South Africa: Beware The White Knight Whistleblower

Last Updated: 27 January 2012
Article by Neil MacKenzie

This article examines the incentives motivating whistleblowers when tipping off the competition authorities about cartel conduct. It suggests that, following the guidance of the European Courts, the statements that whistleblowers provide should be assessed cautiously and supported by corroborative evidence.

Cartels are by their nature secretive. Cartel members are unlikely to keep any documentary proof of their participation, and will usually take measures to destroy any such evidence. Sometimes firms cover their tracks by creative means, such as assigning each other 'code names' to throw suspecting competition authorities off the scent. Individual participants may use dedicated mobile phones or email addresses for cartel communications. The result is that cartels are difficult to detect and even more difficult to prove.

A leniency programme is therefore an enormously powerful weapon in a competition agency's arsenal. A firm which is participating or has participated in a prohibited agreement may approach the competition authority and obtain immunity from having a financial penalty imposed upon it in exchange for its full cooperation.

To 'cooperate', a whistleblower1 must be on hand to provide any and all information relating to the unlawful activities throughout the investigation and prosecution proceedings. It must make full disclosure to the authority of its involvement in the cartel. All evidence, including statements of employees who attended cartel meetings or had knowledge of the workings of the cartel must be produced.

The evidence provided in this process often forms the central pillar of the authority's case, and is used as a springboard to invoke other enforcement techniques. These may include surprise inspections at the premises of the other participants or subpoenas of people and documents from other firms.

Apart from revealing cartels and gathering evidence, leniency policies fulfil another critical function – they destabilise or threaten existing cartel arrangements. By withdrawing from the cartel and alerting the authorities, a firm may avoid much of the cost of litigation and minimise the risks of large financial penalties. There is also the added benefit that the firm's competitors will face the full consequences of their involvement, which may confer some advantage to the whistleblower in the market as its competitors devote resources to defending themselves. A leniency policy thereby fosters mistrust within cartels and makes a stable cartel difficult for firms to manage and maintain.

Competition agencies are therefore usually only too glad to receive immunity applications accompanied by wide ranging evidence that can be used to investigate and prosecute cartels. Leniency policies have been used effectively in competition jurisdictions all over the world and the South African Competition Commission's Corporate Leniency Policy is no exception.

However, despite the effectiveness of leniency schemes, the virtue of whistleblowers themselves should not be overestimated. Firms are accurately portrayed by economists as self interested profit maximisers. A firm's decision to blow the whistle on its involvement in a cartel is more likely to be commercial rather than moral. The firm weighs the risk of ongoing participation in the cartel (potentially significant fines, costly litigation and the possibility that one of its fellow conspirators may avail itself of immunity) against the advantages that can be obtained through the leniency policy (avoiding the risk that another firm will blow the whistle and the strong possibility of a consequent fine).

This simple calculation may seem obvious, but one important consequence flows from it. Firms do not blow the whistle to help the competition authorities to bring cartels to book. This may be the result of their decision, but the firm's priority is to secure its own immunity status.

Applications for immunity are therefore typically constructed to maximise the firm's chances of being granted immunity. This may entail placing undue emphasis on particular facts, and perhaps exaggerating the conclusions which can be drawn from those facts. For example, an exchange of information between competitors which sits on the border between per se illegality and a potential effects-based infringement may be portrayed by an immunity applicant as more harmful and intentional than may be the case. Similarly, a firm may depict a historical cartel arrangement as having continued longer than it actually did, to convince the authority that it is not blowing the whistle on conduct which has prescribed and is time-barred.

This should be borne in mind when evaluating the evidence supplied by whistleblowers. Competition authorities should guard against an approach which considers the information disclosed by a whistleblower alone as decisive proof. A wholly incorrect approach would be to assume that because an immunity applicant has come forward, the legal tests for establishing the existence and duration of a cartel may be dispensed with.

This question arose in the recent case of Siemens AG v Commission2 before the General Court in Europe. The whistleblower in that case was ABB which confessed to participating in a long running cartel in the international market for gas insulated switch gears. Siemens AG challenged before the Court the evidence provided by ABB and relied upon by the European Commission on the basis that,

ABB's statements are mere assertions made for the benefit of that company and are devoid of probative value unless they are supported by precise and corroborated evidence.3

The European Commission's view, on the other hand, was that a statement from a firm seeking to obtain immunity should be persuasive, because it runs counter to the normal interests of the author of that statement.4 In other words, it is normally in the interests of a cartel participant to keep silent about its activities. Once the firm has opted to make disclosure, there is little incentive for it to make false statements.

There are a number of factors which weigh in favour of the Commission's argument. As the Court points out, an immunity applicant would probably not stray too far from the truth in describing the activities of the cartel for fear of being found not to have cooperated, which would jeopardise its potential immunity status5. A leniency applicant should also not frivolously describe events which could create difficulties in possible subsequent damages actions to which it could be a respondent.

The Court notes, however, that at the time of making the leniency application ABB would reasonably have expected to obtain immunity under the European Commission's Leniency Notice. The Court states therefore that: cannot be ruled out that it might have felt inclined to maximise the significance of the infringing conduct which it was revealing, in order to harm its competitors on the market.6

In keeping with the existing European case law on the subject, the Court therefore recommended a cautious approach. Paragraph 66 of the judgment concludes:

...insofar as those statements from ABB are disputed by other undertakings which are also alleged to have agreed upon the common understanding, they must be supported by other evidence in order to constitute adequate proof of the existence and the scope of the common understanding.

The Court goes on to conduct a detailed assessment of the statements provided by ABB which were disputed by the other respondents, in the context of all other relevant available evidence, in order to establish the statements' credibility, and therefore their evidential value.

It is submitted that the South African competition authorities should have due regard to this cautious European approach when considering information supplied by aspiring immunity applicants. The immunity applicant is not always the 'white knight', as it may seem at first glance.


1. The term 'whistleblower' is used synonymously with 'immunity applicant'. This means the firm that is 'first through the door' under a leniency programme. The term 'leniency applicant' can be confusing as more than one firm may apply for leniency, but only one such applicant is granted immunity.

2. Case T-110/07, decision of 3 March 2011. The case is subject to ongoing appeals to the European Court of Justice and a damages action in the UK civil courts

3. Paragraph 63 of the judgment.

4. Ibid

5. Paragraph 65 of the judgment.

6. Paragraph 64 of the judgment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions