The end of the EU cartel leniency programme

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

A recent European Court of Justice ruling is a potential blow to a key programme protecting anti-cartel whistle-blowers in the European Commission's competition department, argues Andreas Geiger of Brussels law firm Alber & Geiger.

Dr. Andreas Geiger is managing partner of Alber & Geiger, a leading EU government relations law firm in Brussels.

"The ECJ [European Court of Justice] ruled on 14 June concerning the interpretation of Articles 11 and 12 of Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 101 TFEU and 102 TFEU.

The European Court of Justice decided that the provisions of European Union law on cartels must be interpreted as not precluding a person who has been adversely affected by an infringement of European Union competition law and is seeking to obtain damages from being granted access to documents relating to a leniency procedure involving the perpetrator of that infringement.

In other words: as a company you should not rely any more [on that fact] that what you disclosed to the antitrust authorities about a cartel in secrecy [will stay] secret. On the contrary: the ones you cheated […] all those years might get access to the cartel file and sue you based upon exactly the information which you disclosed yourself.

According to the ECJ, it is further up to the national courts of the member states, on the basis of their national law, to determine the conditions under which such access must be permitted or refused by weighing the interests protected by European Union law.

This means that the ECJ has not taken any decision at all. It has avoided solving the problem by kicking the ball back into the national field. The factual result of this judgement is sheer nonsense and could prove to be a catastrophe for the antitrust authorities' future work. It simply means that every European court from Palermo to Hamburg can decide differently whether your secret is safe or not.

Here are some facts: the background of this ruling was an application by Pfleiderer, a purchaser of decor paper, to the Bundeskartellamt (German cartel office) on 26 February 2008, seeking full access to the file relating to the imposition of cartel fines in the decor paper sector. The idea: preparing civil actions for damages against the cartel members. Pfleiderer had purchased goods with a value in excess of EUR 60 million over the previous three years from this cartel of manufacturers of decor paper disclosed by the cartel office.

The cartel office denied Pfleiderer access to the cartel files, saying that they could only crack the cartel case because of having a key witness company disclosing all the info to them. Using these files in a civil court case would endanger finding key witnesses in all future cases.

The national court, however, wanted to grant the access. But since the German leniency programme is based on Council Regulation (EC) No. 1/2003, the German court referred the case to the ECJ.

Why the ECJ didn't have [the] guts to decide the case itself is hard to understand. It has given the chance away to set an EU-wide standard. One could say: 'So what?' After all also the key witness caused the cartel and what he gets in exchange is being [safe from] facing antitrust prosecution based on this information.

Furthermore, neither the provisions of the TFEU on competition nor Regulation No. 1/2003 lay down common rules on leniency or common rules on the right of access to documents relating to a leniency procedure which have been voluntarily submitted to a national competition authority pursuant to a national leniency programme.

But isn't the sense of a leniency programme that we let the key witness off the hook in exchange for disclosing felonies or other severe violations of the law and to protect major principles of our legal system? Of course there is always a bad feeling about these key witnesses that seem to 'buy themselves free'.

But this ECJ decision doesn't solve a problem. It rather creates new ones. Which company will be so stupid to put itself in danger by going voluntarily to a cartel office when this means digging your own grave in civil damage claims? But hardcore cartels can't be disclosed without a functioning key witness programme.

That the ECJ could have gone down another road is obvious. Already the opinion of Advocate General Mazak shows that. He came to the conclusion that at least the self-incriminating statements voluntarily provided by leniency applicants should be left out due to the effectiveness of the authority's leniency programme and the effective enforcement of Article 101 TFEU by the authority.

He states that although the denial of such access may create obstacles to or hinder to some extent an allegedly injured party's fundamental right to an effective remedy and a fair trial, the interference with that right is justified by the legitimate goal of ensuring the effective cartel ban by national competition authorities.

But it seems the attorneys in this case have failed to provide the ECJ with a constructive solution that could be adopted. So the ECJ preferred to say: 'Why me?' Which shows again that ECJ litigation is an art of itself and companies can run into major trouble if they leave it to their standard lawyers.

Now, what comes next? With this ECJ decision the Commission and the Council are under pressure. If they want to keep an effective enforcement of Article 101 TFEU they have to find a way of redrafting Council Regulation (EC) No. 1/2003 accordingly. A lot of lobbying ahead."

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