Leniency as set out by the commission Notice on Immunity from fines and reduction of fines in cartel cases (2006/C 298/11) primarily serves as an evidence-gathering tool. The incentives to receive immunity from or reduction of fines as well as the possibility of a subsequent settlement as opposed to a regular infringement decision pursuant to Articles 7 and 23 Regulation 1/2003, appear to be very conveying for undertakings to report infringements of Article 101 TFEU. Such a settlement decision may be notably shorter than an infringement decision, hence containing less information that could potentially be accessed for the conduct of damages claims.
The mere fact that an undertaking could profit from leniency does however not mean that it did not itself infringe Article 101 TFEU and certainly not, that no one suffered harm due to the anticompetitive behavior of the leniency applicant. Leniency in combination with a settlement decision may lead to difficulties for parties that seek damages to compensate for such anticompetitive conduct from inter alia the leniency applicant. The question needs be asked whether such difficulties seem disproportionate when weighed against the advantages of the leniency system.
Leniency to escape cartel fines (and damage claims)
First of all, leniency is not linked to the gravity of the infringement by the applicant. According to Point 8 of the Leniency Notice, the Commission will grant immunity from any fine which would otherwise have been imposed. It is linked to being the first and providing sufficient evidence for further investigation (see Point 8 of the Leniency Notice). Conditions to qualify for leniency are further full and genuine cooperation, ending involvement in the cartel immediately following the application for leniency and not having destroyed, falsified or concealed evidence (Point 12 of the Leniency Notice). Eventually the Leniency Notice does set some limitation to the eligibility by stating in Point 13 that undertakings that took steps to coerce others to join the cartel or remain within are excluded from immunity (however not from reduction of the fine).
Next to reduction or exemption from fines, the leniency applicant receives additional benefits. Protection is granted through the Damages Directive (2014/104/EU) as it contains a prohibition of disclosure of leniency statements in national damages proceedings or proceedings before EU courts (Article 6 Damages Directive). Also, towards parties other than direct and indirect purchasers/providers, the immunity applicant is liable only in cases where full compensation cannot be obtained from other cartel members (Article 11(4) Damages Directive). For private enforcement this privileged treatment is disadvantageous as it takes away the option for the damaged party on who to hold accountable. Taking the immunity applicant to court may have procedural or substantive advantages which are taken from the damaged party while benefiting the infringer.
Additional benefits through settlement
The settlement procedure aims at procedural efficiency (cf Recital 4 of Regulation 622/2008) and grants further 10% fine reduction. Nonetheless, even in case of immunity from fines, entering into a settlement proceeding may still be advantageous to the leniency applicant as the settlement decision is notably shorter than a regular infringement decision and thus reveals less information that may be used in damages claims. As a consequence, in situations where full compensations by other cartelists is not possible, a settlement decision subsequent to immunity from fines may add additional hurdles to a successful claim for damages.
A well-balanced system?
Resulting from the combination of leniency and settlement, a cartel member that perhaps profited the most of a cartel and caused most damage could apply for leniency as first applicant and be granted immunity from fines (as even leniency applicants that are subject to the application of the maximum amount of the fine maintain the full benefit of fine reductions (Point 12 of the FAQ Leniency)) and have settlement. It seems to be a very beneficial and comfortable position for such an infringer, while at the same time adding obstacles to already damaged parties.
I see that incentives are needed to give cartel members good reasons to leave the cartel and report to authorities. However, in my view the granting of immunity/reduction of fines (and numerous other advantages as described above) regardless of the degree of involvement in the cartel and benefits generated, are too far-reaching. Especially the additional aspects of lack of access to the leniency statement in damages proceedings, only exceptional liability and obtaining of a settlement decision seem disproportionate. In my view however, the individual role of the leniency applicant should be included into the equation and result in a more nuanced access to the benefits through leniency and settlement. Where increased influence on the cartel or benefits thereof can be found, the conduct of damages claims should be facilitated.
It is of course always easier to criticize and complain about an established system rather than providing a fix that does not kill any incentives for cartel members to report to the Commission or National Competition Authorities. However, the current system not only creates incentives to report infringements, but in my view also equal incentives to commit infringements as there are very appealing options to avoid most negative repercussions.
Co(E)mpetition Procedure 