Proposed Amendments to EU Leniency Notice
On February 22, the European Commission (the "Commission") published on its website a series of documents setting out a number of proposed amendments to its 2002 Notice on immunity from fines and reduction of fines in cartel cases ("Leniency Notice").1 The amendments reflect concern about the risk of discovery of corporate statements made to the Commission in the context of its leniency program during civil damages actions in third country jurisdictions.<br><br>
The Commission relies on corporate statements to launch its cartel investigations because they describe a leniency applicant's own involvement, as well as that of other companies, in potential cartel activity. However, while the Commission continues to support efforts to promote effective civil proceedings for damages against cartel participants, it does not want companies which voluntarily cooperate in revealing cartels put in a significantly worse position in respect of civil claims than other cartel members which refuse any cooperation. It believes that the production of corporate statements made to the Commission in civil damage proceedings risks producing produce exactly this result. The Commission commentary to the proposed amendments states: "It could seriously undermine the effectiveness of the Commission’s leniency program and jeopardize the success of our fight against cartels."
The Commission, therefore, proposes to adopt the following measures in order to protect corporate statements from being used for purposes other than the application of the European competition rules:
• The recitals of the Leniency Notice will include a clear policy statement from the Commission stating that the disclosure of corporate statements made to the Commission in the context of its leniency program during civil damage proceedings may undermine the effectiveness of the Commission’s fight against cartels. If necessary, the Commission will intervene as amicus curiae in civil proceedings to make known its views to foreign courts.
• Leniency applicants will be allowed to make their corporate statements in oral form. The Commission will record these statements, and prepare its own transcript of the statement. Applicants will be required to confirm that the transcript is a correct rendering of the oral statement. This confirmation may be given orally, and will then be recorded. The transcript will serve as evidence, and, if necessary, be supplemented before the European Community Courts with the original recordings.
• Access to the Commission's file, including to corporate statements, will be given only for the purposes of administrative and judicial proceedings for the application of Article 81 of the EC Treaty. The Commission will reject requests for any other purpose.
• Interested parties will be allowed access to the corporate statement. However, written corporate statements and transcripts of oral corporate statement can be viewed only at the Commission premises, and interested parties will not be allowed to take mechanical copies of the corporate statements.
• Parties seeking access to corporate statements will be required to sign a document whereby they commit to abide by the provision of Article 15(4) of Commission Regulation (EC) No 773/2004 of 7 April 2004, stating that documents obtained through access to the file may only be used for the purposes of judicial or administrative proceedings for the application of Article 81 of the EC Treaty.
• If the interested party abuses its right of access to the file, the Commission may seek to sanction such behavior by lodging a complaint with the bar association of the lawyer who was allowed access to the file and/or by seeking a higher fine for the undertaking in question either in the cartel decision, or in subsequent proceedings before the European Community Courts.
The procedure for corporate statements will apply to all new and on-going leniency applications from the date of publication of the amended Leniency Notice in the Official Journal of the European Union. The Commission invited comments on its draft amendments to be submitted by March 20, 2006.
Authored by:
Neil Ray
415-774-3269
nray@sheppardmullin.com
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