1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
Current Irish competition legislation is the Competition Act 2002 (‘the Act’) and the Competition (Amendment) Act 2006. The Act repealed and replaced the previous Competition Acts 1991-1996. Ireland’s cartel leniency policy is set out in a notice issued by the Irish Competition Authority – the ‘Cartel Immunity Programme’ issued on 20 December 2001 (‘the Notice’). The Notice was issued under the Competition Acts 1991-1996 following a conference ‘Using Immunity to Fight Criminal Cartels: Competition Authority Conference on New Strategies that Can Help Win the War against Cartels’, held by the Competition Authority and the Director of Public Prosecution on 17 November 2000 (Annual Report 2001). Since the establishment of the Notice in 2001, it has been amended to account for changes made by the Act increasing the severity of criminal penalties and fines applicable to parties involved in cartel activity. Though the Notice is not legally binding as it is not a statute of the Irish government, nor has it been adopted as a statutory instrument, it is unlikely that the Competition Authority would depart from its terms.
Enforcement of Irish competition law is quite decentralised as it relies upon the cooperation of several bodies including the Competition Authority, the Director of Public Prosecution (DPP), An Garda Siochána (Irish police force) and the Courts.
The Competition Authority (the Authority) was established by the Competition Act 1991 as an independent body responsible for administering and enforcing the Competition Acts. The 1996 Amendment Act introduced powers to investigate and prosecute competition offences. The Authority is responsible for carrying out investigations of alleged breaches of the Act and also has the power to initiate proceedings for an offence under sections 6, 7, and 26 of the Act as well as for relief under section 14 of the Act. To aid in the investigation of cartel behaviour, a notably conspiratorial crime, the Authority tends to employ former An Garda Siochána officers, former members of the Criminal Assets Bureau, and others who have experience with the investigation of white-collar crimes (Annual Report 2006). In terms of the Cartel Immunity Programme (CIP), the Authority is responsible for accepting applications for immunity and in turn, making recommendations to the DPP on whether to grant immunity. The Authority has no power to grant immunity itself. This power is solely vested in the DPP. The Authority also has the power to prosecute in the District Court at a summary level, that is, for relatively less serious offences. However, the Authority has no power to impose penalties or fines as this power is reserved by the Courts.
The DPP is an entirely prosecutorial agency and law officer of the state. It relies exclusively upon the Authority to investigate alleged breaches of the Act and is responsible for granting or refusing immunity to applicants, though often (not always) taking into account recommendations by the Authority on this matter. The DPP is responsible for prosecuting on indictment, that is, for more serious crimes. The Authority will not usually prosecute at a summary level pending a decision by the DPP to prosecute on indictment.
An Garda Siochána often works together with the Authority to aid in the investigation of alleged breaches of the Act. According to the Authority’s Annual Report 2006, two Detective Sergeants from the Garda Bureau of Fraud Investigation are employed full time by the Authority as Authorised Officers of the Competition Authority.
The Courts are responsible for both hearing cases and implementing penalties and fines, where necessary. As noted under section 11 of the Act, criminal prosecutions are taken in the Central Criminal Court. While there is a specialist competition division within the Irish civil High Court, there is no specialist competition criminal court.
It is the complicated interaction between these four groups which make up the relatively intricate enforcing body of the CIP.
1 The Authors acknowledge with gratitude the assistance of the Irish Competition Authority in the preparation of this chapter. All of the views expressed within the chapter are entirely those of the authors, however and do not purport to represent the Competition Authority’s views.
2. What are the basic tenets of a leniency/immunity programme?
The CIP has three basic tenets. First, it works to uncover breaches of the Act by enticing members of cartels themselves to come forward and reveal evidence that may not otherwise come to light. Since cartels are “notoriously difficult to detect and prosecute” (Preface of the Notice), many cartels could easily continue unnoticed without the help of inside members, who in turn would be unlikely to cooperate with authorities if not for the offer of immunity.
Secondly, by providing the option of immunity, the programme works to deter companies from taking part in cartel behaviour in the first place. Companies contemplating cartel behaviour are apt to fear the possibility of informers from within who may turn the cartel into the authorities in exchange for immunity.
Third, it encourages the earliest possible disclosure of cartel activity by offering full immunity to only the first applicant who successfully meets the relevant requirements established by the programme.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
The CIP does not allow for the publication of any data regarding the number of cartels unveiled and punished as a result of the programme, until or unless that information comes to light as part of a public trial. Therefore, it is unclear as to the exact number of cartel cases that have been, or are in the process of being, aided by immunity applicants to date.
The Competition Authority’s 2006 Annual Report mentions that the first criminal convictions on indictment for offences against the Competition Act took place in 2006 with the home oil cases in the West of Ireland. Fifteen convictions in total were reported. Two defendants are still awaiting trial. This made Ireland the first country in Europe to have a jury trial conviction for a criminal competition offence.
While specific information regarding the implementation of the CIP is not currently publicly available, the authors are aware that the CIP took a significant role in bringing about the prosecutions. Much of the evidence gathered for the indictment originated from two witnesses who came forward under the immunity programme. These witnesses were directors of a company which was implicated in the cartel. Both were granted full immunity from prosecution. Though one immunity applicant died during the course of the investigation, and the other was only able to provide hearsay evidence and was therefore inadmissible as a witness, the DPP was able to proceed with the prosecution on the basis of other witness evidence. The case is significant in that it is one of the first to take advantage of the CIP since its commencement in 2001.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
The first and most important factor to keep in mind when applying for immunity under the CIP is that only the first successful applicant will receive immunity. Therefore, the Authority urges parties to come forward as early as possible to ensure that they are the first cartel member to apply and that they have done so before the Authority has completed the investigation on its own, at which point the applicant’s information may no longer provide “added value” to the investigation (Commission Notice on Immunity from Fines and Reduction of Fines in Cartel Cases 2006/C 298/11).
A successful application for immunity is dependent upon the applicant’s ability to meet the following requirements:
It is important to note that while applications for immunity from individual directors or employees will be considered they will not be seen as made on behalf of the larger corporate body unless made as a corporate act. Corporate undertakings that apply for immunity as a corporate act must guarantee the cooperation of their employees, officers and directors to ensure the success of their application.
If a corporate undertaking makes a successful application and is qualified for full immunity, all former and present directors, officers and employees who admit to their involvement in the offence will also qualify as long as they meet the requirements mentioned above.
If the above requirements are not met by the first applicant, subsequent applicants may then be considered for immunity. It is important to note that the ultimate decision to grant immunity rests with the DPP and even if applicants successfully meet all the necessary requirements, there is no absolute guarantee that the DPP will in fact grant the desired immunity.
In terms of documentary evidence, both the Authority and the DPP prefer applicants to provide as much documentary evidence as possible. However, given the secretive nature of cartel activities, cartel cases do not generally involve much documentation. This weighs in the applicant’s favour as documented evidence has the potential to be used against them in a civil litigation, as immunity under the programme is only provided from prosecution in criminal cases under the Act. Therefore, applicants will generally prefer to provide oral rather than written testimony whenever possible.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Under the CIP, timing is the most crucial factor as only the first successful applicant will be granted full immunity. Applicants may be any person, group of persons or undertaking implicated in an activity that violates the Act. However, joint applications between two or more conspirators involved in a cartel, that is two or more undertakings, are considered invalid.
Immunity, which is granted to the first successful applicant, is defined as “full immunity from prosecution in criminal cases under the Act” (the Notice). This immunity is of course dependent upon continued compliance with the previously mentioned requirements for a successful application.
While this immunity protects the applicant from criminal prosecution for breaches under the Act, it does not however protect the applicant from criminal prosecution under other statutes or common law, unless this is separately agreed upon with the Authority and the DPP as part of the immunity agreement. Furthermore, applicants would not be granted immunity for hardcore offences under the Act which they have committed and were expected, and failed, to disclose as part of the immunity process.
Applicants are not granted immunity from civil suits.
In addition, since an application for immunity to one national competition authority does not amount to an application to any other competition authority, applicants are left open to possible prosecution by any authority that has the competence to apply Article 81 or 82 of the EC Treaty and is considered well placed to act against the infringement in question. Applicants are therefore urged to apply for immunity to any competition authority that could potentially prosecute the offence in question.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
The CIP will only grant immunity to the first successful applicant. Therefore, there is no mention of leniency of any kind for the second successful applicant within the Notice.
However, it is important to note that the Principles for Leniency Programmes available on www.tca.ie, does recommend a degree of leniency for the second applicant. This notice states that national competition authorities in general: “should where possible have discretion to offer significant but substantially smaller reductions in sanctions to second and subsequent applicants”.
The Principles for Leniency Programmes was devised by a number of competition authorities following the EC’s publication of The Commission Notice on Immunity from Fines and Reduction of Fines in Cartel Cases ([2002] OJ.C 45/3), which has now been amended by The Commission Notice on Immunity from Fines and Reduction of Fines in Cartel Cases ([2006]/C 298/11). The idea of a reduction of sanctions for the second applicant arises out of Article 26 of the 2006 Commission Notice.
It is should be noted that in Ireland the Authority does not determine fines or sanctions as this power is principally a matter for the Courts in criminal cases.
Despite recommendations made within the Principles for Leniency Programmes, there has been no amendment to date to incorporate leniency for second-in-line applicants within the Notice.
In the home heating oil case in the West of Ireland, one of the witnesses for the prosecution had admitted considerable involvement in the cartel in the course of his evidence. His evidence was that his former employer had asked him to attend cartel meetings, and that he had done so and continued to do so, and to charge agreed prices, for a period of months. He was a senior figure in the company, and so was potentially liable for prosecution. However, he appeared as a witness on behalf of the DPP without the protection of a grant of immunity from prosecution. It appears as though the DPP exercised its discretion not to prosecute the individual, notwithstanding a degree of culpability, in exchange for the on-going cooperation of the witness with the investigation and prosecution.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
Again, since the CIP only provides immunity to the first successful applicant, there is no mention within the Notice of leniency for subsequent applicants. There is also no mention of the term ‘useful contributions’ within the Notice.
As mentioned above, the Principles for Leniency Programmes recommend that competition authorities provide a degree of leniency towards subsequent applicants but there has been no movement to date to incorporate this recommendation within the Notice.
One would assume that if a subsequent applicant cooperated with the authorities this may be taken into account by the Authority when deciding whether to prosecute on a summary level or to pass the case on to the DPP for indictment. A party’s cooperation may also be taken into account by a judge when deciding the severity of punishment. The behaviour of the accused during the course of investigation is a relevant consideration of the Courts when imposing sentences.
Since one main tenet of the CIP is to urge cartel members to come forward as soon as possible by promising full immunity to only the first successful applicant, granting leniency to subsequent applicants may damage the viability of the programme by promoting the idea that being first does not hold much importance.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency.
Yes, it is possible to receive full immunity under CIP as the Notice defines immunity as “full immunity from prosecution in criminal cases under the Act”. As mentioned earlier, this does not however provide the applicant with immunity from civil proceedings or prosecution by foreign competition authorities.
Sections 14 and 8(10) of the Act allow any aggrieved person the right to civil action regardless of whether or not there has been a criminal prosecution initiated for the offence in question.
In addition, full immunity does not shield the applicant from criminal prosecution under other statues or common law. In particular, applicants should be wary that criminal prosecution under the Company Law Enforcement Act 2001 is possible if the offence falls within the scope of this Act.
Section 18 of the Company Law Enforcement Act 2001, states: “Notwithstanding any other law, information which, in the opinion of the Competition Authority or a member of An Garda Siochána or an officer of the Revenue Commissioners, may relate to the commission of an offence under the Companies Acts may be disclosed by that Authority, member or officer to the Director or an officer of the Director”.
While applicants should be aware of this possibility, it is unlikely that the Authority and the DPP would first grant immunity and then be involved in prosecuting separately.
The requirements to apply successfully for full immunity have been previously outlined within the answer to question 4.
9. How many companies have received full immunity from fines to date?
The Authority has not published any data on the number of companies that have received full immunity from fines to date. In addition, unlike many other national regulatory authorities, the Authority does not publish any information on the number of immunity applications received. As a result, information regarding immunity applicants will only come to light after a trial, at which point it becomes public knowledge. The Authority, therefore, has no part in publicising this data and as a result, there are no definite statistics available on the number of companies who have been granted full immunity.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
The four steps involved in applying for immunity under the CIP are as follows:
Initial contact
Under this first phase the applicant is asked to submit an application, in person or by telephone, to the designated officer within the Authority. This may be done between the hours of 10am and 4pm, Monday through Friday, with the exception of public and bank holidays. Applications made to anyone besides the designated officer are considered invalid.
The application must contain an outline of the facts of the case. The applicant has the option of presenting the initial application in hypothetical terms through a legal advisor so as to protect anonymity.
Once the application has been received, the applicant is given a place marker in the queue and applications are dealt with in order of receipt.
Qualified guarantee of immunity
Under this second phase the applicant will be asked to provide the Authority with a description of the illegal activity. If the Authority believes the applicant’s information is sufficient and falls within the scope of the CIP, it will request a qualified agreement to grant immunity from the DPP.
Full disclosure
Once the applicant has been given a qualified agreement to grant immunity, he is required to fully disclose any evidence and information within his possession. It is understood that the Authority and DPP will not use this information against the applicant unless the applicant fails to comply with the requirements of the CIP as set out in the answer to question 4 above.
Immunity agreement
Once full disclosure has been completed and the terms of the qualified agreement have been satisfied, the DPP will issue the applicant with the final immunity agreement. It is important to note that the final immunity agreement will not be issued until the prosecution is complete. In order to receive full immunity, an applicant must not have persuaded another party to take part in the cartel activity and must not have played a leading role in the cartel activity. Therefore, the DPP will wait to issue a final immunity agreement until all facts of the case have been presented at trial. If information comes to light during the course of the trial that implicates the applicant as a leader or instigator of the illegal activity in question, the applicant will be disqualified and the DPP will no longer issue him with a final immunity agreement.
11. Is there an optimal time to approach the regulatory authority?
Since the CIP only grants immunity to the first successful applicant, it is suggested that applicants approach the Authority as soon as possible. This ensures that the applicant is the first to be considered, and has come forward before the Authority has had time to complete the investigation on its own and thus would have no need for additional information or evidence.
12. What guarantees of leniency exist if a party cooperates?
During step two of the immunity application process, the Authority will make a recommendation to the DPP for a qualified guarantee of immunity. Though the Authority may strongly recommend that an applicant receive this guarantee of immunity, it is ultimately up to the DPP whether or not this guarantee will be issued. As stated within the Notice: “Nothing in this programme shall affect the discretion of the DPP in the exercise of his functions”. Therefore, at this stage, there is no definite guarantee that immunity will be granted, despite a strong recommendation by the Authority.
If the DPP does in fact decide to grant the applicant a qualified guarantee of immunity, this qualified immunity and the subsequent grant of a final immunity agreement are dependent upon the continued cooperation of the applicant.
As stated in paragraph 30 of the Notice: “Failure to comply with requirements under the agreement includes failure by an undertaking to fully promote the complete and timely cooperation of its employees, failure to disclose any and all offences and failure to provide full, frank and truthful disclosure of all evidence and information known or available to it or under its control”.
In addition, as mentioned earlier, the guarantee of full immunity only protects the applicant from criminal prosecution under the Act. It does not guarantee immunity from civil prosecution, prosecution by foreign competition authorities, or criminal prosecution under other statutes or common law.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
The issue of confidentiality is dealt with on a number of levels within the Notice as well as in other relevant notices by the Authority and the EC.
As previously mentioned, during the early stages of the application process, the applicant may present information to the Authority through a legal representative in hypothetical terms in order to maintain anonymity. However, once a qualified guarantee of immunity has been issued, this option is no longer available and full disclosure is usually necessary.
In paragraph 31 of the Notice it is stated that:
“Information becoming available pursuant to this programme will not be disclosed other than in accordance with normal practices and procedures pertaining to criminal investigations and prosecutions. In particular, information may be disclosed:
This is mirrored by the Principles for Leniency Programmes published on www.tca.ie which mentions that: “The authority shall, to the extent legally possible, honour confidentiality claims by applicants for leniency up to the point that publication of a rapport or decision is required by the relevant legal process”.
In addition, section 32 of the Act provides for the imposition of severe penalties on any Authority member who discloses confidential information improperly.
In the West of Ireland heating oil cartel case in 2006, the DPP granted the defendants full disclosure of all documentary evidence obtained during the course of the investigation. Much of this information originated with applicants protected by immunity agreements. It is important to note, however, that while details of evidence given by immunity applicants were disclosed, the deliberation process by the Authority and DPP on the application for immunity was not disclosed.
Since applicants to the CIP are not protected from criminal prosecution under other statutes or common law, the Competition Authority has entered into cooperation agreements with other statutory bodies which help to maintain confidentiality and protect the applicant. For example, the cooperation agreement between the Authority and the Office of Director of Consumer Affairs contains an agreement to provide one another with information. Yet, this agreement is limited by the understanding that: “In the case of information supplied pursuant to this Agreement, the provisions of any enactment concerning the disclosure of information by the Respondent Party shall apply to the Requesting Party” (section 5(3) of the Co-operation Agreement). For example, if the Authority has received information from an immunity applicant, the Office of Director of Consumer Affairs, while it may request access to this information, cannot disclose it in any manner which has been forbidden by the terms of the immunity agreement in place.
As previously mentioned, immunity under one national competition authority does not amount to immunity under any other authority. Therefore, applicants put themselves at risk of prosecution by another competition authority when they disclose information that implicates them in a crime in that other jurisdiction.
According to the Commission Notice on Cooperation within the Network of Competition Authorities (2004/C 101/03), Article 12 of the Council Regulation states that for the purpose of applying Articles 81 and 82 of the EC Treaty: “the Commission and the competition authorities of the member states shall have the power to provide one another with and use in evidence any matter of fact or of law, including confidential information”. Yet, in the case of an immunity applicant, the statement is limited by the following provisions:
In order to protect immunity applicants further, the Authority urges applicants to apply for leniency to all other relevant authorities, though the ultimate decision to do so is left with the applicant. If immunity is granted to the applicant by all relevant authorities, the transmission of confidential information between these Network Members will not pose a threat to the immunity applicant. The Authority then invites applicants to waive confidentiality claims in respect of these other jurisdictions where immunity has been granted.
This suggestion is also given in the Principles for Leniency Programmes, which states that “the authority shall invite applicants to waive confidentiality claims in respect of other jurisdictions, where the applicant has applied for leniency treatment”.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
As noted in the answer to question 4, the Notice maintains that “if a corporate undertaking qualifies for a recommendation for full immunity, all past and present directors, officers and employees who admit their involvement in a cartel as part of the corporate admission…will also qualify”. Their qualification for immunity, however, is dependent upon their compliance with the requirements for immunity as stated by paragraph 16 of the Notice and as outlined earlier in this chapter.
In addition, the Notice also mentions that an undertaking may initiate an application for immunity on behalf of its employees, directors and officers.
15. Does leniency bar further criminal or private enforcement?
As previously mentioned, immunity under the Notice is defined as “full immunity from prosecution in criminal cases under the Act”. Full immunity therefore, does not protect the applicant from criminal prosecution, by way of private or public prosecution, under another statute or common law, civil suits, or prosecution by another competition authority.
Furthermore, and most importantly, immunity from criminal prosecution under the Act does not protect (in fact, it exposes) the applicant from claims for damages from private parties, (competitors or customers) who can prove that they have suffered losses as a result of the cartel activity.
In addition, if the applicant failed to fully reveal its involvement in cartel behaviour considered an offence under the Act, it would not receive immunity for this behaviour if it was supposed to be disclosed as part of the immunity agreement, and was not.
RELATIONSHIP WITH THE EUROPEAN COMMISSION’S LENIENCY NOTICE AND LENIENCY POLICY IN OTHER EU MEMBER STATES
16. Does the policy address the interaction with applications under the Commission Leniency Notice? If so, how?
The CIP does not mention interaction with applications under the EC Commission Leniency Notice. However, the ECN Model Leniency Programme launched in 2006, available on www.tca.ie, sets out a framework for a uniform summary application system which is intended to “alleviate the burden associated with multiple filings in cases for which the Commission is particularly well placed”.
In line with the ECN Model Leniency Programme’s goals, the summary application system will hopefully be adopted by all member states, Ireland included, by 2008. The summary application system will be available to applicants involved in cases that the Commission is particularly well placed to deal with, but that could also apply to more than three member states. The idea behind the summary application system is that applicants involved in cases potentially falling under several jurisdictions will be able to avoid dealing with varying requirements and multiple filings when applying for immunity. The ECN Model Leniency Programme states: “In cases where the Commission is ‘particularly well placed’ to deal with a case in accordance with paragraph 14 of the Network Notice, the applicant that has or is in the process of filing an application for immunity with the Commission may file summary applications with any NCA’s which the applicant considers might be ‘well placed’ to act under the Network Notice.”
While the summary application system is already in place in some member states, there has not yet been any movement to incorporate this system within the CIP.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
Again, there is no mention in the CIP of interactions with applications for leniency in other EU member states. The ECN Model Leniency Programme, mentioned above, does address the topic however, and takes a first step towards harmonising leniency policies throughout the EU.
As previously mentioned, an application for leniency with one programme is not considered an application for leniency with any other programme. Therefore, applicants, in order to protect themselves from all angles, are often forced to apply for leniency under several different national programmes. The ECN Model Leniency Programme works to “increase predictability for applicants and avoid applicants being faced with differing requirements when they have to deal with several leniency programmes” (Model Leniency Programme – FAQ).
It has been shown that leniency programmes with different rules and procedures often dissuade applicants from reporting cross-border cartels. The ECN Model Leniency Programme’s goal is to align the leniency programmes of all EU member states so as to encourage applicants to report cross-border cartels and in turn, file with multiple immunity programmes.
All EU competition authorities, including Ireland’s Competition Authority, have agreed to put forth every effort to align their leniency programmes with that of the ECN Model Leniency Programme. Convergence of the programmes will be assessed in 2008.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
According to the Competition Authority’s Strategy Statement 2006-2008, published on www.tca.ie, there is a plan for 2007 to conduct, along with the DPP, a review of the CIP in order to increase its effectiveness.
In addition, one would assume that in line with the 2006 ECN Model Leniency
Programme, the Authority will be expected to provide additions to the CIP in terms of a summary application procedure as well as working towards more strict alignment with the Model Programme’s suggestions. However, there has been no published indication of this type of reform as of yet.
There is also a planned review of the Act, to take place over the next few years, which may potentially have an effect on the CIP.
