The network of European antitrust regulators, the European Competition Network, has revised its model leniency programme for cartels Major changes include a broader scope for summary applications when applying for leniency in more than three EU Member States, the application of leniency programmes to cartels with vertical elements, clarifications on the non-disclosure obligation, and unification of the level of protection for oral and written statements by leniency applicants. The changes will take effect once the individual competition authorities have  implemented them in their individual leniency programmes.

The European Competition Network (ECN) is composed of the European Commission and the national competition authorities of all 27 EU Member States.  The ECN, amongst other things, works to create convergence within the European Union between the supranational rules and national rules, as well as between individual States’ national rules.

The Model Leniency Programme (Model Programme) was introduced by the ECN in 2006.  It is not binding to the ECN competition authorities, but all ECN competition authorities strive to design their leniency programmes to conform to the Model programme.  Leniency programmes encourage companies to “blow the whistle” and provide information to the competent competition authorities about possible competition law infringements.  Through a leniency application, companies may be offered full immunity or a substantial reduction of the fine that would otherwise imposed on them, if they cooperate with the competent competition authority (ies) and provide added value information on the members of the cartel and its activities.

On 22 November 2012, the ECN published a revision of the Model Programme.  The main changes relate to summary applications, the inclusion of cartels with vertical elements and non-disclosure obligations.  

Summary Applications

Summary applications will now be open to all leniency applicants, not just the first one, which benefits from full immunity.  Summary applications are a simplified method for leniency applications to different national competition authorities and the European Commission, especially when more than three EU Member States are concerned.  Multiple leniency applications may be vital for companies that need to limit their exposure to fines imposed by different ECN competition authorities. 

A summary application allows the applicant to submit just a limited amount of information to each competition authority that has jurisdiction.  The competition authorities may exchange information without the, normally required, consent of the applicant. 

A standard template for summary applications that is usable for all competition authorities has been designed, relieving applicants from the burden of completing multiple different forms.  For the applicant’s convenience, a list of all ECN competition authorities operating a leniency system that accepts English language summary applications is also supplied.

The new mechanism for the submission of summary applications is a further incentive to leniency applicants as it reduces the costs and resources needed for multiple applications throughout all the ECN competition authorities potentially involved. Therefore, this is likely to result in an increase of the number of jurisdictions named in the applications to the potential detriment of the other companies involved in the alleged infringements, which may need to invest significant time and resources to defend their position, in case one or more of the ECN competition authorities decide to pursue a case.

Inclusion in The Model Programme of Cartels With Vertical Elements

The Model Programme states clearly that, in addition to secret cartels, other types of restriction, such as vertical agreements and horizontal restrictions, are normally less difficult to detect and investigate and therefore do not fall under a leniency programme.  The revised Model Programme, however, now states expressly that a cartel that has vertical elements may be covered by the leniency programme, thus resolving uncertainty as to the scope of the Model Programme.

Non-Disclosure Obligation

The requirements for qualification for leniency have been clarified with respect to the obligation to cooperate, in particular with respect to the non-disclosure obligation.  The obligation of non-disclosure will not be considered breached if the leniency applicant informs another competition authority in the context of multiple applications and external counsel has been consulted for the purpose of obtaining legal advice.

The revised Model Programme requires the leniency applicant to keep a record of who has been informed, when the information was provided and the exact content of the information.  The obligation of non-disclosure lasts at least until the competent ECN competition authority has notified its objections to the parties, but may even be applied by ECN competition authorities throughout the entire procedure.

The revised Model Programme now also protects records of written statements that have been made to the ECN competition authorities by leniency applicants.  Previously, only records of oral statements were protected explicitly.

Leniency programmes have proved their importance.  Not only do the regulators benefit from the help they receive from whistleblowers, but companies can escape huge fines if they are quick to file for leniency.  The revised Model Programme clarifies the rules and makes it easier for companies looking to file applications with multiple competition authorities through summary applications, but we have yet to see when and to what extent the ECN competition authorities’ will implement these changes in their individual leniency programmes.

However, the incentives and enhanced protections offered by the new Model Programme increase the risk of over-reporting by leniency applicants (both in terms of information provided and geographical scope of the alleged infringements) in order to meet the “added value” requirement and therefore benefit of the (total or partial) immunity from the fine. Therefore, the ECN competition authorities will have to carefully assess the reliability of the statements made by the leniency applicants in order to safeguard the fundamental right of defence of the other parties potentially involved in the proceedings.