CHAPTER 3 - THE POTENTIAL SOLUTIONS FOR MAKING LENIENCY
3.4. Introduction of Amnesty/Leniency plus programme
Leniency Plus is a tool developed by the US Department of Justice, known in the US as
"Amnesty Plus". The Antitrust Division of the US DoJ considers the disclosure of antitrust violations related to cartel activity in another market as a mitigating factor when assessing the illegal conduct of a company in the affected market. For example, a large corporation engaged in various industries may be subject to prosecution for participating in a cartel in, for example, a trucking market, but since the company also manufactures trains and has information that would help uncover a cartel in the latter market, the company may be able to obtain mitigating circumstances for the truck cartel by cooperating and providing information on the train cartel. Since its introduction in 1999, the U.S. Amnesty Plus program has been considered a major success.79 In recent years, Amnesty Plus has been introduced in several additional jurisdictions building on its success in the United States. It was implemented by countries like Canada, Singapore or Switzerland. Moreover, some EU countries also decided to apply the programme in their jurisdictions.
Additionally, the Leniency Plus programme was introduced in several EU countries i.e.
Poland and Bulgaria. Unlike the United States, however, European countries have introduced it in a slightly different form. It is not compulsory but an optional element of leniency programme. This means that there is no formal obligation to participate in this programme and it is entirely up to the company whether it decides to take advantage of it, unlike in the
78 OECD Challenges and Co-Ordination of Leniency Programmes - Background Note by the Secretariat 5 June 2018
79 United States Department of Justice Antitrust Division, Status Report: An overview of Recent Developments In the Antitrust Division’s Criminal Enforcement Program, February 2004
31 United States where a company is required to participate in the leniency plus programme under penalty of law. In addition, the amount of fine reduction is predetermined, unlike in the U.S. where it is discretionary and depends on many factors. Also, in Poland and Bulgaria a firm can reap the 'plus' reward a number of times for the same fine.80
In the United States there is another institution that is closely associated with Amnesty Plus, namely Penalty Plus. This involves a company, with the cooperation of the Competition Authority, having to disclose its participation in another Cartel. Otherwise, if it is later disclosed, it may be considered negligent, which will be an additional aggravating factor.
Thus, failure to use Amnesty Plus could lead to serious consequences in the form of Penalty Plus.81 If the Commission wished to implement Leniency Plus into its legal order as an additional tool that could help more effectively deter potential cartels and assist in combating existing cartels, it would have to do so in a slightly different way. Implementing Penalty Plus in the European Union could be problematic. Leniency applicants would be required to provide full information about all their cartel activities, and would otherwise face much stiffer penalties if the cartel was later discovered. Such an obligation could be considered contrary to Article 6 ECHR as a violation of the right not to incriminate oneself.82
Accordingly, the introduction of the Leniency Plus programme in the European Union would have to involve some changes that would, first, adjust the programme to jurisdictions that do not provide for criminal sanctions, and second, the programme should be introduced as optional, rather than mandatory under the threat of Penalty Plus. Such a solution has already been in place for some time in Poland and Bulgaria, where the programme is a facultative option for leniency applicants and no penalty or additional aggravating circumstances are provided for its non-application.83 Additionally, in the United States the amount of penalty reduction is not specified and depends on many factors, which are quite discretionary. In Poland, on the other hand, the reduction is set at 30%, which certainly contributes to reducing any uncertainties that may discourage potential applicants.84
80 Martyniszyn, M, “Leniency (Amnesty) Plus: A Building Block or a Trojan Horse” p. 13-16
81 Ibid, p. 13-16
82 Riley, A, “The Modernisation of EU Anti-Cartel Enforcement: Will the Commission Grasp the Opportunity?
CEPS Special Report”
83 Martyniszyn, M, “Leniency (Amnesty) Plus: A Building Block or a Trojan Horse” p. 13-16
84 Dz.U.2021.0.275 t.j. - Ustawa z dnia 16 lutego 2007 r. o ochronie konkurencji i konsumentów, art. 113d (1),
32 Some scholars have been critical of the leniency plus programme. As per the deterrence function, which is essential to the leniency system but, as I indicated, is not the only one, the programme must be based on a credible threat of consequences that are severe enough to outweigh the advantages of engaging in a prohibited conduct for it to be effective.
In jurisdictions such as the EU, where only fines, no criminal penalties, are provided for competition law violations, Penalties should be equal to the expected profits from the infringement multiplied by the opposite of the likelihood that a fine will actually be issued.
Various commentators argue that fines currently imposed for antitrust violations are too low to secure optimal deterrence. If fine reductions under leniency programmes go beyond compensating for an increase in the likelihood of detection and a successful prosecution, deterrence may be further undermined.85
The average amount of fines that EU violators actually paid was cut by leniency by 45%, and some doctrine representatives claim that the EU leniency programme "appears over-generous".86 In view of the above, the introduction of additional reductions in fines, e.g. in the form of a leniency plus programme, may result in an excessive reduction in fines, which will in effect undermine the function of effective deterrence.
In my opinion, the argument that the penalty reduction is too high is justified, but it should be borne in mind that such a partial reduction for one member of the cartel may result in the discovery of a whole subsequent cartel, of which the commission or another competition authority might never have become aware. Moreover, it is important to remember that deterrence is not the only function of a leniency programme. Building mistrust among cartel members and creating a prisoner's dilemma are also key functions of this programme, and if a leniency plus programme is implemented, the uncertainty and mistrust on the part of cartel members will be extended not only to other cartel members, but also to all other companies that participate in other cartels related to the other members, creating a much larger group of entities that could potentially blow the whistle. For this reason, I believe that this programme could be successful in the EU and it would be worthwhile to implement it in the EU legal order.
85 Martyniszyn, M, “Leniency (Amnesty) Plus: A Building Block or a Trojan Horse” p. 9-10
86 Cento Veljanovski, 'Cartel Fines in Europe–Law, Practice and Deterrence' p. 75
33 CONCLUSIONS
In conclusion to my thoughts above, the leniency programme is an essential tool in Cartel investigations. It assists the Commission in identifying secret cartels and obtaining insider evidence of infringement. It has been in operation for many years in most jurisdictions and has helped to uncover a significant number of cartels around the world. In the European Union, it is the tool by which most cartel investigations have been initiated to date. Despite its great effectiveness since its introduction in the EU, a significant decrease in leniency applications can be observed in recent years, especially since the introduction of the Damages Directive, which has made it much easier to initiate private actions in EU countries.
There are many reasons why there is such a drop in applications, and while there are claims that it is not necessarily related to how the programme works and how it is regulated, statistics show that ambiguity surrounding its functioning and the fear of private damages are the main factors. In addition to the aforementioned fear of private lawsuits, the main disincentives to the use of a leniency programme may include globalization and inconsistent application of leniency programs across countries, uncertainty associated with other forms of agreements and less classic forms of cartels, uncertainty about the scope of the leniency notice for
"secret" cartels, risk of spillover effects, malfunctioning of the marker regime, and high administrative hurdles.
There are many ways to make it work better. It is true that the Commission has attempted to reduce the disincentive impact of private actions in the Damages Directive by limiting the applicant's liability and concealing leniency statements, but as I mentioned, these were not sufficient measures. The way that seems most appropriate to me would be to introduce subsidiary liability and, in parallel, the institution of Fair Funds, based on the US system, which would protect the applicant from private damages and would not violate the right to compensation of cartel victims.
As regards the uncertainties and technical problems of applying in a multi-jurisdictional system, the focus should be on better cooperation between competition authorities. In this matter, above all, the Authorities should try to avoid conflicting requirements by communicating with each other and agreeing on a common position. In addition, increased
34 cooperation from different Authorities in different jurisdictions, including coordination of deadlines and schedules for key tasks and witness interviews, at the request of the leniency applicant, so that applicants are not forced to choose which deadlines to meet, would be on the spot. Additionally, the Authorities should limit document requests to the most relevant documents and make greater use of predictive coding techniques that are used on the civil side of the Antitrust Division.
My final proposed solution would be to implement the U.S. Amnesty Plus programme, which would increase deterrence and help detect cartels more effectively. However, such implementation would have to involve some changes due to the difference in legal orders between the US and EU, for which we can use the experience of Poland and Bulgaria, which have introduced this programme into their legal systems, adapting it to European standards.
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