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Setting up or reforming a leniency programme –what makes a leniency policy successful.

The Spanish Leniency Programme.

Isabel López Gálvez, Cartels and Leniency Deputy Director CNC

Bruges, 12 October 2011

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SPANISH LENIENCY PROGRAMME

SPANISH LENIENCY PROGRAMMESPANISH LENIENCY PROGRAMME::

1. Objectives and requisites to adopting

2. Requirements Spanish Leniency Programme

3. Exemption from payment of the fine (immunity)

4. Reduction of the amount of the fine

5. Features Spanish Leniency Programme

6. Conclusions: first CNC Resolutions with Leniency

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LENIENCY PROGRAMME: Objectives

Main objectives of the leniency policy: prosecution of alleged cartels

Ensure greater effectiveness in the Administration's actions against cartels.

Facilitate the cartel prevention and detection. Increase the instability of cartels agreement.

Introduction of this successful programme in many jurisdictions to improve the level of compliance with antitrust competition laws, through the increases detection of cartels:

Stages of the fight against cartels:Detection Prosecution Penalization

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LENIENCY PROGRAMME: Requisites to adopting

Requisites to adopting a leniency programme: Investigatory powers Significant penalties and increase the probability a cartel pays

penalties. Maximum transparency and certainty in the application of the

leniency programme and procedures (trust of leniency applicant) Cultural issues: education and awareness of the leniency

programme.

International experience: Successful programme in many jurisdictions Improve the level of compliance with antitrust competition laws,

through the increases detection of cartels and making cartel membership less attractive.

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SPANISH LENIENCY PROGRAMME: Requisites to adopting

Competition Act 15/2007, 3 July 2007: prosecution of cartels, a priority of the National Competition Commission (CNC)

Investigatory powers: reinforced power inspections (interviews, use of seals, press release, consequences of obstruction).

Significant penalties: new level of sanctions (Communication of the quantification of fines)

Creation of Cartels and Leniency Unit to handle and examine leniency applications, according implementing regulation.

Cultural issues: public consultation process, seminars, articles, provisional guidance for processing leniency applications in the CNC Web page before entry into force leniency programme, leniency contact point, assistance telephone numbers…

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SPANISH LENIENCY PROGRAMME: Requirements

Spanish leniency programme:

Administrative system, not criminal, although the individuals are also included (fines).

Adapted to EC Regulations and closely resembling the ECN Model Leniency Programme:

o Exemption from payment of the fine (immunity)

o Reduction of the amount of the fine (between 30% and 50% of the amount of the fine, first that fulfils the requirements for reduction; second, between 20% and 30% and successive, up to 20%).

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SPANISH LENIENCY PROGRAMME: Exemption from payment of the fine

Exemption to an undertaking or a natural person (immunity): First to provide with evidence that enables CNC to order an

inspection, providing that at the time of its provision, the CNC does not have sufficient evidence to order the inspection, or

First to provide with evidence that enables CNC to verify a cartel, providing that at the time of its provision, the CNC does not have sufficient evidence and an exemption has not been granted

The exemption granted shall also benefit legal representatives or the persons comprising the management bodies, providing that they have collaborated with the CNC.

Possibility to apply for a additional time for submitting evidence on the cartel (marker), in cases where justified.

Presented before the statement of objections (SO).

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SPANISH LENIENCY PROGRAMME: Reduction of the amount of the fine

In relation to undertakings or natural persons when, without meeting requirement of immunity, reduction of the amount of the fine if: provide with evidence of the infringement which represents

significant added value (whether by its nature o level of detail, reinforces the CNC ability to prove the relevant facts) with respect to the evidence already in the CNC´s possession, and

meet the requirements of duties of cooperation, although it could be adopted measures to oblige other undertaking to participate in the infringement.

Possibility to present an application for reduction after the SO, taking into account the information in the file, the nature or the content of the evidence submitted by the applicant so justifies.

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SPANISH LENIENCY PROGRAMME: Features

Since first day application (six leniency applications presented): Transparency Certainty Predictability Confidentiality Cooperation, coordination and communication among enforcers

Reduction of the administrative burdens for the CNC and for the leniency applicants: Electronic register for leniency applications, since March 2009 Summary leniency applications (35% leniency applications

presented before the CNC 2008/September 2011). Oral Leniency applications (53% leniency applications

presented before the CNC 2008/September 2011)

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SPANISH LENIENCY PROGRAMME: FeaturesTransparency and certainty

Maximum transparency requirements and leniency application: Provisional guidelines for processing leniency applications in the

CNC Website before entry into force Spanish leniency programme, updated March 2009.

Assistance leniency programme telephone numbers Specific instructions to the CNC Register CNC Website leniency programme (English and Spanish):

http://www.cncompetencia.es/Default.aspx?TabId=100

Certainty about expected benefits: Order of receipt of the application -written /oral application-:

according to the date and time of the entry in the CNC Register, given by the Cartels and Leniency Unit.

Confirmed by the Cartels and Leniency Unit if the conditional exemption is available when it is possible.

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SPANISH LENIENCY PROGRAMME: FeaturesPredictability

Predictability: Maintenance of the Spanish system separation between the

investigation phase and the decision making: o Directorate of Investigation: Conditional immunity/rejection of

the leniency application (withdraw the information and evidence presented or request be examined such as a reduction application) and proposal for reducing the amount of the fine (ranges).

o Council of the CNC: Final resolution about the exemption from payment of the fine (confirmed conditional immunity) and setting the percentage reduction.

Draft CNC Notice on exemption from fines and reduction of fines, including internal agency processes about application leniency programme.

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SPANISH LENIENCY PROGRAMME: Conclusions

Successful enforcement tool in fight against cartels:

Causing cartels to cease after inspections, generally.

New cartel cases prosecuted by the CNC (15% formal open proceedings by the CNC 2008/2010, origin is a leniency application -some of them pending of Resolution-).

New leniency applicants after inspections: race between the members of the cartel.

Improve the international cooperation.

Strong deterrence through penalties and press release CNC Resolutions cartel cases arising from leniency: awareness about application leniency programme is a key part of establishing a successful leniency programme.

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SPANISH LENIENCY PROGRAMME: First CNC Resolutions with leniency

Case Leniency applications

Total Fine (€)

S/0084/08 Fabricants de Gel (Resolutions 21/01/2010 and 29/06/2011)

Immunity and reduction (1)

8.499.112 + 6.754.229 (immunity and reduction)

S/0085/08 Dentífricos (Resolution 20/12/2009)

Immunity Prescription/No practice

S/0086/08 Peluquería Profesional (Resolution 2/03/2011)

Immunity and reduction (1)

51.017.000 + 9.890.000 (immunity)

S/0091/08 Vinos Finos de Jerez (Resolution 28/07/2010)

Immunity and reduction (1)

6.173.000 + 670.000 (immunity)

S/0120/08 Transitarios (Resolution 31/07/2010)

Immunity and reduction (2)

14.127.000 + 5.914.000 (immunity and 1 reduction)

S/0185/09 Bombas Fluidos (Resolution 24/06/2011)

Immunity 17.343.581 + 962.500

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SPANISH LENIENCY PROGRAMME

Thank you for your attention!

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Setting up or reforming a leniency programme –what makes a leniency policy successful.

The Spanish Leniency Programme.

Isabel López Gálvez, Cartels and Leniency Deputy Director CNC

Bruges, 12 October 2011

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LENIENCY PROGRAMME: Disclosure

Leniency applicants and Competition Authorities interest in maintaining confidentiality over the leniency applications presented: disclosure could deter companies from participating in the leniency programme.

Duties of the leniency applicant to protect the leniency application presented to preserve the efficacy of the investigation.

Right balance protecting the effectiveness of the leniency programme in detecting and punishing cartel activity by the Competition Authorities:

Right to defense other parties in the proceeding: access to the file/confidentiality.

International coordination: information exchange, inspections… Third parties interest in obtaining information supporting

damages actions.

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SPANISH LENIENCY PROGRAMME: Duties of cooperation leniency applicant

Cooperate fully, continuously and expeditiously with the CNC.

Bring an end to its participation in the infringement, except in those cases where the CNC deems it necessary for this participation to continue with the aim of preserving the efficacy of an inspection.

Not have destroyed, falsified or concealed information or evidence.

Not have disclosed, directly or indirectly, to third parties other than the European Commission or other Competition Authorities, the fact o its contemplated application or any of the content, prior to notification of the SO or such time as may be determined by the DI.

Not to have adopted measures to oblige other undertaking to participate in the alleged infringement (applicant for exemption).

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SPANISH LENIENCY PROGRAMME: Confidentiality

Confidentiality of the information submitted and of the fact of the leniency application itself:

Only known by the Cartels and Leniency Unit and by the Director of Investigation.

Special separate confidential record only known by the Cartels and Leniency Unit.

Access to leniency application after SO, but no copies can be obtained of any oral or written corporate statements.

Formal/informal procedures for information share with other Competition Authorities (legal limits information exchange, specially criminal vs. civil regimes).

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LENIENCY PROGRAMME: International Coordination

International cooperation: successful enforcement tool in the fight against cartels Facilitate the cartel prevention and detection to the standard of

evidence required to initiate a viable investigation. Ensure greater effectiveness in the Competition Authorities´

actions against cartels. Increase the level of evidence during the investigation of cartels. Avoid unnecessary duplication of efforts and the waste of public

resources in the fight against cartels.

Improving the international cooperation: Establish effective formal/informal procedures for information

share (harmonisation of practices). Clarify the legal limits to the information exchange, specially

criminal vs. civil regimes. Implications with the leniency programme.

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SPANISH LENIENCY PROGRAMME: International Coordination

Maximum coordination and collaboration Cartels and Leniency Unit with other Competition Authorities:

European Competition Network (ECN): European Commission and Competition Authorities of the 27 Member States of the European Union

Bilateral contacts with other National Competition Authorities (NCAs).

Practical experience: o Inspections and cases following leniency.o Waiver to disclose information to other Competition

Authorities.

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SPANISH LENIENCY PROGRAMME: Information exchange

Information exchange between Competition Authorities: ECN: coordination, allocation of cases and use in evidence

(article 12 Regulation 1/2003 and Commission notice on cooperation within ECN).

Coordination simultaneous inspections. Regular informal contacts between Competition Authorities

involved leniency applications presented: procedural issues arisen along the proceeding with relevant impact on others parallel cases (access to file).

Although the ECN Model Leniency Programme, differences in leniency regimes.

Regulation 1/2003: limits Implication Leniency programme. Basis of information transmission (with or without prior waiver

from the leniency applicant).

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SPANISH LENIENCY PROGRAMME: Damages action

Decision EU´s Court of Justice Pfleiderer case (14 June 2011):

National courts should decide - on a case-by-case basis -whether private damage claimants may be granted access to leniency applications.

Responsibility of national courts to balance the interest in promoting enforcement through leniency programmes with a private plaintiff's interest in obtaining information to support a civil damages.

Harmonization of antitrust procedure across Europe to improve legal certainty for leniency applicants and protect effective enforcement leniency programmes.

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SPANISH LENIENCY PROGRAMME

Thank you for your attention!