The Heads of the European Competition Authorities ("ECA") met on 23 May 2012 and resolved to protect leniency materials held on the investigation file from disclosure to third parties seeking to bring civil damages actions against decision addressees.
The ECA's resolution sets out the joint position that protection of leniency materials is essential so as not to undermine effective anti-cartel enforcement by discouraging potential leniency applicants from coming forward. The ECA considered it necessary to articulate this joint position in view of the judgment of the Court of Justice of the European Union in Pfleiderer that leniency materials may in principle be disclosed and it is a matter for national courts to determine whether they should be on the facts of the case before them.
Articles 101 and 102 of the Treaty on the Functioning of the European Union ("TFEU") prohibit anti-competitive behaviour in the EU and there is scope for substantial fines and civil claims where these provisions are infringed. The European Commission (the "Commission") has published a leniency notice (the "Leniency Notice") that sets out a framework for rewarding cooperation in the Commission investigation by undertakings which are or have been party to secret cartels affecting the Community. As such, entities that are party to a secret cartel may apply to the Commission for leniency, and if the first party to the cartel to make such an application, may benefit from complete immunity in respect of the fine. Nearly all Member States have similar statutory prohibitions on anti-competitive behaviour and policies on leniency in respect of infringing activity.
There are two types of leniency, with the first type being more generous. The Commission may grant the first type of leniency, amounting to complete immunity from prosecution (Type A), where an undertaking notifies the Commission of its membership in a cartel and provides information which supports a Commission investigation. The Commission may grant the second type of leniency, offering participants a reduction in fines (Type B), in situations where it already has some knowledge of the cartel and the circumstances surrounding it, but the information provided is nevertheless useful. This structure incentivises entities that are party to a secret cartel to apply for leniency as early as possible and make full disclosure so as to get the best chance of providing information to the Commission that it does not already have.
During the leniency process, only other addressees can access corporate statements; they may not copy these statements; and they may solely use them for the purposes of their defence in that particular case. However, various European and national legal provisions including Council Regulation (EC) No 1049/2001 of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (the "Regulation") give rights of access to documents held by competition authorities, including the Commission. Increasingly entities bringing private civil claims for damages resulting from competition law infringements are relying on the Regulation and similar provisions so as to apply via the courts for access to documents held on the investigation file, including leniency documents, in order to help them prove their claims. Since the damages claimed in such actions can potentially exceed any fine, there is a concern that potential leniency applicants might determine not to come forward and/or might be less forthcoming in their statements rather than risk the information they have shared with the Commission being used against them later in a civil claim.
The Commission has long taken the stance that leniency documents should not be disclosed to third parties on the basis that this might undermine the effectiveness of leniency programmes. The recent Pfleiderer judgment acknowledged this concern but determined that Articles 11 and 12 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 101 and 102 of the TFEU (which compel close cooperation and exchange of information between national competition authorities and the Commission with regards to enforcement proceedings for Articles 101 and 102 TFEU) do not prevent those actors adversely affected by a breach of competition law from accessing leniency application documents. The Court of Justice of the European Union concluded that, rather, national courts should balance all interests protected under EU law and decide whether to allow access in any given case based on governing principles of national law.
Although on a reference back to the relevant German court, Pfleiderer was denied access to the leniency documents in the circumstances of that case, the doors were clearly opened for others to make applications. Leniency material has since been released to claimants in at least one other damages case (the National Grid judgment).
The Heads of the European Competition Authorities' Resolution
Arguably, the Pfleiderer judgment created uncertainty over whether national courts would take a consistent approach as to the disclosure of leniency materials. The Commission apparently took note of this and included in its work objectives for 2012 a commitment to "present a specific proposal on antitrust damage actions. This initiative will clarify the interrelation of antitrust damages actions brought before national courts with public enforcement by the Commission and national competition authorities and set common standards and minimum requirements for national systems of antitrust damages actions to ensure that rights are enforceable in a coherent manner across the EU." The Commission specifically noted that it intended to clarify the interrelation of public and private enforcement with a view to protecting leniency programmes.
The ECA resolution on 23 May 2012 might be seen as a first step in that plan for clarification. The ECA acknowledged in the resolution that there is a relationship between civil damages claims and leniency programmes, in that potential leniency applicants will often consider the impact of cooperation upon any relevant civil damages proceedings, and resolved to protect leniency documents from disclosure to civil claimants.
The ECA resolution explained that effective recovery of damages from cartels strengthens EU competition law by discouraging cartels. Whilst leniency programmes and damage claims are therefore complementary in both acting to deter cartel activity, damage claims normally follow on from public enforcement, which in turn relies on leniency programmes, and the promotion of one should not undermine the other. The resolution therefore concluded that protection of leniency programmes is necessary to facilitate successful follow-on damages claims as, if cartels are never uncovered, their members cannot be sued for damages. The ECA concluded that "as far as possible under the applicable laws in their respective jurisdictions and without unduly restricting the right to civil damages, the ECA take the joint position that leniency materials should be protected against disclosure to the extent necessary to ensure the effectiveness of leniency programmes".
The ECA's resolution acknowledges that, ultimately, this is a matter for national courts applying national law (and it remains open to national courts to order disclosure of leniency materials if they consider it appropriate). Nonetheless, the resolution is useful in confirming a single policy position on the part of Member State national competition authorities as to the impact disclosure as a matter of practice might have on the effectiveness of leniency programmes.
National courts still must balance the interests of civil damages as compared with leniency programmes but are likely to take the resolution into account when weighing the importance of not undermining the effectiveness of leniency programmes. The resolution clarifies the aims of leniency programmes, including "preventing further damage being inflicted on businesses and consumers and helping cartel victims to bring forward their claims for damage", and confirms that protection of leniency materials during damages claims in fact satisfies these aims. This statement of policy is useful for national courts tasked with deciding whether to grant access to leniency documents.
We understand that the Commission intends to consult on its wider proposals on leniency documents in the autumn of 2012.