The European Commission (the "Commission") has published a short paper and a proposed revision to the existing 2002 Leniency notice with the aim of encouraging hesitant cartel members to blow the whistle on the schemes in which they are involved.
The policy of leniency is intended to encourage members of cartels to confess the details of their activities to the relevant competition authority. In the case of the UK, this means the OFT although many whistle blowers will inform competition authorities in other member states and the Commission itself. Given the difficulty of detecting cartels, encouraging whistle blowing is a key tool in the fight to clamp down on cartel activity. The incentive for the whistle blower is leniency in their treatment by the relevant competition authority, which can extend to full blown immunity from prosecution.
However, it has come to the attention of the Commission that whistle blowers fear the use by third parties in subsequent civil proceedings of any evidence they give as to their cartel activities. This concern is particularly heightened in relation to civil damage proceedings in jurisdictions such as the USA. Reluctant whistleblowers could threaten the entire leniency policy and the convictions it helps secure. The Commission therefore proposes to amend the 2002 Notice upon which their leniency system is based.
The amendment aims to ensure that corporate statements made by whistle blowers to the Commission cannot be used for any purposes other than the application of the European competition laws. Undertakings will be allowed to make statements in oral form, which will then be transcribed by the Commission. The statements will be kept on file with access to the file only being granted in relation to judicial proceedings relating to the cartel under Article 81 of the EC Treaty. Further, parties seeking to access the file will have to sign a document to the effect that they will not use the statements for any other purpose.
Any party breaking the rules set out above will be liable to a sanction through a complaint being lodged with their lawyer's bar association and/or through a higher fine being sought against the offending party in the cartel decision or in subsequent proceedings before the Community courts. The Commission hopes that the proposals will play a central role in the fight against cartels over the coming years.