BACKGROUND
1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The Norwegian Competition Act of 5 March 2004 No 12 (the Competition Act) introduced the leniency programme in Norway. Further details of the leniency programme are set out in the Regulation on the Calculation of and Leniency from Administrative Fines (the Regulation), which also sets out the method of calculating administrative fines. The Competition Act and the Regulation are available in English at the website of the Norwegian Competition Authority (the Authority), see www.konkurransetilsynet.no.
Section 31 of the Competition Act provides for both full leniency (immunity from administrative fines) and partial leniency (reduction of administrative fines). The Authority has the general responsibility for supervising competition, and for managing the leniency programme.
2. What are the basic tenets of a leniency/immunity programme?
The leniency programme applies to agreements and concerted practices between undertakings that have the object or effect of restricting competition (section 10 of the Competition Act). Section 10 corresponds to Article 81 of the EC Treaty and Article 53 of the Agreement on the European Economic Area 1992 (the EEA Agreement). In many ways, the Norwegian leniency programme replicates the Commission’s 2002 Notice on Immunity from Fines and Reduction of Fines in Cartel Cases, and the identical Notice from the EFTA Surveillance Authority (ESA).
Pursuant to section 31 of the Competition Act, leniency may be granted to undertakings that assist the Authority by revealing that it or others have infringed the prohibition of anti-competitive agreements in section 10 of the Competition Act.
Section 31 of the Competition Act provides for both full and partial leniency, depending on the timing (paragraph 2 below) and extent (paragraph 3 below) of the cooperation. The purpose for granting leniency is to give incentives to participants in cartels to cease the cooperation and to contribute to the Authority’s work by reporting serious infringements of the Competition Act.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
Between 1980 and 2006, 31 cartels have been detected in Norway, nine of which involved indictment and subsequent charges to the persons involved. However, no cartels have been unveiled due to the leniency programme so far. As far as we know, the Authority has only received a few leniency applications and no formal enforcement decisions have been made in such matters.
There are probably two main reasons why we have not seen many leniency applications in Norway. First, even if criminal sanctions (such as fines and imprisonment) can be imposed on both undertakings and individuals, the leniency programme applies only to administrative sanctions on undertakings. Therefore, there is always a risk that the prosecuting authority (the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime) will pursue criminal sanctions either on the undertaking or individuals (for example managers or employees) even if leniency has been granted to the undertaking by the Authority.
Another weakness in the system, is that infringements of the former Competition Act from 1993, that is violations committed before 1 May 2004, are not covered by the leniency rules.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
Please refer to question 8 below.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
The first undertaking to meet the conditions in the Regulation will be granted full leniency. As only one of the undertakings can be given full leniency, only partial leniency is available for the other undertakings.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
Only one undertaking may be granted full leniency for the same infringement. Due to this, the second undertaking can never be granted full leniency, unless the first undertaking does not meet the conditions pursuant to section 4 of the Regulation. However, undertakings that are ‘second’ and therefore do not meet the conditions for full leniency, may be eligible to benefit from partial leniency. The second undertaking is entitled to a reduction of 30 to 50 per cent, and the third undertaking is entitled to a 20 to 30 per cent reduction.
There are no ‘immunity plus’ or ‘amnesty plus’ options in the current Norwegian leniency programme.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
The subsequent undertakings may be given partial leniency with a fine reduction of up to 20 per cent.
Partial leniency can be granted if the undertaking submits evidence that significantly strengthens the Authority’s ability to establish an infringement of section 10 of the Competition Act. The degree of the undertaking’s cooperation with the Authority determines the reduction of the fine within the limits mentioned above.
In order to determine the level of reduction within each of the abovementioned categories the Authority will take into account how timely the evidence was submitted, the extent to which the evidence strengthened the case and the extent to which the undertaking has cooperated with the Authority.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
An undertaking may be given full leniency if it, on its own initiative, is the first to submit evidence and documentation that is sufficient for the Authority to either:
If the undertaking chooses to submit the evidence immediately, it must submit all evidence in its possession regarding the infringement. If it is later discovered that the undertaking has not submitted all evidence in its possession, full leniency will usually be withdrawn.
In cases where the evidence is submitted in hypothetical terms, the undertaking shall give a clear description of the nature and content of the evidence so that the Authority has a sufficient basis on which to assess whether the evidence fulfils the requirements for granting full leniency. The Authority will set a final date for submission of evidence. An undertaking that chooses to submit evidence in hypothetical terms carries the risk that the description is in accordance with the underlying evidence.
Undertakings that do not meet the conditions for full leniency can still be granted partial leniency if the submitted evidence significantly strengthens the Authority’s ability to establish an infringement of section 10 of the Competition Act. In addition, the undertaking must end its participation in the infringement no later than when the evidence is submitted.
The extent to which evidence strengthens the ability to establish an infringement depends upon an objective assessment of the nature and content of the evidence, along with the evidence the Authority already possesses at the time the undertaking submits the evidence. Written evidence that can be linked to the time of the infringement will generally have greater evidentiary value than post infringement evidence. Similarly, evidence that is directly connected to the current case is generally regarded as having greater evidentiary value than evidence with an indirect connection.
If the undertaking fulfils the requirements for partial leniency, the administrative fine will be reduced as set out in questions 6 and 7 above.
9. How many companies have received full leniency from fines to date?
To our knowledge, no companies have as yet received full leniency from fines. See question 3 above.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
The applicant submits a leniency application to the Authority. There are no specific formal requirements for the application, but applicants must provide supporting evidence, both statements and documentation. An undertaking that wants to obtain full leniency should make an application as soon as it has gathered sufficient evidence of the cartel’s existence to comply with the leniency conditions (see question 8). Otherwise, there is a risk that one of the other participants may already have contacted the Authority to receive full leniency. Timing is also crucial when obtaining partial leniency because it determines the potential reduction in fines.
An undertaking can approach the Authority directly or through an intermediary, for instance a legal advisor. A request for full or partial leniency should be addressed to the Authority. Subsequently, the Authority will issue a written confirmation stating the date and time the request, with corresponding evidence, was received. The confirmation includes, interalia, identification of the evidence submitted.
As soon as the Authority has verified that the undertaking meets the conditions for leniency, it either grants a written conditional full leniency to the undertaking or confirms in writing that the undertaking is entitled to partial leniency.
After the investigation is completed, the Authority confirms the full or partial leniency by a final decision in writing, provided that the undertaking complies with the relevant conditions.
There are no specific time-limits for the abovementioned process. However, it is important to consider that it may be necessary to apply for leniency in a number of different jurisdictions.
11. Is there an optimal time to approach the regulatory authority?
As already mentioned above, an undertaking that wants to obtain full leniency should make an application as soon as it has gathered sufficient evidence of the cartel’s existence to comply with the leniency conditions. Otherwise, there is a risk that one of the other participants may already have contacted the Authority to receive full leniency.
Timing is also crucial when obtaining partial leniency because it determines the potential reduction in fines, see questions 6 and 7 above.
12. What guarantees of leniency exist if a party cooperates?
There are no guarantees of leniency.
However, if leniency is granted, the complete immunity covers the entire infringement that is under investigation, including further evidence collected concerning the same infringement, unless the undertaking:
The Authority’s grant or confirmation of full or partial leniency is conditional and can be withdrawn if the undertaking does not fully comply with the conditions pursuant to section 4 or section 6 of the Regulation throughout the investigation.
However, neither the Competition Act nor the Regulation regulate when leniency can be withdrawn, and there is as yet no relevant case law. Whether withdrawal after a final decision by the Authority is lawful will depend on general administrative law. This provides that leniency can be withdrawn only if substantial arguments can be presented that leniency should be withdrawn (on the balance of the interests involved). Relevant factors for the Authority to consider are the degree to which the applicant has not complied and the time that has passed since the final decision. In addition, leniency can probably not be withdrawn once the final decision has been approved by a legally binding court judgment.
The Regulation does not directly address the situation that applies to other undertakings if leniency is withdrawn from the first applicant. This depends on an interpretation of the Regulation. An advance to full leniency by the next applicant in line is difficult to reconcile with the Regulation’s wording. However, it may be possible to argue that full leniency should be granted if the applicant that is next in line presents important and previously unknown evidence concerning the cartel (for example, that expands the investigation to cover new undertakings or markets).
When these questions arise, the Authority will probably follow the European Commission’s precedents.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
There are no specific rules on confidentiality in relation to leniency applications. Therefore, the undertakings concerned in an investigation can request access to any documents in the case, except for documents that contain confidential information and internal documents prepared by the Authority.
All information that relates to the investigation is kept confidential to third parties until the proceeding is completed (section 26 of the Competition Act). However, the Authority must publish its final decisions and the names of the parties involved (including the leniency applicant) (section 22 of the Competition Act).
During the investigation the undertakings concerned can request the documents in the case, except where the information compromises the investigation, third parties or business secrets, or the information exclusively concerns another undertaking (section 27(1), Competition Act).
After the investigation and/or court proceeding is completed, the undertakings concerned and third parties can request all the documents in the case, unless this is contrary to the rules on professional secrecy or unfair for the parties with an interest in the documents (section 27(2), Competition Act).
The Authority does not have to grant any confidentiality in excess of its obligations. Court proceedings are generally open to the public, but access can be limited or closed on the defendant’s request if this request is made on reasonable grounds (section 125(1) Courts Act 13 August 1915 No 5). However, according to the case law, these requests are not likely to be granted.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
Whether criminal penalties imposed on employees can be reduced where their employer has obtained leniency, depends on mitigating circumstances under general criminal law. There are no guarantees that a leniency decision in favour of an undertaking will influence the criminal prosecution of the undertaking’s employees.
A practical way to protect employees’ interests is to implement a comprehensive compliance programme (which, for example, safeguards personal and privileged communication).
15. Does leniency bar further criminal or private enforcement?
Leniency does not bar further criminal or private enforcement. Criminal fines can be imposed on both undertakings and individuals. Civil fines cannot be imposed on individuals, only undertakings. However, individuals may risk criminal sanctions in the form of fines and/or imprisonment up to six years.
The leniency programme does not apply to criminal sanctions, but the Authority is given a wide margin of discretion to decide whether it is necessary to make a formal complaint to the prosecuting authority, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime. In exercising this discretion it must take into account the Competition Act’s objectives (that is, to further competition and thereby contribute to the efficient use of resources). It is likely that it will follow the decisions of other jurisdictions that have criminal penalties and civil leniency to make the leniency programmes more effective by not pursuing criminal prosecution against a company that has been granted leniency, or against employees or directors of that company.
The prosecuting authority makes the final decision in all criminal matters, whether or not the Authority or a third party makes a formal complaint. However, the initiation of a prosecution is unlikely, in practice, without the Authority making a formal complaint.
In a criminal prosecution, cooperation with the Authority may be considered by the court as a reason to reduce criminal sanctions (section 59(2) Criminal Code 22 May 1902 No 10).
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 policy does not explicitly address the interaction with applications under the Commission Leniency Notice.
The Authority is not a member of the European Competition Network (ECN) established under the Notice on cooperation within the network of competition authorities (OJ 2004 C101/43) or the ECN’s Model Leniency Programme. However, there is a parallel EFTA network of which Norway is a member.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
The policy does not explicitly address the interaction with applications for leniency in other European jurisdictions.
Norway has entered into agreements with Denmark and Iceland in 2001, and Sweden in 2004, for the purpose of exchanging information between their national competition authorities (NCAs). This includes information that is subject to professional secrecy. This information is treated confidentially by all the NCAs and can only be used for the purposes of enforcing the relevant competition acts. These bilateral agreements do not however specifically address leniency.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
There is currently no proposal for reform of the Norwegian leniency programme.
The director general of the Authority has recently indicated that the leniency programme should be more predictable, in terms of coordinating the leniency programmes for civil and criminal sanctions, in order to be a more efficient tool in the investigation of cartels. It remains to be seen, however, whether this initiative will trigger any formal changes in the leniency programme and other relevant legislation.
