revise the substantive law. Mandatory merger notification is being discussed as well as adaptation of the appeals process. The competition powers of the utility regulators are also under consideration. At present there is no mention of any changes to the criminal cartel offence so this paper will outline the options for reform and will explore two aspects of the enforcement of the Offence. First, in the light of experience since the Enterprise Act, are there aspects of the offence as currently legislated that could usefully be adapted within the reform of policy? Second, how will the cartel offence fit within the possible redesign of policy tools and processes within a new, strengthened and more specialist competition authority?
Andreas Stephan, Reconciling Criminal with Administrative Enforcement
Paper abstract: A defining characteristic of cartel criminalisation in the UK is the existence of a criminal offence reserved exclusively for individuals, but enforced alongside civil or administrative sanctions against the firm. A healthy balance between these two procedures has the potential to further both effective deterrence and the perceived legitimacy of cartel enforcement. This marriage of criminal and administrative enforcement roles might also characterise other attempts to criminalise harmful business practices in the future. This paper identifies the main challenges faced by the OFT in reconciling these two roles, in particular:
- The practical difficulties of undertaking a criminal investigation alongside a civil one, and the strain this potentially exerts on the working culture within the authority.
- A lack of prosecutorial experience in dealing with criminal cases, compounded by 'bad habits' from administrative enforcement.
- The problems posed by evidence gained through the leniency programme, in building both a civil and a criminal case.
- The potential relationship between criminal enforcement domestically and administrative enforcement at the EU level.
The paper concludes by considering the UK government's proposal for a new white collar crime super-agency which would potentially strip the OFT of their criminal enforcement role.
William Kovacic, Criminal Enforcement Norms in Competition Policy: Insights from US experience
Paper abstract: The US is the most experienced and on most accounts the most effective jurisdiction in relation to criminal enforcement of anti-cartel laws. It also has led advocacy efforts in support of criminalisation around the world. At the same time, it is important to acknowledge and understand the particular context in which criminal cartel enforcement has developed in this jurisdiction. This paper will draw on the concept of enforcement 'norms' to explain this context and elicit insights that may be relevant to other jurisdictions contemplating or embarking on cartel criminalisation. Understood as consensus views about how members of a group should behave, 'norms' transcend formal rules and institutional frameworks. They are affected by a range of forces, external and internal, to enforcement agencies and are prone to change and adjustment over time. Drawing on the experience of the US enforcers, the paper will identify the particular norms that an enforcement agency should strive to develop as a means of managing the internal and external environments and meeting the challenges entailed in criminal enforcement.
The fifth panel, The Consequences of Criminalisation: Criminologies of Corporate Misconduct, was convened by Professor Christine Parker and the discussanrt was Associate Professor Vibeke Lehmann Nielsen.
Panel abstract: This panel will critically examine the deterrence and compliance effects of criminalisation of business misconduct vis a vis other means of regulating and sanctioning business misconduct. Criminalisation of price-fixing cartels, corporate killing, financial misconduct and environmental catastrophes has been advocated on the basis that criminal sanctions deter more and communicate better social stigma and moral wrongfulness leading to greater compliance. Papers in this panel will examine the ways in which regulators enforce criminal and regulatory offences, and the ways that business firms and individuals respond to criminal sanctions vis a vis other forms of regulation. Is there evidence that some approaches work better than others? Are there counterproductive effects? Does it make sense to look for clear compliance and deterrence effects of criminalization and regulation?
The papers in this panel included:
Janette Nankivell and Christine Parker, Researching illegal activity by business
This paper reflects on the challenges and opportunities in empirically researching the causes of illegal activity by business people and their responses to enforcement. It describes the methodology used in our own research project that involved interviews with more than 20 business people who had been prosecuted for illegal cartel activity. We describe the approaches that were and were not successful in getting people to agree to be interviewed and what this means for the type of data that can be collected the conclusions that can be drawn.
Christine Parker and Janette Nankivell, Does the punishment fit the crime? The attempt to criminalise cartel activity
This paper summarises evidence from our qualitative and quantitative investigation of the impact of cartel criminalization on cartel conduct in Australia. First we investigate the nature of the "crime" of cartel conduct from the perspective of business people who have been penalized for cartel activity. We do so using in depth qualitative interviews about their activities and their experience of enforcement. Second, we test the likely impact of criminal sanctions vis a vis criminal sanctions using evidence from business people's responses to a range of hypothetical vignettes in a survey. Our qualitative interview evidence uncovers a powerful range of rationalizations for cartel activity that mean business people do not see their own activities as "criminal" and "punishable". Our survey evidence suggests insufficient knowledge of the law and fear of its criminal enforcement to challenge these rationalizations. These findings are not just of practical policy relevance. They reflect a fundamental instinct among business people that much activity that is currently treated as illegal cartel activity in Australia should be controlled by means of economic "regulation" rather than befitting punishment as a crime. This paper suggests that this has consequences for the integrity of the whole project of using criminal law for economic regulation.
Dr. Judith van Erp, Administrative sanction publicity: an alternative for the criminalization of business conduct?
Contrary to developments in the United States, business regulation in the Netherlands is increasingly administrative. Criminal enforcement of business misconduct is virtually absent, whereas regulatory enforcement authorities are empowered with a growing variety of administrative sanctions and higher
fines. They also publish the names of offenders, which aims, among other things, to increase the strength and general deterrent effect of adminstrative sanctions. "Naming and shaming" of offenders is therefore often presented as an alternative to criminalization of business misconduct.
This paper compares the impact of "naming and shaming" with the assumed impact of criminal sanctions, on the basis of interviews with thirty Dutch financial intermediary firms whose name was published as a result of an administrative offense. It describes the effects of sanction publications in terms of loss of business opportunities, social stigma, and business perceptions of the legitimacy of the enforcement process. It also presents results of a media analysis of negative publicity about offending firms. The results show that the business community experiences published sanctions as equally or more severe than criminal sanctions. Because the administrative enforcement process offers less legal protection and less checks and balances than the criminal process, the sanctioned businesses perceive the publication of their names as very unfair. Finally, the media analysis shows that the impact of publicity is unevenly distributed and disproportional to some offenders. The findings suggest that the strength of administrative sanction publications measures up to that of criminal sanctions. Considering the lack of checks and balances in the enforcement process, however, it would be unwise to consider naming and shaming a fullblown alternative to criminalization of business conduct.
Richard Hyde, (Not) Enforcing Following Outbreaks of Food-borne Illness: It's About the Evidence
Much consideration of enforcement officer discretion in the enforcement of regulatory crime focuses on decisions to take (or not take) formal enforcement action based on public interest considerations. The importance of co-operative compliance strategies and the positioning of the law as a 'last resort'
have been explored. But what about cases where compliance strategies have failed and a moment of last resort reached - what factors determine whether enforcement action is taken in these cases?
Drawing on qualitative research (semi-structured interviews and documentary analysis) into the behaviour of environmental health officers and other actors dealing with outbreaks of food-borne illness this paper argues that in these cases, where officers express their desire to prosecute businesses following outbreaks, it is often evidential considerations that act as a break on this. The evidential difficulties in taking enforcement action following outbreaks are functions of the legal framework applicable to food safety and food hygiene law and the decisions taken by enforcement officers during their investigation of the outbreaks. The difficulties of taking enforcement action alleging that food was unsafe, where the product has often been destroyed by eating and where epidemiological evidence is necessary, are explored. The relative ease of proving hygiene offences is contrasted, but the difficulties with relying on these offence following outbreaks of food-borne illness are considered.
Further, this paper examines the dual goals of investigation, for the purposes of outbreak control and of obtaining admissible evidence on which to base enforcement action, and how this can impact on the possibilities for prosecution and other forms of enforcement action, particularly in relation to information obtained verbally from businesses and their staff.
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