“No legal link” between whistleblower applications to the EU and National Competition Authorities, ECJ rules

​28 National Competition Authorities need not assess a summary application in light of any wider immunity or leniency application to the European Commission.

In brief

On 20 January 2016, the Court of Justice of the European Union (ECJ) ruled that there is no legal link between leniency applications submitted to the European Commission and summary applications submitted to national competition authorities in relation to the same cartel.

The ECJ ruling underlines the importance of a prospective leniency applicant formulating its summary application to national authorities widely when it applies to the European Commission for leniency to ensure that all aspects of its behaviour are caught.

In detail

The leniency applications

On 05 June 2007, DHL Express (Italy) Srl and DHL Global Forwarding (Italy) Srl (together DHL) applied to the Commission for immunity from fines for their role in the international freight forwarding cartel relating to air, shipping and road. On 12 June 2007, DHL submitted a summary leniency application to the Italian competition authority in relation to the cartel conduct.

DHL was granted conditional immunity by the Commission for its role in the cartel in September 2007. Deutsche Bahn AG lodged a leniency application with the Commission (for itself and its subsidiary Schenker) in November 2007.

In December 2007, DHL submitted further information to the Commission relating to the behaviour of other undertakings active in forwarding freight cross border from Italy by road. The Italian Competition Authority considered that DHL’s summary application did not cover the international freight forwarding sector by means of road. Although DHL disagreed, it lodged an additional summary leniency application with the Italian Competition Authority in June 2008. In the meantime, Deutsche Bahn AG had submitted a leniency application to the Italian Competition Authority (for itself and its subsidiary Schenker).

The Commission eventually decided to pursue its cartel case only in relation to international freight forwarding by air and issued a fining decision in March 2012. Deutsche Post (including its subsidiaries Exel and DHL) received total immunity from fines for the four cartels covered by the Commission’s decision. Deutsche Bahn received a reduction in fine for its cooperation.

In the Italian Competition Authority’s fining decision, Schenker was recognised as the immunity applicant and did not receive any fines while DHL was only granted a 50% reduction in fine. DHL appealed the Italian decision, first to the Administrative Tribunal of Latium and then to the Italian Council of State. The Italian Council sought guidance from the ECJ under the preliminary reference procedure on three issues.

ECJ ruling

Autonomy of national leniency programmes

The key question was whether there was a legal link between an immunity application submitted to the Commission and a summary application submitted to a National Competition Authority (NCA) in respect of the same cartel.

The ECJ held that NCAs can adopt any leniency programme they choose and each of those programmes is autonomous, not only in respect of other national programmes, but also in respect of the Commission’s leniency programme. A legal link between an immunity application submitted to the Commission and a summary application submitted to an NCA would call into question the autonomy of the various applications and, consequently, the rationale behind the system of summary applications.

There is no EU law provision that requires an NCA to assess a summary application in the light of an immunity application to the Commission in respect of the same cartel. Nor, where the summary application is more limited in scope than that to the Commission, is the NCA required to contact the Commission or undertaking itself to obtain information on the parallel immunity application to the Commission. In such a case, the NCA also does not have to obtain specific examples from the undertaking of unlawful conduct in the sector allegedly covered by the application. Such an obligation on NCAs would diminish the leniency applicant’s duty to co-operate, which is one of the pillars of any leniency programme, as Advocate General Wathelet pointed out in his Opinion.

The ECJ also confirmed that measures adopted under the ECN Model Leniency Programme were not binding on NCAs. This is the case despite the fact that the authorities play a judicial or administrative role. The ECN Model Leniency Programme and the Commission's Notice on co-operation within the network of competition authorities have already been held by the ECJ not to be binding on Member States (in Pfleiderer). Indeed, they were published in the "C" series of the Official Journal, which is not intended for the publication of legally binding measures. In the absence of a centralised EU system for the receipt and assessment of cartel leniency applications, the treatment of a leniency application is determined by the NCA under the national law of the Member State in question.

Following on from this, the ECJ concluded that an NCA is not prevented from accepting a summary application for 100% immunity from an undertaking which has only submitted an application for a reduction in fine to the Commission. Given the non-binding nature of the instruments adopted in the context of the ECN, NCAs are free to adopt leniency programmes that diverge from the ECN Model Leniency Programme, provided that this does not jeopardise the effective application of Articles 101 and 102 TFEU. In fact, such an approach promotes the uncovering of conduct contrary to Article 101 TFEU by encouraging cartelists to report cartels, as a cartelist could still obtain immunity from an NCA if it is the first to bring the cartel to an NCA’s attention on the basis of a summary application. This is the case even if it has not submitted an immunity application to the Commission.

Conclusion

The judgment confirms that the burden rests squarely on a cooperating undertaking to coordinate its various immunity or leniency applications. It also demonstrates that summary applications to NCAs should be drafted very broadly and reflect any application to the Commission (or other NCAs) so as to maximise the chances of gaining immunity/leniency. This will require a level of strategic planning and time investment by the cooperating undertaking as well as flawless execution in terms of the timing of the submission of leniency applications across different jurisdictions in the EU. It remains to be seen whether or not this will decrease the incentive for whistleblowers to come forward and/or lead to any changes in the leniency programmes of NCAs or the ECN.

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