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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?

Yes. The Commerce Commission has a cartel leniency policy and companies may benefit from immunity and leniency under that policy. The leniency policy has been an effective tool for breaking cartels based in New Zealand and for producing settlements in international cartel cases.

Leniency is available to the first party to report a cartel to the commission. Parties seeking leniency apply for a marker from the commission and are placed in a queue for leniency based on the order of their approaches. If the first party's conditional immunity is revoked (eg, because it failed to provide sufficient evidence of the cartel), the next person in the queue benefits from conditional immunity.

The practical effect of leniency is that a party will receive conditional immunity from prosecution by the commission. Leniency does not protect a party from any action taken by third parties.

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

Yes, leniency and conditional immunity can be declined or withdrawn if the party fails to cooperate in full with the Commerce Commission's investigation and court proceedings or ceases to provide information that it has to the commission. 

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

Persons in the queue after the first party to report get the benefit of cooperation. The benefit of cooperation is a discount on the penalty that the party may otherwise be ordered to pay. The extent of any discount is based on the nature of the party's cooperation and the value of the information that the party provides, rather than the order in which the parties offered to cooperate with the Commerce Commission.

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

Where the conduct may involve a parent company and a subsidiary, a leniency or cooperation agreement is likely to cover both of those parties. Directors, officers and employees of the parent company and subsidiary can usually rely on the leniency or cooperation agreement.

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

The Commerce Commission's cartel leniency policy applies to both companies and individuals. It largely operates in the same way for both.

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

Many of the cartel investigations that the Commerce Commission conducts are initiated by an immunity application from one of the cartel participants. Notable recent cases where an investigation included an application for leniency from one of the participants are:

  • Commerce Commission v Kuehne + Nagel International AG ([2014] NZHC 705) regarding air freight forwarding; and
  • Commerce Commission v Carter Holt Harvey ([2014] NZHC 531) regarding timber products.

Criminal liability

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

Cartel conduct is not a criminal offence in New Zealand.

Application procedure

What is the procedure for a leniency application?

At the outset, a party or its legal adviser usually applies for a marker to the party's position as a leniency applicant (or a cooperation applicant). 

The party then has a limited amount of time to perfect the marker by providing sufficient information on the nature of the cartel to the Commerce Commission. In practice, the party will provide as much information as the commission requires in order to secure conditional immunity and conclude a conditional immunity agreement.

The cartel leniency policy states that the party must admit to participating in a cartel and participating (either at present or in the past) in conduct in respect of the cartel that may breach the Commerce Act.

As part of meeting the conditions of immunity, the party must fully and continually cooperate with the commission's investigation. 

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

A leniency applicant usually has 28 days to perfect a marker.

What information and evidence is required?

To perfect a marker, the information and evidence that the applicant must provide to the commission generally includes:

  • details of the arrangements, including the goods and services affected by the cartel, the cartel participants and the duration and operation of the cartel;
  • supporting documents, such as statements outlining contact with competitors and any agreements reached, copies of emails and correspondence, telephone records and calendar entries;
  • details of the cartel arrangements given effect to in relation to New Zealand, if the cartel arrangements were entered into outside New Zealand;
  • details of any internal investigation of the cartel that the applicant may have undertaken or plans to undertake;
  • details of how information relating to the cartel has been stored; and
  • whether the applicant has applied for immunity in any other jurisdictions.

In practice, the Commerce Commission will often require an investigation and report by an independent party, such as the applicant's lawyers.

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

The Commerce Commission's leniency policy guidelines state that the commission will endeavour to protect confidential information provided by holders of a marker or conditional immunity to the fullest extent. However, the commission may test information provided with third parties.

What level of cooperation is required from applicants?

The immunity agreement signed by the applicant and the Commerce Commission generally includes a standard condition that the applicant must maintain continuous, complete and expeditious cooperation with the commission throughout the investigation and any civil proceedings.

Cooperation from parties that are not granted immunity is also rewarded. To qualify for the exercise of a lower level of enforcement action or the commission choosing to seek a lower penalty, the information provided must add significant value to the investigation. The earlier that it is provided, the more value the information will carry. The number of parties that seek to cooperate with the commission also affects the value of the information that they provide. The cooperation agreement signed by the cooperating party and the commission generally requires that the party must maintain continuous, complete and expeditious cooperation with it throughout the investigation and any civil proceedings.

If an individual or company has agreed to cooperate with the commission's investigation, but fails to do so, the commission can withdraw its indication that it would seek a lesser penalty for that individual or company.

What confidentiality protection is offered to applicants?

Entering a leniency or cooperation agreement is usually confidential, until a settlement is approved by a court. The Commerce Commission says that it takes "all practical steps to protect the identities of conditional immunity applicants and any confidential information they provide".

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

Yes. Companies, as well as individuals, can apply for a marker.

If a leniency applicant with a marker fails to provide the additional information in the timeframe agreed with the Commerce Commission, other cartel members that have applied for immunity in the meantime can be given the opportunity to provide the required information.

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