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Brussels, 13 February 2002

Commission adopts new leniency policy for companies which give information on cartels

The European Commission on Wednesday took another important step to uncover and suppress price-fixing pacts and other hard-core cartels. The Commission unanimously adopted a new leniency policy that creates greater incentives for companies to blow the whistle on the most serious violations of antitrust rules. Under the new rules the Commission will grant total immunity from fines to the first company to submit evidence on a cartel unknown to, or unproved by the Commission. The leniency policy updates a previous 1996 document. "Detection and prosecution of cartels is one of my top priorities," European Competition Commissioner Mario Monti said, adding: "The 1996 leniency policy played an important role in uncovering and punishing secret cartels in the last five years. The new policy will create even greater incentives to denounce this scourge of the economy which has companies making illicit profits at consumers' expense".

Secret cartels are the most serious violation of competition rules since they invariably result in higher prices. Whether they take the form of price-fixing or market-sharing agreements, the allocation of production quotas or the rigging of bids, they harm European industry and consumers. Such illicit behaviour makes raw materials and components more expensive and, in the long term, leads to a loss of competitiveness and reduced employment. That is why they are expressly prohibited in Article 81 of the European Union treaty.

The detection, prohibition and punishment of cartels is one of the highest priorities of the Commission in the field of competition policy.

The greatest challenge in the fight against hard-core cartels is to penetrate their cloak of secrecy and counter the increasingly sophisticated means at the companies' disposal to conceal collusive behaviour.

Following on the experience of the United States in this field, the Commission in 1996 adopted for the first time a Leniency Notice providing for immunity or reduction from fines for companies that help it in the detection and prosecution of these cartels.

This policy greatly contributed to the adoption in 2001 of 10 cartel decisions in which 56 companies were fined a total of €1 836 million, a record figure compared with any other previous year, larger even than the total amount of fines imposed in the whole preceding period, i.e. between the creation of the EC and the year 2000

As decided in 1996, the Commission last year reviewed the experience acquired in the implementation of the Leniency Notice. After consultation with the competition authorities of the 15 EU states and with the business and legal communities, it concluded that the policy could be improved in terms of transparency and legal certainty in order to make it more attractive for companies to come forward.

Main aspects of the revision

  • The Commission will grant complete immunity from fines:

    • to the first member of the cartel to inform the Commission of an undetected cartel by providing sufficient information to allow the Commission to launch an inspection on the premises of the suspected companies; or

    • to the first member of the cartel to provide evidence that enables the Commission to establish an infringement, when the Commission is already in possession of enough information to launch an inspection, but not to establish an infringement. This type of immunity is available only in cases where no other cartel member has qualified for immunity under the first scenario.

Consequently, immunity from fines will reward firms that provide important insider information and evidence to the Commission at two crucial stages of a cartel investigation: either with the disclosure of a cartel previously undetected or by supplying unknown crucial evidence that will lead to the successful prosecution of the cartel members.

To obtain full immunity, a company must also cooperate fully and on a continuous basis with the Commission, provide all evidence in its possession, put an end immediately to the infringement and may not have taken steps to coerce other undertakings to participate in the cartel.

The new policy contrasts with the old 1996 leniency notice in that the latter required a company to provide "decisive" evidence and excluded from full immunity companies that had acted as an instigator of or played a determining role in a cartel. Both left room for interpretation and, therefore, uncertainty as to what decisive information was and what it meant to be an instigator or play a determining role.

In the five years to the end of 2001, the Commission granted full immunity in three occasions: Rhône-Poulenc, in respect to its participation in two of the three vitamins cartels in which it was found to be involved, a subsidiary of Interbrew in the Luxembourg brewers cartel and South-African company Sappi for the valuable information and co-operation provided in the carbonless paper cartel (see respectively IP/01/1625 of November 21, 2001, 2001IP /01/1740 of December 5 2001and IP/01/1892 of December 20,).

  • In another innovation, a company fulfilling the conditions for immunity will promptly receive a letter from the Commission confirming that immunity will be granted if the conditions set out in the Notice are observed.

  • As in 1996, the new Notice provides also for a reduction of fines for companies that do not qualify for immunity but provide evidence that represents "significant added value" to that already in the Commission's possession and terminate their involvement in the cartel.

The first company fulfilling these conditions will receive a reduction of 30-50% of the fine which would otherwise have been imposed, the second successful applicant 20-30% and subsequent successful applicants will receive a reduction of up to 20%.

Within each of these bands, the final amount of any reduction will again depend on the time at which evidence was provided and the quality of this evidence. The extent of co-operation provided by the company throughout the Commission's procedure will also be taken into account.

Successful applicants for reduction of fines will also be given a letter indicating the band to which they will, in principle, be entitled. This letter will be sent no later than the day the statement of objections is notified.

The new policy will not only increase the legal certainty provided to companies but will also enhance its overall transparency and predictability.

Commissioner Monti added:

« This new Notice should not, in any way, be understood as reflecting a more lenient approach in the fight against price-fixing and other anti-competitive practices. On the contrary, the new policy will increase the likelihood that cartels will be detected which, together with the Commission's determination to impose fines at dissuasive levels, should deter companies from entering into collusive behaviour in the first place.»

Entry into force and publication of the new Notice

The new Notice will come into force tomorrow, February 14, 2002 and will be applicable to companies which file for leniency in a cartel case, as long as no other firm is already co-operating with the Commission in an investigation into that same cartel.

The "Notice on immunity from fines and reduction of fines in cartel cases" will be published in the Official Journal of the European Communities in the coming days and is already available on the internet at the following address:

Leniency applications

Companies wishing to approach the Commission in order to benefit from the new Notice may do so directly or through an intermediary, such as a legal adviser.

For the purpose of filing an application for leniency initial contact should be made through the dedicated fax number:

Dedicated Fax number:  + 322 299 45 85

The use of this fax ensures that the precise time and date of the contact is duly recorded and that the information is treated with the utmost confidentiality within the Commission.

If necessary, initial contact can in exceptional cases also be made through the following dedicated telephone numbers:

Telephone numbers:   + 322 298 41 90 & 298 41 91

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