On 22 March 2016, the Belgian Competition Authority’s (“BCA”) new cartel leniency guidelines (the “Guidelines”) entered into force.[1]
Below we briefly outline the procedure to apply for leniency, after which we shall elaborate on the three main novelties of the new Guidelines.
1 Procedure
Under the leniency programme, parties to a cartel can obtain immunity from fines or a reduction of fines, in exchange for providing valuable information on the cartel to the BCA. In this procedure a first-come, first-served principle applies. The first leniency applicant can obtain full immunity of fines. For further applicants, fine reductions are available: a 30% to 50% fine reduction for the second applicant, a 20% to 40% reduction for the third applicant and a 10% to 30% reduction for further applicants.The Guidelines explain in detail what is considered valuable information for which type of leniency application. In summary, an applicant for full immunity of fines must be the first to provide information and evidence which allow the BCA to obtain a warrant and to conduct a dawn raid or to establish a cartel infringement.
Applicants for reduction of fines should provide information which has additional value compared to the information of which the BCA already disposes at the moment of the application. The amount of the fine reduction will depend on the timing of the application (first, second, third,…) and the qualitative value of the information provided.
The Guidelines allow for an informal, orienting contact prior to a formal leniency application. Aspiring leniency applicants can anonymously request information on the application of the Guidelines or the underlying legal provisions. The Guidelines also codify the existing practice which allows an attorney-at-law to enquire with the BCA on a no-names basis whether the full immunity from fines is still available.
Next, aspiring leniency applicants may request a so-called “marker” by providing basic information on the cartel, such as the identity of the applicant, the identity of the other cartel participants, the reason for the application, the type of cartel practice, the products and territories concerned and the estimated duration of the cartel. If the BCA grants a marker, it will guarantee a rank (first, second, …) for a certain period of time, allowing the applicant to gather more qualitative information and evidence for a formal leniency application.
Formal leniency applications are made via an appointment with the Auditor-General of the BCA. Save in situations where a marker has been accorded, the date of the appointment will determine the applicant’s rank. The BCA will decide on the admissibility of the leniency application and on the level of leniency to which the applicant is in principle entitled. A fundamental condition for all leniency applications is full cooperation with the BCA for the whole duration of the procedure. The BCA may attach additional conditions to the granting of leniency. In practice, formal leniency applications require recognition of the cartel infringement, in-depth and detailed information on the cartel practices over the relevant period and substantial evidence of the infringements from the leniency applicant.
The final decision on the leniency follows at the end of the investigation, together with the decision on the merits. Leniency will only be awarded if the applicant has respected the conditions imposed by the BCA and if the applicant has effectively given full cooperation to the BCA during the procedure.
Besides, the Guidelines clarify that leniency applications will not be transferred to civil courts, or to other parties in the context of actions in damages against the applicants. This is consistent with the confidential treatment of leniency statements under Article 6(6)(a) of Directive 2014/104/EU (Cartel Damages Directive).[2]
2 Main novelties of the new Guidelines
2.1 Overlapping percentages of fine reductions
Under the new Guidelines, the BCA has refined the system of fine reductions. The fine reduction percentages now overlap. A successful first applicant for reduction of fines may now benefit from a 30% to 50% fine reduction, a second applicant from a 20% to 40% reduction and further applicants from a 10% to 30% reduction. The overlapping percentages allow the BCA to take into account the quality of the information provided by the applicants, in addition to the timing of the application.
As a result, having a lower rank, because the application was filed later than other leniency applications, may still allow for a higher reduction of fines, if the information provided is of particular high quality. Direct evidence, evidence from the period of the facts or evidence which is self-evident, are considered high quality evidence under the Guidelines.
2.2 Immunity from prosecution for natural persons
In 2013, fines for natural persons were introduced in Articles IV.1, § 4 and IV.70, §2, of the Belgian Code on Economic Law. Natural persons, such as directors or senior employees of cartel participants may incur administrative fines ranging from € 100 to € 10,000 for negotiating or agreeing with competitors on price fixing, sales or production limitations or market allocation for and on behalf of an undertaking.
The Guidelines establish the conditions and procedure under which such natural persons may apply for immunity from prosecution. The leniency regime for natural persons is different from the one for undertakings. First, the leniency granted to natural persons entails immunity from prosecution, instead of leniency of fines for undertakings.[3] Second, individuals’ immunity from prosecution applies no matter the rank of their leniency application, whereas only the first applicant-undertaking can obtain immunity from fines. Third, individuals’ leniency applications are not taken into account to determine the rank of an undertaking. A prior application by an individual will therefore not prevent an undertaking from being granted first rank and thus immunity from fines.
2.3 The Guidelines implement ECN Model Leniency Programme
The Guidelines adapt the Belgian leniency programme in accordance with the Model Leniency Programme of the European Competition Network (“ECN”).
An important innovation are the “summary applications”. An undertaking that has filed or intends to file a leniency application with the European Commission can file a summary application with the BCA if it considers that the BCA is also “well placed” to act.[4] The latter will then grant the applicant a marker to safeguard the applicant’s rank in a possible Belgian cartel procedure.
The summary application must be identical in content to the application submitted to the Commission and must be updated if the Commission investigation shows that the scope of the alleged cartel differs significantly from the original description in the summary application. If the undertaking fails to update its summary application it may lose its rank in a subsequent national procedure.[5]
Three things one should take away from the new BCA Cartel Leniency Guidelines:
The BCA has strengthened the incentives for undertakings to provide it with high-quality evidence on cartels. In order to obtain full immunity of fines or the highest possible reduction of fines, leniency applicants will have to be both quick and comprehensive in their leniency applications. Having a lower rank (coming later in the chronological order) may still allow for a higher reduction of fines, if the information provided by the applicant is of particular high quality.
A leniency application to the Commission alone may not always be sufficient. Undertakings must consider submitting summary applications to the BCA if they consider that the latter might also be “well placed” to act. Accurate and, if necessary, updated summary applications to the BCA will prevent that the undertaking loses its rank in a possible parallel cartel proceeding by the BCA.
Finally, the new Guidelines introduce leniency for natural persons. Natural persons may obtain full immunity of prosecution. This is a strong incentive for natural persons to assist the BCA in uncovering prohibited cartel practices by undertakings.
The text of the Guidelines is available here (in Dutch) and here (in French). The BCA indicated it would publish an English convenience translation of the Guidelines on its website in the weeks to come.
[1] Belgian Official Gazette, 22 March 2016, 19796.
[2] Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union [2014] OJ L349/1.
[3] Undertakings can only obtain immunity from or a reduction of fines. Their participation to the cartel will in any event be established.
[4] Guidelines, para. 45 and ECN Model Leniency Programme, para. 24, available at:http://ec.europa.eu/competition/ecn/mlp_revised_2012_en.pdf.
[5] Guidelines, paras. 46 and 49. See also Case C-428/14, DHL Express (Italy) Srl land DHL Global Forwarding (Italy) SpA v Autorità Garante della Concorrenza e del Mercato (ECJ, 20 January 2016) (ECLI:EU:C:2016:27).
