Leniency Program

Leniency Program

Leniency Program

Introduction  

In this paper I will talk about the Leniency Program in cartel law enforcement, which today is utilised by the European Commission and many other competition authorities to notice and discourage cartels, from a Law & Economics perspective. Cartels are commonly accepted as one of the gravest limits of competition and are thus prohibited by Article 81 EC because of their important contradictory consequences on general communal welfare by expanding charges and decreasing alternative for the consumer. From a European Community viewpoint, cartels are furthermore powerful impediments to the market integration aim of the Treaty. Therefore cartels are a major task of the European Commission ("Commission" hereinafter) in the enforcement of the EC Competition Law. (Evenett et al., 2001)

For these causes it is broadly acknowledged that competition authority should enquire hard-hitting into cartels and penalize its constituents severely. However, the competition authorities have faced important adversities in enforcing their competition principle with esteem to cartels because the "wall of silence", which normally surrounds the constituents of the illegal collusion, makes the detection and thriving prosecution of these competition law infringements a very tough task.  To overwhelm this grave enforcement difficulty competition authorities have begun to rely more on direct clues supplied by insiders, i.e. the cartel constituents themselves, to disclose and verify the reality of the cartel. In alignment to supply the essential inducements to the cartel constituents that can supply this data, the competition authorities in some jurisdictions issued so called "Leniency Programs", "Amnesty Programs" or "Immunity Programs". These Programs allocate leniency, i.e. partial or full exemption from governmental sanctions of the cartel law infringement, for a cartel constituent that "blows the whistle" on its co-conspirators and presents the competition authority with the essential data to prosecute the other cartel members. By entails of this offer of lenient remedy for the cooperating cartel constituent the competition authority endeavours to encourage and exploit the volatility that is inherent to numerous cartels. (European Commission, 1998)  

 

The EC Leniency Program

The European Commission taken up its Leniency Program in 1996 via a Commission Notice called "Commission Notice on the non-imposition or decrease of penalties in cartel cases". The Notice allocations full or partial immunity from the administrative penalties enforced on cartel lawbreakers under EC Competition Law if the corporation cooperates in more nearly recounted modes with the Commission. Civil impairment assertions against the cartel constituent by its victims are not enclosed by the leniency conceded under the EC Leniency Notice as these damages drop under the Member States' jurisdictions. The Notice groups up a skidding scale of decrease in penalties against the colluding corporations, namely three declining, non-overlapping varieties of discounts (Sections B, C, and D of the EC Leniency Notice). To advantage from a decrease the applying corporation has to fulfill the cumulative situation of the respective section. The accurate allowance of the decrease is set by the Commission, which is granted discretion to work out the befitting allowance of decrease inside the variety granted ...