UK: European Commission Hopes to Make it Easier for Cartelists to ‘Blow the Whistle’

Important changes have been proposed by the European Commission to its 2002 Leniency Notice. If the changes are confirmed, whistleblowers may be more willing than before to seek leniency.

Background

The Commission has expressed concern for a number of months that statements submitted by whistleblowers as part of an application to the Commission for leniency are being disclosed too readily in civil proceedings heard in national courts. Those proceedings may involve a claim for damages by third parties against the cartelists. The Commission fears that potential leniency applicants (some of whom will no doubt be amongst the most culpable of the cartelists and therefore sources of valuable information) are becoming increasingly reluctant to seek leniency because of the risk that documents created for the purposes of the leniency application will fall into the hands of third party claimants as a result of court disclosure orders. EU companies that trade in North America are particularly vulnerable because third party class litigation arising from antitrust infringements is common in the United States.

In order to strike a balance between the public interest in encouraging greater numbers of third party claims for damages and the need in the public interest to ensure a regular flow of whistleblowers, the European Commission has proposed a number of amendments to its 2002 Leniency Notice. These include:

• Offering applicants the ability to make corporate statements orally. These would be transcribed by the Commission, checked by the leniency applicant and held by the Commission;

• Creating greater control over access to the Commission's file. Access to the file will only be granted for the purposes of administrative and judicial proceedings for the application of Article 81, and for no other purpose;

• Limiting strictly any photocopying of the corporate statements. Access to the statements for the purposes of reading the statements or for taking notes will only be possible at Commission premises;

• Facilitating the imposition of sanctions on any lawyers who fail to comply with the agreed requirements and conditions for access to the Commission's file; and

• The Commission intervening as an amicus curiae in national civil proceedings in order to emphasise the potentially adverse effects on the investigatory process that would result from a disclosure order being made.

The proposed amendments are designed to ensure as far as possible that cartel members who do not seek leniency are not placed in a more advantageous position than whistleblowers. The amendments also hope to persuade businesses that class actions brought by third party litigants (especially those brought by US claimants) do not act as a deterrent to the flow of potential leniency applicants. The Commission recognises expressly in the draft that it could face claims for non-contractual liability should it fail to comply with the new procedures in the draft amended Leniency Notice. Whether the CFI or ECJ would, however, make such an award would depend on the facts and such claims are notoriously difficult to substantiate.

The brevity of the consultation period (4 weeks), the indirect reference to non-contractual liability of the Commission and the varied range of procedures and remedies listed, all point to the gravity with which the Commission views the threat to its Leniency Programme. Moreover, if the amendments are adopted, the new Leniency Provisions on the treatment of corporate statements would apply to all pending leniency applications, even those that were made before the implementation of the 2002 Notice.