The Commission has issued a new draft leniency notice which amends the previous 2002 Leniency Notice following the Commission’s review of its policy and experiences in granting leniency. In particular the draft notice provides further detail on the information and evidence that must be provided by an applicant, the ability for an applicant to put down a marker when applying for leniency which can be perfected within a defined timescale and the co-operation requirements when applying for a reduction in fines. The Commission has invited comments prior to final adoption of the notice.
The purpose of the amendments is to enhance the effectiveness of Commission cartel investigations by providing more guidance and clarity for companies applying for immunity and/or a reduction in fines and streamlining the application procedure. The Commission had granted conditional immunity on 51 out of a total of 87 applications under the 2002 Leniency Notice. Immunity had not been granted where applicants had not given the necessary insider information and evidence on the alleged cartel to meet the immunity threshold. Immunity had also been withdrawn in one case where the applicant revealed that it had applied for leniency to the other members of the cartel. Equally the Commission had found that applicants had spent a lot of time supplementing applications with additional information which had prolonged the process.
The draft notice sets out additional requirements for the immunity threshold to be met. The applicant must describe its participation in the cartel to be eligible for immunity. In order to comply with the duty of full and continuous co-operation the applicant: cannot have destroyed, falsified or concealed information, whether during the investigation or whilst preparing its leniency application; cannot disclose that it has made a leniency application; and must make employees available for interview. The notice also now explicitly provides flexibility as to when participants have to end their involvement in the cartel so that a leniency application does not, for example, prejudice a planned Commission inspection.
A further requirement is for the applicant to submit a corporate statement, for which the Commission has established a particular procedure to protect such statements from discovery in civil damages proceedings. Statements can be made orally and access will only be granted to addressees of a statement of objections in accordance with the Commission rules on access to the Commission file.
The Commission has also introduced a marker system to protect an applicant’s first place in the queue for immunity for a short period. This will give an applicant more time to gather the information to be submitted in order to perfect the marker and meet the threshold for immunity. The Commission will determine the relevant time period on a case-by-case basis.
The Commission has also amended the requirements for applicants for a reduction in fines. Applicants are expressly required to co-operate and the notice clarifies the kind of compelling evidence that an applicant is required to provide in order to offer significant added value to the information the Commission already has. The notice also provides that the Commission will not use compelling evidence provided by a party to increase fines on that party.
The draft Leniency Notice does not provide an EU-wide one-stop shop system and applicants will still have to apply under different procedures to both EU and various Member States for leniency where relevant. However the European Competition Network has launched a model leniency programme to facilitate multiple applications within the EU. This is not binding on members of the ECN and so leniency applicants are likely to face practical difficulties due to the lack of harmonisation for some time to come. If adopted, the model provides for a leniency programme with similar principles to the draft Leniency Notice and in addition enables an applicant to submit a summary application (which can also be made orally) which acts as a marker to secure an applicant’s place in the queue in that Member State until it is clear which authorities will be dealing with the case.
The draft notice provides clarity on the kind of information that a leniency applicant is expected to provide and the marker system should encourage applicants to come forward early on. The Commission has stated that it does not want to discourage leniency applicants from coming forward because of the risk that the information they provide as part of that application will be produced in civil damages actions. The procedures put in place for corporate statements will provide some reassurance, however elements from published Commission decisions can still be used in actions for damages to establish the existence and extent of a cartel.