IP/06/1705

Brussels, 7^th December 2006

Competition: Commission adopts revised Leniency Notice to reward companies that report cartels

The European Commission has taken another important step to uncover and put an end to hard-core cartels by adopting a revised Notice on Immunity from Fines and Reduction of Fines in Cartel Cases (the “Leniency Notice”). The revised Leniency Notice clarifies the information an applicant needs to provide to the Commission to benefit from immunity, and introduces a so-called marker system for immunity applicants. It also clarifies the conditions for immunity and reduction of fines and introduces a procedure to protect corporate statements made by companies under the Leniency Notice from being made available to claimants in civil damage proceedings. The revision takes account of public consultations in February and October 2006.

Competition Commissioner Neelie Kroes said “Secret cartels undermine healthy economic activity. To root out cartels we need heavy sanctions to deter cartels and an efficient leniency policy providing incentives to report them. These changes will further strengthen the effectiveness of the Commission’s leniency programme in the detection of cartels and offer clearer guidance for business."

Leniency allows the Commission to offer full immunity or a reduction in the fines that would otherwise have been imposed on a cartel member in exchange for disclosure of information on the cartel and cooperation with the investigation.

Main aspects of the revision

Improvements have been made in several areas of the Leniency Notice to provide more guidance to applicants and to increase the transparency of the procedure. These improvements reflect more than four years of experience in applying the 2002 Leniency Notice (see IP/02/247 and MEMO/02/23) and are also fully in line with the European Competition Network's Model Leniency Programme (see IP/06/1288 and MEMO/06/356).

The immunity thresholds have been clarified to:

• set out explicitly and clearly what type of information and evidence the applicants should submit to qualify for immunity
• link the threshold for immunity to information needed by the Commission to carry out a “targeted” inspection in connection with the alleged cartel, which will allow for the inspections to be better focused
• clarify that applicants are not required to produce in their initial application for immunity information and evidence, the collection of which would jeopardise a Commission inspection, and which can be provided under the continuous cooperation obligation
• state explicitly that the applicants need to disclose their participation in the cartel.

Concerning the threshold for reduction of fines the Notice makes it clear that evidence that requires little or no corroboration will have greater value. Such evidence will also be rewarded outside the normal bands for reduction of fines, when it is used to establish any additional facts increasing the gravity or duration of the infringement.

The conditions for immunity and reduction of fines have been made more explicit by:

• introducing flexibility as to the point in time when applicants should terminate their participation in the alleged cartel activities
• clarifying that genuine cooperation requires in particular that the applicant provides accurate, and complete information that is not misleading
• extending the obligation not to destroy, falsify or conceal information to cover also the period when the applicant was contemplating making an application
• stating explicitly that the obligation on continuous cooperation concerns also applications for a reduction of fines.

Another innovation in the revision is the introduction of a discretionary marker system. Where justified, an application can be accepted on the basis of only limited information. The applicant is then granted time to perfect the information and evidence to qualify for immunity.

In order to ensure that applicants that cooperate with the Commission investigation are not impaired in their position in civil proceedings, as compared to companies who do not cooperate, the Commission has developed a procedure to protect corporate statements given under the Leniency Notice from discovery in civil damage procedures. This is essential to maintain effectiveness of the Leniency Notice.

For more information on changes to the Leniency Notice, see MEMO/06/469 and MEMO/06/470.

Entry into force

The revised Leniency Notice will come into force on 8^th December 2006, when it is published in the EU Official Journal. From that date it will be applicable to companies which file for leniency in a cartel case, as long as no other company is already co-operating with the Commission under the Leniency Notice in the same cartel. The procedure to protect corporate statements will be applied from the moment of publication of the Notice to all pending and new applications for leniency.

The revised notice is available on the Commission's competition web-site: http://ec.europa.eu/competition/cartels/legislation/leniency_legislation.html

Comments on the public consultation are available at: http://ec.europa.eu/competition/cartels/legislation/leniency_consultation.html

For general information on the Commission’s action against cartels, see MEMO/06/451.