This newsflash provides an insight into the most significant aspects of stopping an investigation by the Competition Council and recognition of a violation included in expected Competition Law amendments (Draft Law).

Making an administrative agreement and case termination by written undertaking

At present, the Competition Law allows an administrative agreement only to terminate court proceedings. The Draft Law will enable the Competition Council also to enter into administrative agreements in cases where the investigation has not been completed. Parties to an administrative agreement will be allowed to agree on such issues as application of a decreased fine, the alleged offender performing certain legal obligations and other issues where a case investigation can be terminated without a decision. An application can be filed with the Administrative Regional Court to review the compliance, validity, conclusion or correct performance of these agreements. In turn, an administrative agreement whereby the court proceedings have been stopped will be legally binding.

The written undertaking in the Competition Law is meant to close a matter before the investigation is finished. In the case of a written undertaking, the Competition Council adopts a decision that usually includes an undertaking by the market participant to perform certain legal obligations. In these cases the market participant does not pay a fine. Performance of legal obligations is monitored by the Competition Council. After adoption of the Draft Law, the Competition Council will be able to start compulsory enforcement if an alleged offender fails to perform its legal obligations.

Leniency programmes

The Draft Law is expected to include general regulation of so-called leniency programmes. This will set conditions where a market participant that provides information to the Competition Council about its involvement in a cartel will be entitled to exemption from (or a decreased) fine. At present, regulation is included only in Cabinet Regulations and is rarely applied in practice. When the general principles of leniency programmes are included in the law, market participants will have more assurance about their rights when reporting a competition law violation.

The Draft Law is expected to enable the Competition Council when deciding on a detected violation to approve or decline a market participant's application for exemption from (or decreased) fine. This means that the importance of information supplied as proof of violation will be assessed by the Competition Council only when all case facts and evidence are collected. This regulation ensures that market participants actively cooperate in providing as comprehensive information and proof as may be available.

The requirements set in the Draft Law as to use and disclosure of information obtained during a leniency programme are no less important. The Draft Law states a new principle that the Competition Council must use information obtained during a leniency programme solely within the framework of that specific matter. Thus, when reviewing claims for damages in court, the Competition Council will have no obligation to disclose information obtained during a leniency programme. Likewise, in a decision on case termination the Draft Law requires the Competition Council not to disclose the identity of a market participant that provided information during a leniency programme.

Summary and comments

The Draft Law, if adopted, will expand the authority of the Competition Council to terminate a case investigation by concluding an administrative agreement, also empowering the Competition Council to enter into such an agreement during case investigation.

Inclusion of the general principles in the Competition Law with regard to leniency programmes is expected to encourage market participants to report competition law violations within the scope of the leniency programme.

At present the Draft Law is being coordinated among ministries, and at the meeting of State Secretaries of 17 April it was decided to extend the Draft Law coordination term to 1 June this year. Therefore market participants have the opportunity to be involved in the initial stage of Draft Law development.