Cartel infringements - Increasing risk of extradition

Cartel infringements in Germany can lead to extradition and imprisonment abroad, e.g. in the US, if they have an impact there. This shows the importance for companies and their employees of preventing antitrust violations and having robust measures in place to ensure compliance with antitrust law. In the case of Romano Pisciotti, the Advocate General of the European Court of Justice has confirmed that European Union citizens are not protected by European law from these serious consequences.

Context of the case

The case started with the marine hose cartel. Various marine hose manufacturers had infringed antitrust law by manipulating numerous tenders worldwide. Once the cartel was uncovered, both the European Commission and the US Department of Justice imposed high fines on the companies involved. At the same time, criminal investigations were initiated into persons involved in the cartel infringement – one of whom was Romano Pisciotti – and arrest warrants were issued.

After an international search via Interpol, Romano Pisciotti was stopped in transit at Frankfurt Airport in 2013 and placed in custody prior to extradition (see here).

Mr Pisciotti took legal action against his extradition but to no avail. The courts ruled that the extradition was lawful. He thus became the first EU citizen to be extradited to the US for cartel infringements. Once Mr Pisciotti had come to a plea agreement with the US prosecuting authorities, he was sentenced to a term of two years’ imprisonment (reduced by the period of his detention in Germany), and fined USD 50,000. Mr Pisciotti served his prison sentence in the United States until his release in April 2015.

State liability action for breach of EU law

However, the extradition led to yet another lawsuit: Mr Pisciotti filed a state liability action against the Federal Republic of Germany for compensation for all losses arising from the extradition to the US (which in his opinion contravened EU law).

Mr Pisciotti asserts that it is a breach of EU law by the Federal Republic of Germany not to extradite its own citizens to third countries in accordance with Article 16 (2) of the German Constitution (Basic Law), but for citizens of other EU Member States not to enjoy the same protection. This is a breach of the prohibition of discrimination on grounds of nationality under EU law, he claimed.

In spring 2016, the competent court in this matter, Berlin Regional Court, requested a preliminary ruling of the European Court of Justice (“ECJ”) in this matter.

Opinion of the Advocate General

On 21 November 2017, the Advocate General of the ECJ in charge of the case, Yves Bot, presented his opinion.

He believes that the extradition of Mr Pisciotti by Germany to the US was lawful. Germany therefore cannot be accused of breaching EU law, he said.

The Advocate General applies the criteria established by the ECJ in the Petruhhin case. He comes to the conclusion that the prohibition of discrimination on grounds of nationality under EU law does apply. However, in this case the unequal treatment of the Italian citizen Pisciotti in comparison to German citizens and the resulting restriction of the freedom of movement under Article 21 TFEU can be justified. The justification is to counteract the risk that in the event of non-extradition, a person suspected of committing a criminal offence, such as Mr Pisciotti, will enjoy impunity. At the time the US sought the extradition of Mr Pisciotti from Germany, there was no alternative measure that would have restricted the EU-granted freedom of movement less and which would have been equally effective in preventing the risk of impunity.

In addition, Germany informed Italy about the arrest, the legal basis for it and the related court proceedings. Thus, Germany met the information obligation established by the ECJ in Petruhhin and gave the Italian state the chance to apply for the transfer of Mr Pisciotti for prosecution. This applies regardless of whether these obligations exist at all in the present situation (unlike in the Petruhhin ruling, there is an extradition treaty between the EU and the third country seeking extradition (the US)).

Outlook and consequences in practice

The opinion of the Advocate General once again makes it clear that cartel infringements harbour risks not only for the companies involved. The individual involved in a breach of antitrust law bears considerable risks, too – not only of a financial nature. In countries like the US, people can face long prison sentences and large fines after criminal proceedings. It is becoming clear that even EU law does not protect the EU citizens concerned from extradition to such countries. Although the ECJ ruling on this matter still remains to be seen, it looks likely that the ECJ will confirm and thus solidify its case law from Petruhhin.

The resulting risk of extradition and the risk of personal criminal responsibility in third countries such as the US once again highlight the importance for companies and their employees of preventing cartel infringements and having robust measures in place to ensure compliance with antitrust law.

The opinion of the Advocate General Yves Bot in Romano Pisciotti [C-191/16] is available here.

Follow this link to read the judgment of 6 September 2016 in the Petruhhin case [C-182/15]. The ECJ’s press release about this case is available here.