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CMA publishes guidance for businesses on new approach to leniency in cartel cases

The UK Competition and Markets Authority (CMA) has published guidance on its new approach to handling applications from businesses seeking leniency from prosecutions and fines for cartel activity.07 Nov 2017

The information note (6 page / 236KB PDF) sets out the approach, which only applies in respect of leniency applications in the UK, and is designed to encourage companies to report cartel behaviour. It follows a period of consultation with UK regulators that are full members of the UK Competition Network, namely Ofcom, Ofgem, Ofwat, the Financial Conduct Authority, the Office of Rail and Road, Civil Aviation Authority, the Northern Ireland Authority for Utility Regulation, and the Payment Systems Regulator.

The CMA will now be the first point of call for all leniency applications relating to the sectors covered by this group. It will operate a “single queue system”, in which applicants will be put in the leniency queue strictly in the order in which applications were received.

Competition law expert Richard Snape of Pinsent Masons, the law firm behind, welcomed the guidance.

“The process of making a competition law related leniency application is time-critical. Those ‘first in the queue’ are eligible to benefit from total immunity from fines and protection against the prosecution of individuals. These incentives are key to encouraging whistle-blowers to come forward, and therefore the CMA’s clarification to this process is to be welcomed,” Snape said. 

Snape said having the CMA as the first point of contact would make the process clearer.

“This will avoid the uncertainty that had existed in relation to applicants’ ‘position in the queue’ if one applicant had applied to the CMA, but another had applied to their regulatory authority. This means that regulated companies can now conduct the difficult assessment as to whether to make a leniency application with greater certainty as to their legal position regarding the various advantages of doing so,” Snape said.

Three different types of leniency are available, subject to certain conditions, as with the previous process when leniency applications were made to individual authorities.

The first company to report cartel activity in a case where there is no existing investigation will gain guaranteed corporate immunity from financial penalties, automatic blanket immunity from criminal prosecution for individual employees and officers, and guaranteed protection from competition disqualification orders (CDOs).

If an investigation is already ongoing, the first company to contact the CMA will receive discretionary corporate immunity from financial penalties or reductions of up to 100%, discretionary immunity from criminal prosecution for employees or officers, and CDO protection if immunity or leniency reduction is granted.

All other leniency applicants in either of the first two situations could gain a discretionary reduction in the financial penalty of up to 50%, discretionary immunity from criminal prosecution for specific individuals, and CDO protection if a leniency reduction is granted.

In each cartel case, there can be only one company meeting the first two conditions. The CMA said this approach, coupled with the single queue system, would maximise the incentives to apply early for leniency as only the first applicant in each case of cartel conduct will receive the greatest protection from fines and prosecution.

Once an application has been granted a provisional leniency marker, the case will be handed over to the appropriate authority, if not the CMA itself. However the CMA will remain responsible at all times for the grant of criminal immunity.

The approach is only applicable for competition cases and other regulatory self-reporting still needs to be made to the appropriate regulator.