The European Competition Network ("ECN") has published
a new version of its Model Leniency Programme ("MLP").
The MLP makes it easier for companies that have uncovered evidence
of participation by their employees in a cartel to "blow the
whistle" in return for immunity from, or a reduction in, fines
in the EU Member States affected by the reported
cartel.
Although the MLP falls short of introducing a one-stop shop
leniency program at EU level, it introduces a set of common
standards for multiple leniency applications, in an endeavor to
overcome any reluctance to apply for leniency resulting from
discrepancies between the different leniency regimes in the
EU.
Background
The ECN is a forum for discussion and cooperation between the
European Commission ("Commission") and
the national competition authorities
("NCAs") of the EU Member
States.
The Commission and the NCAs have concurrent powers to enforce
Article 101 of the Treaty on the Functioning of the EU which
prohibits cartels and similar anticompetitive practices. A case
allocation mechanism works to ensure that each case is handled by
the best placed authority. For example, the Commission may be
particularly well placed to deal with cartels with effects in more
than three Member States. However, at the outset, when the effects
of the suspected cartel are often not fully known, it is not
certain which competition authority ultimately will handle the
matter. Accordingly, leniency applicants initially may wish
submit parallel applications to all ECN members that may
investigate the reported cartel. Making multiple parallel
applications is a complex exercise, given the discrepancies that
currently exist among the different leniency regimes in the
EU.
The MLP was adopted by the ECN in 2006 with the aim of making it
easier for companies to submit multiple leniency applications
simultaneously. The new MLP introduces some important changes and
clarifications.
These are summarized below.
The type of conduct to which the MLP applies
The MLP continues to apply only to secret cartels. Other types
of restrictions such as vertical agreements and horizontal
restrictions other than cartels are less difficult to detect and
therefore excluded from the MLP. However, the ECN now extends the
application of the MLP to cartels that include vertical elements
(such as a hub-and-spoke cartel).
The MLP continues to apply only to companies, not individuals. The
MLP ought not to prevent NCAs from applying their own national
leniency regimes for individuals, if any (e.g. the UK Office of
Fair Trading's no action letter regime).
The categories of leniency and the conditions of
eligibility
The MLP continues to use the categories and eligibility
conditions contained in the EU Leniency Notice. Accordingly,
immunity from fines is granted only to the company that first
submits evidence of an alleged cartel, either before or after a
dawn raid (so-called Type 1A or 1B applications). Further,
reduction of fines is granted to the companies that do not qualify
for immunity but nevertheless come forward with evidence that
represents significant added value relative to the evidence already
in the possession of the authority (Type 2
applications).
Additional conditions must be met for leniency: full
cooperation, termination of any participation in the reported
cartel, confidentiality, non-disclosure, and relevant documents
retention. Finally, ringleaders may qualify for a reduction of
fines, but not for immunity.
Procedures to apply for leniency
The MLP now allows for anonymous approaches to the NCAs by any
potential applicant wishing to obtain guidance on whether it
qualifies for leniency. A "marker" is available to
protect an applicant's place in the queue for a given period of
time while the applicant gathers the required information and
evidence in order to meet the leniency threshold. An applicant will
be informed as early as possible of the status of its
application. Finally, where the applicant believes that the
Commission is the best placed authority to investigate, an
applicant now may make summary applications to the NCAs, thereby
protecting its position under the leniency program of the
NCAs.
Protection from disclosure of leniency applications
The MLP introduces a number of additional safeguards against the
risk of disclosure of leniency applications to plaintiffs in
private actions for damages against leniency applicants (see the
previous Jones Day alert,
Leniency Documents Not Exempt from Disclosure Demands in
EU.
To reduce such risk, the MLP allows for oral applications
(so-called corporate statements) in cases where this would appear
to be justified and proportionate, in particular in cases where the
Commission is particularly well placed to act. The MLP also
provides that no access to the investigation file should be granted
to the parties under investigation before the statement of
objections (formally recording the charges against alleged cartel
member) has been issued.
Practical Impact
Making multiple parallel applications across the ECN is a
complex exercise given the existing discrepancies between the
different leniency regimes across the EU.
Recent cases illustrate the dangers of getting this exercise wrong.
For example, in the washing powder cartel, Henkel obtained immunity
at EU level but was fined at national levels where it failed to
meet the conditions for immunity. Similarly, in the freight
forwarding cartel, DHL obtained immunity at EU level but was fined
at national level where it failed to meet the conditions for
immunity.
In an ideal world, leniency requirements and procedures would be
harmonized throughout the EU, to avoid the risk of inconsistent
approaches at the national level. Without EU harmonized
legislation, even under the new MLP, leniency applicants may still
need to submit multiple applications to protect themselves from
exposure in EU jurisdictions. However, the new MLP is a welcome
step towards further harmonization of leniency regimes across the
EU.
Documentation
- Revised ECN Model Leniency Programme
- Template for the submission of a summary leniency application within the ECN
- List of authorities which accept summary applications in English
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