BACKGROUND
1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
Sweden has had an explicit immunity/leniency programme in place since 1 August 2002 when sections 28a-28c were added to the Swedish Competition Act (konkurrenslagen (1993:20)) (the ‘Act’), (for an English version of the Act, see the SCA’s website www.kkv.se). In brief, the programme provides companies with the possibility of obtaining immunity from or a reduction in fines if they help the Swedish Competition Authority (Konkurrensverket) (the ‘SCA’) to detect and prosecute infringements.
Clearly its focus is to entice companies to come forward and report on secret horizontal cartels. However it also applies to other types of infringements of section 6 of the Act and Article 81 EC, both of which outlaw anti-competitive agreements. In addition, the wording of the programme allows companies to obtain leniency in respect of infringements of section 19 of the Act and Article 82 EC, which outlaw abuses of a dominant position.
The enforcing body is primarily the SCA. Admittedly it does not have the power to impose fines by itself1. Indeed, only the Stockholm City Court (or the Market Court in the event of an appeal from the Stockholm City Court) can impose a fine on a company for violations of sections 6 and 19 of the Act and Articles 81 and 82 EC respectively. These fines could be for an amount not exceeding 10 per cent of the company’s turnover in the most recent financial year.
However the SCA is not under an obligation to bring an action for fines against companies which have infringed the Act and the courts cannot impose a fine which is higher than the one the SCA has claimed in its summons. The SCA therefore controls the implementation of the programme as part of its discretionary power to decide whether or not to bring an infringement action and, if it so decides, it sets the ceiling for the level of fines that could be imposed (although the courts could lower the fines in accordance with the leniency provisions, including granting immunity).
To this end, the SCA issued guidelines in June 2002 (the ‘Guidelines’), which gave its interpretation of the possibilities for companies to obtain leniency in section 6/Article 81 infringements. These Guidelines were amended in March 2006 (KKVFS 2006:1). The Guidelines are modelled on the European Commission’s 2002 Notice on Immunity from Fines and Reduction of Fines in Cartel Cases.
It should be noted that the Guidelines do not cover leniency in relation to non-horizontal infringements of section 6/Article 81 or section 19/Article 82 infringements. Moreover, there is no case law concerning leniency for such infringements. Hence, if a company were to come forward with a leniency application for, for example, collective abusive behaviour, it would have to rely solely on the legislative text for guidance on its possibility to qualify for leniency.
2. What are the basic tenets of a leniency/immunity programme?
The Swedish leniency/immunity programme contains the following three basic substantive elements:
In addition, there is a procedural rule (in section 28c of the Act) which provides that a company which reports a section 6/Article 81 infringement may request the SCA to declare whether it is the first to report the infringement and whether at the time of the revelation the SCA had sufficient material to take action against the infringement. Such a declaration, which takes the form of a decision, is binding not only on the SCA itself but also on the Stockholm City Court and the Market Court.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
Fewer than ten cartels have been unveiled and punished since the entry into force of the Act in 1993 and three of those have occurred since the introduction of the leniency programme on 1 August 2002.
Generally speaking, it appears that the SCA has received relatively few leniency applications from companies in comparison, for example, to the European Commission. Approximately ten dawn raids have been conducted by the SCA during this period and none of them appears to have been triggered by companies coming forward to report illegal activities under the leniency programme. Instead those dawn raids have been triggered by other sources of information, such as those from competitors, suppliers and customers. However, leniency has been granted to companies in a few cases.
In March 2003 the SCA, following an 18-month investigation which involved a dawn raid, filed a summons application with the Stockholm City Court requesting that fines of approximately SEK 1.2 billion be imposed on nine companies allegedly involved in a cartel in the asphalt sector. In July 2007 the Stockholm City Court imposed fines of approximately SEK 461 million. In its writ of summons the SCA declared that it had decided not to bring action against one company because it had fulfilled the conditions for immunity. Interesting to note is that during the court proceedings it was revealed that the company possessed information which it had not provided to the SCA. It appeared that the SCA never confronted the company with the question of whether it had provided all information in its possession. However, it is unlikely that this would happen in the future since it is an explicit condition for obtaining immunity.
Moreover, the SCA declared in the summons that it had awarded a 30 per cent reduction of fines to two companies as they had provided it with internal reports containing factual information and certain admissions related to the alleged infringement. One of the companies argued that it should be awarded full immunity according to the special immunity rule in the second paragraph of section 28a of the Act since it had provided ‘highly significant assistance’ to the investigation. The Stockholm City Court stated that the special immunity rule should only be applied when a company voluntary comes forward and presents decisive evidence. The Court noted that the provision should be applied moderately and did not grant the company immunity. However, the Court did not find any reason to overrule the SCA’s decision to award the two companies a 30 per cent reduction. It is still to be seen whether the judgment will stand the scrutiny of the Market Court since it is likely to be appealed.
In July 2003 the SCA also filed a summons application requesting that fines be imposed on two companies for being involved in a bid-rigging cartel (SEK 23 million and SEK 390,000 respectively). In this case the SCA granted a 50 per cent reduction to one of these companies (the one on which the SCA sought to impose a SEK 23 million fine) for having assisted in revealing the infringement. It was not prepared to grant full immunity. This was despite the fact that the company was the ‘first in’ and despite the fact that the SCA did not already have sufficient information to proceed to an investigation at the time of being approached.
The reason for the SCA’s parsimonious treatment was that, prior to approaching the SCA, the company in question had carried out an internal investigation which had included contacts with competitors including the other company involved in the infringement. The SCA took the view that such contacts had made the investigation more difficult than it otherwise would have been.
However, the Stockholm City Court found that the conditions for full immunity had been met. The contacts had been made just a couple of days before the SCA was approached and it could not find any evidence that such contact had made it more difficult for the SCA to investigate the alleged infringements. In addition, it should be noted that the Stockholm City Court also reduced the fine for the other company from SEK 390,000 to SEK 150,000, so as not to jeopardise the company’s existence.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
As described above (see question 2), there are three different types of leniency that may be granted and the application of each of them depends on a number of factors.
If a company is aware of a section 6/Article 81 infringement then it can seek full immunity under the ‘cartel immunity rule’. However this would require that:
The ‘first in’ condition requires that the notification, which may be oral or in writing, is submitted by a person who is empowered to act for the company for that purpose and that the notification is made individually. A joint notification will result in none of the undertakings fulfilling the conditions for immunity.
To be deemed an application, the company must provide all the information at its disposal at the time which is relevant to prove the infringement. Consequently the company must, as far as possible, state:
Copies of documents that concern the reported infringement and that the company has access to when the notification is made, for example notes and minutes from meetings, shall be attached to the notification. If the infringement has also been reported to another competition authority within the European Union, the SCA may deviate from the requirements stated in items 5-9 (above) and the requirement to submit all documentary evidence in its possession.
The obligation to submit information does not end with the notification. Indeed, the company must then throughout the investigation continue to provide (on its own initiative) information to the SCA. Moreover it must ensure that it does not take action which frustrates the investigation, such as informing the other culprits what type of information has been provided to the SCA. However, this does not preclude a company’s right to contest the legal characterisation of the infringement if the SCA brings a summons application before the Stockholm City Court.
The ability to obtain immunity is not precluded if the SCA already suspects an infringement. Indeed this type of immunity is only precluded if the SCA at the time of the notification had sufficient information to take action against the infringement, ie sufficient information to apply for an authorisation to conduct a dawn raid.
Moreover, in contrast to leniency programmes in many other countries, the Swedish programme does not automatically rule out immunity for companies which may be considered to have taken the initiative to start the cartel or to have played a major part in such a cartel. Immunity for such companies should only be excluded if it would ‘be manifestly unreasonable’ to grant immunity in such circumstances. In making such an assessment the SCA will consider whether a company has taken steps to coerce others to participate in the infringement. Hence the mere fact that the company has had the leading role in a cartel does not per se exclude immunity. However, the SCA has recently proposed amendments to the leniency policy in order to bring it in line with the ECN Model Leniency Programme. According to the proposal a company which has coerced other companies to participate in a cartel should be disqualified from immunity.
Even if a company fails to meet one or more conditions for the cartel immunity rule to be applicable, such as if it turns out that the company was not the first to report the illegal activity, it could still obtain immunity under the ‘special immunity rule’. However, this will only be possible in exceptional circumstances and will require that the company contributes to the investigation to a highly significant extent.
Apart from the possibilities for obtaining immunity, there is the ‘general leniency rule’ which applies in respect of both section 6/Article 81 and section 19/Article 82 infringements and which essentially provides that a company can get a lower fine than the one it otherwise would have received if:
To meet the significant assistance condition, the company must be of some importance to the investigation, ie it must ‘greatly facilitate’ the investigation. The travaux préparatoires make it clear that, in principle, a reduction may be granted if the company on its own initiative submits important information to the SCA, which it did not already possess or which it could not easily obtain. It does not suffice merely to be prepared to answer any questions from the SCA or to assist the investigation in a similar manner.
Although the notion of what may considerably facilitate an investigation has yet to be developed in case law, the SCA’s Guidelines seem to go further than the travaux préparatoires in holding that the information at issue, having regard to its level of detail, should represent ‘significant added value’ to the information already available to the SCA.
As explained above, there is little guidance from the courts on the level of reduction to be awarded to companies that submit information which significantly assists the investigation. However, in the Guidelines the SCA states that in preparing a writ of summons, it is ready to give the first company coming forward a reduction of 30 per cent to 50 per cent, the second company 20 per cent to 30 per cent and any subsequent companies a reduction of up to 20 per cent.
In determining the level of reduction within each of these categories, the SCA will take into account at what time the information was provided and to what extent it represented added value. In addition, account will be taken as to what extent and with what continuity the company cooperated with the SCA following the submission of information.
Accordingly, in the asphalt cartel mentioned above, the SCA reduced the fines for two companies by 30 per cent, since shortly after the dawn raids were conducted these companies voluntarily provided the SCA with internal reports containing new factual information and certain admissions relating to the alleged infringements. As mentioned, this was the first case in which the SCA applied the leniency programme.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
As described above in question 4, it is only the company which is ‘first in’ that can get immunity without having to provide ‘highly significant assistance’ into an investigation.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
Clearly the programme encourages companies to be ‘first in’. Hence if a company is ‘second in’ to cooperate, it has missed the chance of getting immunity under the cartel immunity rule (as described above in question 4). Moreover, it has also lost the chance to get a statement from the SCA that it will be eligible for immunity (see question 12).
However, for a company that is second in line there are still limited possibilities to qualify for immunity under the ‘special immunity rule’, provided the company is deemed to contribute to an investigation to a highly significant extent. In practice this may require that the evidence is decisive in proving the infringement.
If the information is not sufficiently significant for the grant of immunity, then the company may get a reduction of fines provided that the information represents considerable added value compared to the information already available to the SCA. However, as a result of being second in, it cannot get a reduction higher than 30 per cent.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
The ‘special immunity rule’ described above is available to any company and not only to those that come in first. Hence any subsequent company may (also) get immunity provided that it possesses evidence which is deemed to contribute to an investigation to a highly significant extent. If immunity cannot be obtained, then a company can still get a reduction of fines according to the ‘general leniency rule’ described above, provided it provides significant assistance in the investigation. According to the Guidelines the company should submit information which represents added value compared to what the SCA already had access to in order to provide ‘significant assistance’. In determining whether or not certain information provides such added value, the SCA will take into account whether the information strengthens its ability to fully establish the facts in the investigation.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
A company may receive full leniency, ie immunity, provided it meets the conditions described above (see question 4).
9. How many companies have received full immunity from fines to date?
As described above (see question 3), to our knowledge, two companies have obtained full immunity from fines since the adoption of the programme on 1 August 2002.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
In general, if a company wishes to take advantage of the leniency programme, it should contact the SCA in any of the following ways: Tel: +46 8 700 15 99, Fax: +46 8 700 15 98, Email: eftergift_kkv@kkv.se
There is very little in terms of formality, unless there is an intention to reveal a section 6/Article 81 infringement to get immunity. If that is the objective, it is generally recommended first contacting the SCA anonymously to describe the infringement in hypothetical terms – thereby not revealing the company’s own participation – so as to determine whether or not such treatment can be obtained. On the basis of this contact the company will be informed by the SCA if immunity could be granted.
It should be noted that the Swedish leniency programme does not yet provide for a marker system and therefore the SCA cannot guarantee that some other undertaking does not report the infringement before the anonymous undertaking has made its notification. However, the SCA has recently proposed the introduction of a marker system (see answer to question 18 below).
If the company then decides to proceed with an immunity application, which may be oral or written, it must submit all the information it has at its disposal which could be considered relevant for providing evidence of the infringement in question.
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 SCA as soon as it is practicable (in order not to miss being the first in to cooperate). However, before making such a decision, a company should carry out an internal audit to determine whether it has any evidence of the infringement which could be submitted to the SCA. Likewise it should investigate whether the pros of leniency are outweighed by the cons: such as the fact that it will not know for sure whether it will benefit from immunity/reduction of fines and what effect the cooperation could have in terms of civil liability.
12. What guarantees of leniency exist if a party cooperates?
The only possibility for a company to obtain any kind of formal guarantee is if it is ‘first in’ to report a section 6/Article 81 infringement. In such circumstances the company has the right to request that the SCA states that it fulfils the first condition for immunity, ie that it is first in and that the SCA does not have sufficient grounds to act against the infringement (see question 4 with respect to the conditions for immunity). If issued, such a statement is binding on the SCA and means that it cannot initiate legal proceedings for the imposition of a fine on the company in question, provided that the other conditions for immunity are fulfilled. Moreover, the statement is also binding on the Stockholm City Court and the Market Court. One such statement was issued in 2004 concerning an international cartel with Swedish ramifications.
Even though the applicant company will receive a statement from the SCA that the first condition for immunity is fulfilled, it has to wait until the SCA has sent its preliminary assessment before it knows whether all conditions for immunity have been fulfilled. Officially, immunity will not be granted until the SCA’s summons application concerning the infringement has been submitted to Stockholm City Court.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
Confidentiality (or ‘secrecy’ to use the Swedish legal jargon translated into English) is afforded to leniency applicants and other parties cooperating with the SCA, but only within certain limits.
In fact, in Sweden there is a constitutional right of public access to official documents. Hence the rule of thumb is that any individual has the right to access all documents that are drawn up by public authorities such as the SCA (provided they are considered to be ‘official’ and not in draft form), as well as all documents and information that have been submitted to such public authorities.
However there are detailed (and some might say obscure) rules in the Secrecy Act which put limits on this basic principle. Generally, information regarding planning and other preparations for investigations such as dawn raids is confidential, provided that the purpose of the investigation will be adversely affected if the information is revealed. Moreover, confidentiality also applies with respect to the SCA’s activities if it can be assumed that disclosure would cause damage to the individual concerned.
In a report in 2000 the SCA claimed that the aforementioned confidentiality restrictions in the Secrecy Act were insufficient to attract informants to come forward to report illegal activities.
On 1 April 2002 the Secrecy Act was therefore amended to make sure that any information related to an investigation by the SCA would be treated as confidential if, considering the object of the investigation, it were of ‘exceptional importance’ that the information was not disclosed. With this change, confidentiality therefore does not only apply to the planning stage of an investigation, such as carrying out a dawn raid, but also later, such as to documents taken at a dawn raid. Admittedly the information is primarily confidential in relation to the company being investigated, but it may also be confidential in relation to third parties. Hence, information provided by applicants for leniency and other cooperating parties may be treated as confidential under this amendment provided it does not harm the investigation in question.
In addition, on 1 August 2002 the Secrecy Act was yet again amended to strengthen the possibility of obtaining confidentiality for informants and information submitted to the SCA by such persons. The amendment ensures confidentiality if the individual in question will suffer substantial damage or considerable detriment if his identity or information is revealed. Hence this amendment could also be invoked by leniency applicants in order to get confidential treatment.
All in all, the restrictions on the general constitutional principle of public access permit the SCA to keep the identity of applicants for leniency and other cooperating parties confidential, as well as the information it obtains from these parties.
However, confidentiality will always be subject to the alleged culprits’ right of access to the SCA’s file. Such companies have full access unless it is of particular importance from a public or individual perspective that the information is not revealed. Indeed, in the so-called asphalt cartel case Skanska, one of the alleged cartel members, obtained only restricted access to a report drawn up by NCC, one of the other alleged cartel members, on its possible involvement in the alleged cartel.
In practical terms, the confidentiality treatment will end if an investigation proceeds to a filing of a summons at the Stockholm City Court by the SCA. Normally at that stage or when the court judgment is made public, the identity of the leniency applicant and other cooperating parties will become known, as will the information they provided to the SCA.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
This is not applicable, as no sanctions can be imposed on individuals for competition law infringements.
However, the 2006 Legislative Inquiry proposes to introduce the possibility of a disqualification order on private individuals.
15. Does leniency bar further criminal or private enforcement?
Under Swedish competition law sanctions can only be imposed on companies involved in the infringements (in the form of pecuniary fines and damages). There is no possibility of imposing criminal sanctions.
However, the 2006 Legislative Inquiry proposes to introduce the possibility of a disqualification order on private individuals. Furthermore, the immunity/leniency programme does not bar private damage claims.
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?
The Swedish immunity/leniency programme does not directly address the interaction with leniency applications under the Commission’s Leniency Notice or policies adopted in other EU member states. Instead the interaction between the Swedish programme and other policies is governed by the general principles set out in Council Regulation (EC) No 1/2003 and in the Commission’s Notice on cooperation within the ECN.
However, if a company has made a notification for immunity/leniency to another authority within the EU, the Guidelines state that the company may be relieved from some of the information requirements (see answer to question 4 above). This could be the case if the SCA had the possibility of receiving the necessary information from the other authority. However, such information exchange would require consent from the applicant according to the Commission’s notice on the cooperation within the ECN (para 40).
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?
The latest development is the 2006 amendments to the Guidelines. The amended Guidelines are not materially different from the previous ones. The amendments are primarily a cosmetic overhaul of the guidelines adopted in 2002.
More interesting is that the SCA has recently (April 2007) proposed amendments to the leniency policy in order to bring it in line with the ECN Model Leniency Programme. In summary, the SCA proposes that:
In addition, it should be noted that the 2006 Legislative Inquiry yet again investigated the need to criminalise cartel activities in Sweden. According to its findings there were insufficient reasons for proposing criminalisation. One stumbling block was that the Swedish legislator opposes the introduction of a crown witness system (ie a system where there is a possibility of granting criminal immunity to individuals). In such circumstances, the 2006 Legislative Inquiry recognised that a criminalisation would have an adverse effect on the Swedish immunity/leniency programme since it would deter individuals from coming forward with an application for leniency.
Instead, the 2006 Legislative Inquiry proposed that, in addition to corporate fines, disqualification orders (a prohibition on a private person being engaged in trade) should be introduced for cartel infringements. If that proposal were to come into effect, the Stockholm City Court and (on appeal) the Market Court would have the power to impose disqualification orders on persons who exercise legal or actual management of undertakings engaged in cartel activities. It should be noted that disqualification orders would only be imposed for infringements concerning price fixing, reduction of production, and market sharing.
It could be argued that the 2006 Legislative Inquiry proposes an introduction of a type of crown witness system through the back door. According to the proposal, the SCA should not seek the imposition of a disqualification order on persons who have provided significant assistance, personally or in the context of business operations, to facilitate the SCA’s investigation of the infringement. It is to be seen whether the Swedish legislator will ignore its concerns regarding a crown witness system and adopt the proposal.
FOOTNOTES
1 This may be slightly modified in the next few years. Indeed, in November 2006 a legislative inquiry (the ‘2006 Legislative Inquiry’) proposed that the SCA should be enabled to take decisions on financial penalties in cases that are not contested (ie the power to issue an injunction to pay a penalty).
