German FCO publishes New Leniency Programme

28 July 2006

Christian Schwedler

April 2006

In announcing a new Leniency Programme on 15 March 2006, the German Federal Cartel Office (FCO) has presented further incentives for cartel members to cooperate with the cartel authorities. The new regulation is intended to build on the experience gained over the last few years and to make the Leniency Programme, which has become an important instrument in the fight against illegal agreements between competitors, even more effective.

Pursuant to the 7th Amendment of the Act against Restraints of Competition (ARC), the FCO was expressly authorised by the legislator to issue a Leniency Programme. The Act itself additionally encouraged a Leniency Programme as it raised the ceiling for fines against companies to 10 per cent of their total annual turnover. Even before this readjustment, fines imposed by the FCO on cartel participants had amounted to millions of euros. Companies and those in charge can avoid these fines if they cooperate with the FCO. But those who are considering cooperating with the FCO should not hesitate as the offer of immunity from fines only applies to the first company which approaches the FCO. If a company waits too long another member of the cartel might benefit from this opportunity.

In comparison with the former regulation, the Leniency Programme now contains the following new features:

  • The applicant who is first to cooperate with the FCO and enables it to obtain a search warrant against the other cartel members, automatically obtains an assurance in writing of complete immunity from fines.

  • A cartel member can still obtain full immunity from fines after a search has been conducted, provided that he is the first to cooperate with the FCO and gives submissions which prove the offence.

  • The second and third cartel members, who apply to participate in the Leniency Programme, can still reduce their fines up to 50 per cent. The level of reduction in fines depends on the timing of the announcement of their intent to cooperate.

  • The FCO is going to apply a so-called “marker system”. A potential applicant who wants to cooperate with the FCO can place a “marker“ by giving a specified minimum amount of information on the cartel. The marker assures the applicant of his status as first applicant, provided that he adds the lacking information within eight weeks.

  • Additionally, the new Leniency Programme offers considerable simplifications for members of a European-wide cartel, who are willing to cooperate. In the future, their status before the FCO will be assured by placing a marker.

The Leniency Programmes of the different Member States and the European Commission have not yet been harmonised. Therefore, a working group within the Network of the European Competition Authorities (ECN) was established, which aims to develop a programme for harmonisation in this area with the assistance of the German Federal Cartel Office. The revised Leniency Programme in Germany has taken up some of the recommendations of this working group but does not preclude further adaptations following a possible approval of a harmonisation programme by all European Competition Authorities.

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