The rise and fall of leniency applications in Europe: What
is next?
Arlette Stalder
11213620
Thesis supervisor: dhr. prof. dr. mr. Rein Wesseling
LLM European Competition Law - Faculty of Law 2020-2021
Word count inc. footnotes: 143762
Table of contents
Introduction & methodology 4
Chapter Outline 5
Chapter 1 Conceptualising cartels and the rise of leniency applications in Europe 7
1.1 Conceptualising cartels 7
1.1.1 Legal definition of cartel: 7
1.1.2 The purposes of participating in a cartel and their economic impact 8
1.1.3 Challenges encountered by companies participating in a cartel 9
1.1.4 Prisoner’s dilemma 9
1.2. Development of leniency programme in Europe 11
1.2.1 Definition and rationale behind the leniency programme 11
1.2.2 The first attempt: Leniency Notice 1996 and its criteria 12
1.2.3 Leniency notice 2002: New elements for success 13
1.2.4 Leniency 2006: Additional elements for further success 15
1.3 Chapter conclusion 17
Chapter 2 The reasons behind the decline of Leniency applications 18
2.1 Elements that remain unchanged since the introduction of Leniency notice 2006 19
2.1.1 General uncertainties 19
2.1.2 Uncertainties surrounding less classic form of cartel 19
2.1.3 Uncertainties concerning the scope of the leniency notice 20
2.1.4 Uncertainties around the idea of ‘exchange of information’ 20
2.1.5 The discretionary marker regime 21
2.1.6 Critiques of the marker regime: wide discretion of the Commission 22
2.1.7 The risk of spillover effects 23
2.2 Elements that changed since the introduction of Leniency notice 2006 24
2.2.1 The risk of private damages 24
2.2.2 Risk and concern for immunity applicants since the introduction of damages claims 25
2.2.3 The challenges coming from multi-jurisdiction system 27
2.2.4 The Commission’s overreliance on the leniency programme 29
2.3 Chapter conclusion 30
Chapter 3 Suggestions for the future of the leniency programme 31
3.1 Suggestions for potential revision: 31
3.1.1 damages claim approach 31
3.1.2 Provision on the marker regime 32
3.1.3 Scope of the leniency programme 33
3.2 ECN+ Directive 34
3.3 Alternative enforcement tools 36
3.4 Broader considerations: balance between ex officio and reactive measure 37
Conclusion 39
3
Abstract
The current research traces the rise and the fall of leniency applications in Europe and explores the potential areas of improvement for the future of the policy. The introduction of the leniency programme drastically transformed the landscape of competition law. The Commission accessed new datasets which allowed them to prosecute cartels more effectively, whilst companies also have the option to provide information to the Commission in order to avoid significant fines. The policy was successful until approximately 2010, although the Commission is currently facing a decline in the number of leniency applications which could be detrimental to the European economy. This stems from combining factors which can be classified in different categories, such as factors permanently in the policy, factors that changed over the years and factors that are increasingly complex to categorise. The Commission is aware of this matter and adopted a proactive role to address the decline notably with the implementation of the ECN+ directive. This research explores the possibility to review aspects of the 2006 notice as well as changes that could be achieved in the competition law enforcement system.
4
Introduction & methodology
The introduction of the leniency programme in Europe has transformed the landscape of competition law.1 On the one hand, it offered the possibility for cartel participants to obtain fine immunity in exchange for exposing other cartel members and cooperating with the Commission. On the other hand, the creation of a leniency programme helped the European Commission (thereafter the Commission) to access an entirely new data set which was previously inaccessible. Hence the introduction of the leniency programme enhanced the Commission’s capability to dismantle cartels.2 A cartel is a group of two or more rival undertakings who decide to stop competing against each other and instead the companies cooperate to maximise their profits.3 The purpose of the leniency policy in Europe is to destabilise cartels in order to co-opt companies as informants. This method primarily targets less stable cartels that might already fear detection, thus increasing the likelihood of such cartels snitching. This regulatory device was initially introduced in 1996 and subsequently revised in 2002 and 2006 in order to improve its effectiveness. The programme has proved to be successful given the increasing amounts of cartels detected.4 The first version was mainly criticised for the lack of legal certainty and transparency offered to leniency candidates throughout the application process. Consequently the leniency notice 2002 brought further details and guaranteed higher fine reduction for informants and the leniency 2006 included a marker system to ensure an increased level of legal certainty to leniency applicants.5 It is evident that the leniency programme contributed to an increased detection of cartels, between 2001 and 2010, the Commission granted immunity to companies in 64 cases.6 Nevertheless, since 2010 approximately the amount of leniency applications has significantly decreased
1 Christopher Harding, Julian Joshua, Negotiating Guilt: Leniency and Breaking the Code of Silence in
Regulating Cartels in Europe, (2010) Oxford University Press. p.9-10
2 Wouter P. J. Wils, ‘The use of Leniency in EU Cartel Enforcement: An assessment after Twenty Years’ (2016)
World Competition <https://www.researchgate.net/publication/308984258> accessed 20 September 2020 p.12-13
3 Margaret C Levenstein, Valerie Y. Suslow, ‘What Determines Cartel Success?’ (2006) Vol.XLIV Journal of
economic literature <https://www.jstor.org/stable/30032296?seq=1#metadata_info_tab_contents> accessed 10 September p.43
4 Sari Suurnäk, Maria L. Tierno Centella, ‘The Commission adopts revised Leniency Notice to reward
companies that report hard-core cartels’ (2006) Competition Policy Newsletter
<https://ec.europa.eu/competition/publications/cpn/2007_1_7.pdf> accessed 10 November 2020 p.1
5 Commission notice 2006/C298/11 on the non-imposition or reduction of fines in cartel cases [2006] OJ C
298/17 Section B para 15
5 compared to previous years.7 According to the Global cartel enforcement report for 2018, only 4 decisions involved the leniency programme.8 This is considered as a serious issue for the Commission since the leniency programme is regarded as the most effective tool to combat cartel activity in Europe. If the effectiveness of the programme has reduced, it could cause serious damage to competition through increasing price or restraining supply which in turn cause serious harm to both the Union’s economy and consumers.9 Given the transformative role that the leniency programme has had on the landscape of competition law, and its current decline, this research aims to trace the rise and the fall of leniency applications in Europe. Following this the primary aim is to explore possible improvements that could be achieved within the leniency notice 2006 and propose potential adjustments in the system of competition law enforcement. This research is conducted from a classic legal approach, consisting of describing and analysing the legal concept, which in this case is the leniency programme. It has the purpose to inform stakeholders including academics and legal professionals concerning the current state of the leniency programme and finally influence the ability of competition authorities or legal professionals to adjust their own actions in line with the law. This research traces the development of the leniency programme in Europe and discusses the success of this policy in dismantling cartels. This research also investigates the reasons behind the decline and explores how the leniency notice could be ameliorated in the future. This research is not based solely on legal sources and incorporates economic considerations such as insight taken from European primary documents and other secondary sources.
Chapter Outline
The first chapter focuses on the rise and success of the leniency programme in Europe. It explains the differing concepts such as cartel, the prisoner dilemma and finally explains the development of the leniency notice since its introduction in 1996. It demonstrates how the leniency notice became an effective tool between 1996 and 2010 with regards to dismantling cartels and protecting the European economy. Conversely, the second chapter analyses the decline of leniency applications in Europe and presents various reasons for the decline. These
7 Johan Ysewyn, Siobhan Kahmann, ‘The decline and fall of the leniency programme in Europe’ (2018) N°
1-2018 Concurrences Review <https://awards.concurrences.com/en/awards/2019/academic-articles/the-decline-and-fall-of-the-leniency-programme-in-europe > accessed 11 May 2020
8 Allen & Overy, Global cartel enforcement report 2019 p.8
9 Mario Monti, ‘Fighting Cartels Why and How? Why should we be concerned with cartels and collusive
behaviour?’ (3rd Nordic Competition Policy Conference, Stockholm 2000)
6 include the introduction of the damages claim, uncertainties surrounding the concept of cartels, and consequently distinguishing two distinct categories of factors. The first category includes features that remain unchanged since the revised leniency programme in 2006, such as the uncertainties surrounding the concept of cartel, the risk of spillover effect, and the discretionary marker system. The second category then gathers the features that have changed between 2006 and today such as the introduction of the damages directive and the concerns regarding multi-jurisdiction inconsistencies, as highlighted in the 2016 case DHL italia. Chapter two also argues that the Commission overly relied on the leniency programme as an enforcement tool for dismantling cartels, which in turn reduced its effectiveness. Finally, cartel organisations may have evolved over time and their appeal to the leniency policy may have coincidently transformed or at the very least, a new form of cartel has emerged. Chapter 2 concludes that the decline stems from two categories of factors, including those that were permanently a part of the leniency notice, as well as more contemporary factors such as the introduction of the damages directive, which directly coincide with the programme's decline. Chapter 3 explores the possibility to revise the leniency notice 2006 and further suggests that certain provisions, including the scope of the leniency notice and the marker system, as well as the provision on damages could be reviewed. Subsequently chapter 3 discusses what has been achieved so far with the introduction of the ECN+ directive and discusses alternative methods of enforcement available to prosecute cartels such as ex officio methods.
7
Chapter 1 Conceptualising cartels and the rise of leniency applications in
Europe
The Leniency programme became a prominent feature of competition law enforcement in the late 1990s in Europe.10 In order to comprehend the success of the leniency programme as an enforcement tool, it is first necessary to establish the concept of cartel. This will be achieved both from a legal perspective but also more generally to understand the purpose of cartels, the ways in which they function, their impact on the European economy and finally their instability especially since the introduction of the leniency programme. Once this has been established the focus will shift to the development of the leniency programme in order to understand how it became a successful enforcement tool in regulating competition for the european Commission.
1.1 Conceptualising cartels
1.1.1 Legal definition of cartel:
The definition of cartel is not as clear as it seems. From a legal perspective, Cartel is generally associated with the term ‘agreement’ between undertakings and is strictly prohibited under Article 101 of the Treaty on the Functioning of the European Union (thereafter TFEU).11 The European competition law framework strictly prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States, and which effect or objectivise the prevention, restriction or distortion of competition within the common market.12 The idea of agreement or concerted practice between the participants' companies was defined in the case Bayer v Commission. The idea behind the concept agreement ‘centres around the existence of a concurrence of wills between at least two parties, the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention.’13 There is not an exhaustive list of what behaviour constitutes an agreement, however a broad interpretation of the notion has been adopted by the Court as it encompasses any form of collaboration between undertakings which
10 Christopher Harding, Negotiating Guilt: Leniency and Breaking the Code of Silence. p. 9-10 11 Consolidated version of the Treaty on the Functioning of the European Union [2012] OJ C 3266 12 Ibid Article 101
8 affect competition. However it is only in Directive 2014/104/EU that the term cartel was officially defined.14 According to Article 2(14) cartel is:
an agreement or concerted practice between two or more competitors aimed at coordinating their competitive behaviour on the market or influencing the relevant parameters of competition through practices such as but not limited to, the fixing or coordination of purchase or selling prices or other trading conditions, including in relation to intellectual property rights, the allocation of production or sales quotas, the sharing of markets and customers, restrictions of imports or exports or anti-competitive actions against other competitors.15
1.1.2 The purposes of participating in a cartel and their economic impact
The purpose of participating in a cartel is to maximise its profits, by limiting competition.16 Profit maximisation can be achieved in different ways: cartel participants may agree on prices, customer allocation, territory allocation, market share and division of profits, among others. The cartel participants adopt a strategy to restrain the outputs and increase prices, to the price that a monopolist would set in order to reach profit maximisation for all cartel members.17 According to the European Commissioner Mario Monti ‘cartels are cancers on the open market economy, which form the very basis of our Community.’18 For this reason, competition authorities prosecute cartels as they seriously affect the economy and foster unfair competition. This occurs for instance, when companies decide to raise their price together (i.e. price fixing) instead of the price being set by the market laws (i.e. supply and demand rule). Therefore, disturbing normal market conditions of competition and increasing the price for end consumers. It also harms the European industry as competition among european companies is reduced by the formation of cartels. By reducing competitiveness, companies avoid the incentives that would normally promote innovation in terms of product development or amelioration of their
14 Council and Parliament Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for
damages under national law for infringements of the competition law provisions of the Member States of the EU [2014] OJ L 349/1 Article 2(14)
15 Ibid
16 Margaret C Levenstein, and Valerie Y. Suslow. ‘What Determines Cartel Success?’ (2006) Vol.XLIV Journal
of economic literature, <https://www.jstor.org/stable/30032296?seq=1#metadata_info_tab_contents> accessed 10 September p.45
17 Ibid p.45
9 production processes.19 For these reasons cartel practices are strictly prohibited by EU law, and cartel participants are severely condemned under European competition law. For instance, in 2016 the European Commission caught MAN, Volvo/Renault, Daimler, DAF and Iveco in violation of Article 101 TFEU.20 These companies colluded for 14 years on truck pricing. The Commission thus imposed a fine of 2.93 billion euros, which amounted to the largest fine ever given and MAN avoided the penalty as it informed the competition authorities of the cartel's existence.
1.1.3 Challenges encountered by companies participating in a cartel
Although participating in a cartel might be appealing in terms of profit, cartels remain internally unstable organisations which are confronted by numerous challenges.21 The main risk for cartel participants, especially since the introduction of the leniency programme is to be betrayed by another company. Thus every company participating in the cartel must be able to develop efficient strategies to generate sufficient gains to deter members from cheating. Secondly, cartel members must be aware of potential entry to the market. When cartel strategies are successfully monitored, the industry in which the cartel is operating may become attractive. This could attract potential outsider entrants, which could eventually become a threat for the collusion.22 Finally cartel participants must be aware of the evolving economic environment. They must be consistent and capable to find effective colluding strategies in a collective manner, hence cartels need to have a flexible organisational structure which can adapt to a dynamic environment.23 Therefore participating in a cartel is not necessarily an obvious decision considering the difficulty of maintaining stable collusion and the uncertainty concerning its success.
1.1.4 Prisoner’s dilemma
Considering the instability and the challenges encountered by cartels, whistleblowing might be a solution for companies. The prisoner’s dilemma game theory illustrates the position in which cartel participants find themselves when debating whether to cooperate with the competition
19 Commission notice 96/C207/04 on the non-imposition or reduction of fines in cartel cases [1996] OJ C207
para 1
20 The European Commission Presscorner, ‘Antitrust: Commission fines truck producers € 2.93 billion for
participating in a cartel’, (2016) <https://ec.europa.eu/commission/presscorner/detail/en/IP_16_2582> accessed 10 September 2020
21 Christopher Harding, Negotiating Guilt: Leniency and Breaking the Code of Silence. p.2-3 22 Margaret Levenstein, ‘What determines Cartel Success?’, p.45
10 authorities or remain silent. For example, undertaking A and B are involved in a cartel and are suspected to be detected by the Commission. Both parties hope for the optimal outcome which is the smallest fine as it concerns EU competition law and the EU does not have criminal competence. Each undertaking has to decide without knowing the other party’s decision. Undertakings however are aware of their options. If both A and B confess and turn each other in, they will serve 3 months (1). If both parties remain silent, both will go to jail for 1 month (2). If undertaking A confesses and betrays B, A is free and B serves 1 year in jail (3). If undertaking B confesses and betrays A, B is free and A is condemned to 1 year.24
Both undertakings aim to reach the best possible outcome given that they are not aware of what other players are doing (i.e. Nash equilibrium). Undertaking A is not certain of what B will do. If B confesses, A should replicate. If B is silent, the best option for A is to confess. Similar for B, if A confesses B should also confess. If A remains silent it is also in B’s advantage to confess. Therefore the dominant strategy for both A and B is to confess and whistleblow. The ideal situation would be if A or B confesses and the other remains silent to be completely free. This represents the dynamic in a cartel and emphasises that while there is an incentive for undertakings to collude and remain silent (they would only get 1 month of jail) there is also an incentive to break silence and use the leniency programme as there is the possibility to escape significant fine.25
24 Tine Carmeliet, ‘How lenient is the European leniency system? An overview of the current (dis)incentives to
blow the whistle’ (2011-2012) Jura Falconis Jg. 48
<https://www.law.kuleuven.be/apps/jura/public/art/48n3/carmeliet.pdf> accessd 20 September 2020 p.465
11
1.2. Development of leniency programme in Europe
1.2.1 Definition and rationale behind the leniency programme
The first leniency programme was adopted in 1996 to help the Commission in destabilising cartels and to prosecute them effectively.26 The European Commission declared that it was in the Community’s interest (i.e. consumers and citizens) to grant lenient treatment to cartel members who were willing to cooperate. The detection and termination of cartel activity became more important than granting a fine to the party cooperating.27 According to the Commission Notice on cooperation within the Network of Competition authorities, leniency programmes must be understood:
as all programmes including the Commission’s programme which offer either full immunity or significant reduction in the penalties which would otherwise have been imposed on a participant in a cartel, in exchange for the freely volunteered disclosure of information on the cartel which satisfies specific criteria prior to or during the investigative stage of the case.28
The rationale behind all leniency policies including the leniency notice is to create an effect of deterrence and desistance.29 Deterrence concerning the prevention of companies entering cartel activity whilst desistance means encouraging companies that are already part of the cartel to step away. The Commission exploits the tension among cartels with the leniency programme to create a climate of uncertainty.30 Hence the leniency policy mainly targets secret cartels (i.e. cartel that are arduous to detect) that are already unstable or on the verge of detection.
Besides destabilising cartels, the Commission must also consider the companies’ interests by guaranteeing a certain degree of legal certainty and predictability. Legal certainty in this context must be understood as offering a genuine opportunity for companies to obtain immunity by informing leniency candidates in a transparent manner throughout the whole
26 Wouter P. J. Wils, The use of Leniency in EU Cartel Enforcement, p.12-14
27 Commission notice 96/C207/04 on the non-imposition or reduction of fines in cartel cases [1996] OJ C207
para 2-5
28 Commission notice (2004/C 101/03) on cooperation within the Network of Competition authorities [2004] OJ
C 101/43 footnote 14 in para 37
29OECD, Roundtable on ex officio cartel investigation and the use of screens to detect cartels,
DAF/COMP(2013)14 p.6
12 process, whereas predictability concerns the degree of reassurance offered in regards to where companies stand in the process and how likely they would receive immunity. The leniency notice must therefore be balanced between creating deterrence but also providing a certain degree of legal certainty to be optimally effective.
From a more general point of view the leniency programme can be classified as a ‘reactive’ detection instrument as it relies on third parties informing the competition authorities about the cartel infringement.31 Reactive methods are opposed to ‘proactive’ detection tools which relate to competition authorities proactively seeking out suspicious conduct by screening markets and behaviour. The advantage of reactive detection tools is that the Commission can access a new set of data that would not be available without the cooperation of third parties.32 Ideally the Commission should rely on both methods to ensure an effective enforcement system.33
As mentioned previously the leniency notice encountered two revisions, one in 2002 and another in 2006, with the latter still in use. Interestingly the Commission has discovered a period of success and a period of decline with the same document. This section focuses on the successful period, presenting the different criteria to obtain immunity and how these have transformed over the years. It highlights what elements of the notice changed in the revised leniency notice and what features remained the same.
1.2.2 The first attempt: Leniency Notice 1996 and its criteria
The first European leniency notice was introduced in 1996 and established five criteria that must be fulfilled to obtain immunity from fines. First the company has to report the cartel activity to the Commission. The cartel activity must be reported prior to the commencement of the Commission’s investigation and the Commission shall not already possess sufficient information about the cartel reported. Second the company must be the first to inform the Commission and third, must terminate its involvement in the cartel. Fourth, the company provides the Commission with all relevant information and all evidence available and commits to cooperate the whole time of investigation with the Commission. Finally the company must not be in a position where it has obliged another company to participate in the cartel nor has
31 OECD, Roundtable on ex officio cartel investigation and the use of screens to detect cartels,
DAF/COMP(2013)14 p.6
32 Wouter P. J. Wils, The use of Leniency in EU Cartel Enforcement, p.12-13 33 The proactive method will be discussed in chapter 3 of this research
13 initiated the cartel. If the company fulfills every criterion, the company can receive a fine reduction of at least 75 percent or even benefit from total immunity.34 These five criteria form the basis for the following notices. While there are some additional features that will be added, no drastic changes occurred in notice 2002 or 2006. The 1996 notice is relatively short and the text of the notice remains rather vague, for example in section B, ‘an instigator’ or an undertaking that ‘played a determining role in the illegal activity’ will not grant leniency or immunity.35 Notion such as ‘a determining role’ is not further defined which leaves room for interpretation and can create confusion for leniency candidates. In the same line of reasoning the notice states that the applicant must be the ‘first to adduce decisive evidence of the cartel’s existence’36 but the Commission does not inform the applicants on whether they are the first nor if the evidence provided are relevant for the investigation. Hence the degree of predictability provided to the applicants is rather limited. However the Commission reported applying the leniency notice in 16 decisions and that it significantly improved its anti-cartel activity.37 The Commission further states that it was genuinely favourable for companies who apply for leniency as they obtained a significant reduction. This is illustrated by the total amount of fine imposed among these 16 cases which amounted to 2 240 million and the overall reduction obtained by the leniency applicants was 1 400 million.38 The notice requires certain clarifications to provide more legal certainty and predictability to leniency candidates but it is already a significant improvement for competition law enforcement as it introduced a new method of detection.
1.2.3 Leniency notice 2002: New elements for success
The commissioner at the time, Mario Monti recognised that the 1996 notice played an important role in dismantling and prosecuting secret cartels in the last five years, however he claimed that the introduction of a revised notice would create even greater incentives for companies to denounce cartels.39 Since the introduction of the 2002 Notice the Commission
34 Commission notice 96/C207/04 on the non-imposition or reduction of fines in cartel cases [1996] OJ C207
p.2
35 Ibid Section B
36 Commission notice 96/C207/04 on the non-imposition or reduction of fines in cartel cases [1996] OJ C207
Section B(b)
37 F. Arbault, F. Peiró, ‘The Commission’s new notice on immunity and reduction of fines in cartel cases:
building on success’, EC Competition Policy Newsletter (2002)
<https://ec.europa.eu/competition/publications/cpn/2002_2_15.pdf> accessed 20 September 2020 p.19-21
38 Ibid p.19-21
39 The Commission press corner, ‘Commission adopts new leniency policy for companies which give
information on cartels’ (2002) <https://ec.europa.eu/commission/presscorner/detail/en/IP_02_247> accessed 05 December 2020
14 has received an increased amount of applications. The Commission received 80 applications for immunity and 79 for a fine reduction.40 This increase in the use of leniency programmes in Europe stemmed from different modifications achieved in the notice. The first change concerns the conditions to obtain immunity. Undertakings participating in a cartel now has two ways to be entitled for immunity, the company has to either provide evidence enabling the Commission to start the investigation (Section A (8)(a)) or if the Commission already initiated the procedure, the company is required to supply additional evidence which would allow the authorities to prove the infringement of Article 101TFEU (Section A(8)(b)).41 There are thus two stages where a company can crucially help the Commission, either before the investigation starts or once the cartel is detected but the Commission needs additional evidence to prove the infringement of Article 101TFEU. The rest of the criteria that need to be fulfilled to obtain immunity remain unchanged from the previous notice (i.e. fully cooperate on a continuous basis, end their involvement in the cartel and dp not coerce or influence other undertakings to participate in the cartel.) What differs from the 1996 Notice relates to the fact that previously the company was required to provide ‘decisive’ evidence to the Commission and excluded companies that played a determining role or were an instigator in the collusion.42 The term ‘decisive’ as well as the phrase ‘playing a determining role’ generated uncertainty as it was open to interpretation. Therefore this change decreased the risk of legal uncertainty.43 Furthermore, the Commission also expressed their intention to institute more transparency in the leniency programme. To meet this target the Commission decided to send a written letter to applicants stating that immunity would be granted if they meet the conditions articulated in the notice.44 In regards to the possibility of fine reduction, the 2002 leniency notice brought further clarifications as to how the subsequent applicants should be dealt with. It indicates that fine reduction should reflect the undertaking's contribution to the investigation both in terms of quality and timing devoted.45 Applicants that are entitled to fine reduction will also receive a confirmation letter from the Commission. Overall the modifications achieved for the 2002
40 Bertus Van Barlingen, Marc Barennes, ‘The European Commission’s 2002 Leniency Notice in practice’
(2005) EC Competition Publications <https://ec.europa.eu/competition/publications/cpn/2005_3_6.pdf> accessed 20 October 2020
41 F. Arbault, ‘The Commission’s new notice on immunity’, p.20
42 The Commission press corner, ‘Commission adopts new leniency policy for companies which give
information on cartels’ (2002) <https://ec.europa.eu/commission/presscorner/detail/en/IP_02_247> accessed 05 December 2020
43 Ibid 44 Ibid
45 Commission notice 2002/C45/03 on the non-imposition or reduction of fines in cartel cases [2002] OJ C 45/3
15 notice increased the level of legal certainty and brought further transparency and consequently incentivised companies to blow the whistle.
1.2.4 Leniency 2006: Additional elements for further success
Four years later the Commission took further steps to combat anti cartel activity by improving the effectiveness of the leniency policy.46 The leniency notice 2006 introduced a marker system, which clarified information the companies need to provide to the Commission to obtain immunity and created a procedure to protect corporate statements. These modifications provided increased guidance to companies while rendering the programme more attractive.
Interestingly the notice was implemented shortly after the creation of the parallel system of competences by Regulation 1/2003.47 The implementation of a system of parallel competence was a turning point for the EU as it completely modernised and reformed the European competition law enforcement. The new system divided competition law issues in an efficient and consistent manner and corresponded with the current EU landscape.48 Given the EU’s enlargement and increased globalisation, the EU had to modify its system by reaching out further and becoming capable of combating cross border cartel. For these reasons Regulation 1/2003 established the network of European competition authorities (thereafter ECN). The ECN is composed by the Commission and the competition authorities of the member states. Together they form a system of parallel competence where national competition authorities remain independent from each other but can cooperate between them or in parallel with the Commission. This means that cartel members must apply in more than one competition authority if the cartel concerns multiple member states (i.e. companies can apply to any national competition authorities concerned and the Commission).
The ECN adopted the model leniency programme to enhance the effectiveness of the leniency programme and simplify the procedure for companies, in the case of multiple filings.49 In this model ECN attempts to harmonise the main elements of leniency policies such as the scope,
46 The European Commission Presscorner,’Competition: Commission adopts revised Leniency Notice to reward
companies that report cartels’ (2006) <https://ec.europa.eu/commission/presscorner/detail/en/IP_06_1705> accessed 05 December 2020
47 Council Regulation (EC) 1/2003 of 16 December 2002 on the implementation of the rules on competition laid
down in Article 81 and 82 of the Treaty [2003] OJ L 1/1 Article 5
48 The European Commission Presscorner, ‘Competition: the European Competition Network launches a Model
Leniency Programme - frequently asked questions’ (2006)
<https://ec.europa.eu/commission/presscorner/detail/en/MEMO_06_356> accessed 20 October 2020
16 the exclusion of certain applicants, conditions, procedure and thresholds. The purpose of the model is two fold: to ensure a certain degree of convergence between member states and to encourage companies to make use of the leniency programmes. The model leniency programme is not a legally binding document and the system remained decentralised.50 However the provisions of 2006 leniency notice are in line with the ECN Model Leniency programme.51
The 2006 leniency provides an increased level of guidance to companies with regards to the conditions and the procedure. For instance, Section A states explicitly what evidence the applicant must submit to qualify for immunity. Contrary to the 2002 notice, provision 12 highlights in a clear manner the duty of the applicant when cooperating with the competition authorities. Companies must collaborate in a genuine and continuous manner, not falsify or conceal information.52 There is also now the possibility of remaining in the cartel if the CA requests it. The main innovative feature of the 2006 leniency notice is the marker system set up to deal with multiple filings in different jurisdictions. According to provision 15 ‘the Commission may grant a marker protecting an immunity applicant’s place in the queue for a period in order to allow for the gathering of the necessary information and evidence.’53 If the company is not yet ready with all evidence, they can still apply for immunity. To be eligible, ‘the company must provide the Commission with information concerning its name and address, the parties to the alleged cartel, the affected products and territories and an estimation of the duration of the cartel activities and the nature of the conduct. The applicant must also inform the Commission on other past or potential future leniency applications to other authorities to justify its request for marker.’54 Furthermore the 2006 notice clarifies the notion of ‘added value.’ In provision 25 ‘added value refers to the extent to which the evidence provided strengthen, by its very nature or its level of details, the Commission's abilities to prove the alleged cartels.’55 By establishing a clearer definition it increases the level of legal certainty provided to companies. Finally, the 2006 notice provides some reassurance to leniency applicants concerning the risk of civil litigation and states that companies shall not be
50 Ibid p.1
51 The European Commission Presscorner, ‘Competition: Commission and other ECN members co-operate in
use of leniency to fight cross border cartels’ (2006)
<https://ec.europa.eu/commission/presscorner/detail/en/IP_06_1288> accessed 20 October 2020
52 Commission notice 2006/C298/11 on the non-imposition or reduction of fines in cartel cases [2006] OJ C
298/17
53 Ibid para 15 54 Ibid para 15 55 Ibid para 25
17 discouraged to apply for immunity because of the possibility of being privately prosecuted for damages. The Commission considers that the effectiveness of the Leniency programme partly depends on the protection corporate statement and thus has developed a procedure to protect them.56
The revised version of the leniency notice has helped the CA to dismantle further cartels.57 The 2006 leniency notice is still utilised today and was amended in 2015, to grant further protection to corporate statements. The information they contain can only be used for the purposes of judicial or administrative proceedings for the application of the union competition rules.’58
1.3 Chapter conclusion
The introduction of the leniency programme in Europe played a crucial role in cartel law enforcement, which enabled the Commission to prosecute an increasing number of cartels. The Commission now has access to companies’ data which can legally prove the infringement of Article 101TFEU.59 This enables the Commission to be quicker at collecting evidence and providing sanctions, while simultaneously saving resources. Overall the Commission is increasingly accurate in their analyses which entitles them to impose larger fines.60 The possibility to impose significant fines is definitely an incentive for companies to utilise the leniency programme.61 A well-designed leniency programme complicates cartel organisation and perturbs collusive strategies which creates a climate of fear among these organisations.62 The 1996 notice failed to provide sufficient predictability for applicants as it did not provide automatic immunity. The 2002 notice focused on further incentivising companies to denounce cartel behaviour. The criteria to obtain immunity became more clear and more predictability was offered to candidates. For instance, applicants receive a written letter stating that
56 Commission notice 2006/C298/11 on the non-imposition or reduction of fines in cartel cases [2006] OJ C
298/17 para 31-33
57 Wouter P. J. Wils, The use of Leniency in EU Cartel Enforcement, p.9
58 Commission communication 2015/C256/01 Amendments to the Commission Notice on Immunity from fines
and reduction of fines in cartel cases [2015] OJ C256
59 Wouter P. J. Wils, The use of Leniency in EU Cartel Enforcement, p.12-13 60 Ibid p.14
61 OECD, ‘Using Leniency to Fight Hard Core Cartels’ (2001)
<http://www.oecd.org/daf/competition/1890449.pdf> accessed 20 October 2020 p.1
18 conditions would be granted if they meet the conditions articulated in the notice.63 The 2006 notice implemented a marker system to secure the applicants position in the race for immunity and introduced a provision to protect corporate statements. The leniency programme was revised twice and continuously introduced new features to improve its effectiveness. This highlights the responsiveness and the commitment of the Commission to enhance the success of the leniency notice. The leniency programme promoted the breakdown of multiple cartels at an early stage and might also have played a role in preventing the formation of cartels as it created fear and instability.64 Consequently the leniency programme appears to be a success benefitting both the Commission and the companies.
Chapter 2 The reasons behind the decline of Leniency applications
The first chapter described the operations of cartels and discussed the evolution of the leniency policy in dismantling cartels. The leniency programme was a success until approximately 2010 however post 2010 the use of leniency applications significantly decreased.65 The decrease in leniency applications made by companies is not completely acknowledged by the competition authorities and thus there is increased difficulty to find sources concerning the decline. Nevertheless based on the global competition reviews, the number of leniency applications has reduced by almost 50 percent in the last few years.66 The decrease in leniency applications can have multiple explanations. For instance, it could be devised that there are currently more advantages of being part of a cartel and that the leniency programme no longer fulfils the cartels participants’ expectations. However the decline does not stem from one reason but rather the result of a combination of different factors, such as increasing exposure to civil damages, uncertainty stemming from the parallel system of competence introduced by ECN, uncertainty over the concept of cartels and perhaps the Commission’s over reliance on the programme. Interestingly the decrease of leniency application only became visible around 2010, the leniency notice did not change since 2006. Therefore this chapter is divided in two distinct categories. The first category includes features that remained unchanged in the leniency programme (i.e. since 2006) including the uncertainties surrounding the concept of cartel, the risk of spillover effect, and the discretionary marker system. The second category gathers the
63 The Commission Presscorner, ‘Commission adopts new leniency policy for companies which give
information on cartels’ (2002) <https://ec.europa.eu/commission/presscorner/detail/en/IP_02_247> accessed 05 December 2020
64 Wouter P. J. Wils, The use of Leniency in EU Cartel Enforcement, p.14 65 Ysewyn, The decline and fall of the leniency programme, p.2
19 features that have changed between 2006 and today, including the introduction of the damages directive and the concerns regarding multi-jurisdiction inconsistencies, as highlighted in the 2016 case DHL italia.
2.1 Elements that remain unchanged since the introduction
of Leniency notice 2006
2.1.1 General uncertainties
Legal certainty is the core element of the leniency programme because it is required to guarantee a certain degree of assurance to leniency applicants to keep them incentivised. Nevertheless the system cannot be too lenient in this regard and must create a deterrent effect to remain effective while providing a minimum of predictability and certainty to applicants. This equilibrium is complex to maintain since both parties have conflicting interests. While each leniency notice revision (i.e. 2002 and 2006) brought enhanced clarity including legal predictability, uncertainties still remain. Uncertainty is not a direct cause of the decline in leniency applications, however a higher degree of certainty definitely plays a role in incentivising the cartel members to apply for immunity. Increased certainty reassures the cartel members and provides them with predictability, and in turn if the company does not feel this degree of certainty, they are less likely to apply for immunity.
2.1.2 Uncertainties surrounding less classic form of cartel
There is some uncertainty regarding the less classic forms of cartel. One example being the cases of hub-and-spoke arrangements, which represent a subtle form of collusion that are not always clear and transparent ‘A hub-and-spoke arrangement are cartels that are not coordinated through direct exchanges between the horizontal competitors but through indirect exchanges via a vertically related supplier or retailer.67 Such as the case of Estonia – Vodka cartel where four retailers in the country agreed to increase the retail price of vodkas to a specific minimum price, however the retailers did not communicate directly, instead the retailers exchanged information through the supplier.68 This type of arrangement broadened the classic definition
of cartel and highlights the fact that the scope of the leniency programme excludes less classic
67 OECD, Roundtable on Hub-and-Spoke Arrangement - Background Note, DAF/COMP(2019)14 p.2
20 forms of cartel. It complicates the situation for cartel members as they do not always know whether they fall within the scope of the cartel and whether they can use the leniency notice.69 Therefore for less classic cartel formations it may be in the companies’ interest to allow the authorities to carry out their investigation and not cooperate, as cooperation is not always a guarantee for leniency.70
2.1.3 Uncertainties concerning the scope of the leniency notice
The scope of the leniency notice has been established in the 2006 Notice which ‘sets out the framework for rewarding cooperation in the Commission investigation by undertakings which are, or have been party to secret cartels affecting the Community.’71 The use of the term ‘secret’ aims at limiting leniency applications to those companies that are part of cartels that are arduous to detect, meaning that agreements between companies that are already public do not fall within the scope of the EU leniency notice. Therefore implying that less companies participating in cartels can utilise the leniency programme. The EU leniency notice was established to offer a supplementary tool to the competition authorities in detecting complex cartels that would not be dismantled. Therefore the EU leniency programme only offers protection to secret cartels members.
2.1.4 Uncertainties around the idea of ‘exchange of information’
The concept of ‘exchange of information’ as an infringement by object under the leniency regime has always been unclear. The particularity that not all information exchanges amounts to an infringement. Companies are permitted to exchange certain types of information The main example being that companies can communicate their historic or publicly available information, however exchanges involving price or quantity information amounts to cartel behaviour and is strictly prohibited. The difference between the legal and illegal exchange of information is ambiguous. The EU Commission has denied leniency applications relating to information exchanges on the grounds that there was insufficient certainty of an established infringement of cartel prohibitions based on the reported information.72 Clearly illustrating the
69 Ysewyn, The decline and fall of the leniency, p.8 70 Ibid p.10-11
71 Commission notice 2006/C298/11 on the non-imposition or reduction of fines in cartel cases [2006] OJ C
298/17 para 1
72 Christopher R.A. Swaak, Rein Wesseling, ‘Reconsidering the leniency option: if not first in, good reasons to
21 degree of uncertainty in the way competition authorities deal with leniency applications, especially concerning exchanges of sensitive information in horizontal situations.
The different types of uncertainties described in this first section depicts one of the reasons behind the decline of leniency application. Leniency candidates remain in an uncertain position which reduces their incentivisation to apply for leniency. Cooperating with the Commission may not always be the most advantageous solution for companies. However companies should take into account that uncertainties have always been present in the leniency programme. Although the revision of the leniency notice in 2002 and in 2006 brought further certainty, uncertainty still remains one of the components of the leniency system. In the case that uncertainties were to be removed from the system, the programme would become too lenient and therefore become ineffective. The effectiveness would be undermined since the goal of detecting more cartels is to protect the European economy.
2.1.5 The discretionary marker regime
The marker system was introduced in Leniency notice 2006 and has not changed since then. This is an innovative feature that provides further predictability for leniency applicants. Cartel participants can yet apply for a marker before filing the formal leniency application. The marker system provides the immune applicant with a chance to protect its position in the queue from other applicants, for a specified period of time. The company wishing to apply for a marker must inform the Commission with relevant information, such as the names of the cartel parties, the affected products and a time frame.73 Once the application for a marker is submitted, the applicant will be informed by the Commission where he stands in the queue. The marker system seeks to bring more transparency and predictability for immunity applicants.74 Theoretically this seems to be precisely what leniency applicants require, increased legal certainty which would reassure them to increase the use of the leniency programme. Hence benefiting both parties involved, the leniency applicants and the competition authorities.
73 Commission notice 2006/C298/11 on the non-imposition or reduction of fines in cartel cases [2006] OJ C
298/17 para 14
22
2.1.6 Critiques of the marker regime: wide discretion of the Commission
The marker system quickly gained criticism and was not able to fulfil its purpose of increased transparency and predictability.75 According to provision 15 of the Leniency notice 2006, ‘the Commission may grant a marker…the applicant should justify its request for a marker.’76 Meaning that the Commission does not automatically grant markers and retain a significant level of discretion in their decision. Applicants have no guarantee as to whether they will be granted the marker and do not receive guidance from the Commission concerning the way they should justify their request. Providing information which disclose the existence of a cartel and reveals the infringement of Article 101 TFEU should be sufficient justification to apply for a marker. The marker system remains unclear and not completely objective.77 For example, the Commission explained that markers are often granted to companies with new management who took over the company and realised later its cartel involvement.78 This implies that a company without a change in management seeking leniency can only file application for full immunity and cannot apply for the marker. Henceforth, companies are treated differently depending on their structure, and this practice is unfair and discriminates between the different leniency applicants.
Furthermore the time frame which the applicant must submit their application is determined by the Commission and on a case by case basis. The period to gather the necessary information is often short which in turn decreases the chance for companies to obtain the marker. The idea of not establishing a standard time frame can seem flexible but also very subjective and somehow unfair. The absence of a standard time frame for applicants triggers inconsistencies as every applicant would receive a different time frame, without relevant justifications. Introducing a definite time frame would serve the goal of increasing predictability and clarity for the applicants.79 Overall the wide discretion power of the Commission and the time constraint in the marker regime are discouraging elements for companies seeking immunity.
75 Payal Verma, Philippe Billiet, ‘Why would cartel participants still refuse to blow the whistle under the current
EC leniency policy?’ (2009) Global antitrust review
<https://www.yumpu.com/en/document/read/34100431/why-would-cartel-participants-still-refuse-to-blow-the-whistle-under-> accessed 29 October 2020 p.2-6
76 Commission notice 2006/C298/11 on the non-imposition or reduction of fines in cartel cases [2006] OJ C
298/17 para 15
77 Tine Carmeliet, ‘A critical analysis of the procedural fairness of the leniency instrument: finding the right
balance between efficiency and justice in EU competition law’ (2013-2014) Jura falconis Jg. 50
<https://www.law.kuleuven.be/apps/jura/public/art/50n2/carmeliet.pdf> accessed 27 November 2020 p.206
78 Verma, Billiet, ‘Why would cartel participants still refuse’, p.3 79 Ibid p.3
23
2.1.7 The risk of spillover effects
The risk of spillover effects is inevitable and has always been a risk that company may undertake when applying for immunity. Cartel participants seeking immunity will usually file an application for a conduct concerning a single product or market. Nonetheless the risk remains that the application for leniency concerning one product leads to leniency applications for conduct in relation to other products or unrelated markets.80 This spillover effect must be taken into consideration by companies when applying for leniency, as the spillover can create unforeseen costs and increased civil liability for damages.81 This spillover effect usually occurs when companies pursue an internal investigation to prepare its leniency application or following an investigation led by the authorities. For example, an investigation in relation to product A may reveal evidence of illegal activities for product B and C. The company applying for leniency for product A is strongly recommended to also apply for product B and C to prevent spill over effect to product B and C which could lead to an increased fine.82 Obtaining immunity for product A does not secure immunity for related infringement.83 Hence, leniency applicants must assess the risk of spill over effect, as a company might be safe for one product but can still be investigated and fined for other products in different markets. Companies seeking for immunity must additionally appraise their exposure under other authorities such as public prosecutor, financial authorities or stock exchange authorities. For instance in case
YIRD, UBS obtained full immunity from EU and US competition authorities, however, UBS’s
Japanese subsidiary was prosecuted with wire fraud by the US department of Justice and had to pay large fines to the UK financial Service Authority and to the US Trading Commission.84 Leniency applicants must therefore assess the potential spillover effects both concerning the product market and in relation to exposure from authority. If the risk of spillover is too high, cartel participants might withdraw their applications to avoid unexpected and unpleasant surprise, which would significantly increase their fine.85 The various forms of uncertainties, the marker regime and the risk of spillover effect are all elements that were not modified after the introduction of leniency notice 2006. These remain elements that caused to a certain extent
80 Ysewyn, The decline and fall of the leniency, p.15
81 Swaak, Wesseling, ‘Reconsidering the leniency option’, p.8 82 Swaak, Wesseling, ‘Reconsidering the leniency option’, p.8 83 Ysewyn, The decline and fall of the leniency, p.15
84 Swaak, Wesseling, ‘Reconsidering the leniency option’, p.8 85 Verma, Billiet, ‘Why would cartel participants still refuse’, p.3
24 the decline of leniency applications in Europe. However elements that changed after the 2006 notice are required to be investigated.
2.2 Elements that changed since the introduction of
Leniency notice 2006
As opposed to the previous section, in which various reasons were determined for the decline of leniency applications in Europe that did not change since the introduction of the leniency notice 2006. This section focuses on the introduction of the damages directive in 2014 and on case DHL italia which highlighted the challenges relating to the absence of a ‘one-stop-shop’ principle in 2016. This section also includes the notion of over-reliance on the leniency programme, although it is uncertain as to whether overreliance has always been an issue or only became relevant more recently.
2.2.1 The risk of private damages
The main novelty and possibly the main cause of the decline of leniency applications concerns the introduction of the damages directive in 2014. This directive introduced the possibility to claim compensation to companies that have caused harm and infringed competition law. As articulated in Article 11 of the Damages Directive, ‘member states shall ensure that undertakings which have infringed competition law through joint behaviour are jointly and severally liable for the harm caused by the infringement of competition law; with the effect that each of those undertakings is bound to compensate for the harm in full and the injured party has the right to require full compensation from any of them until he has been fully compensated.’86 Prior to the implementation of the directive, claims for damages were nonexistent at the EU level. The expansion to private enforcement could significantly discourage cartel activities, as it is becoming a serious threat for companies to pay large fines to compensate for their harm.87 The leniency programme does not protect companies for that type of fine. The introduction of private damages claims at the European level became common
86 Article 11 of Council and Parliament Directive 2014/104/EU of 26 November 2014 on certain rules governing
actions for damages under national law for infringements of the competition law provisions of the Member States of the EU [2014] OJ L 349/1
87 Case C-453/99, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others, [2001] ECR
25 practice and the EU might be at risk of becoming victim of its own success. It is favourable to sustain a competitive economy, nevertheless it may discourage companies to blow the whistle considering the risk associated with damages claim after a cartel case.88
2.2.2 Risk and concern for immunity applicants since the introduction of damages claims
The first concern for immunity applicants relates to the protection of their leniency statement and all the documents provided to the competition authorities for their application. The competition authorities require access to the documents supplied by the immunity applicants in order to calculate the damages, however the factual information should not be used against the applicants or become publicly available. The information contained in the leniency statement can be disclosed in a public version of the Commission’s infringement decision, which is released on the Commission’s website or can be claimed by a third party (i.e. national courts).89 Some mechanisms of protection are available at the EU level but it remains questionable as to whether they are sufficient to reassure leniency applicants. For instance, protection for business secrets under Article 28 or 30(2) of Regulation 1/003 or Article 339 TFEU for wider protection of professional secrecy and more recently Article 6(6) of the Damages Directive. Article 6(6) of Directive Damages supposedly prohibits the disclosure of sensitive information, nevertheless Article 6(5) states that national courts may order the disclosure of the information that the competition authority has drawn up and sent to the parties in the course of its proceedings. The information at stake is essentially based on the information provided by the leniency applicants, hence national courts require to a certain extent access to leniency statements. These protections are rather limited due to the conflicting interests. Providing leniency applicants with further protection of their leniency statement increases the effectiveness and the attractiveness of the leniency programme, but it needs to be balanced with the right to claim damages. To fully honour that right claimants must access leniency statement to prove the causal link between the breach and the harm caused.90 Both the leniency programme and the Damages Directive have the common objectives to dismantle and punish anti-competitive behaviour, however an increasing number of damage claims has the potential to undermine the leniency programme considering the risk of follow-on damages actions that may discourage cartel members to apply for immunity.91
88Ysewyn, The decline and fall of the leniency, p.15 89 Ysewyn, The decline and fall of the leniency, p.17 90 Ysewyn, The decline and fall of the leniency, p.17
91 European Commission, Green Paper Damages actions for breach of the EC antitrust rules, COM(2005)672
26 Until now the Commission has refused access to leniency statements in the view of protecting the effectiveness of the leniency programme, the threat derives from the national courts.92 The access to leniency file is mainly determined by the national courts. National courts possess the power to balance the right to obtain compensation for damages and the effectiveness of the leniency programme on a case by case analysis.93 The threat for leniency applicants mainly originates from the national courts, especially the courts grant access to the Commission’s file to parties that have been harmed. The Damages Directive attempts to limit immunity applicants’ exposure to damages. According to recital 38 ‘successful immunity applicants should be relieved from joint and several liability for the entire harm caused by the cartel, and the contribution it should make vis-à-vis its co-infringers must not exceed the harm caused to its direct and indirect purchasers.’94 This is reinforced by Article 11 which attempts to protect the successful ‘immunity applicant from undue exposure to damages claims.’ Nevertheless Article 11 does not provide sufficient protection to immunity applicants to sustain the attractiveness of the leniency programme.95 This provision does not take into account that immunity applicants are the most publicly exposed and will be the first exposed to civil damages.96 Moreover immunity applicants are less likely to appeal the Commission’s decision in comparison to other applicants. Subsequently other applicants may take a few more years to obtain their final infringement decision. Therefore leaving the successful immunity applicant in a situation where the company is an easy target for damages claims.97 The increased exposure to damages claims has a direct impact on the effectiveness of the Leniency programme, and thus discouraging potential applicants to apply the programme. Measures need to be taken to facilitate the coexistence between the Damages Directive and the Leniency programme, which would in turn redress this imbalance between private and public enforcement.98
92 Case C-365/12 P European Commission v EnBW Energie Baden-Württemberg AG [2014]
ECLI:EU:C:2014:112
93Ysewyn, The decline and fall of the leniency, p.18 and Case C-356/11 Bundeswettbewerbsbehörde v Donau
Chemie AG and Others [2013] ECLI:EU:C:2013:366
94 Recitals 38 of Council and Parliament Directive 2014/104/EU of 26 November 2014 on certain rules
governing actions for damages under national law for infringements of the competition law provisions of the Member States of the EU [2014] OJ L 349/1
95 Ysewyn, The decline and fall of the leniency, p.18-19
96 Tine Carmeliet, ‘How lenient is the European leniency system?’, p.481 97 Ysewyn, The decline and fall of the leniency, p.18-19
27 After the entry of the damages Directive in 2014, many companies succeeded to escape the fine without the use of leniency programme. The research conducted shows that the chance of escaping the fine was near to 70 percent.99 Most of these cases were found in publicly available sources and in the Commission’s decisions, which means that companies would not be entitled to immunity (i.e. the EU leniency programme only include ‘secret’ cartel in its scope). The high percentage does not mean that there is a 70 percent chance of evading a fine when participating in a cartel. It is possible that the behaviour of these companies did not amount to an illegal cartel or that there was insufficient evidence to prove the infringement. The main key take-away from this research remains that escaping the fine is also a possibility in certain cases and is also a factor that cartel organisations must consider when balancing the pros and the cons when deciding to apply for immunity.100 Therefore applying for immunity might not always be worth the risk.
2.2.3 The challenges coming from multi-jurisdiction system
Over the years an increasing number of jurisdictions across the globe adopted competition enforcement rules with various procedural rules differing from one jurisdiction to another.101 The increase is evident considering that in 1990 there were 23 jurisdictions in the world that had a competition law enforcement body, in comparison to a total of 150 jurisdictions in 2016.102 Concurrently cartel increasingly operate internationally which in turn obliges companies to file applications in multiple jurisdictions. The european leniency programme is characterised by the absence of a ‘one stop shop’ principle, which could have simplified the process of applications by allocating one supervising authority to the case. Consequently the diversity of jurisdictions, the globalisation of cartel and the absence of a ‘one-stop-shop’ principle for leniency applications might create inconsistencies in decision as several authorities deal with the case and might focus on different aspects. For instance in the case of
Consumer detergents, the Commission and the French Competition Authority (FCA) initiated
investigations and both imposed a fine concerning different features of the cartel.103 Both parties appealed, claiming that the Commission already imposed a fine. The appeal was rejected as both authorities fined divergent aspects of the cartel and their decisions were not
99 Ibid p.12
100 Ysewyn, The decline and fall of the leniency, p.11-12
101 Agon working paper, ‘Enforcements of antitrust Laws: Global challenges’ (2016)
<https://www.agon-partners.ch/files/Webeditoren/Publikationen/10%20Enforcements%20of%20Antitrust%20Laws%20Global%20 Challenges.pdf> accessed 15 December 2020 p.3
102 Ibid p.3
