Cartel leniency in UK (England and Wales): overview
A Q&A guide to cartel leniency law in the UK (England and Wales).
The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, availability of immunity from civil fines to individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.
To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.
This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-guide.
For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/mergercontrol-guide and www.practicallaw.com/restraintsoftrade-guide.
Applicable laws and guidance
Cartels are prohibited by:
Chapter I of the Competition Act 1998 (CA), which prohibits agreements between undertakings (businesses), decisions by associations of undertakings and concerted practices that:
may affect trade within the UK; and
have as their object or effect the prevention, restriction or distortion of competition within the UK.
Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits such agreements in relation to trade and competition within the EU.
In addition, individuals involved in hard core cartel conduct can be subject to criminal prosecution under section 188 of the Enterprise Act 2002 (EA) (that outlines the criminal cartel offence). The Enterprise and Regulatory Reform Act 2013 (ERRA) made substantial amendments to the criminal cartel offence in the EA. These changes, which took effect from 1 April 2014:
Removed the dishonesty element from the offence for cartels entered into from 1 April 2014, to make criminal cartel activity easier to prove.
Introduced a series of circumstances preventing an agreement from amounting to a criminal cartel.
Introduced three substantive defences to the criminal cartel offence.
The Competition and Markets Authority (CMA) has primary responsibility for cartel enforcement in the UK. The CMA (like its predecessor, the Office of Fair Trading (OFT)) can impose fines of up to 10% of the worldwide turnover of a company that is found to have breached the CA or TFEU prohibitions.
Investigations by the European Commission under Article 101 can also be used to penalise cartel conduct occurring in the UK, which has any effect on trade between EU member states (this position will remain the same post-Brexit regardless of the outcome of negotiations, although the effect of the cartel would need to be on trade between remaining EU member states).
In practice, cartels in the UK are likely to be investigated by the CMA, as the CMA's Cartels and Criminal Group has responsibility for prosecuting individuals under the EA criminal cartel offence. However, criminal cartel cases can be referred to the Serious Fraud Office (SFO) that will work together with the CMA in respect of any such prosecutions.
The criminal cartel offence carries:
A maximum term of imprisonment of five years.
The possibility of an unlimited fine.
A competition disqualification order (CDO) or disqualification under the Company Directors Disqualification Act 1986 in respect of an individual who is also a director. A CDO can last for up to 15 years and prohibits an individual from performing certain functions in relation to companies (such as acting as a director).
The CMA offers leniency to undertakings that are willing to confess their involvement in a cartel (by granting either immunity from fines or reductions in the level of fine imposed), and can issue a written notice (that is, a no-action letter) preventing an individual from being prosecuted in England or Wales (see Question 7, Circumstances). It can also refrain from applying for a CDO in respect of an undertaking's directors. Where the CMA grants immunity, this applies to all co-operating past and present employees of the undertaking with the benefit of leniency, but this is subject to the complete and continuous co-operation of the undertaking and relevant individuals with the CMA's investigation and any related appeals process.
The CMA has published its own guidance on cartel investigations and the criminal cartel offence and has adopted a series of guidance notes on leniency issued by the OFT, including:
Applications for leniency and no-action in cartel cases (OFT1495, 2013), which contains detailed guidance on the principles and processes.
Quick guides to cartels and leniency for business (OFT1495b, 2013) and individuals (OFT1495i, 2013).
Guidance on the CMA's investigation procedures in Competition Act cases (CMA8, 2014), which summarises how to contact the CMA to apply for leniency and how the leniency fits alongside the CMA's settlement policy.
Cartel offence prosecution guidance (CMA9, 2014), which contains guidance on the principles the CMA will apply when determining whether to initiate criminal cartel offence proceedings.
OFT's guidance as to the appropriate amount of a penalty (OFT423, 2012), which sets out the rules for leniency in respect of the CA and the TFEU and contains the CMA basic leniency programme.
Director disqualification orders in competition cases (OFT510, 2010), which sets out the effect of leniency on the CMA's decision to apply for these orders.
In addition to the CMA, certain industry regulators have concurrent powers to apply and enforce Chapters I and II of the CA and Articles 101 and 102 of the TFEU. These are the:
Office of Communications.
Gas and Electricity Markets Authority.
Northern Ireland Authority for Utility Regulation.
Water Services Regulation Authority.
Office of Rail and Road.
Civil Aviation Authority.
Monitor (an executive non-departmental body of the Department of Health).
Financial Conduct Authority (since 1 April 2015).
Payment Systems Regulator (since 1 April 2015).
The CMA is accountable for these concurrency arrangements and is required by law to publish an annual report on progress.
The SFO has dual power with the CMA to bring proceedings for the cartel offence in England or Wales. The SFO will investigate and prosecute cases where serious or complex fraud is suspected. The basis of such co-operation is set out in the Memorandum of Understanding between the CMA and the Serious Fraud Office (2014).
Throughout this chapter, references to the CMA should be read (where appropriate) to include the above authorities, which also have powers to investigate cartel behaviour.
Scope of application
The leniency programme covers cartel activity prohibited under the civil provisions in Chapter I of the Competition Act 1998 and Article 101 of the Treaty on the Functioning of the European Union applicable to undertakings, which includes (but is not limited to):
Arrangements to fix prices with competitors, including in relation to elements of price.
Horizontal or vertical sharing of competitively sensitive information.
Any forms of bid-rigging or collusive tendering.
Vertical price fixing arrangements, including in relation to retail prices.
Arrangements aimed at market sharing or customer allocation.
It also covers the cartel behaviour prohibited by the criminal cartel offence under the Enterprise Act 2002, which can lead to sanctions on individuals. These offences are limited to horizontal arrangements (that is, offences between competitors), such as:
Agreements to limit supply or production.
Market sharing or customer allocation arrangements.
Bid-rigging (collusive tendering).
The grant of leniency was a regular feature of competition investigations carried out by the Office of Fair Trading (OFT) (the predecessor of the Competition and Markets Authority (CMA)). In its first year of operation, the CMA did not reach any decisions in which immunity or a reduction in the administrative fine was granted. However, in the past year, there has been evidence of it applying its leniency policy in a couple of cases:
On 12 August 2016, the CMA issued a decision finding that Trod Limited and GB eye Limited (trading as GB Posters) infringed competition law by agreeing over a four-year period not to undercut each other's prices for posters and frames sold on Amazon's UK website. Trod Limited agreed to pay a fine of GB£163,371 for breach of Chapter I of the Competition Act 1998. GB eye Limited received no fine as it reported the cartel to the CMA under the CMA's leniency policy. Under the terms of the settlement, the leniency granted to GB eye Limited is conditional on it continuing to co-operate and comply with the CMA's leniency policy conditions. The CMA's investigation was conducted solely as a civil matter.
On 10 May 2016, the CMA issued an infringement decision finding that Ultra Finishing Limited infringed competition law by engaging in online resale price maintenance in relation to the supply of bathroom fittings in the UK. Ultra Finishing Limited admitted its involvement and agreed to pay a fine of GB£826,000 for restricting online prices. In the non-confidential version of the infringement decision, the CMA reported that a reseller applied to the CMA for leniency after the CMA had opened its investigation. The CMA sent warning letters to a number of other suppliers of bathroom fittings that it suspected had engaged in similar practices in relation to internet sales. A warning letter does not amount to a finding as to whether or not a company has infringed competition law.
Despite the relatively low levels of fines to date by the CMA, the levels of enforcement and penalties are expected to increase. In February 2015, fines of GB£45 million were imposed on GSK and various generic pharmaceutical companies in relation to practices relating to the drug paroxetine (no party received leniency in that case).
The OFT had also established a record for imposing significant fines, albeit with a mixed record of upholding such penalties on appeal, including for example:
GB£121 million on British Airways in 2011 for price-fixing in respect of passenger fuel surcharges with Virgin Atlantic, which received full immunity. The fine was ultimately reduced to GB£58 million and the parallel criminal prosecution of four British Airways executives was unsuccessful.
GB£225 million in 2010 on 12 companies in relation to alleged price-fixing of tobacco products by suppliers and supermarkets. One of these companies, Sainsbury's, received full immunity from penalties. The final two parties, Gallaher and Somerfield, were successful in July 2016 in having their penalties annulled before the Court of Appeal on the basis of the public law principle of equal treatment after other parties had successfully appealed in 2011 and one party (TM Retail) had its fine repaid on the basis of the successful appeal of others in 2011.
The CMA, by contrast, has committed to improving its enforcement record and avoiding successful challenges of its decisions on appeal. It is also understood that leniency applications feature in a number of the CMA's ongoing investigations and that the CMA continues to receive a high volume of leniency applications, with cartel enforcement a policy priority for the coming years.
Availability of leniency
There are two types of immunity under the Competition and Markets Authority's (CMA) leniency policy, which offer applicants full protection against fines:
Type A immunity.
Type B immunity.
Type A immunity
The first applicant to report and provide evidence of a cartel, when there is no pre-existing CMA investigation into the cartel and the CMA does not otherwise have sufficient information to establish the existence of the reported cartel activity, will be granted Type A immunity.
Type A immunity offers the strongest level of protection, guaranteeing successful applicants all of the following:
Corporate immunity from financial penalties.
''Blanket'' immunity from criminal prosecution for individual employees or officers.
Protection against any action to disqualify directors (for all directors of the undertaking).
To obtain Type A immunity, not only must the applicant be ''first through the door'' and provide information that gives the CMA a sufficient basis for taking forward a credible investigation, it must also accept that it engaged in cartel activity, cease its participation in the cartel and agree to co-operate with the CMA's investigation (including in respect of any appeal process following an infringement decision).
Type A immunity is not available to an applicant who coerced others to participate in the cartel. The types of conduct that can amount to coercion include actual physical violence (or proven threatened violence) or making market exit a real risk through applying strong economic pressure.
Type B immunity
Where the CMA is already conducting an investigation into cartel activity, the first applicant to provide additional evidence of the cartel prior to the CMA issuing a statement of objections is eligible for Type B immunity.
Type B immunity offers:
Discretionary corporate immunity from all penalties (or up to a 100% reduction in penalties).
Protection from actions to disqualify directors (for all directors of the undertaking).
To benefit from Type B immunity, the applicant must provide evidence which adds ''significant value'' to the CMA's investigation (that is, the information provided must genuinely advance the investigation). In addition it must:
Accept that it engaged in cartel activity.
Cease its participation in the cartel
Agree to provide continuous co-operation throughout the CMA's investigation (and any subsequent appeals)
Not have coerced others to participate in the cartel.
When determining whether to exercise its discretion to award Type B immunity, the CMA will balance gaining additional evidence by reason of a grant of leniency against granting immunity (or a reduction in penalties) after an investigation has commenced (and resources have already been expended). The CMA will also take into account the overall level of co-operation provided.
The CMA will assess the grant of corporate immunity (or a reduction in penalties) independently from the grant of any individual criminal immunity. The public interest in granting immunity from fines may not extend to immunity from criminal prosecution in all cases.
A sliding scale of leniency from administrative fines is available. There are two forms of non-immunity leniency offered by the CMA:
Type B leniency.
Type C leniency.
Type B leniency
Applicants for Type B leniency will be eligible for anything up to a 100% reduction in penalties (see Question 4, Type B immunity for the conditions that must be fulfilled).
Type C leniency
In circumstances where another undertaking has already reported the cartel activity (or where the applicant has coerced another undertaking to participate in the cartel), only Type C leniency is available. Applicants for Type C leniency can receive:
Discretionary reductions in corporate penalties of up to 50%.
Discretionary criminal immunity for specific individuals.
If a reduction in a corporate penalty is granted, protection from actions to disqualify directors (for all directors of the undertaking).
An applicant for Type C leniency must submit evidence that adds significant value to the CMA's investigation (that is, it must genuinely advance the investigation) and must accept that it engaged in cartel activity, cease its participation in the cartel and agree to co-operate with the CMA's investigation.
Type C leniency does not grant blanket immunity to all of an undertaking's current and former employees and directors who co-operate with the CMA, but if an undertaking is given Type C leniency, at least some of its current or former employees or directors may still be given individual immunity.
The grant of Type C leniency is discretionary and for the CMA to exercise this discretion, it must be satisfied that the undertaking should benefit from a reduction in penalty, taking into account the same factors that are taken into account for Type B immunity, corporate immunity and Type B leniency. The key criterion for determining the fine reduction available will be the overall added value of the information, documents and evidence provided by the undertaking. The CMA will also take into account the overall level of co-operation provided.
Individuals are not liable to administrative fines under either the Competition Act 1998 or the Treaty on the Functioning of the European Union, but are liable to prosecution for the criminal cartel offence under the Enterprise Act 2002, which may lead to custodial sentences or other criminal sanctions being imposed (see Question 1, Applicable laws and guidance). Immunity and leniency under the civil/administrative regime are therefore not applicable to individuals. However, the grant of immunity or leniency to a company will protect its directors (to the extent they have co-operated with the investigation) from the Competition and Markets Authority making an application to disqualify them as company directors through a competition disqualification order.
Companies are not liable to prosecution for the cartel offence under the Enterprise Act 2002 (EA), only to administrative fines under the Competition Act 1998 and/or the Treaty on the Functioning of the European Union.
Individuals can be granted immunity from prosecution in the form of a no-action letter, issued by the Competition and Markets Authority (CMA) (section 190(4), EA). A no-action letter will prevent a prosecution from being brought against an individual in England and Wales or Northern Ireland for the cartel offence, except in circumstances specified in the letter and will also protect relevant individuals from the CMA making a competition disqualification order (CDO) application to disqualify them as directors (although this would normally be covered by a company's award of immunity/leniency).
A no-action letter can be granted when an individual satisfies all of the following conditions:
Admits participation in the criminal offence.
Provides the CMA with all information available to them regarding the existence and activities of the cartel.
Maintains continuous and complete co-operation throughout the investigation and until the conclusion of any criminal proceedings arising as a result of the investigation.
Has not taken steps to coerce another undertaking to take part in the cartel.
Refrains from further participation in the cartel from the time of its disclosure to the CMA (except as may be directed by the investigating authority).
In cases where the CMA concludes that, on the basis of the information that has been given, an individual who has applied for immunity is not at risk of criminal prosecution for the cartel offence, it will not issue a no-action letter for this reason and will confirm this in writing (comfort letter).
Proceedings against employees
If an undertaking has been granted immunity or leniency, its employees and directors can be given two forms of immunity from prosecution for the cartel offence:
Blanket immunity grants immunity from prosecution to all of an undertaking's current and former employees and directors who co-operate with the CMA. It is given automatically when an undertaking is given Type A or B immunity (see Question 4).
Individual immunity grants immunity from prosecution to a single individual. It can be given to at least some of the current or former employees or directors of an undertaking, which has been given corporate immunity or Type B or C leniency (see Questions 4 and 5).
The CMA will not apply for a CDO against any current director of a company, which has been given immunity or leniency in respect of the activities to which such a grant relates. However, it may consider applying for a CDO against such a director who:
Has at any time been removed or otherwise ceased to act as a director of a company owing to their role in the breach of competition law in question and/or for opposing the relevant application for immunity or leniency.
Fails to co-operate with the leniency process by failing to maintain continuous and complete co-operation throughout the CMA's investigation (including any criminal investigation) and until the conclusion of any action taken by the CMA as a result of its investigation (including any subsequent appeal by other parties to an infringement decision).
If an undertaking is given Type A or B immunity, all of its current and former employees and directors will automatically be protected by blanket immunity, provided that they co-operate with the CMA.
If an undertaking is applying for corporate immunity or Type A or B leniency, it (or its legal advisers) can explore (including on a no-names basis) the approach that the CMA is likely to take, including both whether:
In a hypothetical situation it would contemplate a criminal investigation.
If contemplating a criminal investigation (or if such an investigation has already begun), it would be willing to grant individual immunity to any of the undertaking's current or former employees or directors.
Both blanket and individual immunity are conditional on individuals co-operating with the CMA. If an individual refuses or withdraws co-operation, the immunity will be cancelled and the individual will be liable to prosecution.
As the interests of undertakings and their current and former employees and directors may not coincide, it may be appropriate for individuals to be provided with separate external legal advice and/or representation.
There is no specific time when an application for leniency must be made, but the longer an undertaking waits, the greater the risk of another undertaking making an application first and/or an investigation being started. This is known as the race for leniency. In extreme cases, the precise moment when a party provides the information required for the Competition and Markets Authority (CMA) to grant a ''marker'' for immunity to the first applicant can be critical. Therefore, generally, the sooner an application is made, the greater the likelihood of leniency being given and the greater the level of leniency that is likely to be granted.
The CMA confirms in its guidance that it recognises that the decision as to whether to apply for leniency will ordinarily be made at a very senior level. Therefore, it offers confidential guidance to undertakings or individuals thinking about applying for leniency, which may help inform this decision (see Question 9).
The Competition and Markets Authority (CMA) has established a dedicated telephone number (the leniency enquiry line), which anyone can call to obtain confidential guidance on the CMA's leniency programme. This enables potential applicants to obtain comfort on certain issues before deciding whether or not to submit an application. Typically, calls will be made on a ''no names'' basis by the legal representatives of the undertaking or individual. The legal representative will provide sufficient information to enable the CMA to determine and confirm whether there is an existing civil and/or criminal investigation and whether there is an existing applicant for leniency. The representative must also confirm that the potential applicant has a genuine desire to confess (that is, that it accepts that, as a matter of fact and law, the available information suggests that it has been involved in prohibited cartel activity). The CMA will consider the information provided and will confirm (as swiftly as possible) what form of immunity or leniency is, in principle, available. Typically, the CMA will be able to revert within one or two working days to confirm if Type A immunity is available.
If the CMA has already commenced an investigation, the legal representative may seek to establish whether the information it can provide would be sufficient to warrant some form of immunity or leniency by making an informal proffer specifying the form and substance of the information it expects to be in a position to provide to the CMA. The CMA will then confirm whether, if the information was provided, it would grant the leniency in question.
A formal application by an undertaking for immunity or leniency must be made by the undertaking's legal representative, or by a director or senior employee authorised to act on the undertaking's behalf.
A formal application by an individual for immunity must be made by the individual or their legal representative. Applications for immunity for current or former employees or directors can also be made on their behalf by undertakings when they apply for immunity or leniency.
The formal grant of immunity or leniency does not take place until a CMA investigation has substantially progressed. Applicants in the first instance seek a ''marker'', which ensures their position in the pecking order (that is, for a grant of Type A immunity, Type B leniency or Type C leniency) subject to perfection of the marker, which will take place once further evidence and co-operation has been provided to support the CMA's investigation. If the CMA elects not to launch or continue an investigation, a marker remains on the CMA's file to protect the position of the applicant in case the subject matter is subsequently revisited.
Where the CMA has confirmed that a particular form of immunity or leniency is, in principle, available, a marker can be secured if the undertaking:
Discloses its identity.
Identifies the concrete basis for suspicion that it participated in cartel activity.
Normally, specifies the nature and emerging details of the suspected infringement and the substance and form of the evidence uncovered so far.
The requirement for an undertaking to disclose its identity will be waived if its legal representative confirms to the CMA that they also have instructions to apply to the European Commission for a marker under section II of the Commission Leniency Notice. In this case, the legal representative must satisfy all of the below:
Provide their name and firm.
Give sufficient details of the affected sector to enable the CMA to confirm that there is no existing civil and/or criminal investigation and/or applicant for leniency.
Confirm that the undertaking has a genuine desire to confess (see above, Confidential guidance).
If a ''no names'' marker is secured in these circumstances, the CMA will expect the legal representative to revert to it within an agreed time frame confirming that an application has been made to the European Commission and providing the material required for a normal marker. If the undertaking's application to the European Commission has been unsuccessful, it can either proceed in this way or withdraw its no-names marker without revealing its identity.
Form of application
In the first instance, applicants wishing to make a formal application for leniency should call the CMA's leniency enquiry line. Once the CMA has confirmed that a preliminary marker is available, it will discuss the timing and process for the prompt provision by the applicant of supporting evidence (see Question 10).
An applicant for leniency must provide all information, documents and evidence available to it regarding the existence and activities of the reported cartel activity, including evidence from current and former employees and directors, which the CMA may or may not incorporate into witness statements.
The information, documents and evidence provided must at least:
In Type A immunity cases, give the CMA a sufficient basis for taking forward a credible investigation (which in practice means that it must be at least sufficient to allow the CMA to exercise its formal powers of investigation, for example, on-site inspections) (see Question 4, Type A immunity).
The entire application process can be oral if requested and provided there is good reason for it. However:
All pre-existing written evidence of the cartel must be provided to the CMA.
Witnesses must be made available for interview and to sign statements, setting out their evidence.
In recent years, applicants concerned about future damages claims have sought to avoid making applications in writing because of concerns that leniency statements may be obtained by possible claimants. These concerns were enhanced by the 2012 National Grid case. The English High Court applied the European Court of Justice's decision in Pfleiderer in which the court explicitly required an individual case-by-case assessment of requests to access documents suggesting there was no blanket protection for leniency-related material. Clearer protections are, however, afforded by Article 5 of Directive 2014/104/EU on actions for damages under national law for infringements of competition law provisions of the member states, which creates a right in damages actions for parties to access evidence that is held by the opposing or third parties but specifically excludes leniency statements (see Questions 14 and 18).
The CMA accepts short-form summary applications in accordance with the European Competition Network (ECN) Model Leniency Programme in cartel cases where:
The European Commission is particularly well-placed to deal with a case in accordance with paragraph 14 of the Notice on co-operation within the network of competition authorities (OJ 2004 C101/43) (ECN Notice).
The CMA is (in its opinion) also well-placed to act in accordance with paragraph 8 of the ECN Notice.
The applicant has made or is in the process of filing an application for immunity with the European Commission.
The applicant is in a Type A immunity position in the UK.
Where this route is available to an applicant, the CMA will apply the procedures set out in paragraphs 22 to 25 of the ECN Model Leniency Programme. In addition to the information required by that programme, the CMA can also require relevant UK-specific information relating to the reported cartel.
There is no prescribed timetable for a leniency process but once an initial call has been made to the leniency enquiry line (particularly where there is no pre-existing investigation) the process can move swiftly.
The process will generally involve the following steps:
An undertaking's legal representative will contact the Competition and Markets Authority (CMA), confirming they have instructions to apply for leniency and providing sufficient information to enable the CMA to confirm which form of leniency, if any, is available.
The CMA officer will make internal enquiries and will revert to the legal representative to confirm whether or not Type A immunity is in principle available.
The legal representative will (except in the cases of a ''no names'' marker application) disclose the undertaking's identity and provide sufficient information to the CMA to secure a marker.
Where the cartel activity is continuing, the applicant must cease its participation. The CMA will provide guidance as to how to achieve this without tipping others off.
Once the marker has been granted and assuming the CMA decides to take the case forward, the undertaking will begin the process of providing all relevant information to the CMA to enable the marker to be perfected. The CMA offers guidance on how to conduct internal investigations, including how to preserve and secure different forms of evidence. The CMA has a preference for undertakings not to have conducted extensive internal investigation prior to applying for leniency, for fear that this may lead to contamination of evidence or tipping off of cartelists.
Once the CMA has received at least the substantial and most evidentially probative elements of the relevant information, it will sign the relevant immunity or leniency agreement and/or any no-action letters. In practice, it may be many months or even years into the CMA's investigation before it is prepared to take this step.
Even following the grant of leniency or immunity, the undertaking (and relevant individuals) must continue to provide complete and continuous co-operation with the CMA under the terms of the agreement until the conclusion of the CMA's investigation and any subsequent court proceedings (such as appeals). Although the CMA is showing signs of reaching cartel infringement decisions more speedily than its predecessor, the co-operation obligations for a party awarded immunity or leniency may persist for a number of years, particularly in cases that are challenged on appeal.
Withdrawal of leniency
Any grant of immunity or leniency is subject to the conditions set out in the leniency agreement or no-action letter, which are principally concerned with the undertaking or individual providing continuous and complete co-operation. This requirement necessitates compliance with the rules and principles set out in the Competition and Markets Authority's (CMA) guidance and involves the undertaking or individual's overall approach to the leniency process to be a constructive one, designed genuinely to assist the CMA in efficiently and effectively detecting, investigating and taking enforcement action against cartel conduct, so that the public policy objectives of the CMA's leniency policy are achieved.
If, at any time before the conclusion of the case (whether by the adoption of a decision or otherwise) the CMA determines that any of the conditions have not been complied with, it may revoke the grant of immunity or leniency and take enforcement action. Before doing so, the CMA will give written notice to the undertaking or individual of the nature of the alleged non-compliance and that it is considering revoking the grant of leniency. They will be given an opportunity to respond to the notice and if the CMA considers it possible and appropriate, to remedy any breach within a reasonable period of time from the service of the notice.
The withdrawal of leniency from one undertaking does not have any consequences for other undertakings applying for or granted leniency.
Where an undertaking chooses to withdraw a leniency application, having received confirmation of a marker, the CMA can use the information provided by the applicant against the applicant itself or any third party. If the CMA later decides to fine the applicant for its participation, the CMA will consider whether it is fair and reasonable to reduce any fine later imposed on the withdrawn applicant.
Scope of protection
The Competition and Markets Authority (CMA) will discuss the scope of the leniency application during the undertaking's initial approach. The scope of the application should cover the suspected cartel activity. The CMA will be realistic about what can sensibly be identified at the early marker stage and the scope can be further specified and/or refined as progress is made towards the perfection of the marker.
Where an undertaking discovers any innocent omissions up to and after the perfection of the marker, it should inform the CMA immediately and satisfy the CMA both that the:
Omission was innocent (that is, the audit for relevant information had been thorough).
Information subsequently discovered has been provided to the CMA without undue delay.
If the CMA is satisfied that this is the case and the information affects the scope of the suspected infringement, it will normally be prepared to expand the scope of leniency agreements and no-action letters accordingly.
If an undertaking submits information relating to an entirely separate infringement, this information will fall outside the leniency agreement, and so undertakings are encouraged also to apply for leniency for any separate infringement identified (and if an undertaking is not benefitting from immunity or Type B leniency in relation to the original investigation, it should take advantage of the CMA's leniency plus policy (see Question 13)).
A situation can arise where an undertaking co-operating with an investigation by the Competition and Markets Authority (CMA) under the Competition Act 1998 in relation to an occurrence of prohibited cartel activities, uncovers and reports conduct in relation to a completely separate occurrence of prohibited cartel activities (such as in a separate market, or at a different period in time). In these circumstances, the undertaking can both:
Obtain immunity or Type B leniency in relation to the second reported conduct.
Receive a reduction (leniency plus) in the administrative fines imposed on it in respect of the first investigation, which is additional to the reduction which it would have received for its co-operation alone in that case. The undertaking does not need to have been given leniency in the first case, simply to have co-operated to the extent that it is receiving a reduction for co-operation by way of mitigation, under the normal guidelines for determining administrative fines.
In determining what would be an appropriate additional reduction by way of leniency plus, the CMA will have regard to all the relevant circumstances, such as the:
Scale of the consumer detriment involved in the additional reported cartel, including the number and size of the affected markets.
Amount of effort gone to by the immunity applicant to investigate the additional cartel.
Likelihood that the CMA would have uncovered the additional cartel in any event.
In practice, the level of reduction for leniency plus does not tend to be high, but the principal benefit for the company would be the expected Type A immunity in relation to the second reported cartel conduct.
If a third party is adversely affected by an agreement or conduct by a leniency applicant (which they believe infringes one or more of the prohibitions in Chapters I and II of the Competition Act 1998 and Articles 101 and 102 of the Treaty on the Functioning of the European Union), their ability to take action in the civil courts or make a complaint to the Competition and Markets Authority (CMA) is not affected by the grant of immunity or leniency.
Following a decision of the CMA or the Competition Appeal Tribunal (CAT) (on appeal from a decision of the CMA) finding an infringement of a prohibition, third parties who consider they have suffered loss as a result of the infringement can bring an action for damages against the undertaking or undertakings concerned in the normal civil courts or the CAT. Both the courts and the CAT will be bound in these proceedings by the relevant infringement decisions, providing that the decision is no longer capable of being overturned on appeal. In the UK, the competition damages claims are well established. The UK must implement Directive 2014/104/EU on actions for damages under national law for infringements of competition law provisions of the member states on or before 27 December 2016, which is expected to further encourage damages actions. It is understood that the UK Government will proceed with this implementation in spite of the Brexit vote and the UK's impending departure from the EU under Article 50 of the Treaty on European Union.
Confidentiality and disclosure
The fact that an undertaking has applied for leniency will not normally be revealed to other undertakings until the Competition and Markets Authority (CMA) has formed the provisional view that the conduct under investigation amounts to an infringement and has issued its preliminary findings to the undertakings it considers responsible for the infringement (statement of objections).
Where the CMA's investigation results in an infringement decision, it will confirm that a party to the proceedings has been granted leniency or immunity. The parties will be notified of this decision and a non-confidential version will be published under the CMA's rules (providing details of the party who has been granted leniency or immunity, together with the nature of at least some of the evidence provided).
Where individuals who have been issued with no-action letters provide witness statements, the existence of the letters must be disclosed to the defendants if the CMA commences a prosecution of other individuals. However, where necessary, it will be possible to protect the identities of individuals who are confidential sources. There is a risk that the other parties to the investigation may suspect (as a result of the information disclosed) the identity of the party who has applied for or been given immunity/leniency.
When the CMA is conducting a civil investigation, it may be necessary for it, directly or indirectly, to disclose information provided by a leniency applicant to third party witnesses or to those suspected of direct involvement in the cartel. Similarly, when the CMA is conducting a criminal investigation, prior to interviewing suspects, it must provide disclosure of any material to which it wishes to refer or allude during the interview.
In a civil investigation, the fact that an undertaking has applied for leniency, together with the information it has submitted and on which the CMA intends to rely, will be set out in the statement of objections. Subject to the CMA's rules on the protection of confidential information, material submitted as part of the leniency application will be disclosed to the other parties during the course of access to the file.
If a prosecution is commenced for a cartel offence, disclosure is regulated by the criminal disclosure rules. The following must be disclosed:
All witness statements and exhibits relied on by the prosecution.
Material satisfying the test for the disclosure of unused material under the Criminal Procedure and Investigations Act 1996 (that is, any material, which might reasonably be considered capable of undermining the case for the prosecution or assisting the case for the accused). This will inevitably include material provided by a leniency applicant and may (in certain circumstances) include proffer statements or transcripts of proffer recordings, where the statements are capable of having an impact on issues arising in the criminal case.
If the CMA is advised by counsel that disclosure to it and to others is necessary to enable a case to proceed, it will expect an undertaking or individual to waive any applicable privilege (including legal professional privilege) over specified documents to the extent that it is advised that it is necessary.
Where there are particular sensitivities about the possibility of a leniency applicant's identity being revealed in the course of the investigation, these should be discussed with the CMA at the start of the application process.
An applicant can identify particular information supplied to the CMA as being confidential and can make representations as to why the CMA should treat it as such. If the CMA proposes to disclose the information, it will take all reasonable steps to inform the applicant of its proposed action and give them a reasonable opportunity to make representations on such action.
Domestic submissions and domestic discovery
Disclosure of material submitted as part of the leniency process is regulated by the restrictions on disclosure in Part 9 of the Enterprise Act 2002 (EA). Generally, the Competition and Markets Authority (CMA) would firmly resist (on public interest grounds) requests for disclosure of leniency material or the fact that leniency has been sought, where these requests are made, for example, in connection with private civil proceedings.
However, if disclosure of leniency material, or the fact that a leniency applicant existed, was genuinely necessary for the CMA to defend general civil proceedings (for example, a judicial review on the correctness of the CMA's decision to open an investigation) limited disclosure may be permitted. If limited disclosure is permitted, the CMA states that it would always give utmost consideration to the public interest in maintaining an effective leniency policy (OFT1495).
The civil courts can order disclosure on application of a balancing exercise of the public interest in favour of disclosure in private damages actions (which contribute to the maintenance of effective competition) and that in favour of protecting the information provided as part of a leniency application (therefore protecting leniency policies as a competition enforcement tool) (section 244, EA).
Domestic submissions and foreign discovery
The same principles apply to disclosure in respect of foreign proceedings as apply in respect of domestic proceedings, save that any foreign disclosure is subject to the restrictions in section 243 of the EA, which provide that:
Ministers can block disclosure in certain circumstances.
Disclosure can be subject to conditions as to further disclosure and use.
The CMA must, when deciding whether or not to disclose material to an overseas authority, have regard to whether:
the matter in respect of which the disclosure is sought is sufficiently serious to justify making the disclosure;
the law of the country to whose authority the disclosure would be made provides appropriate protection against self-incrimination in criminal proceedings;
the law of that country provides appropriate protection in relation to the storage and disclosure of personal data; and
there are relevant mutual assistance arrangements in place.
Foreign submissions and domestic discovery
The question of whether information submitted in a foreign jurisdiction can be made subject to discovery orders in the UK's courts is governed by the laws and disclosure rules of the relevant foreign jurisdiction.
The Competition and Markets Authority (CMA) is (at least pending Brexit) a member of the European Competition Network (ECN), which was established in particular to:
Agree on working arrangements and co-operation methods.
Provide an efficient framework for the obligatory and optional information mechanisms.
Establish a continual dialogue between the different authorities, to discuss and build a common competition culture approach.
Co-operation between members of the ECN is mandated by Regulation (EC) 1/2003 on the implementation of the rules on competition laid down in Articles 101 and 102 of the TFEU (formerly Articles 81 and 82 of the EC Treaty). The ECN has published a Model Leniency Programme, which was intended to introduce a "soft harmonisation" of the key elements of leniency programmes used by members of the ECN.
The European Court of Justice recently considered the status of the Model Leniency Programme (Case C-428/14 DHL), finding that an application for leniency to a competent authority (including the European Commission) should not be considered as an application for leniency to any other authority.
The Enterprise Act 2002 permits the CMA, in certain circumstances, to disclose confidential information to agencies in other jurisdictions to facilitate the performance of their respective enforcement functions.
Proposals for reform
Directive 2014/104/EU on actions for damages under national law for infringements of competition law provisions of the member states is due to be implemented by 27 December 2016. This Directive states that, for the purpose of damages actions, national courts cannot at any time order a party or third party to disclose leniency statements.
Description. Official website managed by the National Archives, containing original and revised versions of British legislation.
Competition and Markets Authority (CMA)
Description. Official website of the CMA, containing its policies and guidelines.
CMA guidance on cartels and leniency
Description. CMA guidance on cartels and leniency.
The primary regulatory authority
Competition and Markets Authority (CMA)
Acting Chief Executive. Andrea Coscelli
Executive Director Enforcement. Dr Michael Grenfell
Senior Director Cartels and Criminal. Stephen Blake
Competition and Markets Authority
37 Southampton Row
T +44 20 3738 6000
Responsibilities. The CMA is responsible for ensuring that markets in the UK function properly for the benefit of consumers, by:
- Enforcing competition law.
- Enforcing consumer protection law in matters that affect consumers in general.
- Monitoring the consumer credit system.
Person/department to apply to. Undertakings wishing to take advantage of the leniency programme and individuals wishing to apply for a no-action letter should in the first instance contact the leniency enquiry line on +44 20 3738 6833.
Procedure for obtaining application documents. There are no formal application documents, with applications typically being based on a corporate statement and supporting evidence.
Ian Giles, Partner
Norton Rose Fulbright LLP
Professional qualifications. England and Wales, Solicitor; Republic of Ireland, Solicitor
Areas of practice. EU and UK competition and regulatory law.
Ian is part of the Norton Rose Fulbright team in London, which is advising (or has advised) in the following recent cartel investigations as well as numerous ongoing confidential investigations:
- The Competition and Market's bathroom fittings investigation.
- Current and previous EU investigations into auto parts, aircraft engines and components, EURIBOR, CDS and freight forwarding.
- The Financial Conduct Authority's investigations into Foreign Exchange trading.
- The Office of Fair Trading's Dairy, Tobacco and Air Passenger investigations.
Languages. French, Spanish
Professional associations/memberships. City of London Law Society Competition Section; ICC UK Competition Group; BIICL competition group; American Bar Association.
- Public Competition Enforcement Review, published by LBR (UK chapter).
- Butterworths Competition Law.
- IFLR Merger Control Survey 2015.
- Has written numerous articles for publications such as Competition Law Insight, European Competition Journal, and many others.
Susanna Rogers, Of Counsel, Head of Antitrust and Competition Knowledge
Norton Rose Fulbright LLP
Professional qualifications. England and Wales, Solicitor Advocate
Areas of practice. EU and UK competition and regulatory law; EU and UK competition.
Susanna is part of the Norton Rose Fulbright team in London, which is advising (or has advised) in the following recent cartel investigations as well as numerous ongoing confidential investigations:
- The Competition and Market's bathroom fittings investigation.
- Current and previous EU investigations into auto parts, aircraft engines and components, EURIBOR, CDS and freight forwarding.
- The Financial Conduct Authority's investigations into Foreign Exchange trading.
- The Office of Fair Trading's Dairy, Tobacco and Air Passenger investigations.
Professional associations/memberships. City of London Law Society Competition Section; American Bar Association.
- Getting the Deal Through ''Pharmaceutical antitrust'' (UK chapter).
- Has written numerous articles for publications such as Competition Law Insight and Digital Business Lawyer.