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Immunity and leniency

Immunity and leniency programmes

Is an immunity and leniency programme available for companies? If so, how does it operate?

Differing types of protection are available for applicants depending on the specific circumstances of the application.

Type A immunity This is available where the undertaking is the first to apply and there is no pre-existing civil or criminal investigation into such activity. Type A immunity provides automatic immunity from civil fines for an undertaking and criminal immunity for all current and former employees and directors who cooperate with the Competition and Markets Authority (CMA). Cooperating individuals should also avoid director disqualification.

Type B immunity This is available where the undertaking is the first to apply, but there is already a pre-existing civil or criminal investigation into such activity. In such circumstances, the CMA retains discretion regarding whether to provide civil immunity to the undertaking and criminal immunity to current and former employees and directors who cooperate with the CMA. Cooperating individuals should also avoid director disqualification.

Type B leniency Where the CMA decides not to grant Type B immunity to an undertaking, it may still provide a reduction in any penalty. There is no limit to the level of reduction that may be granted. The CMA will consider whether it is in the public interest to grant criminal immunity on a blanket or individual basis. Cooperating individuals should also avoid director disqualification.

Type C leniency This is available to undertakings which are not the first to apply, but provide evidence of cartel activity before a statement of objections (SO) is issued – provided that such evidence genuinely advances the investigation. Recipients may be granted a reduction of up to 50% of any penalty. The CMA will not grant blanket criminal immunity, but may exercise its discretion to award immunity from prosecution for specific individuals. Cooperating individuals should also avoid director disqualification.

In addition to fulfilling the criteria above, an undertaking must:

  • accept that it participated in cartel activity in breach of the law;
  • provide the CMA with all information, documents and evidence available to it regarding the cartel activity;
  • maintain continuous and complete cooperation throughout the investigation and until the conclusion of any action by the CMA as a result of the investigation;
  • refrain from participating in the cartel from the time of disclosure of the cartel activity to the CMA – except as may be directed by the CMA); and
  • (except in respect of Type C leniency) not have taken steps to coerce another undertaking to take part in the cartel.

Can the enforcement authority decline or withdraw leniency? If so, on what basis?

Once the CMA has issued an SO, it will not accept applications from undertakings for leniency. Once an individual is charged with a cartel offence, the CMA will not accept an immunity application from him or her. In exercising its discretion in respect of granting immunity or leniency in cases where the CMA has a pre-existing cartel investigation, the CMA may in some cases conclude that it will not accept any further leniency applications.

An applicant must adopt a constructive approach to assist the CMA in detecting, investigating and taking enforcement action against cartel conduct. If at any time the CMA finds that the applicant is not adopting a constructive approach or that there are unreasonable delays in supplying information or otherwise cooperating with its requirements, the CMA may withdraw leniency if its concerns are not adequately addressed after a meeting between the applicant and the senior responsible officer.

Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?

Where an applicant qualifies for Type B or Type C leniency, reductions of its penalty are made at the discretion of the CMA. The key criterion for determining the level of a discount is the overall added value of the information, documents and evidence provided by an applicant. This will depend on:

  • the stage at which the applicant comes forward;
  • the information, documents and evidence already in the CMA’s possession; and
  • the probative value of the information, documents and evidence provided.

The CMA will also consider the overall level of cooperation provided. Recipients of Type B or Type C leniency may receive a reduction of up to 100% or 50% of a penalty respectively.

What benefits (if any) are available for employees and former employees of a company that seeks leniency?

See above.

Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?

Individuals can be granted immunity from criminal prosecution in the form of written notice issued by the CMA stating that, except in specified circumstances, no proceedings for a cartel offence of a specified description will be brought. The same conditions required for immunity and leniency must be satisfied.

Have there been any notable recent cases in which a leniency application was the subject of adjudication?

In three of its most recent cartel investigations into the supply of products to the furniture industry, the supply of steel water storage tanks and online sales of sport and entertainment merchandise concluded in August 2016, December 2016 and March 2017 respectively, the CMA granted complete immunity to one cartelist under its leniency policy and in each case reached settlement with the remaining parties. In addition to granting immunity to one cartelist in the water tanks cartel, the CMA granted one party Type C leniency and reduced its fine by 30% and another party a Type A immunity marker in relation to conduct it reported regarding a separate market and reduced its fine by 5%.

Criminal liability

Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?

See above.

Application procedure

What is the procedure for a leniency application?

An applicant’s adviser can approach the CMA on its behalf to ascertain whether Type A immunity is available on a no-names basis. To do this, he or she must have instructions to apply for Type A immunity if it is available and must confirm to the CMA that there is a concrete basis for a suspicion of cartel activity and that the undertaking has a genuine intention to confess.

To confirm the availability of immunity, the CMA requires sufficient information to determine whether there is a pre-existing civil or criminal investigation or a pre-existing applicant. If immunity is available, the adviser must identify the applicant which will receive a preliminary marker. Once the CMA receives a complete application package containing the information and evidence set out above, it will confirm the marker.

A similar approach may be made to obtain a marker for Type B immunity, although an undertaking is not required to make an immediate application if the CMA confirms that immunity is available. An applicant may also apply to obtain a marker in respect of Type B and Type C leniency. To receive a marker, the applicant must submit a complete application package to the CMA with information adding significant value to its investigation.

What is the typical timeframe for consideration of a leniency application?

There is no set amount of time between an applicant receiving a preliminary marker and the CMA confirming its marker and accepting its application once it receives a complete application package.

What information and evidence is required?

To apply for a preliminary marker, an applicant must disclose its identity and submit information concerning:

  • the type of arrangement;
  • affected product markets;
  • dates;
  • evidence uncovered so far;
  • names and locations of other involved undertakings and individuals; and
  • geographic scope.

In addition, for the CMA to confirm its marker, the applicant must submit:

  • a written or oral statement confirming and clarifying the information submitted to receive a preliminary marker;
  • all relevant documentary evidence uncovered so far and its provenance; and
  • the names of employees and directors who may give evidence.

What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?

The information and evidence submitted by an applicant to apply for leniency are not disclosed to other undertakings at the time of its application. However, in the course of its investigation, it may be necessary for the CMA to disclose information received from an applicant.

What level of cooperation is required from applicants?

All applicants for immunity and leniency have a duty to maintain continuous and complete cooperation throughout the CMA’s investigation and any subsequent proceedings by the CMA. This requires applicants to engage positively, proactively and in a timely manner with the CMA to assist it in efficiently and effectively detecting, investigating and taking enforcement action against cartel conduct.

What confidentiality protection is offered to applicants?

The CMA recognises the importance of confidentiality for applicants; accordingly, the identity of an applicant is not normally revealed to other undertakings until an SO has been issued – although there is a risk that undertakings may infer the identity of an applicant from information disclosed during the investigation.

Private litigants have been increasingly concerted in seeking to obtain access to leniency documents, including applications and evidence. The European Court of Justice in Pfleiderer AG v Bundeskartellamt held that, in the absence of EU law, it is for the national courts of EU member states to determine on the basis of national law and on a case-by-case basis whether to order the disclosure of leniency documents by balancing the need to ensure effective public enforcement with the need to ensure the effective exercise of the right to full compensation; this decision has subsequently been followed by the UK High Court. However, the EU Damages Directive, transposed into UK law by virtue of regulations which came into force in March 2017, provides for absolute protection from disclosure for corporate leniency statements and settlement submissions.

Can the company apply for a marker? If so, under which conditions?

See above in respect of applying for leniency.

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