Published for consultation a draft amendment to the Leniency Notice

The European Commission has recently published for consultation a new version of its Leniency Notice relating to cartel cases. This new version incorporates some important changes to the leniency programme. It aims to increase protection for whistleblowers from private damages claims.

The Commission’s leniency programme offers cartel members the chance to blow the whistle on the cartel, co-operate with the Commission and in return to obtain immunity or reductions in fines for their cartel involvement.

Recently, as private damages claims for breach of competition law have become more prevalent, the Commission has found that a number of undertakings have major concerns about making statements to the Commission in the context of its leniency programme. The undertakings are worried that their statements to the Commission, in which they admit to cartel behaviour, could be made available to litigants in private damages claims via order for discovery of documents.

The Commission has stated that it “strongly supports effective civil proceedings for damages against cartel participants”, but equally it does not want its leniency programme to be undermined by undertakings deciding it is better not to blow the whistle and thereby not to expose themselves so openly to damages claims. Otherwise undertakings cooperating with the Commission would be in a weaker position as regards such civil claims than non-cooperating cartel members.

The new draft therefore maintains the key provisions of the existing notice, but adds a special procedure to protect corporate statements made in the context of its leniency programme against discovery in civil damage proceedings. The special procedure basically provides:

• Leniency applicants will be permitted to make oral statements rather than written statements;
• access to the Commission’s case file, including to corporate statements will be rejected where it is requested for purposes other than administrative and judicial proceedings for the application of Article 81 EC Treaty (prohibition on cartels). In any case, access will be limited to viewing (at the premises of the Commission) written corporate statements and transcripts of oral statements. Making written notes will be permitted, but “mechanical copies” will not be allowed;
• parties seeking access to the Commission file will be required to sign a document stating that documents obtained through access to the file may only be used for the purposes of judicial and administrative proceedings for the application of Article 81. This aims to prevent them from discovering corporate statements in civil claims;
• if a party abuse its right of access to the file, the Commission may seek to punish this by making a complaint to the relevant lawyer’s Bar Association and/or by seeking a higher fine for the undertaking in question, whether in its cartel decision or even in subsequent proceedings before the European Courts.

The new procedure for corporate statements will apply from the moment of the publication of the Notice in the Official Journal of the European Communities to all pending and new applications for immunity from fines or reduction of fines, including those lodged before that date.

This step demonstrates the Commission’s commitment to encouraging cartel members to blow the whistle. It also provides a degree of balance with another stated Commission aim, namely encouraging civil actions for damages due to breach of competition law. The Commission recently published a Green Paper on damages actions for breach of the EU anti-trust rules, to view our Law-Now article on this please click here.

The deadline for comments is Monday 20 March 2006. We shall be happy to forward comments to the Commission should clients wish to do this anonymously, or after discussion with us.