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Competition Guidelines: Leniency Programmes

Policy brief by Brusick, Philippe/UNCTAD, 2016

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Also available in: Arabic, French

Hard-core cartels constitute very serious violations of competition rules. However, they are often very difficult to detect and investigate without the cooperation of an insider. Accordingly, leniency programmes are designed to give incentives to cartel members to take the initiative to approach the competition authority, confess their participation in a cartel and cooperate with the competition law enforcers in exchange for total or partial immunity from sanctions. This publication, by the UNCTAD Secretariat, seeks to set specific guidelines for countries of the MENA region which envisage adoption or improvement of leniency programmes on competition. The view is to help them achieve a substantive degree of convergence in this field, as a practical way to increase the overall efficiency of the system in their struggle against hard core cartels. To this end, it draws attention to specific considerations for MENA Project countries, such as limits of leniency in small, less developed markets. It also reflects on how to make leniency programmes attractive for potential whistle-blowers, describes possible procedural guidelines along with cases deserving total or partial immunity, and lists some difficulties encountered in practice.



ii




Note


The material contained in this publication may be freely quoted or reprinted but acknowledgement is


requested, together with a reference to the document number. A copy of the publication containing the


quotation or reprint should be sent to the UNCTAD Secretariat: Palais des Nations, 1211, Geneva 10,


Switzerland.


The designations employed and the presentation of the material do not imply the expression of any


position whatsoever on the part of the United Nations Secretariat concerning the legal status of any


country, territory, city area, or its authorities, or concerning the delimitations of its frontiers and boundaries,


or regarding its economic system or degree of development.


For further information on the UNCTAD MENA Programme please consult the following sites:


https://twitter.com/unctad_mena, and https://www.facebook.com/unctadmena/


Or contact: julieta.coca@unctad.org


This document has been reproduced without formal editing.




Acknowledgements


This publication was written by Philippe Brusick, UNCTAD MENA Programme Expert.


The publication was organized and prepared for publishing under the supervision of Julieta Coca, Project


Manager, UNCTAD MENA Programme, Division of International Trade in Goods and Services, and


Commodities, UNCTAD.


The formatting of this document was done by Rafe Dent, UNCTAD.


Maria Bovey, UNCTAD, assisted with the English language version, the cover page design was created by


Lirong Zang, UNCTAD and the Arabic translation was done by Ali Khaffane.


Special thanks are owed to the Swedish Government, which has provided generous financial support to


the UNCTAD MENA programme and enabled the production of this publication.


Guillermo Valles


Director


Division of International Trade in Goods and Services, and Commodities


22 June 2016


















UNCTAD/DITC/CLP/2016/3


United Nations Publication


Copyright©United Nations, 2016


All rights reserved




iii


Table of Contents


Note ......................................................................................................................................... ii
Acknowledements .............................................................................................................. ii
Executive summary ........................................................................................................... iv


1. Background ................................................................................. 1
1.1 Definition of leniency programmes .................................................................................................. 1
1.2 The need for credible sanctions for hard core cartels ............................................................ 1
1.3 Administrative versus criminal sanctions ....................................................................................... 2
1.4 External events that might induce applications for leniency ............................................... 2
1.5 International cooperation...................................................................................................................... 2


2. Preliminary considerations for MENA Project Countries ................... 4
2.1 Weak action against cartels in developing countries .............................................................. 4
2.2 Whistle-blower on a market of a developing country ............................................................ 4
2.3 Need for convergence of leniency programmes in MENA Project Countries .............. 5


3. Making leniency attractive for whistle-blowers ................................ 6
3.1 Immunity ....................................................................................................................................................... 6
3.2 Predictability ................................................................................................................................................ 6
3.3 Corporate leniency and leniency for individuals ...................................................................... 6
3.4 Protection from private damage action ......................................................................................... 6
3.5 Risks related to corruption ................................................................................................................... 7


4. Guidelines on procedure ................................................................ 8
4.1 Informal contact ........................................................................................................................................ 8
4.2 Formal leniency application: obtaining a marker ....................................................................... 8
4.3 Who qualifies for leniency? .................................................................................................................. 8
4.4 Summary applications ............................................................................................................................ 9


5. Examination of the application for leniencey .................................. 10
5.1 Conditional leniency ..............................................................................................................................10
5.2 Final leniency letter ................................................................................................................................10


6. Total Immunity for first in ........................................................... 11
6.1 Before investigation is launched ......................................................................................................11
6.2 After investigation has begun ...........................................................................................................11
6.3 Expanded leniency protection .........................................................................................................11
6.4 One case brings another cartel to light .......................................................................................12


7. Reduced immunity ...................................................................... 13
7.1 Significant value-added .......................................................................................................................13
7.2 Amnesty plus ............................................................................................................................................13
7.3 Degree of immunity ..............................................................................................................................13
7.4 Distinction between leniency and settlement ...........................................................................13


8. Difficulties in practice ................................................................. 15
8.1 Deficiencies of evidence offered ......................................................................................................15
8.2 Unavailability of persons cited .........................................................................................................15
8.3 Determination of significant value-added ...................................................................................15
8.4 Difficulties encountered during investigations ..........................................................................15
8.5 Keeping an application for leniency secretive ...........................................................................15
8.6 Informing the applicant for leniency of the progress of the investigation .................16
8.7 Leniency programmes versus private enforcement ................................................................16


Bibliography ................................................................................... 17


Annexes


ANNEX1: Present leniency programmes in MENA Project Countries ....................................................18
ANNEX 2: Settlement in MENA Project Countries ...........................................................................................20





iv






Executive summary




Hard-core cartels constitute very serious violations of competition rules. However, they are often very


difficult to detect and investigate without the cooperation of an insider. Accordingly, leniency


programmes are designed to give incentives to cartel members to take the initiative to approach the


competition authority, confess their participation in a cartel and cooperate with the competition law


enforcers in exchange for total or partial immunity from sanctions.


This publication, by the UNCTAD Secretariat, seeks to set specific guidelines for countries of the MENA


region which envisage adoption or improvement of leniency programmes on competition. The view is


to help them achieve a substantive degree of convergence in this field, as a practical way to increase


the overall efficiency of the system in their struggle against hard core cartels. To this end, it draws


attention to specific considerations for MENA Project countries, such as limits of leniency in small, less-


developed markets. It also reflects on how to make leniency programmes attractive for potential


whistle-blowers, describes possible procedural guidelines along with cases deserving total or partial


immunity, and lists some difficulties encountered in practice.




Competition Guidelines: Leniency Programmes




1


1. BACKGROUND


Hard-core cartels constitute very serious violations


of competition rules. They are often very difficult to


detect and investigate without the cooperation of


an insider. Historically, insiders turned "whistle-


blowers" were dissatisfied employees who took


revenge against their former employer by


disclosing their participation in a cartel.


In the United States, the original version of the


leniency program dates back to 1978. However, it


is only after the Antitrust Division revised its


"Corporate Leniency Programme" in 1993, that the


US leniency programme became fully successful.


To make it easier and more attractive for


companies to come forward and cooperate with


the Antitrust Division, three major revisions were


made to the programme:


1) Leniency became automatic for qualifying


companies, provided there was no pre-existing


investigation;


2) Leniency was still made available after the


investigation was underway; and


3) All officers, directors, and employees who


came forward regarding the company were


protected from criminal prosecution.


As a result, the US Leniency Programme became


the Antitrust Division’s most effective investigative


tool. Leniency programmes provide unparalleled


information from cartel insiders about the origins


and inter-workings of secretive cartels.


The success of the Antitrust Division’s revised


leniency programme led to the adoption of similar


voluntary disclosure programmes by other


jurisdictions, and after substantive improvements


were achieved in Canada and the EU after 2000,


the corporate leniency programmes of the United


States, the European Union, and Canada came


into substantial convergence, which has made it


much easier and far more attractive for companies


to simultaneously seek and obtain leniency in the


United States, Europe, Canada, and in a growing


list of other jurisdictions where applicants have


exposure.


In the last decade, many other jurisdictions around


the world have adopted leniency programmes.


Today over 50 jurisdictions have leniency


programmes in place. Among MENA Project


countries, Egypt and Tunisia have recently adopted


modern leniency programmes in the field of


competition policy.


This publication by the UNCTAD secretariat, seeks


to set specific guidelines for countries of the MENA


region envisaging adopting leniency programmes


on competition, with a view to helping them


achieve a substantive degree of convergence in


this field, as a practical way to increase the overall


efficiency of the system in the struggle against


hard core cartels.


As can be seen below in Annexes 1 and 2, all


countries of the MENA Project which have


competition laws have one type or another of


leniency envisaged into their legislation. While


modern leniency was introduced only very recently


in Egypt and Tunisia, the competition laws of


Algeria, Jordan and Morocco provide for some


degree of leniency for enterprises which have fully


cooperated in an investigation with an out-of-court


settlement, before the case had been submitted or


decided by a Tribunal.


Accordingly, the present guidelines review a set of


preliminary considerations that should be taken


into account prior to the drafting of a leniency


programme, especially when directed at


developing countries. These guidelines will be


followed by a list of difficulties in practice, which


are often encountered by countries in the


application of their leniency programme.


1.1. Definition of leniency programmes


Leniency programmes are designed to give


incentives to cartel members to take the initiative


to approach the competition authority, confess


their participation in a cartel and aid the


competition law enforcers. The aim is to drive a


wedge at the heart of a cartel through its trust and


mutual benefit. The reward for the first whistle-


blower is generally a large (or total) reduction in


penalties and other incentives can be offered to the


second whistle-blower and to those who come


after, if they bring forward decisive evidence.


Effective leniency programmes are aimed at


creating a race among conspirators to disclose


their conduct to enforcers, in some instances, even


before an investigation has begun, and to quickly


crack cartels that may have otherwise gone


undetected.





Competition Guidelines: Leniency Programmes




2


1.2. The need for credible sanctions
for hard core cartels


Seeking leniency, which brings a cartel to an end,


entails sacrificing future cartel profits and, if


leniency is not fully granted, possibly suffering


penalties. If a cartel is unlikely to be punished, or


penalties are small, then certain losses from


seeking leniency outweigh the small risk of


detection and punishment. Cartel members will


tend not to seek leniency and the anti-cartel laws


tend to be ignored.


Simply adopting a leniency programme will not


ensure that it is going to be effective. Three


essential conditions must exist before a jurisdiction


can successfully implement a leniency programme:


a) Competition law must provide the threat of


severe sanctions for those who participate in


hard core cartel activity,


b) Members of a cartel must perceive a high risk


of detection by competition authorities, and


c) There must be transparency and predictability


to the greatest extent possible regarding the


jurisdiction’s anti-cartel enforcement, so that


market players can predict with a high degree


of certainty what the consequences will be if


they are caught colluding, and what treatment


they can expect if they apply for leniency.


1.3. Administrative versus criminal
sanctions


The choice among applying administrative, civil or


criminal law to cartels also affects company


conduct. Fines imposed under administrative or


civil law may be regarded as simply the cost of


doing business, especially if the maximum fines at


stake are lower than the financial benefits of


keeping the cartel running. In such cases, it is


essential that fines and the risk of being caught are


sufficiently high to discourage businesses from


colluding. In addition, the competition authorities


need to ensure that fines are imposed on the


individuals responsible for the infringements, and


are not automatically passed-on to the enterprise’s


assets and liabilities.


While criminal law may impose substantial fines on


companies, sanctions on individuals and more, it


serves as a reflection of societal judgement


directed at improper conduct. Thus, criminal law


gives leniency programmes additional leverage


since penalties may include jail sentences for


individuals. Criminal law prosecution, however,


imposes higher costs and constraints. The higher


standard of proof required, the greater the demand


for more resources. If a different agency


prosecutes crimes, coordination and priorities


must be worked out between that authority and the


competition authority.


Jurisdictions are increasingly criminally prosecuting


hard core cartels. This is the case, for example, in


Australia, Brazil, Canada, the United Kingdom and


the United States. In Egypt, all violations to


competition law, including the prohibition of cartels,


fall under criminal law. This is not always the case


in the other MENA project countries.


1.4. External events that might induce
applications for leniency


After a period during which a cartel has been


stable, some external events may cause


nervousness among its members and lead some to


be tempted to apply for leniency. This can be the


result of new harsher anti-cartel legislation being


introduced, or stricter implementation by


competition authorities. It can follow the arrival of


new non-cartel member competitors who drive


market prices down, reducing the attractiveness of


the agreement. This can also be the result of a


technological breakthrough which disrupts


previous conditions, making collusion suddenly


unattractive. A takeover of one of the cartel


members by an outsider company may also lead


the new owners to discover the existence of a


cartel and wish to disband it. If such events occur,


cartel members may suddenly race to apply for


leniency before others do.


1.5. International cooperation


In an increasingly globalized economy, cartels


often do not stop at national borders, so cartel


investigations can be conducted internationally.


Accordingly, many competition laws have adopted


the "effects principle", which widens the scope of


application of national laws to all activities,


including extra-territorial, which have effects on the


national territory. There is also a growing


worldwide consensus that international cartel


activity is harmful to economies and consumers


everywhere, and that international cooperation in


competition enforcement is essential. This is


especially true when it comes to investigating hard


core cartels in international markets.


One interesting development in this respect is the


International Competition Network’s (ICN) Cartel




Competition Guidelines: Leniency Programmes




3


Working Group. Launched in 2004, this working


group seeks to identify the best investigative


techniques and policy approaches from around the


world. The ICN has assisted cartel enforcers in


developing cross-border relationships that have


resulted in real-time coordination among enforcers


conducting parallel investigations of the same


cartel. In addition, the proliferation of effective


leniency programmes has resulted in an increasing


number of applicants seeking leniency


simultaneously in multiple jurisdictions. Enforcers


can then coordinate investigative steps, share –


with the applicant’s consent – information provided


by a mutual leniency applicant, and coordinate


searches.















Competition Guidelines: Leniency Programmes




4


2. PRELIMINARY
CONSIDERATIONS FOR MENA
PROJECT COUNTRIES


2.1. Weak action against cartels in
developing countries


In many developing countries, Governments may


not be fully convinced by the priority attributed to


fighting cartels. Competition law might give priority


to checking vertical restraints including abuse of


dominance and abuse of economic dependence,


rather than horizontal restraints such as cartels.


Many laws of the MENA region place much


emphasis on notifying and controlling


concentrations of market power. Hence, limited


resources of competition authorities may be fully


utilized to examine mergers and acquisitions with


very little resources left to deal with detecting and


sanctioning possible cartels. In fact, countries with


a high degree of State intervention and monopolies,


which are exempted from competition law, may


have little scope left for dealing with cartels. As


indicated above in the introduction to this chapter,


a leniency programme would be ineffective unless


cartels are actively and significantly sanctioned. If


that precondition is not met, then it might be better


to forego a leniency programme.


In most MENA Project countries, the competition


authority broadly depends on the Ministry in


charge of Commerce. Most decisions are directly


taken by the Minister, after consulting the


competition authority. In some important cases,


such as authorising a merger to take place, the


Minister may actually overrule the decision of the


competition authority on grounds of employment


security, competitiveness of domestic industry or


in application of industrial policy.


While the competition authority has limited


financial and human resources, competition law


often does not apply to settlements to which


Government is a party, and other Government


institutions are sometimes disinclined to cooperate


on cartel enforcement. In particular, sectoral


regulators are keen to defend their territory and


seldom cooperate with the competition authority.


Rather, they reject its interventions and make their


own decisions, often encouraging cartel-like


approaches, in order to favour, or at least to allow


the incumbent firm (ex-state monopoly) to survive


in the new "competitive" environment. Moreover,


anti-cartel enforcement tends to be weak since


evidence is often located abroad.


2.2. Whistle-blower on a market of a
developing country


In developing countries where considerations of


trust and personal relations tend to play an


important role in business, and where business


circles are relatively small and familiar, social or


informal penalties (as opposed to official sanctions


even including a jail sentence) for those who self-


report against collusion could be quite significant.


Social penalties could include boycott and even


violence. As relationships are tightly interwoven,


acting as an informer would result in social


exclusion, perhaps even physical harm. Unofficial


measures may also undermine competition


authority investigations. Such a situation may


increase the relative importance of informal


penalties, and thus decrease the attractiveness of


formal penalty reductions under a leniency


programme.


Another limitation in applying for leniency by some


cartel members in developing countries is the fact


that some might belong to the so-called informal


economy. Given the high-percentage of informal


economy in developing country economies, some


cartel members might be part of the informal


economy, and thus be unwilling to come into the


open by applying for leniency in a cartel case. For


them, coming out into the open could imply heavy


sanctions for tax evasion, eventually money


laundering and other important liabilities.


In addition, international cartel members might


have less incentive to apply for leniency in a small


jurisdiction where the risk of being caught and


penalties are relatively low. The risk of having


information leaking from one country to another


may be perceived as higher within a less-


developed country and uncertainty as to the


degree of leniency might be greater felt in a


developing country. Hence, a cartel member within


an international cartel, ranging from developed to


developing countries, might be tempted to seek


leniency in the developed jurisdictions and to


forego any attempts in the smaller, developing


countries. Moreover, the existence of "out of court


settlement" in developing countries like is the case


in Algeria and others, might be considered a further


reason not to apply for leniency and to seek


settlement instead.




Competition Guidelines: Leniency Programmes




5


2.3. Need for convergence of leniency
programmes in MENA Project
Countries


Another consideration is that leniency in one


country might be hampered by lack of leniency or


different treatment of cartels altogether, in another.


In the MENA Project countries, three countries,


Egypt, Morocco and Tunisia, have recently


introduced leniency programmes. Jordan applies


leniency only for the first to inform about the


existence of a cartel. Algeria does not have a


leniency programme as such, but applies out-of-


court settlement with the possibility of leniency.


Lebanon and Palestine, which do not have


competition law, hence, do not have any anti-cartel


enforcement at all.


It is important to note that similar or convergent


leniency programmes may be mutually reinforcing.


A simultaneous application of leniency


programmes by multiple jurisdictions, along with a


waiver to allow the exchange of confidential


information, allows coordinated investigations


against the remaining cartel members. For this


reason, competition authorities usually encourage


applicants for leniency to apply simultaneously for


leniency to other jurisdictions, as applicants are


questioned as to whether they have or intend to


apply for leniency elsewhere.


On the other hand, a leniency programme may be


weakened if another jurisdiction imposes


significant penalties and lacks an effective leniency


programme. This effect occurs whether the second


jurisdiction entirely lacks such a programme or has


one that is unappealing, for example, because its


leniency policy is not transparent and tends to be


unpredictable. The threat of punishment in the


second jurisdiction discourages applicants to


proceed to the first. Consider the situation where


jurisdiction A has a well-designed leniency


programme, but jurisdiction B has none, or an


unattractive one. If applying for leniency to A


increases the risk of punishment in B, then


applying to A will be less attractive. Of course,


such negative spillovers will not exist if punishment


in the second jurisdiction is trivial or highly unlikely.


Hence, uncertainty as to the final outcome of anti-


cartel action in one country as compared to


another might discourage actors from seeking


entry into a leniency programme which might end


up turning against the whistle-blower’s interests in


another country.


Moreover, incompatible conditions may discourage


seeking leniency in multiple jurisdictions – e.g. one


jurisdiction may require the applicant to continue


within the cartel to gather evidence or safeguard


the investigation while another requires immediate


cessation. Requirements that create disadvantages


for applicants in a second jurisdiction discourage


the application process.


It is, therefore, clearly in the interest of MENA


Project countries to work hand in hand to increase


cooperation in their struggle against cartels, and to


make every effort to achieve convergence in their


treatment of hard core cartels and in the


establishment of mutually compatible leniency


programmes.


In this respect, it might be useful to take into


account the "European Union’s European


Competition Network (ECN) Model Programme" of


leniency, which contains a model for a uniform


system of so-called "summary applications". By


filing a summary application, the applicant for


leniency in one EU member country protects


his/her position at the European Commission level


as well.







Competition Guidelines: Leniency Programmes




6


3. MAKING LENIENCY
ATTRACTIVE FOR WHISTLE-
BLOWERS


For a leniency programme to be successful, it must


be made attractive for potential whistle-blowers.


Among the main conditions are the level of


sanctions and risks of staying in a cartel, as


opposed to the advantages of informing the


competition authority.


3.1. Immunity


In order to encourage whistle-blowing, most


leniency programmes offer immunity to leniency


applicants when the competition authority was


unaware of the cartel and also when it was aware,


but did not have sufficient evidence to proceed


with the case. This is the main advantage of being


first through the door. If the second applicant


would be treated similarly to the first, then there


would be less incentive in rushing to apply for


leniency. Each cartel member could wait until they


suspects that a first application has been made.


3.2. Predictability


To induce leniency applications, both "the carrot


and the stick" must be important. The penalty, if


there is no leniency, and the reduction in penalty if


one is granted leniency, must be large and


predictable. “Penalty” within this text does not


refer to the maximum penalty in statute books, but


what is expected to be imposed taking into


account actual penalties imposed in past cases,


actual settlement policies, and expected delays in


administering penalties. Some degree of


predictability of penalties, with and without


leniency, is necessary to enable potential


applicants to calculate roughly the cost and benefit


of seeking leniency.


Predictability may be further increased by


eliminating prosecutorial discretion. If an applicant


meets certain clearly stated conditions, then


leniency should be automatically granted. Such


would also increase the perception of fairness and


non-favouritism.


3.3. Corporate leniency and leniency
for individuals


In a growing number of jurisdictions, individuals are


liable for collusion, along with the enterprise in


which they work. Sanctions for participation in a


cartel may include fines, imprisonment, and


temporary or permanent bans from acting as a


director or officer of a company. Leniency


programmes in jurisdictions where individuals may


be sanctioned, typically grant immunity from


prosecution to cooperating individuals at the


relevant company at the same time as they grant


leniency to the company.


If individuals are not granted immunity from


prosecution simultaneously with their company,


they may influence corporate decision-making


away from seeking leniency out of concern, in part,


for their own circumstances. Some leniency


programmes allow individuals to apply for leniency


independently of the company where they work or


have been employed.


3.4. Protection from private damage
action


In a rapidly growing number of countries,


conviction in a public competition case, even


though considered public enforcement, may be


followed by private lawsuits for antitrust damages,


thus, private enforcement. A company and its


employees obtaining full immunity from penalties in


the first case might still be liable to pay damages in


the following private case. Such a situation would


obviously undermine incentives to self-report for


leniency in the first instance.


To this end, law enforcers can attenuate the


negative spillovers by reducing the information


available to follow-up actions and modifying


incompatible or disadvantageous requirements


imposed on leniency applicants. Some competition


authorities keep the identities of companies


granted leniency as "confidential" in perpetuity.


Many accept oral corporate statements and


reserve them confidential.


Moreover, principles of international comity


suggest that courts would not order documents to


be produced if they were to bring harm to another


jurisdiction’s law enforcement. To reduce the


spillover effect of private civil antitrust lawsuits in


the United States, the 2004 Antitrust Criminal


Penalty Enhancement and Reform Law inter alia


reduced leniency recipients’ liability from treble to


the actual amount of damages. In France, however,


the competition authority accepts to preserve


confidentiality, within the limits of its national and


EU obligations during the procedure, and up to the


time when statements of objections are sent to the


parties concerned. Moreover, it is clearly stated




Competition Guidelines: Leniency Programmes




7


that partial or total immunity accorded to a


company does not protect it from civil


consequences which may follow an infringement of


article L.420-1 of the Code of Commerce and/or


article 101 TFEU. It nevertheless considers that


leniency is among the legitimate considerations


that justify not transmitting to the Court


incriminating evidence against individuals working


for a company that has benefitted from leniency,


and who might also be subject to civil action.


3.5. Risks related to corruption


There is a need to ensure that during the leniency


process, corruption will not take place. An official


may, for example, place a condition for obtaining


leniency on getting a bribe. In one case which was


reported in the press, a high-level competition


official attempted to extort a bribe from a potential


leniency applicant, who reported the extortion to


the police and the bribe-seeker was convicted.


However, for countries envisaging the adoption of


leniency programmes, it is clearly important to


ensure that safeguards are adopted in the law, to


avoid such circumstances.







Competition Guidelines: Leniency Programmes




8


4. GUIDELINES ON PROCEDURE


4.1. Informal contact


Many programmes allow potential applicants to


probe, often anonymously, as to whether they


might qualify before applying. For example the


Dutch, French and German competition authorities


have established a position of "leniency


counsellor", who can be approached anonymously


by companies or their lawyer, to inform them about


the leniency procedure, participate in company


hearings and provide technical assistance in full


confidentiality. The leniency counsellor also


cooperates with other competition authorities


concerned by demands for multi-jurisdiction


leniency applications.


4.2. Formal leniency application:
obtaining a marker


Most leniency programmes have a “marker”


system. The marker establishes the applicant’s


place in the queue, but the threshold of disclosure


and cooperation requirements must be fulfilled


before a deadline.


In the US, for example, in order to obtain a marker


for a company, counsel must:


a) Report some information or evidence


indicating that the company it represents has


engaged in a criminal antitrust violation;


b) Disclose the general nature of the conduct


discovered;


c) Identify the industry, product, or service


involved in terms that are specific enough to


allow the Antitrust Division to determine


whether leniency is still available and to protect


the marker for the applicant; and


d) Identify the client.


Under the EU ECN model leniency programme, a


company wishing to make an application for


immunity may initially apply for a ‘marker’. A


marker protects an applicant’s place in the queue


for a given period of time and allows it to gather


the necessary information and evidence in order to


meet the relevant evidential threshold for immunity.


The competition authority has discretion as to


whether or not it grants a marker. Where a marker


is granted, the authority determines the period


within which the applicant has to ‘perfect’ the


marker by submitting the information required to


meet the relevant evidential threshold for immunity.


If the applicant perfects the marker within the set


period, the information and evidence provided will


be deemed to have been submitted on the date


when the marker was granted.


To be eligible to secure a marker, the applicant


must provide the competition authority with its


name and address as well as information


concerning:


a) The basis for the concern which led to the


leniency approach;


b) The parties to the alleged cartel;


c) The affected product or products;


d) The affected territory or territories;


e) The duration of the alleged cartel;


f) The nature of the alleged cartel conduct; and


g) Information on any past or possible future


leniency applications to any other competition


authorities within or outside the EU in relation


to the alleged cartel.


In France, once the company decides to launch a


formal application, it addresses its request to the


Rapporteur général in writing, by completing a


standard form, sent by registered letter with receipt,


which will serve as marker of the date and hour of


receipt of the application for leniency. The


application can also be made orally, on


appointment with the Rapporteur (Rapporteur


general) who will duly indicate the date and time of


hearings in the official minutes. This will be the


"marker", an essential measure to certify that the


company was the first to provide the competition


authority with the necessary information to be in a


position to apply for leniency.


To apply for leniency, the company must declare


its name and address, and provide clear


information about the specific products and the


geographical market covered by the cartel, identity


the other members of the cartel, the nature of the


agreement and its estimated duration, as well as all


the leniency applications the company has, or


intends to submit to other competition authorities.


4.3. Who qualifies for leniency?


In order to qualify for leniency under the EU ECN


programme, the applicant must satisfy the


following cumulative conditions:


a) Before making an application for leniency to


the competition authority, the applicant must


not have destroyed evidence falling within the


scope of the application or disclosed, directly




Competition Guidelines: Leniency Programmes




9


or indirectly, the fact or any of the contents of


the application it is contemplating, except to


other competition authorities, including any


competition authority outside the EU;


b) Immediately following its application for


leniency, the company must end its


involvement in the alleged cartel, except if


requested by the competition authority to


continue its involvement in order to preserve


the integrity of the competition authority’s


inspections; and


c) It is essential the cooperation with the


competition authority be genuine, total and


permanent as soon as the application is


submitted to the Competition Authority until


the conclusion of the case, which means:


1. Promptly provide to the competition


authority all relevant evidence and


information elements in its possession or


that it would be aware of;


2. Remain at their disposal to respond


quickly to any requests that, in the


opinion of the competition authority,


could help to establish the facts;


3. Ensure that all personnel are available for


questioning, such as employees and


current directors, and to the extent


possible, former employees and directors;


4. Not allowed to destroy, falsify or conceal


relevant information or evidence;


5. Not allowed to disclose the existence or


content of its application before the


Competition Authority has communicated


its objections to the parties (except


agreement of that authority) and;


6. Not have taken steps to coerce another


company to join a cartel. Any company


that has taken steps to force one or more


other companies to join or to remain in a


cartel must, in principle, be excluded


from the benefit of immunity.


4.4. Summary applications


In the EU, in order to alleviate the burden


associated with multiple parallel applications, the


ECN Model Programme contains a model for a


uniform system of "summary applications". By


filing a summary application, the applicant protects


their position under the leniency programme of the


national competition authority concerned for the


alleged cartel for which they haves submitted, or is


in the process of submitting, a leniency application


to the European Commission.


This does not exempt leniency applicants from


applying for leniency in other, non-EU jurisdictions


affected by the cartel. However, the applicant has


no guarantee they will receive immunity in another


jurisdiction, even if they secure a conditional


leniency letter in their own jurisdiction.











Competition Guidelines: Leniency Programmes




10


5. EXAMINATION OF THE
APPLICATION FOR LENIENCY


Within the deadline established at the time of the


submission of the application for leniency, for


example 30 days in the US, the company or its


counsel transmits the information and evidence


documents to the competition authority, on the


basis of which, a report is submitted to the


applicant for leniency and to the officials of the


competition authority in charge of hearings to


decide if leniency may be granted.


5.1. Conditional leniency


Following the hearings, the competition authority


issues a conditional leniency letter. Although many


of the leniency requirements are fulfilled only


during the criminal investigation, applicants want


prior assurances that they will receive non-


prosecution protection at the conclusion of the


investigation on the condition that they fulfill the


requirements of the leniency programme.


To receive a conditional leniency letter, the


applicant must admit his/her participation in a


criminal antitrust violation involving price fixing, bid


rigging, capacity restriction, or allocation of


markets, customers, or sales or production


volumes.


Leniency is granted conditionally. It may be


withdrawn if the applicant does not comply with


the ongoing cooperation requirements. Although


uncertainty about conditions that trigger


withdrawal may reduce a programme’s


predictability, by not withdrawing leniency from


incompliant applicants, risks undermining the


entire programme.


5.2. Final leniency letter


Once all the conditions of the conditional leniency


letter have been satisfied, a final leniency letter


confirms that the leniency application has been


granted. In that letter, the competition authority


specifies if it offers total or partial immunity to the


applicant. In case of partial immunity, it indicates


the exact level of immunity.







Competition Guidelines: Leniency Programmes




11


6. TOTAL IMMUNITY FOR
FIRST IN


Many leniency programmes demand “full and frank


disclosure and ongoing cooperation by the


applicant, and if applicable, the applicant’s


directors, officers and employees.” They also


typically require the applicant to stop cartel


activities, although some competition authorities


may order applicants to continue so as to aid


proceedings against the other cartel members.


Leniency programmes may differ as to who may


qualify for total immunity. Most applicants qualify


both in cases where the competition authority is


unaware of the cartel and in the case where it is it


is aware, but has insufficient evidence to proceed.


Many offer full immunity or total leniency


exclusively to the first applicant, in order to press


potential whistle-blowers to rush to be "first


through the door". Some also offer leniency to a


second or third person as an incentive, but with


reduced leniency. Many leniency programmes


exclude those who coerced other cartel members


or were ring leaders.


6.1. Before investigation is launched


In the US, for example, "Type A Leniency" will be


granted to a company reporting illegal antitrust


activity before an investigation has begun,


especially when the DOJ is unaware of the cartel, if


the following six conditions are met:


a) At the time the company comes forward, the


Antitrust Division has not received information


about the activity from any other source;


b) Upon the company's discovery of the illegal


activity, it takes "prompt and effective action to


terminate its participation in the activity";


c) The company "reports the wrongdoing with


candor and completeness and provides full,


continuing, and complete cooperation" to the


Antitrust Division throughout the investigation;


d) The confession of wrongdoing is "truly a


corporate act", as opposed to isolated


confessions of individual executives or officials;


e) Where possible, the company makes restitution


to injured parties; and


f) The company did not coerce another party to


participate in the activity and clearly was not


the leader in, or the originator of, the activity.


If the company does not meet all six of the Type A


Leniency conditions, it may still qualify for leniency


if it meets the conditions of Type B Leniency,


which may be granted after an investigation has


begun.


It should be noted that the EU ECN model is very


similar, as it offers so-called Type 1 A leniency for


the first company that provides the competition


authority with sufficient evidence to enable it to


carry out targeted inspections in connection with


an alleged cartel. Type 1 B leniency is for the first


company that submits evidence which in the CA’s


view may enable the finding of an infringement of


Article 101 TFEU in connection with an alleged


cartel.


6.2. After investigation has begun


In the US, a company will qualify for leniency even


after the Antitrust Division has received information


about the illegal antitrust activity, under so-called


Type B Leniency, whether this is before or after an


investigation is formally opened, if the following


conditions are met:


a) The company is the first to come forward and


qualify for leniency with respect to the activity;


b) At the time the company comes in, the


Antitrust Division does not have evidence


against the company that is likely to result in a


sustainable conviction;


c) Upon the company's discovery of the activity,


it took prompt and effective action to terminate


its part in the activity;


d) The company reports the wrongdoing "with


candor and completeness and provides full,


continuing, and complete cooperation that


advances the Division in its investigation";


e) The confession of wrongdoing is truly a


corporate act, as opposed to isolated


confessions of individual executives or officials;


f) Where possible, the corporation makes


restitution to injured parties; and


g) The Antitrust Division determines that granting


leniency would not be unfair to others,


considering the nature of the activity, the


disclosing company's role in the activity, and


when it came forward.


6.3. Expanded leniency protection


It should be noted that in the US, only the first


company which applies for leniency will be given


total immunity. However, US, leniency protection


can be expanded if, during the course of its


internal investigation, an applicant discovers




Competition Guidelines: Leniency Programmes




12


evidence that the anticompetitive activity was


broader than originally reported, for example, in


terms of its geographic scope or the products


covered by the conspiracy. In such case, the


applicant's leniency protection may be expanded


to include the newly discovered conduct.


6.4. One case brings another cartel to
light


Leniency programmes make use of the fact that


companies typically supply many markets and


hence, cartel behaviour learned in one market can


be applied in others. Certain provisions encourage


members of a cartel under investigation to disclose


additional cartels in which they are involved.


In the US, for example, the so-called "Amnesty


Plus" provision makes it possible for a company


under investigation for one antitrust conspiracy, for


which it was too late to obtain leniency, "to receive


benefits in its plea agreement for that conspiracy


by reporting its involvement in a separate antitrust


conspiracy".


"Carrots and sticks" may be applied as follows:


a) “Amnesty Plus” encourages a company under


investigation for one cartel to apply for leniency


with respect to another, and earn not just a


penalty reduction in respect of the newly


disclosed cartel, but also in respect of the


cartel already under investigation;




b) “Penalty Plus” increases penalties if a


company could have taken advantage of


“Amnesty Plus” but did not, and the cartel is


later discovered and successfully prosecuted;


and


c) Persons who are witnesses under oath in a


cartel investigation are asked an "omnibus


question" as to whether they know about cartel


activity in any other market than the one at


hand. Being subject to perjury penalties, this


gives them a greater incentive to disclose other


cartels.


Such carrots and sticks tactics have been very


successful in discovering cartels in a chain of


investigations. For example, in the US, vitamin


cartels were uncovered one after the other in a


chain of investigations concerning 12 separate


vitamin markets. An investigation into the lysine


cartel led to one in citric acid, then to sodium


gluconate, to sodium erythorbate, etc.









Competition Guidelines: Leniency Programmes




13


7. REDUCED IMMUNITY


In the EU ECN model, companies that do not


qualify for immunity under Type 1 applications,


may still benefit from a reduction of any fine that


would otherwise have been imposed under a so-


called "Type 2 Application".


7.1. Significant value-added


Such reduced immunity may be obtained by


companies which provide the competition authority


with evidence which, in the authority’s view


represents "significant value-added" relative to the


evidence already in the authority’s possession at


the time of the application.


"The concept of ‘significant value-added’ refers to


the extent to which the evidence provided


strengthens, by its very nature and/or its level of


detail, the competition authority’s ability to prove


the alleged cartel."


7.2. Amnesty Plus


Similarly, in the US, partial immunity may be


obtained under the "Amnesty Plus" leniency


provision as follows:


"The size of the Amnesty Plus discount depends


on a number of factors, including:


1) The strength of the evidence provided by the


cooperating company in the leniency product;


2) The potential significance of the violation


reported in the leniency application, measured


in such terms as the volume of commerce


involved, the geographic scope, and the


number of co-conspirator companies and


individuals; and


3) The likelihood the Division would have


uncovered the additional violation absent the


self-reporting, i.e., if there were little or no


overlaps in the corporate participants and/or


the culpable executives involved in the original


cartel under investigation and the Amnesty


Plus matter, then the credit for the disclosure


would be greater. Of these three factors, the


first two are given the most weight."


7.3. Degree of immunity


In order to determine the appropriate level of


reduction of the fine, the competition authority


takes into account the time at which the evidence


was submitted, including whether the applicant


was the first, second or third, etc. undertaking to


apply for leniency, and its assessment of the


overall value added to its case by that evidence.


Reductions granted to an applicant following a


Type 2 application shall not exceed 50% of the fine


which would otherwise have been imposed.


In France, in line with the EU ECN model, the


degree of immunity will depend on the time at


which the evidence was submitted, whether the


applicant was the first, second or third, etc. to


apply for leniency, and its assessment of the


overall value added to its case by the evidence


provided.


In any event, the reduction of the fine will not


exceed 50% of the penalty it would have been


imposed if it had not benefited from Type 2


leniency. Taking into account the conditions listed


above, the French Competition Authority gives the


following indications as to the extent to which it


may apply reduced immunity from fines:


a) For the first company providing significant


value-added evidence, a reduction of 25 to 50%


may be provided;


b) For the second company applying for leniency


in this case, a reduction of 15-40% may be


provided; and


c) For any other company providing significant


value-added evidence, the maximum reduction


would be 25%.


These amounts may differ somewhat, as the


Austrian Competition Authority has indicated that it


applies reductions of 30-50% for the first company


providing significant value-added, 20-30% for the


second, and a maximum 20% for others.


7.4. Distinction between leniency and
settlement


Leniency, also called settlement, is relevant at an


earlier stage, before the competition agency is


aware of the cartel or, under some programmes,


before it has sufficient evidence to proceed, e.g.,


to court. By contrast, settlement is an agreement


between the parties after the agency has


concluded its investigation but before the


adjudicating body has reached a decision.


Settlement is aimed at reducing the cost and


delays of adjudication.


Penalty reductions under a settlement process can


undermine the effectiveness of the leniency


programme. Too large expected settlement




Competition Guidelines: Leniency Programmes




14


discounts reduces the attractiveness of the


leniency offer – e.g. the European Commission


aimed to limit the undermining effect by capping


settlement discounts at 10%, in contrast with


leniency discounts of up to 100%.











Competition Guidelines: Leniency Programmes




15


8. DIFFICULTIES IN PRACTICE


In applying a leniency procedure, competition


authorities may face a number of problems,


emerging mainly from the divergence of interests


between the competition authority and the


applicant for leniency. For the competition


authority, it is necessary to keep in balance the due


respect for the rights of the leniency applicant on


the one hand, with the efficiency of the


investigation and the deterring effect of the rules


on the other.


8.1. Deficiencies of evidence offered


A leniency application may contain insufficient


evidence, or evidence contradicting other evidence


obtained by the competition authority. In the case


of evidence insufficient to undertake a targeted


inquiry, the applicant will not be granted a


reduction of the sanction.


If the evidence produced is unfaithful, the applicant


will be denied leniency. However, it is often very


difficult for the competition authority to verify the


truthfulness of certain declarations. For example,


assurances by the applicant that they were not a


leader of the cartel, nor did they pressure other


enterprises to become members can be difficult to


assess.


8.2. Unavailability of persons cited


Sometimes the persons implied have left the


company applying for leniency, either because of


retirement, bad health, or new job with a


competitor, etc. and the leniency applicant cannot


force a former employee to cooperate with the


competition authority. The former employee may


now be employed by a competitor and risks being


penalised if they cooperate with the former


employer, or they might be scared of having to pay


damages.


8.3. Determination of significant value-
added


According to the EU Commission’s definition, a


significant value added is one that provides


evidence reinforcing the capacity of establishing


the existence of the cartel. However, the members


of the cartel obviously do everything possible to


hide any evidence of their participation. Hence, the


difficulty for the leniency applicant is to establish


strong enough evidence. The "value-added" they


may bring forward is often very weak. To what


extent should the competition authority reward


such evidence?


At an advanced stage of the inquiry it becomes


increasingly difficult for whistle-blowers to bring


any substantive value-added. The leniency


applicant does not know the level of evidence


already available to the competition authority, so


they may not easily estimate the level of evidence


necessary for it to constitute substantive value-


added. Depending on the leniency applicant’s


goodwill and efforts, the competition authority may


still accept to award limited leniency.


8.4. Difficulties encountered during
investigations


During an investigation resulting from a leniency


application, coordination with the whistle-blower is


essential. They are the informant from within the


cartel, and this allows the competition authority to


better target its investigations. However, the


competition authority must be aware that the


informant might try to orient the investigation in


their favour, and to hide certain elements which


may weigh not in their favour. The competition


authority should be careful to always keep control


of the investigation and to ensure the informant will


remain active even when they believe that they will


benefit from immunity.


When preparing the investigations, the competition


authority must decide whether it is best to act fast,


in a dawn raid for example, in order not to lose the


surprise effect and maximize its chances to find


evidence, or if it is best to take more time to


coordinate the investigation with the informant, in


order to ensure that the interventions are be better


targeted.


8.5. Keeping an application for
leniency secretive


During the investigation, the leniency applicant is


obliged not to disclose his/her position of


informant. For the competition authority, it is not


always easy to maintain secrecy. For example, if


the competition authority needs to produce a


declaration of the whistle-blower to obtain a search


warrant, the other members of the cartel will easily


guess that he has applied for leniency.


Disclosure of this information can have positive or


negative results on the investigation. The other


members of the cartel might then be less




Competition Guidelines: Leniency Programmes




16


motivated to apply for leniency, and as they are


less motivated to cooperate, it might be more


difficult to win a case. Also, if they believe it is too


late to apply for leniency, they might engage for an


out-of-court settlement, which could hamper the


effects of the leniency programme.


8.6. Informing the applicant for
leniency of the progress of the
investigation


The competition authority might need to inform the


leniency applicant about certain results of the


investigation in order to request that they provide


further information on new issues emerging from


the investigation.


This situation might pose certain difficulties for the


competition authority:


a) It should not provide the leniency applicant


with certain sensitive business secrets of


his/her competitors;


b) The leniency applicant might find out that the


competition authority has evidence that certain


information they have provided is false; and


c) The leniency applicant might be tempted to


use this information to manipulate the


interpretation of the results of the investigation


by the competition authority.


8.7. Leniency programmes versus
private enforcement


Competition laws may provide for private damage


suits, after the public case has been decided. For


example, EU Directive 2014/104 aims at


strengthening private actions for damages on


infringements to competition rules.


However, as discussed above, if leniency


applicants who receive full or partial immunity from


public enforcement do not receive such immunity


from the private enforcement that might follow,


they might consider it too dangerous to cooperate


in a public case, if this will lead to heavy damages


having to be paid as a result of private damage


action. Therefore, serious thought needs to be


given to resolving this problem. As seen above,


some competition authorities refrain from allowing


access to evidence they have obtained from


whistle-blowers.









Competition Guidelines: Leniency Programmes




17


BIBLIOGRAPHY


Austrian Competition Authority Powerpoint presentation: BWB Autorité Fédérale de la Concurrence: Programme


de clémence II: problèmes pratiques, March 16, 2016.
EU DG-Comp: ECN Model Leniency Programme, revised in November 2012.
French Competition Authority: Communiqué de procédure relatif au programme de clémence franc ̧ais, April 3,


2015.


UNCTAD: The use of leniency programmes as a tool for the enforcement of competition law against hardcore
cartels in developing countries, document TD/RBP/CONF.7/4, August 26, 2010.


United States of America, Department of Justice Antitrust Division: “The Evolution of Criminal Antitrust
Enforcement over the Last Two Decades,” Scott D. Hammond, Deputy Assistant Attorney General for
Criminal Enforcement, February 25, 2010.


United States of America, Department of Justice: "Frequently Asked Questions
Regarding the Antitrust


Division’s Leniency Programme and Model Leniency Letters,”, November 19, 2008.











Competition Guidelines: Leniency Programmes




18


ANNEX 1


Leniency Programmes in MENA Project countries having competition laws


As can be seen below, MENA Programme countries having competition laws all have some sort of


leniency. While Algerian law provides for the possibility to reduce or even eliminate the fine for enterprises


who cooperate willingly with the investigation and undertake not to infringe the law through an out-of-court


settlement, other MENA Project countries have specific leniency programmes for those who assist the


competition authorities to disclose and provide evidence in cartel cases, in addition to provisions related to


settlement.


In Egypt, violators who take the initiative to inform the Authority of offences and submit the supportive


evidence may be fully exempted from the sanction as from the 2014 amendments to Law No.3 of 2005.


In Jordan, the Court may mitigate the punishment of a violator of the provisions of Articles 5, 6, 8, 9, and


10 of Competition Law No.33 of 2004 if such violator provides to the Directorate information leading to the


uncovering of such practices.


In Morocco, Article 41 of Law 104-12 provides for total or partial exemption of fines for a violator of Article


6 (collusion), if they contributed to disclosure of a violation the Competition Council was unaware of.


In Tunisia, Law 36 of 15 September 2015 provides for a detailed leniency programme in Article 26, which


allows the whistle-blower to be totally exempted from the sanctions if they permit the disclosure and


brings evidence against a cartel which the Competition Council was unaware of, or if they bring evidence


on an infringement the Competition Council was aware of, but was unable to prove. A partial exemption of


the sanction may be granted if the applicant for leniency brings significant value-added to the evidence in


the hands of the competition council, if the firm undertakes significant efforts to bring back competition


into the market, and they do not oppose in any way the infringement(s) it is accused of.


In order to determine the degree of reduction of the fine, the Competition Council takes into account the


order, such as the first, second…to denounce, and the date of submission of the information, as well as


the degree of importance, a significant value-added, of the evidence put forward. A Governmental Decree


adopted after proposal of the Minister of Commerce fixes the procedure for demanding a partial or total


reduction of the fine.






Algeria Ordinance No 03-03 of


19 July 2003 on


Competition


Article 60:


The Competition Council may decide to reduce the amount of


the fine or to not pronounce fines against companies that,


during the investigation of the case concerning them, recognize


the offenses alleged against them, collaborate to accelerate it


and commit to no longer perpetrate any offenses related to the


implementation of the provisions of this Ordinance.


Egypt Law No.3 of 2005 on


Protection of


Competition and


Prohibition of


Monopolistic Practices


+ Amendments to Laws


190/2008 and 193/2008


+ 2014 Amendments


Article 26:


As amended by Law 190/2008. In case of any crimes committed


that are mentioned in articles 6 and 7 of this Law, the court may


exempt up to the half of the sanction decided thereby* (see


below). This refers to violators who take the initiative to inform


the Authority of the offence and submit the supporting evidence,


and for those whom the Court considers to have contributed to


disclosing and establishing the elements of the offense at any


stage of the inquiry, search, inferences gathering, interrogation


and trial processes. *2014 Amendments offer full and mandatory


leniency for the first applicant who comes forward to ECA.




Competition Guidelines: Leniency Programmes




19


Jordan Competition Law No.33


of 2004 + Amendment


to Law No. (18) of 2011


Article 25: (…) B


The Court may mitigate the punishment of a violator of the


provisions of Articles 5,6,8,9, and 10 of this Law if such violator


provides to the Directorate information leading to the uncovering


of such practices.


Lebanon No Competition Law


Morocco Law No. 104-12 on


Freedom of Prices and


Competition June 30,


2014.


Article 41:


Total or partial immunity from sanctions can be granted to a


company or organization which, with others, implemented a


practice prohibited by the provisions of Article 6 of this Law if it


helped establish the reality of the prohibited practice and to


identify the perpetrators, by providing the information which the


Competition Council or the administration did not previously


have. (...)


Palestine No competition Law


Tunisia Law No. 36 of 15


September 2015


concerning the


Reorganization of


Competition and Prices


Article 26:


The Competition Council may, after hearing from the


Government Commissioner, as provided by this article, grant full


exemption or reduction of the sanction to any party to a cartel or


to an anti-competitive agreement.


Total exemption from any sanction is granted to the first person


to provide:


- Information which the administration or the Competition
Council did not previously possess and that enables it to
conduct an investigation into violations of competition in a


given market; or
- Decisive evidence that allows the Administration or the
Competition Council to establish the existence of an
anticompetitive practice previously known to them without
being able to prove it.


The partial exemption of the penalty is awarded to any person
who:


- Provides evidence that contributes a significant added value
to the evidence that the administration or the Council
already had; or


- Does not dispute, in an unequivocal manner, the existence
and content of the practices alleged against him/her; or


- Who takes the initiative to implement measures that lead to


restore competition in the market.


To determine the level of reduction of sanctions, the
Competition Council shall take into account the rank and date
as to when the application was submitted and the extent to
which the elements bring a significant added value.


The procedures for submitting applications for full exemption


from punishment or reduction are determined by governmental


decree upon proposal by the Minister for Trade.









Competition Guidelines: Leniency Programmes




20


ANNEX 2


Settlement in MENA Project Countries


In many competition systems, there is the possibility for parties to solve a pending lawsuit before any


implication of the Court. In some countries, an out of court settlement can also take place during a judicial


intervention, which is thereby canceled. In general, an out-of-court settlement may be reached between


the authorities and the defendant in exchange for a "settlement" or heavy fine, which settles the case, with


no possibility of recourse.


In MENA Project countries, this is provided for in the competition laws of Egypt (Article 21 provides that


the competent Minister may settle a case before a final judgment is rendered), Morocco (Article 93


concerning only goods and services which prices are regulated, provides that the authority can settle a


case before being transmitted to a Court). In Tunisia, Article 73 of the new Law excludes the possibility of


settlement by the Minister for anti-competitive actions and concentrations under articles 5, 7, 8, 9, 10 of


the Law. For the rest, the Minister can conclude a settlement before the final decision of a Court, by which


the action annuls all sanctions and cannot be subject to recourse. However, the amount of the settlement


cannot be less than 50% of the amount fixed by the administration, and the violator is still responsible for


any damages resulting from the violation.




Algeria Not Found


Egypt Law No.3 of 2005 on


Protection of


Competition and


Prohibition of


Monopolistic


Practices


Article 21: (…)


The Competent Minister or the person delegated by him/her


may settle with regard to any violation, before a final judgment is


rendered, in return for the payment of an amount not less than


double the minimum fine and not exceeding double its


maximum. The settlement shall be considered a waiver of the


criminal lawsuit filing request and shall result in the lapse of the


criminal lawsuit relevant to the same case subject to suing.


Jordan The Competition Law


No.33 of 2004 +


Amendment to Law


No.18 of 2011


Not Found


Lebanon No competition Law


Morocco Law No. 104-12 on


Freedom of Prices


and Competition +


Law No. 20-13 of


August 7, 2014


Article 93:


Violations of the provisions of Title VII (goods, products and


services whose price is regulated) of this Law and the texts


adopted for its implementation may be concluded either by


settlements, administrative penalties or criminal sanctions. The


authority empowered to proceed with out-of-court settlements


and to impose administrative sanctions will be established by


regulation.


Article 94:


Only the authority referred to in Article 93 above has the right to


proceed with a settlement. (...) The right to settle cannot be


exercised after the file has been forwarded (...) to the competent


court of first instance.


Article 95:


The settlement passed without reserve cancels the action of the


administration. (...) Article 96 The settlement must be in writing


(...).




Competition Guidelines: Leniency Programmes




21


Palestine No competition Law


Tunisia Law No. 36 of 15


September 2015


concerning the


Reorganization of


Competition and


Prices


Article 73 :


With the exception of breaches to the provisions of Articles 5, 7,


8, 9, 10 and 69 of this law and upon request of the offender, the


Minister of Trade may, before public action is initiated, or the


case has been taken to Court, authorize the conclusion of a


settlement, as long as a final judgment has not been delivered.


During the period of accomplishment of settlement procedures


and the deadlines fixed for its execution, the prescription


deadlines will be suspended. The execution of the settlement


results in the ceasing of public action and the discontinuance of


the proceedings or of the judgement or execution of the


sentence.


The amount of the settlement does not release the offender from


the obligations under the law or their liability for any damage


which may be caused to others because of the offense.


The settlement cannot be less than 50% of that requested by


the administration. It cannot be lower than the minimum


threshold of the penalty provided by this Law.


The settlement irrevocably binds the parties and will not be


subject to appeal for any reason whatsoever.

















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