Cartels are widely recognised as the most serious violation of competition rules, and their detection and prohibition, and the punishment of those involved in cartels is one of the highest priorities in the field of competition policy. Conduct caught by the prohibitions on cartel activities includes price-fixing, bid-rigging (collusive tendering), setting output restrictions or quotas, and market-sharing. Companies that infringe the prohibition on cartel activities (section 1 of the German Act against Restrictions of Competition) will be liable to fines of up to €500,000.00 or triple the profit gained from the cartel activities. The risks and penalties for involvement in cartels are therefore quite strong. For the purpose of fighting cartels more effectively the FCO introduced in April 2000 a leniency programme, to encourage members of cartels to come forward in a timely manner with information on the cartel in which they are involved. In case of full co-operation of companies involved in a cartel it can provide for total or partial immunity from fines to such companies.
The great practical relevance of the leniency programme arose again in the cartel proceedings against companies in the cement sector a few months ago. The FCO imposed in these proceedings the highest fines in its history, totalling approximately €660 million. The accused companies operated anti-competitive market allocation and quota agreements, some of them since the 1970s, and continued to do so until 2002. The President of the FCO attributed the successful breaking up of the cartel mainly to the leniency programme. In addition, he stated that the fines would have been considerably higher without the comprehensive co-operation of some of the companies.
The Leniency Programme of the FCO
The Leniency Programme gets its bearings from the 1996 EC Leniency Notice. It provides total/partial immunity under the following conditions:
Total immunity is generally granted if a company involved in a cartel:
(a) informs the FCO about the cartel before preliminary investigations into the cartel have been initiated and the company knows about or has to reckon with these investigations;
(b) is the first member of the cartel to provide the FCO with information that makes a decisive contribution to uncovering the cartel;
(c) provides the FCO with all the relevant information as well as the available documents and evidence relating to the cartel and cooperates continuously and unreservedly with the FCO during the entire duration of the proceedings;
(d) has not played a decisive role in the cartel (i.e. the company that profited most from the cartel or initiated it or forced others to take part); and
(e) discontinues its participation in the cartel at the request of the FCO.
Significant reduction of fines
If a company involved in a cartel voluntarily fulfils the conditions under (b) to (e) after the initiation of investigations has been made known, the fine will generally be reduced by at least 50 per cent.
Setting reduced fines:
Fines can also be reduced if (1) a company has essentially contributed to the detection of a cartel on a voluntary basis and (2) has put an end to its infringement (see (e) above). A compliance with the preconditions (a) to (d) above is not necessary for a reduction in fines, but will be taken into account in setting the amount of a fine.