On 26 October 2011, the UK's Office of Fair Trading (OFT) announced that it was consulting on two new draft guidance documents setting out its general approach to penalties as well as to applications for leniency in competition cases.

Under the proposed new guidance on the appropriate amount of penalty, the OFT proposes to increase the maximum starting point for penalty calculations from 10% to 30% of an undertaking's relevant turnover. This is more in tune with the European Commission's own approach as well as that of other competition authorities in Europe and the US. The OFT's hope is that this change will better reflect the gravity and seriousness of certain competition infringements, as undertakings will be further deterred from engaging in anti-competitive practices. On the other hand, the OFT also proposes to pay particular attention to the proportionality of the penalty so that fines are not excessive.

Other proposals seek to enhance transparency and shed light on the OFT's approach to calculating penalties. These include how to work out the exact duration of the infringement, and adjustments for aggravating and mitigating circumstances (i.e., persistent and repeated delays during the investigation, recidivism, compliance activities, etc). The previous guidance on penalties, which is currently in force, was introduced in 2004.

In parallel, the OFT is consulting on its draft leniency guidance to update its previous version of 2008. The aim of this draft is to give greater clarity and transparency to the OFT's current practice, rather than to introduce considerable substantive changes to its leniency policy. Under the proposals, additional detail will be given on the procedure for applying and conditions of admission, the scope of leniency protection and the expected level of cooperation and type of information required from leniency applicants.

In addition, the guidance also contains some sections on the OFT's policy in relation to seeking waivers of legal privilege from leniency applicants. The OFT will not request waivers of privilege in civil cases, but will not rule out this option in certain criminal cases.

The deadline for submitting comments in the framework of both consultations is 26 January 2012. More information on the draft revised penalty and leniency guidance is available on the OFT's website at:

http://www.oft.gov.uk/news-and-updates/press/2011/116-11.

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