In the EU system of antitrust law, the European Commission and the member states are autonomous in their application of leniency programmes. The soft harmonisation via the European Competition Network’s Model Leniency Programme is not binding on national competition authorities.
Leniency programmes mitigate penalties imposed by competition authorities on participants in anti-competitive arrangements. This involves immunity or reduction of sanctions against an enterprise participating in a cartel in exchange for information about the cartel or evidence leading to punishment of the participants. Such programmes operate at the EU level (in proceedings before the European Commission) and in 26 EU member states, including Poland.
The Polish leniency programme is patterned on the EU programme. It was introduced by an April 2004 amendment and is now based on Art. 113a and following of the Competition and Consumer Protection Act of 16 February 2007. The justification for the most recent amendment of the act stressed how the Polish leniency programme has been influenced by EU law, other jurisdictions, and particularly the European Competition Network Model Leniency Programme.
ECN Model Leniency Programme
The European Competition Network (ECN), a forum for cooperation among competition authorities in the European Union, operates on the basis of Art. 101 and 102 of the Treaty on the Functioning of the European Union and Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty. The ECN was established pursuant to the Joint Statement of the Council and the Commission on the Functioning of the Network of Competition Authorities, issued at the same time as adoption of Regulation 1/2003. The ECN is not a formalised institution. It has no legal personality. All competencies concerning enforcement of TFEU Art. 101 and 102 continue to be vested in the European Commission and the member states. The ECN is only an organisational framework for cooperation among competition authorities pursuant to Regulation 1/2003, as well as a discussion forum for these authorities.
The ECN regards itself as a platform for harmonisation of antitrust law in the EU. One of the most important initiatives of the ECN is the Model Leniency Programme (MLP). According to the ECN, this is a measure for approximating and harmonising leniency programmes in the EU and across the member states.
The MLP was published for the first time in 2006, and a revised version was released in 2012 by the Commission and the member states. In its current form the MLP includes:
- Uniform subject matter covered by leniency programmes (cartels, including hub-and-spoke arrangements where, for example, a common supplier serves as a centre for exchange of information)
- Uniform criteria that need to be met by a leniency applicant in order to obtain complete immunity or a reduction in fines, and for the applicant’s obligations
- General rules for filing of applications and procedures for considering applications
- Rules for “summary” (short-form) applications.
As the Commission announced in 2006 and in connection with the latest revision, the competition authorities of the member states have undertaken to harmonise their national leniency programmes and practices with the MLP. However, the Polish programme, for example, has not yet been fully harmonised with the ECN model.
DHL case before the Court of Justice
The connection with the ECN MLP and the EU and national leniency programmes was addressed in the case of DHL Express (Italy) Srl v Autorità Garante della Concorrenza e del Mercato (C-428/14), resulting in issuance of a judgment by the Court of Justice on 20 January 2016.
The case arose out of leniency applications filed with the Commission and AGCM (the Italian competition authority) in 2007 by DHL and other undertakings.
In June 2007 DHL filed a leniency application with the European Commission seeking immunity from fines concerning infringements of EU competition law in the sector of international freight forwarding services. And in December 2007 DHL informed the Commission of conduct observed in Italy involving international road freight forwarding. In June 2008, the Commission decided to pursue only the part of the cartel concerning international air freight forwarding, leaving the national competition authorities the possibility of pursuing the infringements in relation to sea and road freight forwarding.
DHL took similar steps in Italy. In July 2007, DHL submitted to AGCM a summary application for immunity under the national leniency programme, providing information concerning unlawful conduct in the international freight forwarding and transport market. In June 2008 DHL filed an additional summary application for immunity with AGCM to expressly extend the July 2007 application to cover international road freight forwarding.
The other members of the cartel took similar steps. On 5 November 2007, Deutsche Bahn AG submitted to the Commission (for itself and its group, including Schenker Italiana SpA) a leniency application concerning sea freight forwarding, and on 19 November 2007 a second application concerning road freight forwarding. On 20 November 2007, Agility Logistics Srl submitted to the Commission a summary application for reduction of the fine in relation to infringements on the international freight forwarding and transport market. In December 2007, Schenker submitted a summary application for leniency to AGCM, providing information on road freight forwarding in Italy. And in May 2008, the Agility group submitted a summary application for leniency to AGCM concerning road freight forwarding.
In a decision issued in June 2011, AGCM concluded that several undertakings, including DHL, Schenker and Agility, had taken part in a cartel in the international road freight forwarding sector affecting operations to and from Italy, in breach of TFEU Art. 101. AGCM recognised that Schenker was the first company to have applied for immunity from fines in Italy for road freight forwarding, and no fine was imposed on that company. DHL and Agility were ordered to pay fines, subsequently reduced to 49% and 50% respectively of the initial amounts.
AGCM also found that in its application of July 2007, DHL had requested immunity from fines only for air freight and sea freight forwarding, the application in respect of road freight forwarding having been filed by DHL only in June 2008.
The matter reached the Court of Justice on a request for a preliminary ruling by Italy’s Council of State hearing an appeal by DHL from the judgment of the Regional Administrative Court for Lazio, which had denied the application by DHL to annul the decision of AGCM.
In its appeal, DHL argued that AGCM should have accorded DHL first place in the queue for the national leniency programme and therefore immunity from fines. According to DHL, the principles of EU law require a national authority which receives a summary leniency application to assess it taking into account the main application for immunity which that company submitted to the Commission. Moreover, DHL alleged that the decision failed to comply with the Commission Notice on Cooperation within the Network of Competition Authorities and the ECN MLP, which it claimed are binding on AGCM because it is a national competition authority and a member of ECN.
The Council of State sought a ruling from the Court of Justice primarily on whether:
- National competition authorities may deviate in their own implementation practices from the instruments defined and adopted by the ECN and in particular the ECN MLP
- The national competition authority is required to assess a summary application in compliance with the ECN MLP and in light of the scope of the main application filed with the Commission.
The Court of Justice held that the instruments adopted under the ECN MLP are not binding on national competition authorities. In addition to ruling on issues connected with the hierarchy of the ECN MLP and national leniency programmes, the court held that there is no legal connection between filing of a leniency application with the Commission and a summary application with the national authority concerning the same cartel which would require the national authority to assess the summary application in light of the main application filed with the Commission. The national authority does not have to inquire whether a summary application of a narrower scope than the main application should also include circumstances indicated only in the broader main application filed with the Commission. Moreover, a national authority is not precluded from accepting a summary application for immunity from an undertaking which had not submitted an application for full immunity to the Commission, but only an application for reduction of the fine.
The court thus recognised that there is no hierarchical connection or dependency between the ECN MLP and the leniency programmes implemented by the national competition authorities. The Model Leniency Programme is not legally binding on the member states and the national competition authorities.
Accordingly, the Italian competition authority had no obligation to consider the leniency application filed by DHL with the Commission, or to inquire as to its existence.
The judgment underlines the absence of a “one-stop–shop” rule in EU antitrust law. It also indicates that with respect to the Commission and the competition authorities of the member states, the ECN MLP does not constitute an overriding act and is not formally binding with respect to national leniency programmes.
The ECN is taking steps to limit the negative consequences of the lack of a one-stop–shop rule, which can be burdensome for businesses. Nonetheless, it is still up to undertakings to assess the situation when filing leniency applications. The undertaking must take its own decision on whether it will apply for immunity or reduction of fines for anti-competitive arrangements in all of the member states possibly affected by the practice, as well as applying to the Commission, and must also decide on the scope of the particular applications. The undertaking bears the risk that the applications may not be granted and that different competition authorities may reach different decisions on the applications before them.
Marcin Kulesza, Competition Law Practice, Wardyński & Partners