1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The Slovak Republic introduced the possibility of non-imposition or reduction of fines in cartel cases (the ‘leniency policy’ or ‘leniency programme’) in its competition legislation as of 1 May 2001, when Act 136/2001 Coll on Protection of Competition (the Act) entered into force. Section 38(10) of the Act provided for a leniency policy modelled on the 1996 Commission Notice on the non-imposition or reduction of fines in cartel cases. The original wording of the leniency policy presented significant obstacles to the application of the leniency policy in practice, particularly because immunity from or reduction of fines was conditional on the fact that the applicant did not obtain any economic benefit from its participation in the cartel.
In 2004 the leniency policy was reformed based on the 2002 Commission Notice on immunity from fines and reduction of fines in cartel cases by an amendment to the Act, which entered into force on 1 May 2004 (date of the accession of the Slovak Republic to the European Union). The 2004 amendment to the Act brought the Slovak competition legislation in line with the EC competition law, including Regulation 1/2003. The leniency policy is currently regulated by section 38(11) and (12) of the Act.
The national authority which primarily enforces the Slovak and EC competition rules in the Slovak Republic is the Antimonopoly Office of the Slovak Republic (the Office). However, the decisions of the Office can be subject to judicial review by the Slovak courts (the Regional Court in Bratislava in the first instance and the Supreme Court of the Slovak Republic as the second instance court). In reviewing the decisions of the Office, the courts have full jurisdiction and can also decide on the amount of the fine being imposed. The decision of the courts on the amount of the fines has to be based, among other things, on the provisions of the Act on leniency policy.
The Office issued guidelines on the non-imposition or reduction of fines in cases concerning certain types of cartels on 31 March 2006 (the Guidelines). The objective of the Guidelines is to explain, in more detail, the approach of the Office to the application of the leniency policy as set out in section 38(11) and (12) of the Act. These Guidelines are not legally binding and represent only an internal document of the Office, the rules of which are not enforceable by the leniency applicant against the Office. This lack of binding nature of the Guidelines has several negative implications. In particular, the Guidelines fall short of increasing legal certainty of the leniency applicants. With regard to the hierarchy of the enforcing bodies, it is unlikely that the contents of the Guidelines will be taken into account by the courts reviewing the decisions of the Office, unless the regulation contained in the Guidelines is based on the generally binding legislation.
2. What are the basic tenets of a leniency/immunity programme?
The basic objective of the Slovak leniency programme is to facilitate the detection and termination of agreements restricting competition. The leniency programme provides the opportunity for the participants in certain types of cartels to:
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
Based on the limited information available from the Office, it has received only one leniency application since the reform of leniency policy in 2004. This leniency application, reportedly, concerns a cartel affecting multiple jurisdictions; however, this case is still under investigation. No leniency applications were received under the leniency policy applicable before the 2004 reform.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
Conditions for successful leniency application
Full immunity is granted by the Office to the leniency applicant if the following conditions (set out in section 38(11) of the Act) are fulfilled:
If the above conditions, for either full immunity or reduction of the amount of the fine, are met the Office is obliged to grant full immunity or the reduction, respectively; it does not have any discretionary power in this respect. Leniency will also be granted to the applicant, where the fulfilment of the above conditions is proven at the stage of the judicial review of the decision issued by the Office.
Neither the Act nor the Guidelines sufficiently address the issue of burden of proof, in respect of the conditions for granting the leniency. Although it is clear that it is the obligation of the leniency applicant to provide, on its own initiative, ‘decisive evidence’ or ‘significant evidence’, respectively, it does not clearly follow from the applicable procedural law that the leniency applicant bears the burden of providing that the other conditions of leniency are fulfilled. Under the Slovak procedural rules, the Office has the duty to procure all the information and evidence necessary to establish the facts of the case. Although the parties to the proceedings are obliged to propose evidence known to them that supports their arguments, this principle does not amount to shifting the burden of proof on the parties to the proceedings before the Office and does not affect the investigative role of the Office in the proceedings. Despite this, the Guidelines, rather confusingly, provide that the conditions for leniency must be proven by the leniency applicant. While such an approach may be logical having regard to the nature and aims of the leniency programme, it is not adequately based on the existing legal regulation of leniency under Slovak law.
Form of evidence
The form and extent of the evidence that must be provided to the Office by the leniency applicant is specified in the Guidelines. In general, although the leniency application as such may take the form of an oral statement, recorded by the Office in an official protocol (see our response to question 10), the leniency applicant must provide to the Office any written documentation available to it which proves the information disclosed by the applicant in the leniency application. The Guidelines thus indicate that the Office will not consider testimonial evidence to be sufficient if the leniency applicant possesses documentary evidence. Moreover, the Guidelines provide that documentary evidence must be supplemented with written representations, describing the participation of the leniency applicant in the cartel (although this clearly conflicts with the possibility of making the leniency application orally).
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Full immunity can be granted only to the ‘first in’ to provide the ‘decisive evidence’ that proves the existence of the cartel, and at the same time fulfils the other conditions (see the response to question 4 above). According to the Guidelines, if more than one undertaking submits the application for full immunity, the Office will evaluate the applications in the order in which they have been delivered. At the same time, during the review of the application until formulating its position on it, the Office will disregard any other applications that may be submitted later.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
In the event that the application of the undertaking for full immunity is second in the order, full immunity can be granted to such ‘second in’ applicant, on the condition that the undertaking which was the ‘first in’ does not provide to the Office the ‘decisive evidence’, that proves the existence of the cartel. In such cases, if the Office receives ‘decisive evidence’ for proving the cartel by the second undertaking, the Office will grant immunity only to this undertaking (provided that other statutory conditions are met), even if the first undertaking to file a leniency application subsequently supplements the evidence it provided to the Office.
If an undertaking discovers that its application for full immunity is not the first in the order, it can apply for a reduction of the fine. However, the reduction can only be granted to the second undertaking, if it provides ‘significant evidence’, which, in combination with information and documents already available to the Office, enables the Office to prove the cartel. In a situation, where the ‘first in’ has already provided ‘decisive evidence’ for proving the cartel, a considerable risk exists that the information provided by the subsequent applicants will not be evaluated as ‘significant evidence’ by the Office (as evidence adding the value to the evidence already available to the Office).
When the ‘first in’ applicant only applies for the reduction of the fine, the second applicant can also be granted the reduction. Under the Guidelines, when determining the amount of the reduction, the Office will consider the value and/or usefulness of the evidence for proving the cartel, as well as the time when it has been provided. The Office will consider the applications for reduction of fines in the order in which they will have been delivered to it.
There are no ‘immunity plus’ or ‘amnesty plus’ options.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
Reduction of a fine may be granted either to one, or to more than one undertaking, always on the condition that each of the leniency applicants fulfils the conditions set out under section 38(12) of the Act (see questions 4 and 6 above).
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
The leniency applicant may receive full leniency provided that all the conditions set out under section 38(11) of the Act are met (see question 4 above). The Guidelines specify the circumstances under which the Office will examine whether these conditions are fulfilled.
Disclosure of ‘decisive evidence’
First, the ‘decisive evidence’ must be provided on the own initiative of the leniency applicant, ie, the ‘decisive evidence’ must be provided before the leniency applicant is requested to disclose it and before such evidence, needed to prove the existence of a cartel, is available to the Office. It is not relevant whether an investigation is underway or proceedings have been initiated at the time of furnishing the ‘decisive evidence’.
The evidence which is provided must be sufficient for proving the cartel. Evidence must be concrete (direct evidence is preferred), provided that the undertaking has furnished all cartel-related information available to it. The scope of information which must be provided by the applicant to the Office is set out in detail in the Guidelines.
Termination of participation in the cartel
Second, the participation in the cartel must be terminated at the latest at the time of disclosure of the ‘decisive evidence’. Termination of participation means that the leniency applicant must discontinue its participation (cease attending meetings, taking advantage of the information resulting from the cartel, etc).
Non-assumption of a leading role in the cartel
Third, the non-imposition of a fine is not possible in the case of an undertaking that coerced other undertakings to participate in the cartel, or, of an undertaking that was the instigator of the cartel. In this respect, the Office will consider whether the undertaking has played a leading role in the cartel, organised meetings, proposed ways of coordination of undertakings participating in the cartel, or exerted economic pressure on undertakings refusing to participate.
Disclosure of all evidence and continuous cooperation
The leniency applicant must provide to the Office all the evidence of existence and activities performed in the framework of the cartel which is available to the applicant (full disclosure), and cooperate with the Office throughout the entire investigation. In this respect, the Office will take into account if the applicant provides additional evidence to the Office without being asked by the Office and immediately after this evidence comes into the applicant’s possession; if the applicant swiftly provides clarification to the Office on demand or responds to all inquiries from the Office; or, if the applicant does not act so as to create obstacles to the Office’s steps in proving the cartel (such as by disclosing to a third party that it has applied for leniency or informing third parties about the evidence submitted to the Office).
The scope of information to be provided by the applicant to the Office is set out in detail in the Guidelines. In particular, all material evidence supporting the application (in particular agreements, e-mail communication, other documentary evidence, names of witnesses, dates and other information regarding meetings, telephone calls and other contacts between cartel participants) must be provided together with the leniency application. In the event that the leniency applicant does not have at its disposal all the evidence, it must describe in the application other existing evidence not available to it, including the information regarding the person authorised to provide such evidence and location of such evidence.
9. How many companies have received full immunity from fines to date?
To date, no company has received full immunity from fines.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
Since the adoption of the leniency policy in the Slovak Republic, there has been only one application for leniency. Therefore, the practical experience with applications for leniency is very limited. However, the general practice of the Office is to proceed in an extremely formalistic manner and it is reasonable to assume that such an approach will be also applied in respect of leniency applications.
Applicant
The leniency application may only be filed by the undertaking, ie by a person authorised to act on behalf of the applicant (director(s)) and not by employees employed by such undertaking. With regard to the nature of the leniency programme, a leniency application cannot be filed jointly by more than one undertaking nor by an association of undertakings.
The leniency application may be filed by a representative (legal counsel); in this case the legal counsel must produce a valid power of attorney. In the event that the administrative proceedings have already been initiated, the signatures of both the grantor and the grantee of the power of attorney must be notarised.
Form of the leniency application
As to the form of the leniency application, the application may be filed in writing or by recording an oral statement into a protocol. It may also be filed by a telegraph or telefax; however, such filings must also be made in writing or by recording an oral statement into a protocol, within three days. The detailed outline of a leniency application is available on the website of the Office (www.antimon.gov.sk).
Contact details of the Office
The leniency application or any inquiries of the cartel participant wishing to make use of the leniency policy should be addressed to:
Antimonopoly Office of the Slovak Republic
Department of Agreements Restricting Competition
Drienová 24
826 03 Bratislava
Slovak Republic
Tel: +421 2 4333 4045
Fax: +421 2 4829 7365
E-mail (for consultations): leniency@antimon.gov.sk.
11. Is there an optimal time to approach the regulatory authority?
Undertakings may file their leniency applications at any time, ie before the Office starts the investigation in the matter, during the investigation or at any stage of the administrative proceedings. Due to the benefits of being the ‘first in’ as described above (see question 5), the optimal time for approaching the Office is as soon as possible, preferably before an investigation starts, in particular, if a risk exists that other cartel participants consider filing a leniency application. Moreover, in the event that the Office has already started the investigation or initiated the administrative proceedings, the Office may already have available to it sufficient evidence and information that proves the cartel.
12. What guarantees of leniency exist if a party cooperates?
The Slovak legal regulation of leniency programme does not provide for any formal confirmation of leniency being granted to the applicant. On the other hand, if the conditions for granting leniency (as set out in section 38(11) or (12) of the Act) are met, the Office must grant leniency to the applicant. The leniency can also (and, if the conditions are met, must) be granted by the court in the stage of the judicial review of the decisions made by the Office.
In addition to the above, the Guidelines provide for an informal mechanism of providing a certain guarantee to the leniency applicant. According to the Guidelines, if the Office concludes that conditions were met for granting the leniency, the Office will confirm granting of the leniency in a letter (not in a formal decision) addressed to the applicant.
Such a letter is sent by the Office to the applicant, only after the Office has checked all submitted information or evidence and reviewed the actual facts of the case through its investigation. The recommended time for sending the acceptance letter to the applicant is within 14 business days. At this stage, before the Office takes a position on the filing made by the applicant, the Office will not deal with an application filed by another undertaking in the same matter received by the Office at a later stage.
If the Office, after examining the submitted evidence and information, finds that conditions have not been met for granting the leniency, the Guidelines provide that the Office will notify the undertaking of this fact by an informal letter.
If the Office finds, as it proceeds further and after it has notified the undertaking that the conditions for leniency are met, that some information provided by the undertaking were not true or complete, it will notify the undertaking of this fact in a separate letter and will deal with this in the decision.
It should be noted that the informal guarantee provided to the leniency applicant by a letter of the Office does not represent a sufficient safeguard against the (full) imposition of the fine, as this letter is not enforceable by the applicant. As there is no legal basis for the Office to issue such guarantee letter, it is even arguable whether the Office would not be acting outside its competence from the point of view of Slovak competition rules.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
Neither the Act nor the Guidelines address the issue of the confidentiality of a leniency application, therefore, the general principles of the Act and of administrative law will be applicable. Such principles provide for the confidentiality of certain types of information, in particular business secrets and confidential information.
Under the Act, the Office must protect the information marked as business secrets or confidential information. Therefore, in practice, it is advisable that the applicant marks the leniency application as confidential and subject to business secret, in order to seek at least a certain level of the protection. Otherwise, based on the legislation on the free access to information, a risk exists that the Office would disclose such applications that are not marked as confidential, notwithstanding that the Office is only at the stage of the investigation, to third parties upon their request. With regard to this, it should be noted that the applicant must justify to the Office why the leniency application is marked as confidential and subject to business secrets. This option may be of limited use in respect of the business secrets, where clear criteria exist under Slovak commercial law of what can be considered as business secrets.
In addition to the above possibility of disclosure, standard principles arising from the right to defence will apply (eg, the access to the file, the review of the evidence, etc) in the course of the administrative proceedings. In particular, a party to the administrative proceedings under the investigation (the cartel participant) may under certain circumstances have the right to review all the evidence of the Office (including those marked as confidential information or business secrets) on which the Office will base its decision on a potential cartel.
A specific issue stems from the fact that the Office may disclose the leniency application, even if it is marked as confidential or subject to business secrets, to courts in the framework of civil proceedings or to law enforcement agencies within criminal proceedings. This risk is related to the absence of a comprehensive approach to the leniency programme, which would address leniency also in the context of criminal and private enforcement (see questions 14 and 15).
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
The leniency granted to a corporate defendant does not have any effects on the defendant’s directors or employees. Under the Act, fines are imposed only on undertakings; therefore, only undertakings can be granted immunity from or reduction of these fines.
Under Slovak law, the directors (and in the case of bid-rigging also employees) of the leniency applicant can be held criminally liable for their personal involvement in the cartel. A major obstacle to an effective and attractive leniency programme is the fact that there is no criminal law equivalent of the leniency policy as regulated under the Act. In this regard, a specific concern for the directors of a cartel participant could be the necessity to describe, in great detail, the involvement of the leniency applicant in the cartel in the leniency application. Such detailed description of the facts of the case could be self-incriminating, from the point of view of the directors of the undertaking, and could lead to the institution of criminal proceedings against them. This risk is in particular due to the fact that, under the Slovak criminal proceedings regulations, all the state bodies, including the Office, have the duty to actively cooperate with law enforcement agencies in detection and prosecution of criminal offences, including the duty to report any facts indicating that a criminal offence has been committed to the law enforcement agencies.
15. Does leniency bar further criminal or private enforcement?
Leniency does not bar private enforcement of the competition rules against the successful leniency applicant. Moreover, under the Slovak disclosure rules the plaintiffs may demand that the leniency application be produced as evidence.
As stated above (see question 14), leniency does not affect the criminal liability of the directors (and, in certain cases, employees) of the successful leniency applicant. Under Slovak law, undertakings that are legal entities cannot be held criminally liable.
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 Slovak leniency policy does not expressly address the interaction with the leniency application under the Commission Leniency Notice. In the event of an interaction with the leniency application under the Commission Leniency Notice, it appears that the Office will only apply the procedure under the 2004 Commission Notice on cooperation within the Network of Competition Authorities.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
The leniency policy does not expressly address the interaction with applications for leniency in other EU member states. In the event of an interaction with the leniency application in other EU member states, it appears that the Office will only apply the procedure under the 2004 Commission Notice on cooperation within the Network of Competition Authorities.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
In 2007 the Office initiated a public discussion, aimed at identifying barriers that have contributed to the insufficient utilisation of the leniency programme in the Slovak Republic and obtaining suggestions on changes that are necessary to make the functioning of the leniency programme more efficient. This public discussion is to be finalised by the end of August 2007. On the basis of the results of the public discussion, the Office intends to re-evaluate the leniency programme. At the moment, however, no legislative reform of the leniency programme under the Act is planned. On the other hand, all the stakeholders, including the Office, are aware of the need for a reform of the Act as well as other legal regulations (for example, the criminal law statutes) in order to increase the efficiency of the leniency programme. Legislative changes are also required in order to harmonise the Slovak leniency programme with the 2006 Commission Notice on Immunity from fines and reduction of fines in cartel cases.
There are several reasons why the leniency programme has been, to date, largely unsuccessful in the Slovak Republic. These reasons are closely related to the fact that competition law is a relatively ‘unrecognised’ area of Slovak law. With regard to unveiling and punishing cartels, the practice of the Slovak Office is still developing and, except for a few recent cartel cases, no significant fines have been imposed to date. This in turn has a negative impact on the awareness of Slovak undertakings of the competition rules, including the leniency policy. From the perspective of the Slovak business environment, the approach of Slovak undertakings to the leniency programme seems to be (and, most likely, will remain) reserved due to the limited size of the Slovak market and the risk of negative consequences for the ‘whistleblower’, in the event that its identity is revealed. The leniency policy, at this stage, is therefore more likely to be applied in contexts involving multi-jurisdictional cartels.
In addition to the above, one of the main shortcomings of the leniency policy is the high degree of legal uncertainty concerning the approach of the Office to the leniency programme. The legal regulation of the leniency programme under the Act is very general and the lack of a binding effect of the Guidelines leads to uncertainty in its application and may produce varying and contradicting results. With respect to the procedural aspects of the leniency programme, only the general rules of administrative proceedings are applicable, which are, however, not well suited in the context of the leniency programme. The inadequacy of the general procedural rules affects, in particular, the confidentiality of the leniency application and the availability of a legal guarantee of leniency for the leniency applicant.
