The European Commission has issued guidance in the form of twenty-five Frequently Asked Questions to help companies understand and take advantage of the Commission’s leniency policy. The leniency program was launched in 1996, and was refined via a new Leniency Notice issued in 2006. Since then, businesses operating in the European Economic Area have had their fines reduced by €16 billion through immunity and fine reduction applications.
Pursuant to the leniency program, companies can receive full or partial immunity from fines if they report on secret agreements and concerted practices in which they are involved, where the agreements or practices constitute “hardcore” restrictions between competitors. The program enables cartel participants to escape heavy fines, while providing important inside evidence to the Commission about secret cartels. The leniency program is also thought to have a deterrent effect on the formation of cartels.
The new FAQs cover topics ranging from the definition of key terms to the scope and operation of the Commission’s e-Leniency platform. They define the term “cartel” for purposes of the Leniency Notice – it includes patterns of behavior involving contacts between competitors with the objective of influencing the parameters of competition – and describe the types of conduct that fall within the Leniency Notice. The FAQs explain who can benefit from the Commission’s leniency program, how to do so, and how to approach the Commission informally on a no-name basis or using a hypothetical scenario in order to ascertain whether the leniency program will be of benefit.
The FAQs describe the role and powers of the Leniency Officer, who serves as the first point of contact in the Cartels Directorate of the Directorate-General for Competition. The FAQs provide instructions on how a company may retain its place in line as the first cartel member to disclose, when and how public disclosure of a leniency applicant’s ongoing cooperation with the Commission is permitted, and how parties are informed of the outcome of their application.
Other points covered by the FAQs include the mechanics of fine assessment and fine reduction for leniency applicants, the threshold for “significant added value” under the Leniency Notice, the effect of time-barred infringements on the Commission’s decisions and deliberations, and the relationship between whistleblowing and leniency (the former applies to individuals, who are not held liable for breaches of EU competition law, and the latter applies to companies, who are). The FAQs also answer questions about the ramifications of leniency applications beyond fine reduction, in terms of exclusion from public procurement contracts and avoiding prosecution.
Finally, the FAQs explain availability of the leniency program to businesses operating in the European Economic Area, and the interrelationship between the Commission and the national competition authorities of EU member states and non-members (leniency applications do not transfer, so applicants are encouraged to submit requests to all relevant competition authorities; at the same time, applicants are obligated to disclose to the Commission any other leniency applications they have filed with other competition authorities).