European Union: New Cartel Immunity Programme 2015

Last Updated: 27 April 2015
Article by Patrick O'Brien, John Meade, Richard Ryan and Lauren O'Brien
Most Read Contributor in Ireland, October 2018

On 22 January 2015, a revised Cartel Immunity Programme (the "Programme") was brought into effect by the Competition and Consumer Protection Commission (the "CCPC") and the office of the Director of Public Prosecutions (the "DPP"). The Programme replaces a Cartel Immunity Programme which had applied since 2002.

PURPOSE OF THE PROGRAMME

The Competition Act 2002 as amended (the "Competition Act") is the principal legal framework for competition law in Ireland. The Competition Act was most recently amended by the Competition and Consumer Protection Act 2014 (the "2014 Act"), which established the CCPC to replace the Competition Authority and the National Consumer Agency. Cartel detection and prosecution is a key enforcement priority of the CCPC and the introduction of the revised Programme reflects this.

Cartels are agreements or concerted practices between competitors, or decisions by associations of undertakings, that restrict competition by fixing prices, limiting output or sales or sharing markets or customers. Such arrangements are criminal offences and carry hefty penalties. Under the Competition (Amendment) Act 2012, potential fines for companies and individuals were increased to a maximum of €5 million, with maximum prison sentences for individuals increased to 10 years. In addition, the 2014 Act enhanced the CCPC's enforcement powers in relation to cartels and other types of anti-competitive behaviour.

The revised Programme aims to encourage the reporting and detection of cartels by offering an incentive (i.e. immunity from prosecution) to the first member of a cartel to come forward and to reveal their involvement in the cartel, subject to meeting certain requirements.

WHAT HAS CHANGED?

The revised Programme updates and enhances the old regime. The Programme provides the following requirements for applicants in order to be considered for immunity, which are in addition to the requirements already provided for under the old regime:

  • The applicant must refrain from commenting publicly on the activities of the cartel pending the conclusion of any prosecutions.
  • The applicant must not have destroyed, hidden, made unusable or falsified any evidence relating to the offence involved in the application from the time the applicant first considered applying for immunity.
  • The applicant has a positive duty to preserve and not tamper with any evidence that is capable of being under the applicant's control.
  • From the time that the applicant first considered applying for immunity, it must not disclose to third parties any dealings with the CCPC (including the fact of its immunity application) without the CCPC's prior consent, except in specified circumstances. The restriction does not apply where the applicant is required to make the disclosure by law or where it discloses the content to another competition authority or its external counsel.
  • The applicant must disclose to the CCPC all immunity applications that it has made in other jurisdictions.
  • The applicant must provide individuals to the CCPC who give clear and comprehensive statements of evidence that will be recorded by the CCPC. Such individuals must also provide complete and truthful evidence in any resultant prosecutions.

While the revised Programme retains the requirement for the applicant to take effective steps to ensure it does not involve itself in any further illegal cartel activity, the revised Programme also provides that, in exceptional circumstances, the CCPC may require the applicant to act in such a manner so as to preserve the integrity of the CCPC's investigation.

The revised Programme removes a previous bar on a company that instigated the cartel from qualifying for immunity. However, the ban on immunity for a company that coerced others to join or remain in the cartel is retained.

APPLYING FOR IMMUNITY

The revised Programme retains the position whereby the CCPC will recommend that the DPP grants immunity only if the applicant is the first cartel participant that comes forward and complies with the requirements of the Programme. The CCPC cannot make such a recommendation if it already has sufficient information to warrant a referral of a file to the DPP.

Both an individual and an undertaking may apply for immunity. The immunity applicant must comply with all the requirements set out in the Programme, some of which are outlined above and others which are carried over from the old regime. An important requirement is to reveal any and all cartel offences under the Competition Act in which the applicant may have been involved and of which it is aware. Another important requirement is full, ongoing and expeditious cooperation with the CCPC, including ensuring to the best of the applicant's ability the full cooperation of current and former directors, officers and employees.

Applications for immunity can only be made by calling the CCPC, which may be done through the applicant's legal advisor. The applicant or its legal advisor must present an outline of the facts of the case, including the market and the type of practice involved. This enquiry can be made without disclosing the applicant's identity, which will enable the CCPC to determine whether a 'marker' can be granted in the case.

THE MARKER AND ITS SIGNIFICANCE

The marker protects the applicant's place in the queue for immunity to allow the applicant time to gather the necessary information to complete its application for immunity. The CCPC will then give the applicant a reasonable period of time within which to 'perfect' the marker by submitting its full application. The full application must contain detailed information on the alleged cartel, which is set out in the Programme.

If a marker expires before it is perfected, or the application is otherwise refused by the CCPC or the DPP, the CCPC will then consider any other applications in the queue for immunity. An applicant with an expired marker may reapply for immunity but its place in the queue will not be maintained.

If the CCPC considers that the application relates to a likely criminal breach of the Competition Act, it will formally write to the DPP recommending a grant of conditional immunity for the applicant. If the DPP grants conditional immunity, the applicant must then provide the CCPC with full, frank and truthful disclosure of all relevant information about the alleged cartel activity. Finally, when the terms and conditions of the Programme have been met in full the DPP will confirm that the applicant has full immunity.

CONCLUDING REMARKS

In summary, the revised Programme places increased requirements on applicants applying for immunity, but removes the previous bar on an instigator company qualifying for immunity. The fact that only one applicant can obtain immunity and that, as before, applicants cannot seek leniency as opposed to immunity (unlike some other jurisdictions) may be seen as a limiting factor in the application of the Programme.

If a company suspects that it might be involved in potential cartel behaviour, it is important to consider carefully the pros and cons of applying for immunity under the Programme. An assessment should be undertaken of the prospect of a successful application and of the impact on the business of the wide-ranging and ongoing requirements that must be met in order to be granted immunity. As time is often of the essence in such cases, legal advice should be sought as early as possible.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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