Competition: Commission and other ECN members co-operate in use of leniency to fight cross border cartels

The European Commission has adopted draft amendments to its Notice on Immunity from Fines and Reduction of Fines in Cartel Cases (the 2002 Leniency Notice). The proposed amendments take stock of issues that have arisen during the four years of application of the 2002 notice and are in line with the European Competition Network’s (ECN) Model Leniency Programme that was also launched today. The heads of Member States’ competition authorities will use their best efforts to align their leniency programmes on the Model Programme, and today’s changes to the notice show the Commission’s determination to do so quickly. These developments move towards a one stop leniency shop by harmonising the procedure and requirements for leniency applications, to make it easier for companies to apply for leniency when it is not clear which authority will take the case forward. The changes to the Commission’s Notice also introduce a marker system and clarify the information an applicant needs to provide to benefit from immunity as well as the conditions for immunity and reduction of fines. They also include a corporate statements procedure that takes into account comments made during public consultation on an initial proposal launched in February 2006. Interested third parties are invited to comment on the Commission proposal by 27 October 2006, before it is finally adopted by the Commission.

Competition Commissioner Neelie Kroes said “Cartels do severe damage to the European economy, and are serious violations of the competition rules. Effective action against cartels requires heavy sanctions to punish and deter and incentives to participants to report cartels. My colleagues in the ECN share my concerns about potential shortcomings in the current system and we are joining forces to deliver a European one stop shop model. The Commission Leniency Notice is a formidable and successful tool to detect and terminate cartels. These changes will make it even more effective.”
Leniency allows authorities 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 authorities’ investigation. Leniency is a powerful tool to detect, destabilise and terminate cartels. All competition authorities in the EU want to ensure that the European leniency programmes remain efficient and attractive.

Proposed amendments to the Commission’s Notice

The Commission’s Leniency Notice has been in force since February 2002 (see IP/02/247 and MEMO/02/23). More than four years of experience in applying the Notice shows that the clarity and effectiveness of the Notice can be improved further.

The changes proposed will ensure that the Leniency Notice will:

set out explicitly and clearly what type of information and evidence the immunity applicants should submit
link the threshold for immunity to information needed by the Commission to carry out a “targeted” inspection in connection with the alleged cartel
state explicitly that the applicants need to disclose their participation in the cartel
introduce flexibility as to the point in time when applicants should terminate their participation in the alleged cartel activities
clarify the cooperation obligation and extend the obligation not to destroy, falsify or conceal information to cover also the period when the applicant was contemplating making an application
state explicitly that the obligation on continuous cooperation concerns also applications for a reduction of fines
pronounce clearly that only compelling evidence will be rewarded outside the bands for reduction of fines
contain a discretionary marker system, whereby an applicant’s place in the queue for leniency can be protected for a limited period of time
describe the procedure to protect corporate statements and
state that no position is taken on applications concerning prescribed infringements.

For further information on the proposed changes to the Leniency Notice, see MEMO/06/357.
The proposal for an amended Leniency Notice is available for comment by 27 October 2006 at:

http://ec.europa.eu/competition/antitrust/legislation/leniency.html

The ECN Model Leniency Programme

The ECN Model Programme sets out the principal elements which the ECN members believe should be common in all programmes. It also introduces a model for a uniform summary application system at the national level for immunity applications in cases concerning more than three Member States. The ECN is the network of Member States’ competition authorities and the Commission that exists to ensure effective and consistent application of EC Treaty competition rules at national and EU level.

The ECN Model Leniency Programme is available in all official languages at: http://ec.europa.eu/competition/index_en.html

For further information on the ECN Model Leniency Programme, see MEMO/06/356.

The Commission will carefully monitor the improvements to the leniency programmes as regards the one-stop shop for leniency applications that affect multiple jurisdictions, before deciding whether further steps are necessary.

For more information on the Commission’s action against cartels, see MEMO/06/337.