LENIENCY PROGRAMMES IN COMPETITION LAW


A leniency program is a set of rules for granting reduction of penalties to firms which are involved in cartels. The main aim is to make them discontinue with the illegal practice and cooperate with the investigation authorities to release other firms practicing the said practice. An instance of authorities which adopted this method includes the European Union. As a result, it has aided in discovering and interrupting illegal agreements among big firms. LP play an important role in deterring the growth of cartels.

How it works:
The LP works in a way such that they give immunity from imprisonment to individuals/companies that give out firms which are involved in a cartel. Moreover, they could also reduce penalties and fines imposed by the relative authorities,thus making cooperation with the authorities more attractive. The EU regulations such as the TFEU(Treaty on the Functioning of the EU) admit the possibility of granting penalty discounts to firms which report before or even after a formal investigation has begun.
 According to the time when the report was given to the authorities,if it is a first reporting and the authorities had no prior evidence against that firm,the EU could provide immunity from fines.This is according to the European Commission 2002 Regulation.The EC 2002 regulation further gives partial reductions of fines to other reporters because they have provided the information late though it could be regarded important to the authorities.

Consequently,the LP also sets strict requirements for the reporters for instance the reporting ought to be done in an official corporate act.However,in instances where a company is making the report,a single individual is not expected to give the report to the authorities on his own.Once a company has delivered information on an ongoing cartel,they are expected to stop their participation with the cartels.The reason behind this is so that the reporter can give full cooperation during the investigation so as to qualify for leniency.However much an LP can be generous, they still cannot exclude civil damages in private suits. Hence, the risk of exposure to high damages inn private enforcements remains but can still be reduced to the effectiveness of the LP.

The main challenge faced by the EU leniency program is that, they run the risk of receiving many applicants so that they can benefit partial or full immunity from the harsh fines. Hence, the ECN(European Commission Network) competition authorities  is forced to investigate on the credibility of statements given by such providers.
In conclusion,from the theoretical view and the enforcement of laws and policies, LPs allow to save enforcement resources by inducing reporting.Moreover,the benefits that come with reporting is maximum reductions in  fines, with either partial or full immunity. Therefore, companies will only be able to benefit from leniency in all relevant jurisdictions
if they apply for leniency with all authorities that could pursue a case against them. As a result, the leniency program may be concluded as an important element in prosecution of antitrust authorities against cartels.

CASESTUDY;

On 28 March 2012, the Commission fined 14 groups of companies a total of EUR169 million for participating in four distinct cartels in the freight-forwarding sector. According to the Commission, the objective of the cartels was to fix prices and other trading conditions for international air-freight forwarding services. The Commission found that the freight forwarders colluded on surcharges and charging mechanisms concerning important trade routes, in particular the Europe to USA route, and the China and Hong Kong to Europe routes. Deutsche Post received full immunity from fines under the 2006 Leniency Notice for all four cartels, as it was the first to reveal the arrangements to the Commission. Other companies benefited from reductions of 5% to 50% in the fines imposed in relation to each of the cartels due to their co-operation under the EU leniency programme.


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