BACKGROUND
1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The Danish Parliament has passed a bill introducing a leniency programme in Denmark taking effect from 1 July 2007. Up until now there has not been a leniency programme in Denmark. While general provisions in the Danish Criminal Code provided for some incentive for cooperation, the Danish Competition Act did not contain any specific leniency provisions for competition law infringements.
The new leniency programme is based on the European Commission’s Notice on Immunity from fines and reduction of fines in cartel cases1 and the ECN Model Leniency Programme. The key principles behind the leniency provisions are similar, although the unique division of competences between the competition authorities, public prosecution office and the Danish courts are also taken into account.
Under the current and new legislation, the Danish Competition Authority (DCA) will conduct most of the preliminary investigations. After these preliminary investigations the DCA decides on one of three possible main steps to take. Firstly, the DCA can simply close the case if it doesn’t find that there has been an infringement. Secondly, the DCA can pursue the case itself and issue a decision. If the DCA finds that an infringement has occurred which should result in a fine, the case will be handed over to a public prosecutor. The public prosecutor will then decide whether to bring the case before the Danish courts as a criminal proceeding. Thirdly, the DCA can hand over the case to the public prosecutor without investigating the case themselves.
The new amendments will also give the DCA a limited authority to issue fines in competition law infringements. The DCA will be able to issue fines only where (i) the undertaking has admitted an infringement, (ii) there exists an established court practice for the calculation of fines for similar infringements and (iii) the public prosecutor has consented to the case being settled in this way and has approved the level of fines. The DCA cannot enter into discussions with an undertaking in this way until the second and third requirements are fulfilled. Otherwise, cases that involve the imposition of fines will be handed over to the public prosecutor.
In relation to fines, the amendments state that fine reductions may be granted by the ‘investigating body’, which suggests that both a public prosecutor and the DCA will have power to grant fine reductions. A qualification on that power is that the investigating body – either the public prosecutor or the DCA – must first consult the other body.
Notably, the DCA will not have power to grant immunity to an undertaking. Since only the public prosecutor will have the power to bring cartel cases before the courts, they will hold the power to grant immunity, but only after consulting with the DCA.
Apart from the above exception, the competence to impose fines for cartel infringements will lie with the criminal courts. If an infringement has been established, the court will decide on the amount of the fine. However, the court’s discretion will be limited by leniency granted by either the DCA or the public prosecutor during the administrative procedure.
1 Commission Notice on immunity from fines and reduction of fines in cartel cases OJ 2002 C45/3.
2. What are the basic tenets of a leniency/immunity programme?
The leniency programme will only apply to cartel infringements. However, the general provisions in the Danish criminal code may in principle apply to other types of competition law infringements. The practical scope of these provisions is considered limited.
Only the first undertaking to submit information about the cartel can obtain immunity from fines. Immunity from fines requires that the undertaking provides the DCA with information that the DCA did not have at the time of the application and this information enables the DCA to carry out a targeted inspection. If a targeted inspection has already been carried out, the information must enable the DCA to find an infringement.
The second and third applicants are eligible for a 50 per cent and 30 per cent fine reduction, respectively, that would otherwise have been claimed before the criminal courts by the public prosecutor. Subsequent applicants are eligible for a fine reduction of up to 20 per cent depending on the applicant’s contribution to the cartel investigation. This is subject to the discretion of the authorities. It should be noted that in relation to the second and third applicants the authorities do not have the same discretion as the European Commission in deciding the level of reduction.
All applicants applying for a fine reduction must submit information which represents significant added value compared to the evidence already in the possession of the authorities at the time of the application. The term ‘significant added value’ will be interpreted in accordance with the practice of the European Commission.
In addition to the conditions mentioned above, the following conditions must always be satisfied in order for an undertaking to qualify for immunity or a reduction of the fine:
If an undertaking does not satisfy the requirements for leniency, the undertaking will not benefit from any favourable treatment. It should be noted that contrary to the European Commission’s leniency programme an undertaking cannot under the Danish rules be eligible for fine reductions if it has coerced other undertakings to participate in the cartel. Ring-leaders are, however, eligible for leniency.
There is no ‘right of advancement’ for subsequent applicants if a preceding applicant, as a result of non-compliance with the requirements, loses its place in the ‘leniency order’.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
None, as the leniency policy has just entered into force.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
The applicant must submit ‘all information’ about the cartel infringement which the applicant has access to, comes into possession of, or which the undertaking can reasonably obtain. This includes both documentary evidence and testimonial evidence.
The leniency programme does not recognise the use of a marker system similar to that of the European Commission. All information must therefore be submitted at the time of application.
In particular, an applicant must provide the competition authorities with information and details of the applicant’s participation in the cartel, the nature of the infringement, other participants, the relevant product and geographical markets and the duration of the cartel.
The applicant may not submit any false or misleading information, and the applicant may not conceal any facts of the cartel.
An applicant is required to cooperate fully with the authorities on a continuous basis and must therefore supply the authorities with all relevant information concerning the cartel infringement that it has or comes across under the investigation. Furthermore, the applicant must provide prompt answers to any questions the authorities may have during the investigation.
It is not possible at this point in time to fully assess the extent of the on-going cooperation obligation since the leniency programme has just come into force. However, the obligation to cooperate is likely to be similar to the obligations that follow from the European Commission’s leniency programme.
An applicant is also obliged not to inform any other members of the alleged cartel of the leniency application or disclose any information of the ongoing investigation.
The DCA will accept summary leniency applications as provided for by the ECN model leniency programme.
Normally, an undertaking must admit the participation in the cartel and the infringement in order to apply for leniency. It is unlikely that an undertaking would be required to admit an infringement of the Danish Competition Act in order to apply for leniency if this cannot be established with certainty at the time of application. However, it is also not possible to submit a hypothetical leniency application. In these cases, the undertaking may instead seek guidance from the authorities.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
There are substantial benefits to being ‘first in’ to cooperate. Immunity from fines is only granted to the undertaking if that undertaking is the first to submit the required information. If multiple applications for immunity are made in the same cartel case, the decisive factor in determining the order of priority is the point in time where the authorities have received the information. Likewise, the possibility for a fine reduction is determined by the timing of the application.
All decisions made by the DCA are made public under the Danish Competition Act section 13(2). Similarly, all cases in which an undertaking has been fined are made public. Apart from this, neither the DCA nor the public prosecutor makes administrative procedures public. The question arises whether an undertaking that receives full immunity and thereby a withdrawal of charges can avoid the publication of the infringement.
The question is not addressed in the preparatory works. The purpose of the introduction of a leniency policy is not to give infringing undertakings a chance to avoid publicity or to limit the scope of civilian lawsuits. On this basis, it is in our opinion likely that an undertaking eligible for immunity cannot avoid the infringement being made public.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
The second undertaking to apply for leniency does not qualify for immunity. Instead, the second undertaking is eligible for a 50 per cent fine reduction if the requirements mentioned above under questions 2 and 4 are fulfilled.
The principle of ‘leniency plus’ is not recognised by Danish competition law, and it is in our view unlikely that the Danish courts will take ‘leniency plus’ into consideration.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
As described above under question 2, the third undertaking to apply for leniency will be eligible for a fine reduction of 30 per cent while following undertakings will be eligible for a fine reduction of up to 20 per cent if the requirements described under questions 2 and 4 are met.
The information submitted by a subsequent undertaking must meet the threshold of having significant added value to the DCA compared to the information already in the DCA’s possession.
The European Commission has stated that: “The concept of ‘added value’ refers to the extent to which the evidence provided strengthens, by its very nature and/or its level of detail, the Commission’s ability to prove the alleged cartel”. The threshold under the Danish rules is to be interpreted in accordance with this definition and in accordance with the practice of the European Commission.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
It is possible to receive full leniency. See questions 2, 4 and 5 above.
9. How many companies have received full immunity from fines to date?
None, as the leniency policy has just entered into force.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
As a main rule, applications should be submitted to the DCA and the DCA conducts the preliminary investigation. In cases where the public prosecutor is already investigating the cartel in question, the application can be submitted to the prosecutor’s office.
The procedure is divided into three steps. First, the authority which receives the application issues a receipt which includes the identity of the applicant; the information given and date and time of the application. The receipt will not contain any information about the leniency status.
Second, the competent authority informs the applicant of its leniency status. There is no time limit within which the DCA must inform the applicant of this. If the DCA, based on the information submitted, considers that leniency may be granted, the applicant must be informed in writing of its preliminary status in terms of being granted immunity or if the conditions for a fine reduction are likely to be satisfied.
The leniency status is subject to the undertaking’s fulfilment of the requirements outlined under question 2 (above) and the applicant’s status may therefore change during the investigation if the applicant fails to cooperate on a continuous basis or has failed to submit all information about the cartel etc.
Third, the applicant is informed of its final leniency status with binding effect for the authorities and the courts upon completion of the investigation.
If an application for immunity is not met it will automatically be treated as an application for a reduction of the fine. There is no ‘right of advancement’ for subsequent applicants if a preceding applicant, as a result of non-compliance with the requirements, loses its place in the ‘leniency order’.
11. Is there an optimal time to approach the regulatory authority?
The optimal time to approach the authorities will depend on the circumstances. Among other things, it depends on whether immunity is still available or whether the cartel is already under investigation.
A preliminary but sufficiently detailed analysis must first be conducted in order to determine whether there has been an infringement under the Danish Competition Act. If this is the case, it must be assessed what the impact on the business will be if the infringement is made public. Depending on the circumstances it can be better to simply quietly end the infringement and make sure the future business complies with the competition rules. This way, no attention is drawn to the undertaking and the risk of subsequent claims for damages from competitors and/or customers is reduced. In this case no application should be submitted.
If it is decided that an application is the best way to proceed the application should be submitted as soon as possible. The time of application is the only criterion for determining the leniency status. The leniency programme does not recognise the use of a marker system similar to that of the European Commission. It is the information submitted with the application which determines the leniency status. It is therefore necessary to gather enough information to ascertain that the undertaking satisfies the requirements for leniency.
Before an application is submitted it should be evaluated whether the infringement has effect in other jurisdictions and if an application should be submitted to these accordingly.
12. What guarantees of leniency exist if a party cooperates?
When submitting an application for leniency, there are no guarantees as to whether leniency will be granted. It is for the DCA to decide whether the information submitted is sufficient to meet the thresholds of the Danish leniency rules.
If the DCA as part of procedural step two as described under question 10 above informs the undertaking that the information submitted is sufficient for the undertaking to be granted leniency, the DCA is bound by this statement. If the undertaking fulfils the subsequent requirements as described under questions 2 and 4 the undertaking is guaranteed leniency.
It is the authority that handles the leniency application that decides if the subsequent requirements are fulfilled. If the authority decides that these requirements are not fulfilled the undertaking will be charged with the infringements. During the criminal proceedings the undertaking will then be able to get this decision tried before the courts.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
There are no special provisions regarding confidentiality for undertakings seeking leniency. However, it is stated in the legislative history that it is important that leniency applications are treated with the highest possible level of confidentiality. This applies only during the investigation of the cartel.
As mentioned under question 5 above, all decisions made by the DCA are made public under the Danish Competition Act section 13(2). It is not the intention that civil lawsuits should be limited with the introduction of leniency. Undertakings and other cooperating parties should therefore not expect to be able to keep the infringements confidential.
Additionally, the Danish Competition Act sets out specific rules regarding public access to documents. As a general rule only parties to a case – hereunder a leniency application – can get access to the documents of the case. A person is part in a case if he has significant, direct and individual legal interest. As a curiosity, it can be mentioned that an undertaking which has been subject to a dawn raid is not under current DCA practice considered a part of the case until the DCA has decided if the case should result in a decision or should be handed over to the public prosecutor.
The question arises whether competitors and/or customers who have a possible claim for damages pending on the outcome of the investigation of the infringement can be regarded as parties. It must be considered doubtful that such ‘parties’ can be seen as having a sufficient significant, direct and individual legal interest to qualify as parties to the case. Not even a competitor/customer filing a complaint with the DCA will automatically be considered part of the processing of the complaint.
Certain types of information submitted to the DCA will be held confidential at all times. The undertaking should at the time of submitting information highlight which information it regards as confidential.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
In principle, persons can be prosecuted for cartel infringements according to the Danish Competition Act. However, generally the prime subject for prosecution for cartel infringements is the undertaking. Infringements of the competition rules are only sanctioned by fines.
The leniency programme applies equally to persons and undertakings. An undertaking’s application for leniency automatically includes all current and former employees and members of the board of directors and/or the management. The application shall be made in writing and be signed by authorised representatives of the undertaking.
Applications from former employees or persons currently employed by the undertaking but without authority to represent the undertaking will not encompass the undertaking. Applications from current employees with authority to represent the undertaking will only encompass the undertaking if this is explicitly mentioned in the application.
15. Does leniency bar further criminal or private enforcement?
An undertaking which has been given leniency under the leniency policy will be protected against further criminal procedures in Denmark in regards to the infringement in question.
The scope of private enforcement in Denmark is not in any way limited by the given leniency. All decisions made by the DCA and all cases resulting in fines will be made public. Even undertakings receiving full immunity cannot avoid publication of the infringement.
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 interaction with applications under the European Commission’s leniency notice is not addressed thoroughly by the Danish leniency policy. However, the DCA will accept summary leniency applications if full application is submitted to either the European Commission or competition authorities in other EU member states as provided for by the ECN model leniency programme.
Furthermore, the DCA will be able to submit data in accordance with the European Commission’s 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?
See question 16 above. Further, it seems likely that the DCA will be able to release data given in a leniency application to the competition authorities in Sweden, Norway and Iceland under the Nordic agreement on cooperation in competition matters on a confidential basis.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
The leniency policy entered into force on 1 July 2007.
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