On 30 June 2017 the Competition and Markets Authority (CMA) published a consultation document and draft information note inviting comments on proposed arrangements for the handling of leniency applications in the regulated sectors in the UK. In particular, the CMA proposes that it should act as the single port of call for all leniency applications in these sectors.
Concurrent competition powers and the leniency regime
Certain sectoral regulators1 have concurrent powers to enforce competition law in their respective markets alongside the CMA. This includes the power to impose financial penalties for conduct that infringes competition rules.2 Under the CMA’s guidance as to the appropriate amount of a penalty, the first cartel participant that comes forward with information on the illegal activity can apply for leniency and receive complete immunity from fines, with successive applicants eligible for up to a 50 per cent reduction. Individuals may also receive immunity from criminal prosecution and protection from disqualification orders.
Handling of leniency applications: current position
The general process for applying to the CMA for leniency and its approach to handling such applications is set out in its leniency guidance. However, the CMA notes that, to date, it has not published any specific guidance on the handling of leniency applications in the regulated sectors and that as a result there may be a risk of unpredictability for applicants and inconsistency between cases. Leniency applications in these sectors have operated on the basis of a ‘single queue system’. An applicant may make an application to any authority and, provided that the conditions for leniency are met, that application will secure its place in the leniency queue regardless of which authority then takes enforcement action.
Proposed changes to leniency concurrency arrangements
In order to streamline the process and provide certainty and consistency for businesses, the CMA proposes that all initial leniency enquiries and applications begin with the CMA. That is, whistleblowing companies – regardless of the sector they operate in – will have to approach the CMA in the first instance in order to secure their leniency marker and place in the queue. In the event that such an enquiry or application is made to a sectoral regulator, the regulator will immediately direct the applicant to the CMA. This process would cover both civil and criminal immunity.3
Whilst the CMA (in consultation with the relevant sectoral regulators) will be responsible for checking the availability of leniency and granting any provisional marker, the ultimate decision to grant (or withdraw) leniency will be made by the authority to which the case has been allocated in accordance with the Concurrency Regulations. The proposed single point of contact approach will therefore rely on close communication and cooperation between the CMA and the sectoral regulators. In particular, the CMA will need to liaise with the relevant regulators before granting particular types of leniency marker that require the applicant to be ‘first-in’ and/or for there to be no pre-existing investigation into the conduct concerned, in order to determine whether an investigation has already commenced. In addition, the CMA will maintain a single, central leniency register, whilst each sectoral regulator will also keep its own leniency register.
The deadline for responses to the consultation is 28 July 2017. Subject to the responses received, the CMA will subsequently publish a final version of the information note on the leniency concurrency arrangements.