1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
A leniency programme was introduced into the Finnish Act on Competition Restrictions (480/1992, the ‘Competition Act’) by amendments, which took effect on 1 May 2004. The rules on the reduction and non-imposition of a fine are contained in Articles 8 and 9 of the Competition Act, respectively. The application of Articles 8 and 9 of the Competition Act has been further clarified in guidelines issued by the Finnish Competition Authority (the ‘FCA’).
The regulatory authority responsible solely for competition matters is Kilpailuvirasto, the FCA. The relevant court is called Markkinaoikeus, the Market Court. Competences between these two institutions are divided in the following manner. The FCA investigates and renders decisions on competition restrictions as first instance. The FCA also makes a proposal to the Market Court for the imposition of a fine. The FCA lacks, however, the power to impose fines on undertakings found to have infringed either the Competition Act or Articles 81 or 82 of the EC Treaty.
The power to impose pecuniary sanctions on infringing undertakings lies in the exclusive competence of the Market Court. However, in imposing a fine, the Market Court must always act upon a proposal from the FCA. It cannot ex officio impose a fine. The FCA’s proposal is, however, not binding upon the Market Court. In addition to its power to impose fines, the Market Court also reviews the FCA’s decisions as the first appellate instance. The ultimate appellate body in competition matters is the Supreme Administrative Court, which functions as the second appellate instance for the FCA’s decisions and as first instance for the Market Court’s decisions to impose fines.
It follows from this division of competences between the FCA and the Market Court that in respect of the non-imposition of a fine, the decision rests with the FCA, as the FCA in such cases makes no proposal for a fine to the Market Court. Conversely, as regards the reduction of a fine, it is ultimately the Market Court that decides, on a proposal from the FCA, the actual amount of the fine and the reduction of it. While the FCA’s proposal will include an appropriate reduction in the final amount of a fine reflecting the infringing undertaking’s voluntary cooperation with the FCA, this proposal is not binding upon the Market Court, which may depart from it either downwards or upwards.
2. What are the basic tenets of a leniency/immunity programme?
According to Article 9 of the Competition Act, the following five cumulative criteria must be satisfied by an undertaking applying for immunity:
The FCA’s guidelines on the application of Articles 8 and 9 of the Competition Act provide further details, for instance, on issues such as the qualitative criteria applicable for the information to be submitted to the FCA, the order of priority in cases of multiple applications and the submission of anonymous applications. It should be noted that under Article 9 of the Competition Act, only one applicant can benefit from immunity, and immunity is available only in respect of so-called hardcore cartels (ie price fixing, output limitation or market, customer or supplier sharing).
Article 8 of the Competition Act provides that the Market Court may reduce a fine imposed on an undertaking pursuant to a violation of the Competition Act where the undertaking has ‘considerably assisted’ the FCA in the investigation of a competition restriction. In contrast to immunity, a reduction of a fine is possible in respect of several undertakings and can be sought in respect of any competition restriction, thus also applying to vertical restrictions and abuses of a dominant position.
The FCA’s guidelines specify that in order to benefit, for instance, from immunity, the applicant is not required to submit conclusive evidence on the existence of a cartel or the complicity of the other undertakings involved where it does not have such information in its possession at the time of the application. Further, should the information submitted subsequently turn out to be incorrect or incomplete, it does not result in the disqualification of the immunity applicant.
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
The FCA has adopted a policy according to which it does not publish any statistics or other information on leniency applications submitted to it. The FCA has indicated that where this does not endanger its own investigation, it may provide information on the number of pending leniency applications. The FCA has, however, on two occasions published press releases informing that a particular investigation has been based on information supplied by a leniency applicant.
Based on information collected from public sources, mainly press releases by public companies, it seems that some seven applications for immunity or leniency have been made to the FCA since the introduction of the national leniency programme. The most significant of these involved competition restrictions in the raw wood procurement market.
The first leniency-based cartel case was brought before the Market Court in 2006 and it is still pending. The case concerns a collective boycott in the market for car spare parts. The FCA raided the companies suspected of the cartel in July 2004 after one of the companies involved, Oy Arwidson Ab, had confessed its participation in the cartel. The aggregate amount of fines proposed by the FCA on four of the alleged participants is €3.76 million whilst the leniency applicant was granted full immunity from fines.
In the wood procurement cartel case, no infringement fine was proposed to be imposed on UPM-Kymmene Oyj for its participation in forbidden price cooperation and exchange of information in the purchase of timber. The company informed the FCA of the restraint and withdrew from the cartel. The investigations on the timber trade began in May 2004 after UPM-Kymmene’s submission to the FCA after which the FCA raided the companies suspected of the cartel. The forbidden cooperation was conducted during 1997–2004 and it encompassed the whole country. The infringement fines proposed for the other participants in the cartel amount to €30 million for Stora Enso Oyj and €21 million for Metsäliitto Osuuskunta. Metsäliitto Osuuskunta has also assisted the FCA in the investigation of the matter, as a result of which a 30 per cent reduction into its infringement fine was proposed. The Market Court shall decide on the amount of the infringement fine and the reduction to it as first instance.
4. What is needed to be a successful leniency applicant? is documentary evidence required or is testimonial evidence sufficient?
The FCA has specified in its guidelines on the application of Articles 8 and 9 of the Competition Act that for an undertaking to be eligible for immunity, it must provide the following information, either at the time of submitting the application or, where the application is anonymous, at the date agreed upon by the FCA and the applicant undertaking:
The guidelines further state that although the information given is to be extensive and accurate, the applicant is not required to provide conclusive evidence on the existence of an anti-competitive agreement or the complicity of the participating undertakings, should the applicant undertaking not be in possession of such detailed facts at the time of its application. Also, provided that the information is given in good faith, the fact that some of the information provided subsequently proves to be incorrect or incomplete does not result in the applicant undertaking being disqualified from immunity.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Immunity from fines can only be granted to one applicant and only in respect of hardcore cartels, ie agreements or other arrangements whereby undertakings have agreed to fix price, limit output, or share markets, customers or sources of supply. An applicant receives a separate decision from the FCA on whether or not it has satisfied the conditions for the grant of immunity. Where the conditions for the application of Article 9 of the Competition Act are met, the FCA refrains from making a proposal to the Market Court for the imposition of a fine.
In terms of Article 9 of the Competition Act, immunity can only be granted to one applicant, ie the first undertaking to satisfy the conditions stipulated in the said provision. Where multiple applications for immunity have been made in respect of one cartel, the decisive factor in determining the order of priority is the point in time at which the FCA has at its disposal the relevant information.
Conversely, a reduction of a fine under Article 8 of the Competition Act is possible in respect of several undertakings in any one cartel or other competition restriction case. However, the amount of the reduction is likely to decrease progressively where several applications under Article 8 of the Competition Act have been made. Further, it may be increasingly difficult to satisfy the criteria that the applicant has ‘considerably assisted’ the FCA in the detection of a competition restriction where the FCA has already obtained information from several prior applicants.
The possibility of obtaining immunity from fines is determined by the timing of an application. The application must contain information which allows the FCA to initiate an investigation. In particular, an applicant undertaking must always provide the FCA with details of its identity (unless the application is initially made anonymously) and participation in a cartel. In addition, the applicant must describe in the application the nature of the restriction, the other cartel participants, the relevant product and geographical markets and the duration of the cartel. The positioning in the queue is determined exclusively by the timing of a proper application (ie an application which contains all the required information) and not for instance by the amplitude and preciseness of the information provided.
The FCA has shown its willingness to operate a system akin to a marker system in respect of anonymous leniency applications. In such cases an undertaking can approach the FCA anonymously through its legal counsel to ascertain whether immunity is still available. The undertaking does not initially have to disclose its identity or provide any information on the competition restriction, although the applicant must identify the affected industry along with the nature of the competition restriction. Where the FCA is not in possession of information allowing it to take action against such a competition restriction, the FCA informs the anonymous applicant that immunity is available. A date is then agreed on which the undertaking must, at the latest, provide the FCA with the information in its possession. The FCA has specified in its guidelines that the disclosure of identity and the provision of the necessary information must occur promptly after the anonymous inquiry. The timing of the application is then considered to be the point in time of the anonymous contact with the FCA. However, should the anonymous applicant fail to provide the required information by the agreed deadline, it will lose its position of priority.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
While according to Article 9 of the Competition Act immunity can only be granted to one applicant, ie the first undertaking to satisfy the conditions contained in the said provision, Article 8 provides that the Market Court may reduce a fine imposed on an undertaking pursuant to a violation of the Competition Act where the undertaking has ‘considerably assisted’ the FCA in the investigation of a competition restriction. The FCA has not, as yet, clarified the meaning and standard of ‘considerably assisted’.
In contrast to immunity, a reduction of a fine is possible in respect of several undertakings and can be sought in respect of any competition restriction, thus also applying to vertical restrictions and abuses of a dominant position. Further, an application under Article 8 of the Competition Act can be made even after the FCA has initiated its own investigation, but where it lacks sufficient evidence to make a finding of an infringement.
Neither Article 8 of the Competition Act nor the FCA’s guidelines provide for a percentage scaling for the reduction to be given to a successful leniency applicant. The appropriate percentage of reduction is determined solely by reference to the criterion of considerable assistance. Under Article 8 of the Competition Act, the reduction could theoretically vary between 0 per cent and 100 per cent. Accordingly, and should it be considered appropriate, the Market Court could in theory refrain from imposing a fine under Article 8 of the Competition Act.
The Finnish leniency programme does not provide for an ‘immunity plus’ or ‘amnesty plus’ option.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
Please see answer to question 6.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
Please see answer to question 4.
9. How many companies have received full immunity from fines to date?
It is clear that the national leniency policy has proven useful and undertakings have taken advantage of it. By a rough estimate, since the beginning of May 2004, some seven leniency or immunity applications have been submitted to the FCA and been granted immunity by the FCA, although no immunity decisions have yet been issued by the Market Court on the basis of the Finnish leniency policy.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
As regards applications for immunity under Article 9 of the Competition Act, one of the most important elements is the timing of the application, as only one (usually the first) undertaking can benefit from immunity. The FCA should be contacted as soon as the undertaking has gathered sufficient evidence, which allows the FCA to intervene in a competition restriction. Where immunity is not available and an application is consequently made under Article 8 of the Competition Act for the reduction of a fine, both the timing of the application and the quality of evidence are of great significance.
Please see answer to question 2 for a brief description of the basic tenets of the Finnish leniency/immunity programme.
11. Is there an optimal time to approach the regulatory authority?
The best time to approach the authorities when applying for immunity or leniency may vary depending on whether immunity under Article 9 is still available, or whether an undertaking can only benefit from a reduction of a fine under Article 8 of the Competition Act. A preliminary, but sufficiently detailed analysis must first be undertaken in order to identify whether there has been an infringement within the meaning of either Article 4 of the Competition Act or Article 81(1) of the EC Treaty. After this, it must be assessed and a decision made on whether immunity is still available (usually by contacting the FCA on an anonymous basis) and whether the conditions of Article 9 can be satisfied.
Please see also answer to question 4.
12. What guarantees of leniency exist if a party cooperates?
Where an undertaking seeks immunity under Article 9 of the Competition Act, the grant of immunity is automatic upon fulfilling the criteria contained in that provision. Conversely, where immunity is no longer available, either by reason of a prior application or the conditions of Article 9 having not otherwise been fulfilled, and consequently a reduction of fine under Article 8 of the Competition Act is sought, there are no guarantees during the investigative stage that a reduction will actually be granted as a result of voluntary cooperation. This is for the reason that, it is ultimately for the Market Court to decide, on a proposal from the FCA, the actual amount of the fine including any reduction to it by virtue of Article 8 of the Competition Act. While the FCA’s proposal will include an appropriate reduction in the final amount of a fine reflecting the infringing undertaking’s voluntary cooperation with the FCA, this proposal is not binding upon the Market Court, which may depart from it either downwards or upwards.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
Neither the Competition Act nor the FCA’s interpretative guidelines address the issue of confidentiality of immunity/leniency applications. It can be presumed that the ordinary principles of administrative law are applicable, which provide for the confidentiality of certain types of information submitted to a public authority (in particular business secrets). However, it seems that the degree of confidentiality should perhaps be somewhat higher in respect of leniency applications in order to maintain the incentives for voluntary cooperation.
In addition, the FCA has indicated that it may refrain from giving access to documents submitted to it pursuant to a leniency application during its own investigation. Such documents would only be accessible after the FCA has rendered its final decision and/or made a proposal to the Market Court.
In the guidelines, the FCA notes that it is under an obligation to inform the Commission of an application for immunity or reduction of fines. The FCA may also inform the competition authorities of the other member states. It would seem, however, that in releasing information to the Commission and the other national competition authorities, the FCA must ensure that an undertaking’s business secrets are duly protected.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
The provisions of the Competition Act are only applicable to ‘business undertakings’, which are defined in Article 3 as a ‘natural person, or a private or public person, who professionally offers for sale, buys, sells, or otherwise obtains or delivers goods or services in return for compensation’. Thus, issues such as director’s personal liability for anti-competitive behaviour, do not arise under the Competition Act.
15. Does leniency bar further criminal or private enforcement?
The Finnish Competition Act is of administrative law nature, and thus provides only for the imposition of administrative fines in addition to possible civil law liability for damages. An infringement of the Competition Act by an undertaking does not expose its management, or personnel, to criminal law penalties.
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 Competition Act does not address the interaction with applications under the Commission Leniency Notice. The FCA’s guidelines on the application of Articles 8 and 9 of the Competition Act provide clarification on the interaction with applications under the Commission Leniency Notice and information exchange with the EC Commission. According to chapter 2.8 of the FCA’s guidelines, even if a business undertaking exposes an alleged cartel to the FCA on the basis of the Competition Act, this does not imply that the undertaking will be awarded immunity in the other member states on the basis of the information supplied to the FCA. The FCA shall inform the EC Commission of the proceedings in a case involving a leniency application. As a general rule, the FCA may also inform the other member states. The business undertaking is hence advised to apply for leniency from the EC Commission or from all competition authorities whose territories may have been affected by the competition restraint.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
Please see answer to question 16.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
The latest amendments to the Competition Act entered into force in the beginning of May 2004. There are presently no proposals to amend the Competition Act. However, on 19 June 2007, the Minister of Trade and Industry appointed a committee to assess the need for an overall reform of the Competition Act and to produce a proposal for possible reforms. The mandate of the committee includes a review of the procedures used in merger control and antitrust matters as well as the presently applied sanctioning policy. The committee has until the end of 2008 to present its findings.
The primary focus of Finnish competition policy and the FCA’s enforcement resources continues to rest on the pursuit of cartels. To this end the leniency policy will aim to uncover more secret cartels. The challenge is thus to see how the new regulatory environment, including the leniency programme, will operate in practice and whether the modified provisions of the Competition Act can achieve a more effective enforcement mechanism to uphold effective competition.
