CMA Cartel Campaigns and the “Leniency Line”

8 November 2018

In the recent ICM competition law survey, the CMA revealed that only 18% of respondents were aware that they can obtain immunity from admitting to participation in a cartel. See our previous blog, what is a cartel?

Immunity is a concept that all businesses should be aware of as the CMA continues its campaigns to target cartel activity.

Last year’s digital drive by the CMA saw a 30% rise in ‘tip offs’ and earlier this year the CMA received an extra £2.8m in the Budget to pursue its targets and encourage whistle-blowers with the offer of rewards of up to £100,000 for informants. The emboldened regulator stated that the new campaign will target ‘industries such as construction, manufacturing and business support services’ as these sectors ‘have either a history of reported cartel activity or characteristics that make them vulnerable to cartels’

The CMA is using social media platforms such as YouTube, Facebook, Twitter and LinkedIn to direct people to their Stop Cartels Campaign website. Here visitors will find explanatory videos and details of a ‘hotline’ for witnesses who suspect cartel activity and a ‘leniency line’ for those who have been directly involved. Under the tagline ‘Be Safe, not Sorry’ they seek to remind businesses and individuals of the advantages of self-reporting, and the leniency the CMA will show to those speak up.

Leniency

Individuals or businesses who self-report their involvement in cartel activity, and subsequently co-operate fully with the investigation, may receive a reduction in sanctions. Those who are first to come forward may receive complete immunity, including from criminal prosecution and other penalties. Where a cartel is established, businesses can be fined 10% of global company turnover and individuals can face up to 5 years imprisonment, disqualification from director positions for up to 15 years and unlimited fines.

For the CMA, a leniency policy helps facilitate their investigations and enforcement actions. By offering protection to those involved in cartel activity, they uncover cartels that may have gone unnoticed and receive direct ‘insider’ evidence of wrongdoing.  The CMA currently offers three levels of protection: Types A, B and C. Type A leniency is commonly described as ‘immunity’ protection as it offers the greatest protection to potential cartel participants.

As the CMA continues its online campaigning to encourage informants, it is vital that businesses are aware of the conditions required to obtain Type A leniency.

Type A Leniency

Type A leniency is the highest level of protection offered by the CMA and provides the following protections:

  • Guaranteed corporate immunity from financial penalties.
  • Guaranteed 'blanket' immunity from criminal prosecution for individual employees or officers.
  • Guaranteed director disqualification protection.

In order to qualify for this relief, the applicant must be the first applicant to report and provide evidence of a cartel. Further, the information must not relate to a pre-existing CMA investigation or to activities for which the CMA has sufficient information to establish the existence of a cartel.

There are conditions tied to this level of protection. The business/individual must:

  • Accept participation in a cartel;
  • Provide the CMA with all relevant information;
  • Maintain complete and continuous cooperation for the duration of the investigation;
  • Refrain from further participation in the cartel activity; and
  • Not have coerced another party to take part in the cartel.

Further, the information supplied must give the CMA a sufficient basis for taking forward a credible investigation.

In certain circumstances initial enquiries can be made by the applicant or their legal representative on a ‘no names’ basis in order to confirm the availability of immunity without first disclosing their identity.

Leniency in regulated sectors

In November 2017, the CMA published guidelines on leniency applications for regulated sectors. The CMA and sectoral regulators operate what is known as the “single queue system”. This means that applicants make the application to the CMA only and provided the conditions for leniency are met, the application should secure the applicant’s place in the leniency process with all authorities.

European Commission Cases

It is important for international companies to be aware that the CMA’s leniency programme operates entirely independently of the European Commission’s programme. This means that companies who may be involved in cross-border cartels ought to apply for leniency to all relevant competition authorities in order to obtain full leniency protection.

Recent government guidance for a post-Brexit cartel scenario advised that: any existing or potential applicant for leniency under the European Commission’s leniency programme in respect of conduct which is also covered by the CMA’s leniency policy should make a separate application for leniency to the CMA (as would have been the case pre-exit).

At Kingsley Napley we advise clients on criminal liability and related issues arising from CMA investigations. We regularly provide criminal advice to individuals in cases where the company has entered into and been granted immunity and the investigation is civil only. . We also have significant experience of advising in cases involving multi-jurisdiction investigations into allegations of anti-competitive behaviour involving large multi-national corporations.

Further information

For further information on the issues raised in this blog, please contact Caroline Day, Nick Dent or visit Cartels, Competition and Price Fixing.

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