1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The leniency policy is covered by the Competition Act of 4 October 2001 and Regulation 862 of the Cabinet of Ministers of 19 October 2004 Regarding the Procedures for the Calculation of Fines for the Violations referred to in Article 11(1) and Article 13 of the Competition Act (‘Regulation 862’). The enforcing body of the leniency policy in Latvia is the Competition Council (Konkurences padome). Their address is:
5a Blaumana Street (3rd floor)
Riga LV-1011, Latvia
Phone: +371 7282865
Fax: + 371 7242141
www.kp.gov.lv or www.competition.lv
In accordance with Article 12 and 14 of the Competition Act, the Competition Council may impose fines on undertakings that have violated the obligation not to enter into restricted agreements (Article 11(1)) or if a market participant has abused its dominant position (Article 13). Regulation 862 sets out a procedure for imposing fines for the abovementioned violations.
The Competition Act as well as Regulation 862 have been drafted by taking into account the relevant EC legislation. Regulation 862 has not been updated yet pursuant to the latest Commission Leniency Notice of 8 December 2006. However, in accordance with the information provided by the Competition Council, there are no amendments pending for Regulation 862, as it generally does not contradict the Commission’s Leniency Notice.
2. What are the basic tenets of a leniency/immunity programme?
A member of a cartel agreement (horizontal agreement) may be released from the potential fine which would otherwise be imposed by the Competition Council, or the fine may be reduced if the cartel member has cooperated appropriately with the Competition Council in disclosing the existing cartel and the cartel member has fulfilled certain preconditions. First, the cartel member must have informed the Competition Council on its own initiative being the ‘first in’. Second, the cartel member should have submitted to the Competition Council complete information that has enabled the Competition Council to proceed with a successful investigation. Third, the cartel member must actively cooperate with the Competition Council. The final precondition is that the cartel member itself has not been recognised as the leader of a cartel, and that it has not coerced other members to take part in it. Even if the cartel member may not be qualified as a first ‘whistleblower’, it may still receive a fine reduction, provided that the above conditions are met.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
In accordance with the information provided by the Competition Council, there have been no cartels unveiled or punished since the adoption of the leniency policy in Latvia in October 2004, as a result of the leniency regime.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
In order to qualify as a successful leniency applicant, it is required that the respective applicant submits to the Competition Council such information that the Competition Council has not acquired on its own initiative, and it should allow the Competition Council to open a new case, carry out investigations and establish violations of the Competition Act.
The Competition Council will take into account not only documentary evidence, but also testimonial evidence, which, however, must be appropriately recorded in accordance with the Law on the Administrative Process. One such form is a recorded interview with the Competition Council members duplicated by signed minutes of the meeting.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
The main benefit of being the first in to cooperate is full immunity from the potential fine that could otherwise be imposed by the Competition Council. Namely, in case the cartel member has notified the Competition Council being the first in about a cartel of which existence the Competition Council was not aware of, and provided that this information allowed the Competition Council to initiate an investigation and establish a violation, the cartel member may be completely released from the fine that could possibly have been imposed by the Competition Council. Only a cartel member that has not been the leader of the cartel itself and that has not coerced other members to take part in it may be completely released from the fine.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
The legal consequences of being second is that such applicant may receive a fine reduction in the amount of 30–49 per cent (but the fine nevertheless may not be less than LVL 500, equivalent to €700). The cartel member must have delivered to the Competition Council such information that may serve as substantial proof for the given violation and the cartel member must have cooperated actively with the Competition Council during the entire process of the investigation in order to obtain the above fine reduction.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
See also question 6. As to ‘useful contributions’, subsequent firms may receive the fine reduction only if they have informed the Competition Council of such facts that were not known to the Competition Council at the moment when they were delivered to it, as well as the information provided served as essential evidence for the given violation.
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. See also question 5. The following conditions must be met in order to qualify for total immunity from the fine imposed by the Competition Council for violation of a horizontal cartel agreement:
9. How many companies have received full immunity from fines to date?
In accordance with the information provided by the Competition Council, no companies have received full immunity from fines since the date when the leniency policy in Latvia was launched in October 2004.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
In order to qualify for full immunity or fine reduction, the cartel member must submit a well-grounded written application to the Competition Council informing the Competition Council of the cartel agreement.
11. Is there an optimal time to approach the regulatory authority?
There is no specific optimal time to approach the Competition Council. However, the potential applicant must take into consideration that the principle ‘first come, first served’ shall be applied by the Competition Council in order to grant full immunity or fine reduction. Furthermore, the optimal time to approach the Competition Council shall preferably be ‘as soon as possible’ in order to avoid further damage to the economy, consumers and society in general. In accordance with Regulation 862, the duration of the violation shall be taken into account when deciding on the amount of the fine. It is important to approach the Competition Council ‘as soon as possible’ in order to avoid larger fines and other negative consequences.
12. What guarantees of leniency exist if a party cooperates?
There are no guarantees of leniency for a party cooperating with the Competition Council, as each case is analysed separately on a case-by-case basis. The total immunity or fine reduction may be granted at the sole discretion of the Competition Council. In each individual case the Competition Council shall consider whether the potential applicant (reporter) satisfies each and every leniency precondition. Nevertheless, in case a cartel member has on its own initiative truly and fully provided information or given substantial evidence to the Competition Council, and this information or evidence has played an essential role in establishing the violations of the Competition Act, the Competition Council may reduce the total amount of the fine for such cartel member (the fine at the same time may not be less than LVL 250, equivalent to €355).
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
The relevant leniency Regulation 862 provides no provisions with respect to the confidentiality commitment. Nevertheless, the Competition Council must comply with the Competition Act, Commercial Law and Law on Information Publicity, which ensures securing of confidential information (commercial secrets) of the market participants.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
Neither the Competition Act, nor the relevant leniency Regulation 862 provides any provisions with respect to the effects of leniency granted to a corporate defendant on such defendant’s employees.
15. Does leniency bar further criminal or private enforcement?
Violations of the Competition Act may cause administrative and civil liability as well as criminal liability in certain cases (if acts of unfair competition are established repeatedly within a one-year term). The principle ne bis in idem, which is recognised in all EU countries, provides that for a particular violation an individual or undertaking may be punished just once. The granted leniency does not itself bar further private enforcement, as leniency only applies between the Competition Council and the undertaking concerned. Undertakings that qualify for leniency can be subject to private enforcement in the form of civil claims by other undertakings or individuals. Furthermore, leniency does not bar individual criminal liability of a cartel member’s employees or members of its executive authorities.
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?
Neither the Competition Act, nor the relevant leniency Regulation 862 refers to applications under the Commission Leniency Notice. However, the Competition Act provides rules of cooperation with the European Commission in accordance with Council Regulation No 1/2003 of 16 December 2002.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
Neither the Competition Act, nor the relevant leniency Regulation 862 addresses the interaction with applications for leniency in other EU member states. However, the Competition Act provides rules of cooperation with the competition authorities of other EU member states in accordance with Council Regulation 1/2003 of 16 December 2002.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
The analysed Regulation 862 was adopted on 19 October 2004 and came into effect on 23 October 2004. The Commission’s Leniency Notice of 8 December 2006 is not yet appropriately reflected in the leniency Regulation 862. No amendments are planned to Regulation 862 at this point. Regulation 862 would need to be updated by taking into account the latest developments as referred to in the Commission’s Leniency Notice of 8 December 2006. However, neither the Competition Council, nor any other authority has commenced any lawmaking procedures in this matter. In particular, the Commission’s Leniency Notice of 8 December 2006 clarifies the scope of information that an applicant needs to provide in order to benefit from immunity and introduces a discretionary marker system for immunity applicants (where justified, an application can be accepted on the basis of limited information; the applicant is then granted time to perfect the information and evidence to still qualify for immunity as being first in). Furthermore, the latest Commission Leniency Notice introduces a procedure to protect corporate statements made by companies under the Commission’s Leniency Notice from being made available to claimants in civil damage proceedings. The above notions must find their place in Regulation 862 in the near future.
