knowledge 18 October 2023 |

The Competition and Consumer Protection Commission’s new Administrative Leniency Policy is now active

To support its enforcement efforts under the new administrative regime (see our earlier briefing here, the Competition and Consumer Protection Commission (the “CCPC”) has introduced an administrative leniency policy (“ALP”) which became effective on 27 September 2023.  This, the third in our series of briefings on the CCPC’s new powers following the commencement of the Competition (Amendment) Act 2022 (the “2022 Act”), focuses on the new ALP, its interplay with the Cartel Immunity Programme (“CIP”), and what it will likely mean for competition law enforcement in the future. 

Leniency policies are considered in many jurisdictions to be the cornerstone of effective competition law enforcement. They allow for the detection of collusive conduct that may have otherwise gone unnoticed and increase the chances of successful prosecution by bringing forward evidence to the competition authorities’ attention.¹ They achieve this by providing those who reveal or provide significant evidence of collusive conduct to the authorities with immunity from fines or prosecution. 

The detailed guidance contained in the ALP is much welcomed, and is supplemented by further guidance on the interplay between the ALP and CIP, all of which can be found on the CCPC’s website. 

Sanctions for breaches of competition law

Under the administrative regime, an undertaking found to have engaged in anti-competitive conduct is exposed to a potential fine of up to the greater of (i) 10% of the previous year’s worldwide turnover, or (ii) €10 million.  Crucially, when the CCPC choose to pursue administrative sanctions, the lower evidential burden of ‘on the balance of probabilities’ will apply.

Under the criminal regime, following the 2022 Act, that exposure is up to the greater of (i) 20% of the previous year’s worldwide turnover; or (ii) €50 million, when tried on indictment.  This represents a significant increase in the previous criminal fine limits, which were up to the greater of (i) 10% of the previous year’s worldwide turnover, or (ii) €5 million, and which will still apply to investigations wholly relating to conduct that occurred prior to 4 February 2021.   

Individuals may also be subject to sanctions under the existing criminal enforcement regime. They are exposed to fines of up to the greater of €50 million or 20% of the previous year’s annual turnover, director disqualification orders, and terms of imprisonment of up to 10 years.  If tried summarily, an individual will be exposed to fines of up to €5000 and/or terms of imprisonment of up to 6 months.  

Interplay between the ALP and CIP

The CIP offers immunity from criminal prosecution for cartel conduct. The ALP offers ‘leniency’ with respect to administrative fines, which may take the form of either immunity from fines or reductions in fines. It is broader in scope than the CIP in that applications may be made with respect to resale price maintenance as well as cartel conduct.  

The two policies outline a broadly similar procedure for applications and grants of immunity or leniency, though with some important differences which we outline below. A summary of the key differences is also set out in the Annex to this briefing (download here).

The CCPC has clarified that an undertaking that is granted leniency under the ALP will not be automatically immune from criminal prosecution under the CIP (and vice versa). Since the ultimate enforcement route (administrative or criminal) may not be known at the time of an application, it is advisable that companies considering making an application to the CCPC do so under both the CIP and the ALP.

Who can apply?

Applications can be made by individuals (in the case of the CIP) or undertakings (both the CIP and ALP).  Whilst the CCPC has gained the power to impose administrative fines upon undertakings, this does not extend to individuals. Where an application is made by an undertaking, any cooperating (former or current) directors, senior management, employees, or agents, can come under the umbrella of the immunity if granted. 

Full immunity from criminal or administrative fines is available to participants in anti-competitive conduct, including the instigator of the conduct, though there is an important exception for undertakings found to have coerced the other participants.  Interestingly, reductions in administrative fines appear to be available under the ALP even for undertakings found to have ‘coercers'.

Forms of immunity or leniency available under the ALP and CIP

The ALP envisages that varying degrees of leniency may be available for subsequent applicants, which is consistent with the approach already taken by the European Commission. 

Under the ALP, the first undertaking to provide evidence to the CCPC which enables it to (i) conduct a search; or (ii) ground a finding of infringement may benefit, respectively, from Type 1A or Type 1B immunity from administrative fines. The CCPC must not, at the time of the application, already have sufficient evidence to take such action.

Where the undertaking does not qualify for Type 1A or 1B immunity, it may be able to benefit from Type 2 leniency, which entails reductions from administrative fines of up to 50%.² To benefit from Type 2 leniency, an applicant must provide evidence that constitutes “significant added value” to the investigation, a bar the ALP states will be met upon providing evidence that “strengthens, by its very nature and/or its level of detail, the CCPC’s ability to prove the existence and/or membership of the alleged cartel.”

The CIP differs significantly from the ALP in two main respects: firstly, where the ALP provides the CCPC with the power to grant the leniency provided for under the policy, under the CIP, the CCPC has only the power to recommend the grant of immunity to the Director of Public Prosecutions (the “DPP”), with whom the ultimate decision rests.  Second, the CIP offers immunity only to the first applicant that satisfies all the requirements of the programme and does not offer any other form of leniency to subsequent applicants. 

Process

Obtaining a Marker

Both the ALP and the CIP provide for a ‘marker’ system, where the first party to contact the CCPC will obtain a marker which protects their position in the queue for immunity for a short period of time. This is intended to allow the applicant time to gather the information necessary to complete its application. The CCPC will give the applicant a timeframe within which to ‘perfect the marker’ with the necessary information, this will not usually exceed 10 working days in the case of the ALP, or a period not usually exceeding 6 weeks in the case of the CIP. 

Perfecting the Marker

In order to perfect the marker, the applicant must provide details of the alleged infringement to the CCPC, including the identity of the other participants in the conduct, the nature of the conduct, its purported duration, and the affected markets.  The applicant must also provide the form of formal decision to make the application.  This process is broadly similar across both the ALP and the CIP, and where an application has been made under both, can be conducted concurrently. 

Ongoing obligations of the applicant under the ALP and CIP

Under both the ALP and CIP, the CCPC requires that an applicant:

• take effective steps, agreed with the CCPC, to ensure that it does not involve itself in further anti-competitive activity, unless the CCPC is of the view that such steps may jeopardise the integrity of its investigation;

• preserve evidence from the time that the applicant first considered an application;

• provide comprehensive, prompt and continuous co-operation, which includes securing the cooperation of its (former or current) directors, officers and employees; and

• provide full, truthful and frank disclosure of all evidence and information in the possession or control of or accessible to the applicant. 

These obligations are ongoing and last until such time as any resulting administrative or criminal enforcement proceedings (as the case may be) have come to an end. This is likely to place a significant burden upon the recipient, with antitrust investigations often taking years to complete. 

Granting of leniency under the ALP and immunity under the CIP

Where the applicant is the first to come forward under the ALP, the CCPC will determine if the evidential requirements for Type 1A or 1B have been met. If they are met, the CCPC will grant conditional immunity. Where they have not been met, the applicant will be informed, at which point the applicant may request that the CCPC consider its application as a Type 2 leniency application. 

Under the CIP, where an applicant satisfies the requirements of the policy, the CCPC will have the discretion to make a recommendation to the DPP for a grant of conditional immunity. 

Where a grant of conditional immunity is made under the ALP or CIP, the undertaking will obtain confirmation of full immunity only once any resulting administrative or criminal enforcement proceedings (as the case may be) have come to an end.

The future of competition law enforcement in Ireland

As noted in our previous briefing, the purpose of introducing the administrative enforcement regime is to make the CCPC a more effective enforcer of competition law in Ireland.  The ALP will play an important role in achieving this. The significant increase in the available financial penalties will make leniency a much more attractive option for companies who uncover potentially problematic conduct in their business.

In order to ensure that companies mitigate their exposure to the increased risk, it will become increasingly necessary to ensure robust and effective compliance training and programmes are implemented, particularly if the company is operating in sectors that have seen high enforcement rates in other jurisdictions. Should collusive conduct be uncovered in that context or elsewhere, serious consideration should be given to making an application under the ALP and/or CIP.

For more information on the operation of the ALP and the CIP, or to discuss how competition compliance can be incorporated into your organisation, please contact Laura Treacy, Partner, EU & Competition, or your usual contact in the EU & Competition Law team. 

Also contributed to by Beverley Williamson