1

ICN Cartels Working Group Application of leniency to individuals

Stephen BlakeCartels and Criminal Enforcement Group

UK Office of Fair Trading

27 January 2013

2

Contents

• Essential ingredients for an effective leniency policy

• Background – UK cartel regime and leniency programme

• Meeting requirements for an effective policy

• Challenges

3

Essential ingredients for an effective leniency policy

4

Leniency – essential ingredients●Maximum ‘up-front’ certainty for

applicants

- Especially for those blowing the whistle

●Trust in the authority

- Transparency – including published guidance

- Reputation for fairness, accessibility and approachability

5

●Incentives to maintain cooperation

●Record of robust enforcement

- Track record of successful cases and stiff penalties

6

Background

7

UK cartel regime

• Dual regime

- Civil (administrative) regime directed at ‘undertakings’• Article 101 TFEU and/or Competition Act 1998

- Criminal regime directed at individuals• Enterprise Act 2002

8

• Regimes complementary

- Enforcement action may be taken under both regimes• Against undertakings AND individuals• May include parallel UK criminal enforcement where

Article 101 is being applied by the European Commission

- Or only under one regime

9

UK Leniency programme - outline• Scope of leniency programme

- Limited to cartel conduct (but including RPM)

• Corporate immunity or leniency

- Immunity from fines or fine reduction (civil)

• Individual immunity

- Immunity from prosecution (criminal)

- Immunity from director disqualification

10

●Conditions

- Genuine intention to confess

- Evidential threshold – depends on whether there is a prior OFT investigation

- Complete and continuous cooperation

- In the case of immunity, the applicant must not be a coercer

11

Criminal immunity for individuals●Where undertakings apply – three

types of applicant

- Type A – ‘First in’ and no pre-existing investigation: automatic immunity (not available for coercer)

- Type B – ‘First in’ but pre-existing investigation: discretionary immunity or leniency

- Type C - Not ‘first in’ and pre-existing investigation: reduction in fine up to 50%

12

●Availability of individual immunity where undertakings apply

- Automatic ‘blanket’ criminal immunity for cooperating employees in Type A cases

- No automatic ‘blanket’ criminal immunity in Type B cases – may be available on a discretionary basis

- No automatic criminal immunity in Type C cases but scope for individual immunity

13

●Where there is no guarantee of individual immunity

- Availability of confidential guidance • Whether the case is being or likely to be investigated

criminally• Whether individual immunity may be available

●Individuals may apply in their own right

14

Director disqualification

●Immunity from director disqualification

- For all cooperating current and former directors

- Irrespective of whether applicant is Type A, B or C

15

Meeting requirements for an effective leniency policy

16

Maximum ‘up-front’ certainty

●Clear guidance on evidential thresholds and other conditions

- Including when individuals will be required to admit participation in cartel offence, including dishonesty

- Narrow definition of when an undertaking or individual will be considered a ‘coercer’

- OFT in the process of revising its leniency guidance to make the process as clear and accessible as possible

17

●Maximum certainty on interaction between the regimes for undertakings and individuals

- Including in Type A cases guaranteed immunity for all cooperating current and former employees and directors

- Even if an undertaking is found to be a coercer, individuals within the undertaking who did not play coercing role will not be denied criminal immunity

●Availability of informal ‘no names’ guidance

●Availability of markers

18

●Scope for anonymity when exploring availability of immunity

19

Trust in the authority

●Transparency

- Detailed published guidance

- Separate ‘quick guide’ to leniency for individuals currently being drafted

●Accessibility and approachability

- Informal ‘no names’ guidance available

- Leniency contact persons named on OFT website

20

●Fairness

- Commitment to erring in favour of the applicant where there is genuinely a ‘close call’

- Stated aim of achieving reputation for fairness in application of published guidance

21

Incentives to maintain cooperation ●Clarity regarding scope of

requirements

- Must be genuinely to assist the agency in efficiently and effectively detecting, investigating and taking enforcement action against the cartel

●Clarity regarding consequences of failure to maintain cooperation

22

●Timing of leniency agreement/no action letter

- Shortly prior to issue of SO or charging with cartel offence

●OFT considering requirement for a senior representative of the applicant to sign a written commitment to cooperate at marker stage

23

Robust enforcement record

●Civil enforcement against undertakings

- Examples of recent fines: • BA fined £58.5 million in Airline fuel surcharges case• RBS fined £28.5 million in Loans for professional

services firms case

●Criminal enforcement against individuals

- Two prosecutions to date

- Convictions in Marine hose cartel – prison sentences of between 2 ½ and 3 years

- Further cases in pipeline

24

●Director disqualification

- Between 5 and 7 years in Marine Hose case as part of criminal proceedings

- No standalone director disqualification cases to date

25

Challenges

26

Challenges

●Non-alignment of incentives – individuals vs undertakings

- Current requirement of ‘dishonesty’ for criminal offence

- Absence of ‘plea bargaining’ for Type C cases

- Obtaining cooperation from former employees, in particular if they are now employed by a competitor not covered by leniency

27

●Maintaining integrity of evidence

- Electronic evidence

- Witness evidence

●Reliance on accomplice evidence – credibility

●Creating an enforcement record

- ‘Chicken and egg’

- Avoiding sole reliance on leniency

28

ICN Cartels Working Group Application of leniency to individuals

Stephen BlakeCartels and Criminal Enforcement Group

UK Office of Fair Trading

27 January 2013