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Immunity from fines withdrawn

 

If a cartel member applying for immunity from fines under the leniency rules fails to fully cooperate, the Commission is allowed to withdraw this immunity. The Commission’s opinion has been confirmed by the General Court (EGC) in the case of Deltafina (EGC Judgment of 9 September 2011, case no. T-12/06, press release). This is the first case in which the Commission did not grant final immunity from fines to the undertaking that revealed the existence of a cartel.

The Commission’s Decision

In 2005, the Commission imposed fines totaling € 56 million on the four leading raw tobacco processors in Italy. They had been accused of fixing prices paid to the tobacco producers and intermediaries as well as the allocation of suppliers and quantities (Commission Decision of 20 October 2005).

A fine of € 30 million was imposed on Deltafina, although the undertaking had been the one to inform the Commission of the existence of the cartel. At the beginning of the administrative procedure, the Commission had granted Deltafina conditional immunity. Final immunity however was denied, since Deltafina had disclosed, voluntarily and without informing the Commission, the fact that it had applied to the Commission for immunity at a meeting of the professional association of raw tobacco processors. At this point, the Commission had not yet had an opportunity to carry out investigations.

The Commission: “A certain degree of difficulty in keeping an immunity application confidential is inherent in all cases where a cartel participant decides to apply for immunity. However, any such difficulty (or the fact of having informed the Commission of it) does not license the immunity applicant to voluntarily disclose its immunity application at meetings with competitors.” (Commission Decision of 20 October 2005 - summary)

The Commission assessed the cooperation provided by Deltafina in the investigation as an attenuating circumstance and granted it a reduction in its fine of 50%.

The Court’s Decision

The EGC confirmed the withdrawal of the immunity. According to the EGC, a full immunity from fines constituted an exception to the principle of personal liability for infringement of the competition rules of the EU. In order to be granted such immunity, the undertaking’s cooperation with the Commission needed to be “full, continuous and expeditious” throughout the administrative procedure.

Deltafina had infringed its duty to cooperate (EGC Judgment of September 2011, case no. T-12/06, para. 133). Thus, Deltafina was not allowed to rely on the prospect of full immunity it had been initially granted.

Background: Leniency Rules

As a means of rewarding the voluntary disclosure of cartels, the Commission is allowed to grant full immunity from fines to a cooperating undertaking. The underlying leniency rules are set out in the notice on “Immunity from fines and reduction of fines in cartel cases” (Commission Notice).

In order to qualify for immunity, applicants have to voluntarily disclose their participation in an alleged cartel and have to submit information and evidence that enable the Commission to launch a targeted inspection or to find an infringement of Art. 101 TFEU. In addition, the Commission requires the undertaking to cooperate “genuinely, fully, on a continuous basis and expeditiously”. As explicitly set out in marginal number 12 of the notice, the undertaking:

• must promptly provide the Commission with all relevant information and evidence, answer any request and make employees and directors available for interviews,
• must not destroy, falsify or conceal relevant information or evidence relating to the alleged cartel, and further,
• must not disclose the fact or any of the content of its application before the Commission has issued a statement of objections in the case.

An overview on the leniency provisions of the Commission and the German Bundeskartellamt can be provided free of charge if requested.

 

Dr. Christian Bahr Partner, Kartellrecht bahr@sbr-net.com	Dr. Sascha Dethof Partner, Kartellrecht dethof@sbr-net.com
SBR Schuster Berger Bahr Ahrens Lawyers
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