A Q&A guide to cartel leniency law in the EU.
The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, availability of immunity from civil fines to individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.
To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-mjg.
For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/competition-mjg.
Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits anti-competitive agreements and concerted practices. The European Commission's Notice on immunity from fines and reduction of fines in cartel cases (OJ 2006 C298/17) (2006 Leniency Notice) sets out the framework for the EU leniency programme.
The Commission's Directorate General for Competition (DG Competition) is responsible for enforcing EU competition rules and administers the EU leniency programme (see box, The regulatory authority).
The Commission is empowered to impose fines on undertakings for violations of the EU competition rules. The methodology applied by the Commission in calculating fines is set out in the Commission's Guidelines on the method of setting fines (OJ 2006 C210/2) (Fining Guidelines). The fines imposed by the Commission are administrative, rather than criminal, in nature.
The EU leniency programme applies to "secret cartels". Cartels are defined as agreements and/or concerted practices between two or more competitors aimed at co-ordinating their competitive behaviour on the market and/or influencing the relevant parameters of competition (2006 Leniency Notice). This can include:
Fixing purchase or sale prices, or other trading conditions.
Allocating production or sales quotas.
Sharing markets, including bid-rigging.
Restricting imports or exports.
Anti-competitive actions against other competitors.
The 2006 Leniency Notice does not provide any guidance on the requirement that the cartel in question be "secret", but in most cases, a cartel's secret nature is clear. The EU leniency programme does not apply to infringements that arise from vertical agreements or from horizontal arrangements not qualifying as "secret cartels".
The Commission has applied the EU leniency programme in a number of significant recent cases:
On 28 March 2012, the Commission fined 14 groups of companies a total of EUR169 million for participating in four distinct cartels in the freight-forwarding sector. According to the Commission, the objective of the cartels was to fix prices and other trading conditions for international air-freight forwarding services. The Commission found that the freight forwarders colluded on surcharges and charging mechanisms concerning important trade routes, in particular the Europe to USA route, and the China and Hong Kong to Europe routes. Deutsche Post received full immunity from fines under the 2006 Leniency Notice for all four cartels, as it was the first to reveal the arrangements to the Commission. Other companies benefited from reductions of 5% to 50% in the fines imposed in relation to each of the cartels due to their co-operation under the EU leniency programme.
On 28 March 2012, the Commission fined nine European producers of mountings for windows a total of approximately EUR86 million for operating a price-fixing cartel. The companies involved were Roto, Gretsch-Unitas, Siegenia, Winkhaus, Hautau, Fuhr, Strenger, Maco and AGB. The Commission found that, from November 1999 to July 2007, the companies had operated a cartel where they had agreed on common price increases. Roto received full immunity from fines under the 2006 Leniency Notice, as it was the first to provide the Commission with information about the cartel. Gretsch-Unitas's fine was reduced by 45% and Maco's fine by 25% due to their co-operation in the investigation under the EU leniency programme.
On 5 December 2012, the Commission imposed fines totalling over EUR1.47 billion on seven producers of cathode ray tubes for TVs (CPTs) and for computers (CDTs) for their involvement in one or both of two distinct cartels that operated between 1996 and 2006. The Commission found that eight international groups of companies fixed prices, shared customers, allocated markets, co-ordinated capacity and output, and exchanged sensitive commercial information about cathode ray tubes. The Commission identified separate cartels for CPTs and CDTs and found that Chunghwa, LG Electronics, Philips and Samsung SDI had participated both in the CPT cartel and the CDT cartel, while Panasonic, Toshiba, MTPD and Technicolor only had participated in the CPT cartel. Chunghwa received full immunity from fines under the Commission's 2006 Leniency Notice for both cartels, as it was the first to bring these to the Commission's attention. Samsung SDI, Philips and Technicolor received reductions of 40%, 30% and 10% respectively for their co-operation under the EU leniency programme.
The Commission will grant immunity from any fine that otherwise would be imposed on an undertaking that discloses to the Commission its participation in a cartel affecting the EU, provided the undertaking is the first to submit information and evidence which, in the Commission's view, will allow the Commission to either:
Carry out a targeted inspection (dawn raid) in connection with the cartel, as long as the Commission does not already have sufficient evidence to decide to carry out an inspection in connection with the cartel, or has not already carried out an inspection.
Find an infringement of Article 101 of the TFEU in connection with the cartel, as long as the Commission does not already have sufficient evidence to find an infringement and no undertaking has been granted conditional immunity from fines in connection with the cartel.
In either case, an applicant for immunity must:
Co-operate genuinely, fully, expeditiously and on a continuous basis with the Commission, including:
promptly providing the Commission with all relevant information and evidence relating to the cartel that comes into the applicant's possession or is available to it;
remaining at the Commission's disposal to promptly answer any request that may contribute to the establishment of the facts;
making current (and, if possible, former) employees and directors available for interviews with the Commission;
not destroying, falsifying or concealing relevant information or evidence relating to the alleged cartel; and
not disclosing the fact or any of the contents of its application before the Commission has issued a statement of objections (that is, a written communication which the Commission has to address to undertakings before adopting a decision that negatively affects their rights) in the case.
End its involvement in the cartel immediately following its application for immunity, unless the Commission directs otherwise to preserve the integrity of inspections.
Not have destroyed, falsified or concealed evidence of the cartel or have disclosed the fact or any of the contents of its contemplated application (except to other competition authorities).
Not have coerced other undertakings to join the cartel or to remain in it. Where an applicant for immunity has acted as a coercer, a reduction in the fine nonetheless remains available, provided the applicant meets the conditions to qualify for a reduction (see Question 5).
An undertaking that does not qualify for immunity (see Question 4), may benefit from a reduction in the fine that would otherwise be imposed if it provides the Commission with evidence of the alleged infringement that represents significant added value with respect to the evidence already in the Commission's possession.
Evidence is considered to be of significant added value if it enhances the Commission's ability to prove the cartel. The Commission will consider contemporaneous written evidence that directly relates to the cartel to have greater value than later evidence that only indirectly relates to the cartel. Similarly, in its assessment of the added value of evidence submitted, the Commission will consider the degree of corroboration from other sources that is required to rely on the evidence provided.
An applicant seeking a fine reduction must, additionally, fulfil the following conditions:
The applicant must co-operate genuinely, fully, expeditiously and on a continuous basis with the Commission (see Question 4).
The applicant must end its involvement in the cartel immediately after it has applied for a fine reduction, unless the Commission directs otherwise to preserve the integrity of inspections.
The applicant must not have destroyed, falsified or concealed evidence of the cartel or have disclosed the fact or any of the contents of its contemplated application (except to other competition authorities).
The Commission may reduce fines to qualifying applicants within the following bands:
A reduction of 30% to 50% for the first undertaking that provides evidence of significant added value.
A reduction of 20% to 30% for the second undertaking that provides evidence of significant added value.
A reduction of up to 20% for subsequent undertakings that provide evidence of significant added value.
The Commission has discretion to determine the level of reduction to be granted within each of these bands, based on when the applicant submits evidence and the extent to which the evidence represents significant added value relative to the evidence already in the Commission's possession.
EU competition rules apply only to undertakings and not to individual managers or employees.
The EU competition rules do not provide for criminal sanctions.
Not applicable.
Not applicable.
The 2006 Leniency Notice does not define any specific time when an application for leniency should be made. Applicants that are contemplating submitting an immunity application should do so as soon as possible to maximise their chances of being granted immunity, as only the first applicant meeting the relevant conditions will be eligible for immunity.
If an applicant is no longer eligible for immunity, applicants can increase their prospects of securing a significant fine reduction by submitting a fine reduction application as early as possible. By making an early application, applicants can secure a position in a higher reduction band and be better placed to supply the Commission with evidence of significant added value.
In any event, the Commission can disregard any leniency applications that are submitted after it has issued a statement of objections in the proceedings.
Applicants must submit their application to the European Commission's Directorate General for Competition.
Applicants can approach the Commission directly or through their external counsel.
The Commission will not provide informal guidance on a confidential basis as to the availability of immunity or a fine reduction when there is no clear intention on the company's part to make an application.
However, an undertaking considering applying for immunity may, through its external counsel, submit information and evidence relating to the cartel to the Commission in hypothetical terms, without revealing its name or the names of the other parties involved in the cartel. A hypothetical application must include:
Details of the product or service concerned by the cartel.
The estimated duration of the cartel.
A detailed description of the evidence available for disclosure.
The applicant can also provide the Commission with redacted versions of documentary evidence that the applicant would submit with its application for immunity.
On the basis of the information provided, the Commission will verify whether the application will meet the requirements for immunity and inform the applicant accordingly. Following this, to obtain immunity, the applicant must reveal its identity and the names of the other parties involved in the cartel and submit to the Commission evidence that corresponds to the detailed description previously provided. After the evidence has been disclosed, the Commission will verify whether it corresponds to the detailed description previously provided and, if it does, grant the undertaking conditional immunity.
Applications for immunity or a fine reduction must be made formally, either in writing or orally, and comprise a corporate statement and all relevant information and evidence about the cartel that is available to the applicant (see below, Information/evidence).
The Commission can grant an immunity applicant a marker (which secures the applicant's position ahead of any subsequent applicant) to allow the immunity applicant to gather the information and evidence necessary to secure immunity. To be eligible to secure a marker, the applicant must provide the following information:
Its name and address.
The parties to the cartel.
The affected products.
The affected territories.
The cartel's duration.
The nature of the cartel conduct.
Any information on any past or possible future leniency applications to any other competition authorities in or outside the EU in relation to the cartel.
The reasons why the grant of the marker is necessary (for example, the need to conduct further investigation).
Where a marker is granted, the Commission will set a deadline for the applicant to perfect the marker by supplying the information and evidence necessary to secure immunity. If the marker is perfected on time, the information and evidence provided to perfect the marker is deemed to have been submitted on the date when the marker was granted.
Markers are not available for applications to reduce fines.
A formal application for immunity or a fine reduction should include a corporate statement, containing, to the extent known to the applicant at the time of submission:
A detailed description of the cartel arrangement, including:
its aims;
its activities and functioning;
the product or service concerned;
its geographic scope;
its duration;
the estimated market volumes affected by it;
the specific dates, locations, content of and participants in cartel contacts; and
all relevant explanations in connection with the application's supporting evidence.
The names and addresses of the applicant and all the other parties involved in the cartel.
The names, positions and office locations (and, where necessary, home addresses) of all individuals involved in the cartel.
Any information on any past or possible future leniency applications to any other competition authorities in or outside the EU in relation to the cartel.
The applicant must also provide the Commission with all the evidence relating to the cartel in its possession or available to it at the time of the submission, including in particular, any evidence contemporaneous to the infringement.
The Commission allows applicants to submit a corporate statement in oral form, provided the applicant has not previously disclosed the statement's contents to third parties. Oral statements are recorded and transcribed at the Commission's premises. The transcript forms part of the Commission's file and it has the status of an internal Commission document for discovery purposes.
In situations where both the Commission and one or more EU member-state competition authorities are well placed to deal with a cartel case, the European Competition Network (ECN) Model Leniency Programme foresees the possibility of an applicant making a full-form leniency application to the Commission and short-form leniency applications to the relevant EU member-state authorities. However, the Commission itself does not accept short-form leniency applications under the ECN Model Leniency Programme.
Where the Commission has received an immunity application, it will verify whether the applicant has fulfilled all the conditions for immunity under the 2006 Leniency Notice. If all of the conditions are met, the Commission will grant the undertaking conditional immunity from fines in writing. There is no specified time period within which the Commission must take a position on an immunity application, but this usually takes place within a relatively short period after the application's completion.
If the undertaking complies with the conditions of the 2006 Leniency Notice, conditional immunity will become definitive once the Commission issues its final decision in the proceedings. If the application does not fulfil the conditions for immunity, the Commission will notify the applicant in writing. The undertaking concerned can, at this stage, withdraw the evidence disclosed or request that its application be considered for a fine reduction.
Where the Commission considers that the evidence submitted by the applicant constitutes significant added value and that the applicant has fulfilled the other conditions of the 2006 Leniency Notice, the Commission will inform the applicant in writing that it intends to grant the applicant a fine reduction within the applicable leniency band. The Commission will communicate this information to the applicant no later than the date on which the statement of objections is issued in the proceedings. The applicant will be informed of the precise level of the fine reduction only in the final decision.
Where the Commission considers that the applicant does not fulfil the conditions for a fine reduction, the Commission will inform the applicant of this fact no later than the date on which the statement of objections is issued.
If, at the end of the administrative procedure, the Commission finds that an immunity applicant has failed to meet all the conditions for immunity set out in the 2006 Leniency Notice, the Commission will revoke the applicant's conditional immunity by notifying the applicant in writing before the final decision on the case is taken, giving the undertaking an opportunity to respond. This will be the case, for instance, if:
The applicant fails to genuinely and fully co-operate with the Commission.
The applicant discloses information concerning its application to other cartel members.
The Commission finds that the applicant has acted as a coercer.
Withdrawal of conditional immunity from the first applicant will not normally make immunity available to the next applicant in the queue.
For applicants seeking a reduction in fines, if the Commission finds at the end of the administrative procedure that the applicant has not fulfilled the conditions to be eligible for a fine reduction, no reduction will be granted under the 2006 Leniency Notice.
Where an undertaking is no longer eligible for immunity or a reduction of fines under the 2006 Leniency Notice, the Commission can nonetheless take the undertaking's co-operation with its investigation into account as a mitigating circumstance in the setting of the fine, in accordance with the Commission's Fining Guidelines.
The protection offered by the EU leniency programme applies to the infringements that the Commission establishes on the basis of:
The information disclosed by the applicant.
Further information that the Commission may collect from other sources in relation to those infringements.
If, however, the Commission gathers evidence during the course of its investigation that reveals a lack of full and continuous co-operation on the part of the applicant, leniency can be withdrawn.
If an applicant for a fine reduction is the first to submit compelling evidence that allows the Commission to establish facts that increase the gravity or the duration of the infringement, the Commission will not take those additional facts into account when setting any fine on the applicant (partial immunity).
The EU leniency programme does not provide for a leniency plus system.
The fact that the Commission grants an undertaking leniency cannot protect the undertaking from the civil law consequences of its participation in an infringement of Article 101 of the TFEU.
At the same time, to preserve the effectiveness of its leniency programme, the Commission considers that an undertaking's application for leniency should not place the undertaking in a less favourable position from the perspective of civil damages claims than had the undertaking not co-operated with the Commission. This means that the Commission will take measures to protect from discovery in civil proceedings corporate statements in which a leniency applicant provides the Commission with a presentation of its knowledge of and role in the cartel (see Questions 15 and 16).
During the course of the investigative procedure up until the issue of the statement of objections, the Commission will keep the identity of leniency applicants confidential. When the Commission issues a statement of objections, the identities of the leniency applicants will only be revealed to the addressees of the statement of objections. The identities of the leniency applicants will be made known to the general public when the Commission issues its final decision on the case.
Access to the Commission's file is only granted to the addressees of the statement of objections for the purposes of judicial or administrative proceedings concerning the application of the EU competition rules.
During the access-to-file procedure, the statement of objections' addressees are given access to all documents obtained, produced or assembled by the Commission during the proceedings (except for internal Commission documents, including communications between the Commission and other competition authorities).
However, access to documents that contain business secrets and other confidential information may be partially or totally restricted, with access instead being given to a non-confidential version of the documents in question. Furthermore, access to corporate statements submitted by leniency applicants is restricted to access on the Commission's premises. The statement of objections' addressees can examine corporate statements on the condition that they commit not to make any mechanical or electronic copies of their contents.
Leniency applicants' identities are revealed to the statement of objections' addressees when the Commission issues the statement of objections and are made known to the general public when the Commission issues its final decision on the case. It is not possible for a leniency applicant to apply for anonymity at either stage.
A leniency applicant that has submitted documents containing business secrets or other confidential information can request that access be only given to a non-confidential version of the documents from which the relevant business secrets and other confidential information have been redacted. The Commission will grant access to a summarised form of the relevant information when confidentiality can only be preserved in this manner.
Actions for damages for infringements of the EU competition rules are heard before EU member states' national courts. In these cases, EU member states' national procedural laws govern the discovery of evidence, including corporate statements in the hands of leniency applicants. In Pfleiderer AG v Bundeskartellamt (Case C-360/09), the European Court of Justice (ECJ) stated that EU law does not prevent claimants before national courts from being granted access to materials that relate to a leniency procedure if they have been adversely affected by the infringement concerned and are therefore seeking to obtain damages. The ECJ noted that it is for national courts to determine the conditions under which such access must be permitted or refused, on the basis of their national law, by weighing the interests protected by EU law (that is, the right of effective redress against maintaining the effectiveness of the leniency regime).
Claimants before national courts have also sought access to leniency materials directly from the Commission under Regulation (EC) 1049/2001 regarding public access to European Parliament, Council and Commission documents (Public Access to EU Documents Regulation), which grants the right to access documents held by the EU institutions.
The Commission has consistently relied on exceptions under the Public Access to EU Documents Regulation to refuse access to leniency materials on the grounds that disclosure would undermine the purpose and effectiveness of its cartel investigations and its leniency programme. However, in recent judgments, the EU General Court (GC) has sought to limit the Commission's ability to rely on the Public Access to EU Documents Regulation's exceptions to refuse access to documents on its case file, for example:
Hydrogen Peroxide (Case T-437/08). The GC ruled that the Commission had not sufficiently explained why the statement of contents from its case file, to which a claimant was seeking access, was capable of falling within the exceptions to the Public Access to EU Documents Regulation. The Court stated that "all exceptions to the right of access must be interpreted and applied strictly" and reasoned that the Commission should have examined the document more thoroughly before deciding to restrict access to it.
EnBW (Case T-344/08). The GC annulled a Commission decision denying Energie Baden-Württemberg access to one of the Commission's cartel case files because, according to the GC, the Commission had failed to justify its claim that there were too many documents on the file to consider allowing access. The GC suggested that the Commission could not rely on a general presumption that all of the documents on its file fall within exceptions to the Public Access to EU Documents Regulation, but would need to establish this in relation to each document concerned.
In the light of the GC's stance, there appears to be a requirement for the Commission to individually examine a claimant's request to obtain access to leniency materials on its file and to individually justify any refusal to do so.
Another possible means for claimants to obtain access to materials submitted to the Commission by leniency applicants is for the national court to request them from the Commission under the Notice on co-operation between the Commission and the courts of the EU member states in the application of Articles 101 and 102 TFEU (OJ 2004 C101/54). The Commission has declared, however, that it will only transmit to EU national courts information voluntarily submitted by a leniency applicant where the applicant has consented to the disclosure.
See Question 18.
Corporate statements and other information submitted to the Commission in the context of leniency may be subject to discovery orders in foreign courts. However, the Commission can intervene before foreign courts to protect the disclosure of corporate statements, so not to discourage leniency applicants from co-operating with the Commission under the 2006 Leniency Notice. The Commission has intervened in a number of cases in the US on these grounds. For example, in the US Flat Glass anti-trust litigation (Civil Action No. 08- mc- 180, MDL No. 1942), the Commission filed before the US court a declaration from its Director General for Competition advocating against the disclosure before the court of materials that had been generated by the defendants to seek leniency before the Commission.
Actions for damages for infringements of the EU competition rules are heard before EU member states' national courts. EU member states' national procedural laws govern the discovery of evidence in these cases, including the discovery of leniency submissions filed in non-EU jurisdictions.
The European Commission co-operates with EU member states' national competition authorities through the ECN. These relations are governed by the Commission's Notice on co-operation within the network of competition authorities (OJ 2004 C101/43). ECN members can exchange information among themselves and use information received from other ECN members under certain conditions.
In particular, for information submitted in the context of leniency, the Commission can share information submitted by a leniency applicant with other ECN members, provided that one or more of the following apply:
The applicant has consented to the disclosure.
The applicant has also applied for leniency with the relevant national competition authority in relation to the same infringement.
The receiving national competition authority grants the information similar protection against disclosure as that provided by the Commission and commits not to use it to impose sanctions on the applicant (unless it already had sufficient information in its possession to do so).
For non-EU competition authorities, the Commission will proceed with information exchanges only insofar as an applicant provides the Commission with a waiver of its confidentiality rights in relation to other competition authorities to which the applicant has applied for immunity.
The EU has signed bilateral agreements with Canada, Japan, Korea and the US, which contain detailed provisions regarding information exchanges between the parties' competition authorities.
There are currently no proposals for substantive reform of the EU leniency programme.
The Commission Work Programme for 2012 foresaw a legislative proposal on actions for damages for breaches of competition law, as well as a follow-up initiative to the Commission's previous work on collective redress. According to the Commission, "the objective of this legislative initiative would be to ensure effective damages actions before national courts for breaches of EU anti-trust rules and to clarify the interrelation of such private actions with public enforcement by the Commission and the national competition authorities, notably as regards the protection of leniency programmes, in order to preserve the central role of public enforcement in the EU." However, this initiative does not appear in the Commission Work Programme for 2013. The European Commissioner for Competition, Joaquín Almunia, has indicated his intention to announce proposals in this area during 2013.
Joaquín Almunia has also stated that in its regulation of access to leniency documents by third parties, the EU legal framework should provide for an adequate balance of interests between the need to protect leniency programmes and ensuring an effective right to damages. This statement followed the June 2011 judgment of the ECJ in the Pfleiderer case (see Question 16, Domestic submissions and domestic discovery).
W http://eur-lex.europa.eu/en/index.htm
Description. This is the home page of EUR-Lex, which provides free access to EU law. Of particular interest in the context of Cartel Leniency:
Consolidated version of the Treaty on the Functioning of the European Union (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:115:0047:0199:en:PDF).
Guidelines on the method of setting fines (OJ 2006 C210/2) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2006:210:0002:0005:EN:PDF).
Notice on immunity from fines and reduction of fines in cartel cases (OJ 2006 C298/17) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2006:298:0017:0022:EN:PDF).
Notice on co-operation between the Commission and the courts of the EU member states courts in the application of Articles 101 and 102 TFEU (OJ 2004 C101/54) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52004XC0427(03):EN:PDF).
Notice on co-operation within the network of competition authorities (OJ 2004 C101/43) (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2004:101:0043:0053:EN:PDF).
Head. Joaquín Almunia
Contact details. DG Competition
[Until June 2013]
Rue Joseph-II 70
1000 Brussels
[From June 2013]
Place Madou 1
1210 Brussels
T +32 2 298 41 90/91
F +32 2 299 45 85
W http://ec.europa.eu/competition/cartels/leniency/leniency.html
Responsibilities. DG Competition is responsible for competition law enforcement including cartels and the leniency programme at the EU level.
Person/department to apply to. Applicants should contact DG Competition at the numbers provided above.
Procedure for obtaining application documents. There is no standard application form.
Partner
Van Bael & Bellis
T +32 2 647 73 50
F +32 2 640 64 99
E akmiecik@vbb.com
W www.vbb.com
Professional qualifications. England and Wales, Solicitor; Brussels Bar, E-List
Areas of practice. EU competition law.
Partner
Van Bael & Bellis
T +32 2 647 73 50
F +32 2 640 64 99
E rburton@vbb.com
W www.vbb.com
Professional qualifications. England and Wales, Solicitor; Brussels Bar, E-List
Areas of practice. EU competition law.
