On 20 January 2016, the European Court of Justice (ECJ) confirmed that leniency applications made to the European Commission (EC) and the competition regulators of EU Member States are independent from each other, and that instruments of the European Competition Network (ECN) and their Model Leniency Programme are not binding on Member State competition authorities.
The Italian High Administrative Court sought guidance from the ECJ after DHL appealed against the decision of the Italian competition authority, Autorità Garante della Concorrenza e del Mercato (AGCM), to impose fines for its participation in a road freight cartel in Italy. DHL had successfully sought leniency from the EC in relation to the cartel, but was not the first company to apply to the AGCM for leniency in relation to the same cartel.
DHL argued that the timing of its leniency application to the EC should also give it “first in line” status for leniency in Italy.
In June 2007, DHL applied to the EC for immunity from fines resulting from infringements of EC competition law in the international freight forwarding sector. In July 2007, DHL applied to the AGCM for immunity under its national leniency programme in relation to a cartel in the international sea and air freight transport markets. However, DHL but did not make any reference in its application to the AGCM to participation in an alleged road freight cartel until June 2008.
The AGCM ruled, in 2011, that DHL had participated in the road freight cartel and was ordered to pay fines which were subsequently discounted to 49%. The ACGM did not grant DHL leniency as another company, Schenker Italian, had filed a leniency application with respect to their conduct in the road freight cartel in December 2007.
DHL challenged this decision to the Council of State in Italy, which asked the ECJ to decide whether the European Competition Network Leniency Notice and Model Leniency Program, as instruments of the ECN, bound the AGCM.
Specifically, DHL argued that it should have received full immunity from the fines imposed by the AGCM in respect of the Italian road freight cartel because the application made to the EC and the AGCM should have been regarded as a single application and DHL’s EC application was submitted before Schenker Italian’s application to the AGCM.
The ECJ’s Decision
The ECJ affirmed previous decisions that the ECN, being intended to encourage and further discussion and cooperation in the implementation of competition policy, did not have the power to create legally binding rules for Member States through the instruments adopted by the ECN.
The ECJ stated that there was no legal link between an application for immunity submitted to the EC and an application submitted to a national competition regulator because each leniency program is autonomous. This means that, even if a company submits an immunity application to the EC, it must still submit a separate application to the national competition regulator of each jurisdiction where the cartel may have given rise to anti-competitive effects. The EC should not be viewed as a one-stop-shop for seeking leniency.
The decision confirms that companies that make a leniency applications to EC authorities should consider whether they also need to file an application for leniency in individual Member States where the conduct may have an effect.
The corollary of the decision is that, even if a company is unable to obtain immunity from the EC, it may still be able to seek full immunity in respect of the same conduct with competition regulators in particular Member States.
This decision highlights some of the limitations on promoting convergence of competition laws and processes in the EU. From this perspective, it also has some relevance for our corner of the globe, given that the ASEAN Member States have noted that a central goal is to promote economic integration through competition law and policy. As ASEAN Member States consider how best to attain this goal, it is clear that, even after more than 13 years since the establishment of the ECN in the EU, a number of significant policies and processes continue to operate independently at the supra-national and Member State levels.