Cooperating parties

Immunity

Is there an immunity programme? If so, what are the basic elements of the programme? What is the importance of being ‘first in’ to cooperate?

The EC 2006 Notice on Immunity from fines and reduction of fines in cartel cases (the Leniency Notice) provides for a leniency mechanism under EU law.

To benefit from full immunity from fines (and softening of liability in damages claims), an undertaking must be the first to denounce the cartel and must provide evidence allowing the EC to ‘carry out a targeted inspection in connection with the alleged cartel; or find an infringement of article 81 EC [now 101 TFEU] in connection with the alleged cartel’ (paragraph 8). The undertaking must also cooperate with the EC throughout the procedure, and in particular should supply it with accurate information. In addition, the company must terminate its participation in the alleged cartel without delay. It must not have destroyed, falsified or concealed evidence of the cartel, nor have disclosed its intention to apply for leniency or the contents of its application (except to an NCA). Finally, a company may be deprived of immunity if it has forced one or more others to join or remain in the cartel.

In addition, the EC has introduced whistle-blowing mechanisms. In 2017, it put in place an online anonymous whistleblowing form allowing any individual to sound the alert about the existence of a cartel. Furthermore, Directive No. 2019/1937 on the protection of whistle-blowers, adopted in 2019, provides for the creation of reporting channels within companies and administrations, a hierarchy of internal and external communication channels, the protection of a large number of profiles (eg, employees, including civil servants, shareholders, volunteers, trainees) and measures to protect whistle-blowers from reprisals. Member states have until 17 December 2021 to transpose this Directive.

Subsequent cooperating parties

Is there a formal programme providing partial leniency for parties that cooperate after an immunity application has been made? If so, what are the basic elements of the programme? If not, to what extent can subsequent cooperating parties expect to receive favourable treatment?

Undertakings that do not qualify for full immunity may still be granted a reduction to their fine. They must provide evidence that has an ‘added value with respect to the evidence already in the Commission’s possession’ (ie, that strengthens by its nature or degree of precision the EC’s ability to establish the existence of the alleged cartel). In terms of cooperation, subsequent applicants must satisfy the same level of cooperation as the first-in. The reduction ranges from 30 per cent to 50 per cent for the second undertaking, 20 per cent to 30 per cent for the third and up to 20 per cent for the others. There is currently no ‘immunity plus’ nor ‘amnesty plus’ option.

Going in second

How is the second cooperating party treated? Is there an ‘immunity plus’ or ‘amnesty plus’ treatment available? If so, how does it operate?

Second cooperating parties must satisfy the same level of cooperation as the first-in. They may benefit from reductions in the fine ranging from 30 per cent to 50 per cent for the second undertaking, 20 per cent to 30 per cent for the third and up to 20 per cent for the others, provided that they bring additional compelling evidence with significant added value. There are no ‘immunity plus’ nor ‘amnesty plus’ treatments available under EU law.

Approaching the authorities

Are there deadlines for initiating or completing an application for immunity or partial leniency? Are markers available and what are the time limits and conditions applicable to them?

The leniency applicant should contact the Directorate-General of Competition (DG Competition) before the statement of objections has been issued. However, in practice, most leniency applications seeking immunity from a fine (which is only available to the first leniency applicant) are made either before the EC starts an investigation (in which case they form the basis for initiating an investigation) or upon the initiation of an investigation.

The undertaking must submit a formal application for immunity including relevant statements and evidence. According to the Leniency Notice, it can also present this information in hypothetical form, ‘in which case the undertaking must present a detailed descriptive list of the evidence it proposes to disclose at a later agreed date’ (paragraph 16).

Please note that the EC has set up a marker system ‘protecting an immunity applicant’s place in the queue for a period to be specified on a case-by-case basis to allow for the gathering of the necessary information and evidence’ (paragraph 15). The marker system is typically used during dawn raids or at the very beginning of an investigation, insofar as it allows the undertaking to file for leniency without having to immediately provide supporting evidence. If the undertaking provides all the documents within the deadline set by the EC, the information and evidence provided will be deemed to have been submitted on the date when the marker was granted.

Cooperation

What is the nature, level and timing of cooperation that is required or expected from an immunity applicant? Is there any difference in the requirements or expectations for subsequent cooperating parties that are seeking partial leniency?

All immunity applicants, regardless of their rank, must provide compelling evidence to the EC and fully cooperate with the EC’s investigators throughout the procedure. The EC will grant immunity from fines to the first leniency applicant, provided that it submits evidence and information which, in the EC’s view, will enable it to carry out a targeted inspection in connection with the alleged cartel or to find an infringement of article 101 TFEU. Any subsequent applicant must bring additional evidence with significant added value.

Applicants must also terminate their participation in the alleged cartel without delay, and refrain from disclosing their intention to apply for leniency or their application to anyone, except to an NCA.

Applicants that have destroyed, falsified or concealed evidence of the cartel, or forced one or more others to join or remain in the cartel, will not be eligible for leniency.

The ECJ recently confirmed that secondary leniency applicants are not entitled to any change of ranking should the antecedent applicant fail to comply with leniency requirements. It thus ruled that ‘neither the wording […] nor the logic of the 2006 Leniency Notice gives the second undertaking in the ranking […] the right to replace the first undertaking in that ranking […] on the ground that the first undertaking failed to observe the conditions laid down in point 12 of that notice’ (ECJ, 3 June 2021, Recyclex, C-563/19, paragraph 57).

Confidentiality

What confidentiality protection is afforded to the immunity applicant? Is the same level of confidentiality protection applicable to subsequent cooperating parties? What information will become public during the proceedings and when?

Information and documents communicated to the EC under the Leniency Notice are confidential. In practice, the following will be deemed confidential:

  • documents containing business secrets;
  • documents that would significantly harm a person or an undertaking if they were to be disclosed; and
  • internal documents of the EC or of NCAs, such as minutes of meetings with leniency applicants.

 

Any subsequent disclosure, as may be required by the proceedings, will be made in accordance with the rules relating to access to files (ie, after deletion or replacement of business secrets and other confidential information, as provided for by the Notice on the rules for access to the Commission file of 22 December 2005).

The Leniency Notice further provides that any written statement made to the EC in relation to the leniency application forms part of the EC’s file and may not, as such, be disclosed or used by the EC for any other purpose than the enforcement of article 101 TFEU. Therefore, they may not serve as evidence in matters of private enforcement.

Settlements

Does the investigating or prosecuting authority have the ability to enter into a plea bargain, settlement, deferred prosecution agreement (or non-prosecution agreement) or other binding resolution with a party to resolve liability and penalty for alleged cartel activity? What, if any, judicial or other oversight applies to such settlements?

Under the settlement procedure (governed by Regulation No. 622/2008 of 30 June 2008 on the conduct of settlement procedures in cartel cases and the EC’s settlement notice issued the same year), parties that admit having participated in a cartel infringement can obtain a 10 per cent reduction in the fine. The settlement procedure can be combined with a leniency application. Although it was originally scarcely used, with time the EC has adopted more and more decisions under this procedure, including hybrid cases where only some undertakings chose to settle while others opted for a full-blown defence.

In practice, while undertakings may express their interest for a settlement, the initiative rests with the EC, which has a discretionary power to decide whether a case is suitable or not for settlement. When it considers having recourse to the settlement procedure, the EC sends a letter to all parties informing them of its decision to consider a potential settlement and requesting them to express their interest in such a procedure.

Each party has a period of at least two weeks to decide whether or not to enter into the settlement procedure, without this implying any admission of having participated in an infringement or of being liable for it at this stage. If the party decides to enter into the settlement procedure, bilateral discussions open with the EC. Please note that a party that wishes to enter into such procedure and at the same time to apply for leniency must do both within the same deadline.

If the discussions are fruitful, the party will be granted at least 15 working days to submit a conditional settlement proposal to the EC, in which it acknowledges and explains in detail its responsibility in the implementation of the infringement. Upon the party’s request, the EC may allow those settlement submissions to be provided orally. In such cases, settlement submissions will be recorded and transcribed at the EC’s premises. In response, the EC sends a streamlined statement of objections endorsing the party’s proposal, to which the latter will have at least two weeks to reply, confirming that it reflects its submission.

Finally, the College of Commissioners of the EC adopts the settlement decision, which is generally a lighter version of a decision adopted pursuant to the normal procedure, in that it contains far fewer elements than a full probe decision. The EC can terminate the settlement procedure at any time and retains the right to change its position until the final decision is made.

Lastly, if the settlement procedure is not subject to the agreement of all of the undertakings involved, the EC is faced with a hybrid procedure, whereby certain undertakings settle while others decide to defend themselves. This was notably the case in the Trucks cartel case, where one participant to the cartel was prosecuted under the standard procedure (EC, 27 September 2017, Trucks, AT.39824), while the others settled with the EC (EC, 19 July 2016, Trucks, AT.39824). In 2017, the GCEU held that in such cases the EC must take all necessary measures to guarantee the presumption of innocence of the undertaking which has decided not to enter into a settlement. To do so, it must take the necessary measures when:

 

[It] is not in a position to determine the liability of the undertakings participating in the settlement without also taking a view on the participation in the infringement of the undertaking which has decided not to enter into a settlement [including] possible adoption on the same date of several decisions relating to all the undertakings concerned by the cartel. (GCEU, 10 November 2017, Icap, T–180/15).

Corporate defendant and employees

When immunity or partial leniency is granted to a corporate defendant, how will its current and former employees be treated?

The EC does not impose penalties on individuals; there is thus no such immunity.

Dealing with the enforcement agency

What are the practical steps for an immunity applicant or subsequent cooperating party in dealing with the enforcement agency?

The immunity applicant and subsequent leniency applicants must contact the DG Competition before the statement of objections has been issued and submit a formal application for leniency including relevant statements and evidence. In practice, information may first be presented in a hypothetical form, together with a list of evidence that the undertaking intends to disclose, and must then be completed by an agreed date (paragraph 16 of the Leniency Notice).

Immunity and leniency applicants must, without delay, terminate their participation in the alleged cartel and cooperate fully with the EC’s investigation team throughout the procedure. The ECJ recalled in 2014 that they must refrain from disclosing their application to the other cartel members, on pain of having their immunity removed (ECJ, 12 June 2014 Deltafina, C‑578/11).