1. What is the relevant legislation pertaining to the leniency policy and who is the enforcing body?
The Italian Law Decree 223 issued on 4 July 2006, better known as the ‘Bersani decree’, updated national antitrust laws. It introduced a number of important changes to align national regulations with the provisions set by EC Regulation 1/2003. In particular these concern: (i) the power of the Italian Competition Authority (the ‘Authority’) to grant provisional injunctions; (ii) the Authority’s power to adopt a programme aimed at reducing sanctions imposed on companies that voluntarily report the existence of restrictive agreements; and (iii) the option granted to companies charged with infringements, to commit themselves to removing the anti-competitive effects of their unlawful practices, thus bringing proceedings to an early end and obviating the imposition of any sanctions. The Bersani Decree was codified in Law 248/2006 (the so-called Bersani-Visco law).
The Bersani decree also empowers the Authority to adopt an implementing act, setting out the general rules and criteria that the Authority will apply in order to reduce sanctions imposed by antitrust laws, for those companies who report a secret arrangement restricting competition.
The Authority approved the definitive operational guidelines (the ‘Communication’) upon completion of a wide-ranging public consultation. On 15 February 2007 it enacted the antitrust leniency programme for companies intending to cooperate with the Authority, by assisting it in identifying the most serious anti-competitive arrangements. The Communication introduced into the domestic competition regime a system of partial or total exoneration from penalties that would apply to cartel members reporting their cartel membership. Indeed, this leniency programme provides immunity to a cartel member who is the first to withdraw from the agreement and reveals the existence of the cartel. A considerable reduction of fines (between 20 and 50 per cent) is also granted to those who offer additional information to substantiate the presence of these types of agreements. The Leniency Notice is largely inspired by the European Commission’s leniency programme and the European Competition Network adopted the Model Leniency Programme on 29 September 2006.
2. What are the basic tenets of a leniency/immunity programme?
In accordance with EC principles, the leniency programme is applied to horizontal agreements, as well as tender procedures: but especially to price-fixing cartels, market sharing, sales and production limitation agreement cases, because these are capable of causing damage to both consumers and competitors. Furthermore it is applied to violations that are particularly difficult to ascertain.
The leniency programme applies to agreements falling under Article 81 of the EC Treaty and Article 2 of Law 287/1990. In this light, leniency programmes are a particularly effective means of destabilising cartels because they can guarantee full immunity from fines to the company that first ‘whistle-blows’ on the unlawful practices.
The programme allows for a sliding scale of reductions according to the usefulness of the collaboration offered by the ‘penitent’ companies. These go to the extent of total immunity for a company which is the first to spontaneously provide the Authority with decisive proof of a
European Lawyer Reference Series 139
secret cartel, where such information would not be already available to the Authority.
It is, in any case, possible for a company, whose collaboration contributes significantly to the evidence available to the Authority, to benefit from a reduction in its fine, usually of not more than 50 per cent. Obviously, account will be taken of the timeliness of the company’s collaboration and the value of the evidence produced.
Full collaboration with the Authority is an essential requirement in order to benefit from the leniency programme. Therefore, on risk of exclusion, the company must present all of its available relevant information and must not reveal its participation in the leniency programme to third parties.
A company, wishing to take part in the leniency programme, must present an application to the Authority, attaching the relevant information and documents. In some cases, the company may not be in a position to immediately produce the elements of proof necessary to obtain immunity but may be able to obtain them within a short period of time. In such a case, it may present an incomplete application and request that the Authority fix a deadline for producing the relevant information and documents to complete its application.
Lastly, in order to lighten the administrative burden on companies, it is possible to present an application for immunity in a simplified form in cases where the European Commission is best placed to carry out the investigation into the cartel in question.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
As already mentioned, the leniency programme was only recently introduced. The Italian Competition Authority delivered only one decision applying its leniency notice to date: Decision 16835, Produttori di Pannneli Truciolari in Legno, 30 May 2007. In this case the Authority unveiled a cartel that had the aim of market sharing, partitioning of customers and price fixing on the wood chipboard panels market. Such infringement had been taking place from January 2004 until November 2005. The undertakings concerned1 represented 80 per cent of the market. This achievement was reached due to the decisive information received from Gruppo Trombini, one of the undertakings active in that market and also partially involved in the cartel. The investigation began after receiving such information at the end of 2005 and the Statement of Objections was delivered on 15 January 2007 after an extensive investigation had been completed. Gruppo Trombini was made totally exempt from the fine. The Authority imposed fines against all the other cartel participants. Once the proceedings had begun, the other undertakings concerned collaborated with the Authority. In fact, as prescribed in the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation 1/2003,2 the basic amount was reduced by 30 per cent3 for all undertakings fined; nevertheless, the total amount of fines imposed was more than €31 million.4
Furthermore, in the Authority’s decisional practice, there is evidence of reduction and immunity treatments even before the leniency programme was introduced into Italian Competition law: the relevant case is Operatori nel settore degli esplosivi da mine (decision 26 June 1997 No 5161)5.
The latter case is of great significance because it was the first time that the Authority did not fine a company for being part of a cartel. This decision was taken because the undertaking concerned had abandoned the unlawful practice and had informed the Authority of the existence of the cartel. The Authority had been unaware of the existence of the cartel. Following this compliance, the Authority initiated proceedings against the main Italian firms producing and distributing explosives for the mining industry. They were alleged to have implemented agreements with the aim of sharing production and sales as well as fixing prices.
Italesplosivi, one of the companies involved in the proceedings, which distributes explosives in the Italian market on behalf of firms competing among themselves, could have been the means by which to coordinate the commercial policies of its stockholders and the represented undertakings.
Restriction on competition could have been appreciable, given the importance of the parties involved in the agreements. Indeed, they represented over 90 per cent of the Italian explosives market for the mining industry.
Taking into account the significant market shares of the parties, the Authority ruled that the agreement had substantially restricted competition, leading to a reduction in the range of available products and to higher prices in the market. In view of the seriousness of the offence and considering the different roles played by the companies with respect to the agreement, the Authority imposed fines ranging from two to three per cent of the companies’ turnover (totalling 1,406 million Lire). No fine, however, was imposed against the compliant company, since it had voluntarily ceased breaking the law before the Authority took action, and played a decisive role in the detection of the agreement.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
Full collaboration with the Authority is an essential requirement to benefit from the leniency programme.
The programme allows for a sliding scale of reductions according to the usefulness of the collaboration offered by penitent companies. These go to the extent of total immunity for a company which is the first in time to spontaneously provide the Authority with decisive evidence of a secret cartel, where such information is not already available to the Authority.
Furthermore, a company whose collaboration significantly contributes to the evidence available to the Authority, may benefit from a reduction in the fine. Usually, the decrease is about 50 per cent at most, and is proportional to the timeliness of the company’s collaboration and the value of the evidence produced. Therefore, to not risk exclusion, the company must present all the relevant information it has available and must not reveal its participation in the leniency programme to third parties.
The ‘first in’ condition requires that the application, which may be oral or in writing, is submitted by a person who is empowered to act on behalf of the company for that purpose and that such notification is made individually.
When a company makes an oral application, the company representative’s statements are recorded on a hard disk and then written out by the Authority’s employees. However, the oral application does not avoid the obligation of providing any documentary evidence that is at the company’s disposal. Access to oral application is postponed until the statement of objections (see Article 13(10) DPR 217/1998: “The office may, giving reasons therefore, defer access to the documents requested until it has been ascertained that they are relevant for the purposes of acquiring evidence of infringements, but not beyond the date of the service of notice of the results of the investigation referred to in section 14”).
The company must provide all the information at its disposal, which is relevant to prove the infringement. Consequently the company must, as far as possible, state:
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Only the company which is ‘first in’ that can apply for immunity. To receive immunity, the company must provide enough information that meets the following requirements:
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
The company being second has two options:
The reduction of fines is subject to respecting the full collaboration requirements. Therefore, when the Authority discovers that those requirements are not being met anymore, it will promptly communicate this to the company.
Where the Authority obtains new evidence that may increase the fine of the company that provided it, it would not take this into account for the final fine. However, there is no ‘immunity plus’ or ‘amnesty plus’ option.
7. Are subsequent companies given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
This criterion applies only to the second or third party coming in to receive the reduction of up to 50 per cent, and who provides “significant added value” information or evidence.
According to the Communication, the company should submit information, which represents added value when compared to what the Authority already had access to in order to strengthen its ability to fully establish the facts of the investigation. The information and evidence will be evaluated according to its nature and extent of detail that it might be able to provide.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required in order to receive full leniency?
It is possible to receive full leniency, if the company is the first to come in and it meets the following conditions:
9. How many companies have received full immunity from fines to date?
As already mentioned in question 3, only Gruppo Trombini (Decision 16835, Produttori di Pannneli Truciolari in Legno, 30 May 2007) received full immunity from fines to date. It is interesting to point out that the Italian Competition Authority gave an extensive and clear explanation of the reasons for granting the full immunity which were, obviously, compliant with its leniency notice requirements. The wording of the Authority’s reasoning should be emphasised. First of all it remarked on the decisive contribution supplied to the proceeding by Gruppo Trombini. Then it pointed out that this undertaking was the first participant that spontaneously gave crucial information, such as documentary evidence pertaining to the existence of the cartel and specifically information concerning the identity of the undertakings involved and their representatives. Moreover, it gave the Authority all the relevant information it could get before and after the proceedings had started as well as being available to provide extensive and detailed clarifications in relation to the documents found during the inspection by the Authority in the light of the cartel’s functioning mechanism. Finally, the quality of the information provided by Gruppo Trombini further enriched the factual framework, which was the object of the Authority’s investigation.
All those elements led to the Authority’s conclusion that: “importance and completeness of the information provided by Gruppo Trombini during the proceedings were, among others, immediately perceivable either as such as well as when compared to the collaboration given by the other parties in the proceedings during the investigations.”6
To sum up, the key features of the undertaking’s behaviour, awarded by the Authority’s decision for full immunity from fines, can be summarised as follows:
Furthermore, as also mentioned in question 3, in June 1997 the Authority completed an investigation into a horizontal agreement between the nine leading mine explosives manufacturers. The Authority ruled that the agreement had substantially restricted competition, leading to a reduction in the range of available products and to higher prices in the market. In view of the seriousness of the offence and considering the different roles played by the companies with respect to the agreement, fines ranging from two to three per cent of the companies’ turnover (totalling 1,406 million Lire) were imposed. No fine, however, was imposed on the compliant company, since it had voluntarily ceased breaking the law before the Authority took action, and played a decisive role in the discovery of the agreement.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
A company wishing to take part in the leniency programme must present an application to the Authority, attaching the relevant information and documents. If requested by the company, the Authority can release a receipt that states the date and time when the application was submitted.
In some cases the company may not be in a position to immediately produce the elements of proof necessary to obtain immunity, but it may be able to obtain them within a short period of time. In such a case, it may lodge an incomplete application and request that the Authority fix a deadline (the so-called ‘marker’) for producing the relevant information and documents to complete the application. In this case the deadline will be the moment at which the application is submitted. This can raise uncertainty if another company, a member of the cartel, submits a full application before that deadline. In this situation the company who first requested a marker may become ‘second-in’ and accordingly only be able to apply for a reduction of fines.
Furthermore, if the company requesting the marker does not complete its application, the documentation provided may be used in order to consider a reduction of the fine.
11. Is there an optimal time to approach the regulatory authority?
If a company has decided to apply for leniency, then it should approach the Authority as soon as possible in order to be considered the ‘first in’ to collaborate. Probably the best moment for applying is when the Authority has no knowledge of the existence of a cartel, or before it has begun carrying out any inspections.
6 See paragraph 257 of the Authority’s decision 16835 /2007: “Il pregio, completezza e dettaglio delle informazioni fornite dal gruppo Trombini nel corso del procedimento è, peraltro, di immediata percezione sia in termini assoluti che in relazione al contributo fornito nel corso dell'istruttoria dalle altre parti del procedimento.”
However, prior to applying, the company should contact the Authority anonymously to find out if any another undertakings have already applied for immunity.
12. What guarantees of leniency exist if a party cooperates?
The only kind of formal guarantee granted to a company willing to cooperate is that of being the ‘first in’ to report an infringement. In fact, the Authority believes that restricting full exemption from fines only to the ‘first in’ to report an infringement significantly decreases a cartel’s stability by increasing the uncertainty of its participants about which of them would be the first ‘to snitch’. Therefore, this limitation would trigger the undertakings involved to try to be the first to cooperate with the Authority to be awarded the exemption. However, being the first to report an infringement might not in itself be enough because the Authority also evaluates whether the other requirements for immunity have been met. It welcomes the application and grants conditional immunity subject to the condition of full collaboration. Therefore, the Authority only assesses the immunity when it makes its final decision.
If the company refused to cooperate fully, it would lose its conditional immunity and this would promptly be communicated by the Authority. The company would also lose any chance of applying for a reduction in the fines.
In the case where an application for immunity has been rejected, the company may either ask for a reduction of the fine (up to 50 per cent) to be considered or the retraction of all information and evidence. As for immunity, the decision regarding the reduction of fines is only made at the time of the final decision.
13. Is confidentiality afforded to the leniency applicant and other collaborating parties? If so, to what extent?
Furthermore, access to the information and evidence provided by the company is postponed until communication of the preliminary investigation findings. This postponing is mandatory where the company applied orally; whilst in the written application the company might ask to postpone access to the provided documentation.
In case of an oral statement, those who may access it cannot obtain a copy of the recording, but may listen to it and take notes.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
This is not applicable, since no sanctions can be imposed on individuals for competition law infringements.
15. Does leniency bar further criminal or private enforcement?
Pursuant to Italian competition law, the only sanctions that can be imposed against companies involved in infringements are in the form of pecuniary fines and damages. No criminal punishment can be imposed.
Furthermore, the leniency programme does not bar private civil actions for damages.
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’s Leniency Notice? If so, how?
In order to lighten the administrative burden on companies, it is possible for a company to present an application for immunity in a simplified form, where the European Commission is best placed to carry out the investigation of the cartel in question.
In case of a simplified form, the companies have to at a minimum provide the following information:
On request the Authority will issue a receipt stating the time of application and will inform the company if it is still possible to apply for immunity. When the Authority needs more information it will fix a deadline for the company to provide it. Indeed, when the Authority wants to intervene in the proceedings it requests the company to complete the normal application. In this case, the moment of applying would be the time at which the simplified application was lodged.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
See answer to question 16 above.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revise the leniency policy? What are the latest developments?
Since the communication has been introduced recently, there have, as yet, been no developments concerning reforming it.
1 Sacic Legno S.r.l.; Sit S.r.l.; Sia S.r.l.; Sama S.r.l.; Gruppo Frati S.p.A.; Fantoni S.p.A.; Saib S.p.A.; Xilopan S.p.A. and Montanari S.p.A.
2 According to Paragraph 29 the basic amount may be reduced where the Commission finds that mitigating circumstances exist.
One of the circumstances explicitly mentioned is: “where the undertaking concerned has effectively collaborated with the
Commission outside the scope of the Leniency Notice and beyond its legal obligation to do so;”
3 Except for Gruppo Frati's basic amount, which was reduced by 40 per cent due to financial difficulties, since the imposition of a
higher amount could irreparably damage the company.
4 Sacic Legno S.r.l. €2,520,000; Sit S.r.l. €3,024,000; Sia S.r.l. €5,544,000; Sama S.r.l. €7,056,000; Gruppo Frati S.p.A.
€6,955,200; Fantoni S.p.A. €3,276,000; Saib S.p.A. €1,764,000; Xilopan S.p.A. €529,200.
5 The companies involved in the proceedings were: Italesplosivi, Chedidde Italia, Dinamite Dipharma, Internazionale esplosivi,
Mangiarotti, Cocciuti, Pravisani, SEI, Sipe Nobel, SME e Sorlini.
