Sixth United Nations Conference to Review All Aspects of the Set of Multilaterally Agreed

Equitable Principles and Rules for the Control of Restrictive Business Practices

Geneva

8–12 November 2010

Session I (cont'd): Implementation of competition law and policy

Presentation by:

Mr. David Anderson

Belgium

The views expressed are those of the author and do not necessarily reflect the views of UNCTAD.

Leniency – a private sector advisor’s viewDave Anderson - Berwin Leighton Paisner LLP, Brussels

Sixth United Nations Conference to Review All Aspects of the Set on Competition Policy

Geneva, Switzerland - 9 November 2010

Leniency – the stick and the carrot

Assuming the stick (enforcement/penalties)

Focusing on the carrot (leniency)

International cartel liability – a look inside

Internal investigation

• Initial discovery of problem• Internal reporting – first step of cartel breakdown• If lucky, you discover it first; if not, you discover it at the dawn raid

• Internal audit• Is there an infringement? • What products/services were involved?• Who was involved (i) within the company and (ii) from other

companies?• The company’s role – leader/follower/other?• Duration of infringement?• Is it still going on?

• Effects of behaviour • Where has the behaviour had an impact?• Where does the company have significant sales/presence?

Leniency decision

• Is there exposure to enforcement action?• What type and where?

• Can exposure be mitigated through an immunity/leniency application?• What type and where?• Multijurisdictional assessment on leniency

• Civil damages

• Many other pro/con factors in decision calculus

• It is a major corporate decision that will affect the company and employees for years to come

Multijurisdictional assessment

• For each jurisdiction, a leniency decision depends on many factors including:• Did the behaviour have significant effects in that country?• How aggressive and consistent is enforcement?• The leniency regime itself - what are its requirements, benefits and

burdens, is there a track record (next section)?• Are there criminal sanctions?• What is the likelihood of “follow-on” private damages claims?

• Certain well-established regimes will almost always be considered seriously, e.g.:• USA, Canada, EU (and Member States), Brazil, Mexico, South Africa,

Japan, South Korea, Australia• However, typically up to 50+ jurisdictions will be assessed by

companies and legal advisors

Preparation of immunity/leniency applications

• Internal review of all relevant documentation• Emails, electronic documents, hard-copy documents,

telephone records, expenses etc

• Interviews with relevant individuals

• Preparation of the cartel “story” – the corporate statement• Detailed chronology of events and contacts• Supporting documents

What works in leniency - key aspects

Key aspects of leniency – how to get them coming in

• Clear benefits of the program and end result

• Clear burdens on the applicant

• Transparent procedure and certainty if burdens met

• Track record of success – user confidence

• Model program if possible on the major global regimes/best practices

The honey on the carrot: key procedural points (I)

• Hypothetical procedure – allowing anonymous inquiries

• Threshold for immunity/leniency – lower the better if you want companies to report as quickly as possible upon internal detection

• Use “markers” – report and return with evidence

• Form of evidence to be submitted – oral procedure

• Immediate obligations – e.g. ending infringing behaviour

• On-going obligations – continuing cooperation

The honey on the carrot: key procedural points (II)

• Protections for applicants• Written confirmation of position in queue• Protection of leniency statements from disclosure to civil

damages claimants• Withdrawal of leniency should be rare and difficult to do• Provide protection for cooperating individuals if

corporate disqualifications or criminal sanctions exist

• Seek to harmonise/converge program with major models or at least neighbouring jurisdictions to start

Advertise the carrot, honey, stick…

• Advocacy/education• Educate the local bar• Educate business community• Publicise program, track record of success

• Well-designed and well-run leniency programs inspire and build business community/advisor confidence helping in a major way cartel detection and enforcement

• And successful cartel detection builds public and political confidence in the agency and the benefits of competition law

If you build it well…companies (well advised) will come (even if you didn’t think they would)!

Leniency – a private sector advisor’s viewDave Anderson - Berwin Leighton Paisner LLP, Brussels

Email: David.Anderson@blplaw.com

Sixth United Nations Conference to Review All Aspects of the Set on Competition Policy

Geneva, Switzerland - 9 November 2010