1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
The Estonian Competition Act (CA) prohibits agreements between undertakings, concerted practices and decisions by associations of undertakings, which have as their object or effect the restriction of competition, provided that they are not exempted under Articles 4(2), 5, 6 or 7 of the CA (Article 4 CA). The provisions of the CA should be interpreted in line with the relevant EC law.
The above prohibited activities qualify as criminal offences (Article 400 of the Penal Code) for which a natural person may be subject to a pecuniary punishment of 30-500 daily rates (calculated on the basis of his or her income) or up to three years’ imprisonment. The same activities by a legal person may be subject to a pecuniary punishment of up to EEK 250 million (approx €16 million). A legal person is deemed to act through its bodies and senior officials.
In case of such criminal offences the investigative body is normally the Estonian Competition Board (the offences may also be investigated by certain police forces) but the pre-trial procedure is directed by the Prosecutor’s Office. However, the punishments are determined only by the court.
There is no clearly defined leniency programme under Estonian law. As indicated by the Competition Board, the Estonian leniency programme may be considered to consist of the following provisions. The Estonian Criminal Procedure Code (CPC) sets forth certain principles, which allow the Prosecutor’s Office (prokuratuur), the Public Prosecutor’s Office (riigiprokuratuur) or the court (at the application of the Prosecutor’s Office), under certain limited circumstances, to terminate the criminal proceedings against the accused. The Chief Public Prosecutor, on 12 April 2007, issued formal guidance (Guidance) on how the Prosecutor’s Office should apply the above principles. However, although the Guidance should be followed by the Prosecutor’s Office, there may exist countervailing arguments that allow the Prosecutor’s Office not to follow the Guidance.
2. What are the basic tenets of a leniency/immunity programme?
According to Article 202 CPC, the Prosecutor’s Office or the court (at the application of the Prosecutor’s Office), may terminate the criminal proceedings against the accused if each of the following conditions are met:
The Guidance provides that in case of criminal offences under Article 400 of the Penal Code there is a public procedural interest to pursue the matter (ie the criminal proceedings may not be terminated under Article 202 CPC), except in case each of the following conditions are met:
As an alternative, the Public Prosecutor’s Office may terminate the criminal proceedings under Article 205 CPC if the accused helped the investigator significantly in clarifying circumstances relating to evidence of a criminal offence which is important from the point of view of public interests and without such help the discovery of the criminal offence and the collection of evidence must have been impossible or significantly more difficult. This alternative provides a slight possibility for immunity also for persons being not ‘first in’ and also for leaders of cartels.
As can be seen from the above provisions, the current leniency programme does not set very clear conditions as to whether and when ‘immunity’ would be granted, eg whether the Prosecutor’s Office would follow the Guidance in a particular case or what kind of information should be provided. It also grants discretionary power to the Prosecutor’s Office, the Public Prosecutor’s Office and/or the court, as appropriate, whether to terminate the proceedings even if the conditions are fulfilled. Therefore, it would be impossible for a participant in a cartel to predict with certainty whether it will benefit from the programme. This uncertainty is even more important considering the fact that the current programme is based on an ‘all or nothing’ principle, which means that it does not provide for automatic reduction in the punishment if all the above conditions are not met, eg if the person is ‘second in’.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
The CPC became effective as of 1 July 2004 and the predecessor of the Guidance (providing for a similar regulation) was issued by the Chief Public Prosecutor on 20 December 2005.
Due to the significant uncertainty element contained in the current leniency programme it has not led to an increase in the unveiling and punishment of cartels. In 2006, only one cartel was unveiled in Estonia. To our knowledge, the current leniency programme has not been used by any person to inform the relevant authority of any cartels, because undertakings and natural persons do not feel comfortable enough to come forward. An additional reason for not applying for leniency may be the fact that the punishments imposed on competition law infringements have traditionally been very low in Estonia.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
There are no clear conditions that should be met in order to be a successful leniency applicant. Since the leniency programme has not been used in practice, there is no guidance on interpretation of the above rules.
Under Article 202 CPC, the applicant must fully provide all information and/or evidence at its disposal and must continue to cooperate with the investigator. Under Article 205 CPC the amount and quality of information that needs to be provided is more uncertain, since such information must have significantly helped the investigator in its investigations and without such help the discovery of the criminal offence as well as the collection of evidence would have been impossible or significantly more difficult. Therefore, even provision of all information at the disposal of the applicant may not be sufficient.
The form of information to be provided under either of the referenced provisions has not been specified, which indicates that oral information could also be sufficient.
In any case, due to the uncertainty surrounding the termination of criminal proceedings no guarantees could be given to any undertaking that it will succeed as a leniency applicant.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Under the Guidance, being ‘first in’ is a necessary condition for application of immunity under Article 202 CPC. Under Article 205 CPC it is not a necessary precondition since the quality of information is more important, but it may be argued that it would be much easier for the first one to inform the authorities of a cartel to fulfil the necessary conditions.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
Under Article 202 CPC, as interpreted under the Guidance, the criminal proceedings may not be terminated against the person being ‘second’ to inform the investigator of a cartel. Moreover, even under Article 205 CPC there is no guaranteed reduction of punishment for the second person to provide information and it would be very difficult for such person to satisfy the conditions for termination of proceedings.
No specific rules exist as to ‘immunity plus’ or ‘amnesty plus’. However, Article 205 CPC could be interpreted in a way that allows the Public Prosecutor’s Office to terminate the criminal proceedings related to one criminal offence if the accused has helped the investigator significantly in clarifying circumstances relating to evidence of another criminal offence, which is important from the point of view of public interests. The applicant does not even have to be a party to this other criminal offence.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
Apart from the above grounds for termination of criminal proceedings, there are no specific benefits that may be given to subsequent firms if they make a useful contribution since there are no rules for automatic reduction in punishment under the leniency programme. As stated above, such firms may qualify for termination of proceedings under Article 205 CPC. Moreover, according to the general provisions of the Penal Code, appearance for voluntary confession, sincere remorse, or active assistance in detection of the offence shall be considered as mitigating circumstances in imposing a punishment for a criminal offence.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
Yes, in fact the leniency programme that is currently effective in Estonia only provides for full leniency in the form of termination of criminal proceedings in appropriate cases. For the description of the conditions required for termination of proceedings, please see answer to question 2. All such conditions must be met.
9. How many companies have received full immunity from fines to date?
As indicated above, to our knowledge, the current leniency programme has not been used by any person to inform the relevant authority of any cartels. Therefore, up to now, no companies or natural persons have received full immunity on that basis.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
The currently effective leniency programme does not set forth any formalities for application for immunity. There are no specific written procedures and, as indicated above, the whole process involves a great deal of uncertainty for the persons involved.
The only specific reference to practical steps for application for leniency is provided in the Guidance, according to which the process under Article 202 CPC should be started by informing the investigator of the participants in a cartel. The format in which such information is provided, has not been specified.
However, before approaching the investigator (ie the Competition Board or the relevant police force), the relevant person would need to carry out a thorough analysis of the pros and cons of the application (including the degree of probability that criminal proceedings will be commenced and the possible severity of the punishment) and how certain it is that it will satisfy the conditions set forth for termination of the criminal proceedings (either under Article 202 or 205 CPC). In all cases this would involve a prediction of the information that is already at the disposal of the investigator and the discretionary power of the Prosecutor’s Office, the Public Prosecutor’s Office and/or the court. This means that the relevant person may never be absolutely sure that it will benefit from the leniency programme.
However, once the investigator has been approached, full cooperation should be provided, including all information and evidence at the disposal of the applicant.
11. Is there an optimal time to approach the regulatory authority?
In order to be able to benefit from Article 202 CPC, the person would need to be ‘first in’ with the list of participants in the cartel. Moreover, by that time the investigator must not have received information about the cartel from other sources (other leniency applicants, own investigations, etc). In case of Article 205 CPC the relevant information should be provided before the investigator has sufficient information for discovery of the relevant criminal offence and for the collection of relevant evidence.
Therefore, if the person would like to be as certain as possible that it would benefit from the leniency programme, then full information about the cartel should be provided as soon as possible.
12. What guarantees of leniency exist if a party cooperates?
Due to the uncertainties surrounding the current leniency programme, and especially the discretionary power granted to the relevant authorities, there are no guarantees of leniency, even if a party fully cooperates. There are no rules in place as to when during the investigation, or if at all, the relevant authority should terminate the criminal proceedings if the conditions of either Article 202 or 205 CPC are fulfilled.
Even the fact that the relevant authority has terminated the criminal proceedings does not guarantee immunity, since the proceedings may be recommenced under certain circumstances, eg if the party does not fulfil the obligations imposed on it as a condition for the termination under Article 202 CPC (such as community service or payment of specific amount to the state budget) or, under Article 205 CPC, if the party has stopped cooperating or has committed another criminal offence within three years. Therefore, the party’s future behaviour has also an important role to play.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
In principle, the person cooperating with the investigator should have the right to demand that its cooperation should be kept secret. This would be important to encourage persons to come forward and notify offences to the relevant authorities. Specific procedures have been devised to keep the anonymity of the witnesses. However, if the cooperating person is accused of the same criminal offence, as would most likely be the case with cartels until the termination of the criminal proceedings, then such a person may not act as a witness and these procedures would not be applicable.
It should be noted that in criminal proceedings access to file of the criminal proceedings is one of the most important defence rights and any exceptions to it must be based on a concrete legal footing and must be weighed against the breach of such an important principle. Currently the leniency programme does not contain such specific rules on confidentiality.
Moreover, one should always keep in mind the fact that if a cartel is unveiled and all but one of its members is subject to criminal proceedings then the identity of the person who received immunity would be easily deduced.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
The current leniency programme does not distinguish between a legal person and the natural persons connected to such a legal person, eg, its employees. Under the Penal Code both of these groups may be subject to criminal sanctions (please see answer to question 1) and the process for termination of criminal proceedings against them is the same.
In case a natural person has the right to represent a legal person and makes a contribution to the relevant authority on behalf of itself and the relevant legal person then it should mean that the legal person should be treated as also making such a contribution. However, if the natural person only makes a contribution on behalf of itself (this is particularly the case if the natural person is not entitled to represent the legal person) then such contribution should only be taken into account with respect to such natural person.
However, if a legal person is granted immunity (ie, criminal proceedings against it are terminated) then this does not mean that the criminal proceedings against the natural persons connected to the legal person will also be terminated.
15. Does leniency bar further criminal or private enforcement?
The leniency programme, which currently operates under criminal law, does not have any effect on the rights of the parties under civil law, including private enforcement.
Moreover, under criminal law the criminal proceedings that have been terminated on the basis of Article 202 or 205 CPC may be recommenced against the relevant party, but only on the specific grounds set out in the CPC (please see answer to question 12).
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?
No.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
No.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
Yes, both the Ministry of Justice and the Director General of the Competition Board have expressed their desire to reform the current system to make it more predictable for the parties concerned. To our knowledge, no specific steps have yet been taken in this respect.
