Cartel Whistleblowing: Toward an American Model?
| Published date | 01 March 2002 |
| DOI | 10.1177/1023263X0200900105 |
| Author | Alan Riley |
| Date | 01 March 2002 |
| Subject Matter | Article |
Alan Riley∗
9 MJ 1 (2002) 67
Cartel Whistleblowing: Toward an American Model?
§ 1. Introduction
In August 1993 the Antitrust Division of the US Justice Department adopted a new
Corporate Leniency Programme (CLP).1 It differed considerably from the previous leniency
programme in providing a high degree of transparency and certainty. The first member of a
cartel to provide evidence would be granted amnesty from all US prosecutions, particularly,
no criminal fines and no gaol sentences could be imposed. The new CLP has been a
staggering success. Currently CLP applications are running at two per month. CLP
applications have also provided key evidence in the Vitamins case. A case which First has
described as ‘probably the most economically damaging cartel ever prosecuted under US
antitrust law’.2 In that case the Antitrust Division obtained the highest fines against an
undertaking in the 111- year history of the Sherman Act, $500 million from F. Hoffman La
Roche.
Not surprisingly this US success has attracted considerable interest from antitrust authorities
across the globe. Leniency programmes have been adopted or are about to be adopted in
Ireland,3 Canada, the United Kingdom, Germany, Sweden, France and in the European
Community.4 Some of these programmes, particularly the Canadian and UK programmes,
closely follow the US model. Others such as the German and the 1996 EC Leniency Notices
* Butterworths Tolley Research Fellow, Centre for Legal Research, Nottingham Law School.
1. Corporate Leniency Programme (hereafter CLP) notice of August 10 1993, see
2. First, ‘The Vitamins Case: Cartel Prosecutions and the Coming of International Competition Law’, 68
Antitrust Law Journal 3 (2001) 711, 712.
3. Irish Competition Authority, Proposed Options for a Cartel Immunity Programme, (February 2001).
Available from the authority website at .
4. OECD, Report on Leniency Programmes to Fight Hard Core Cartels, (Paris, 2001), 2. This paper uses the
term ‘leniency’ in the way recommended by the authors of the OECD paper to describe programmes that
provide any reduction in sanction in exchange for information. The terms amnesty or immunity will be used
where there is a complete lifting of all regulatory or criminal sanctions.
Cartel Whistleblowing: Toward an American Model?
68 9 MJ 1 (2002)
(hereafter the 1996 Notice)5 are less generous in what they offer and less certain and
transparent. It is argued below that the lack of benefit to potential applicants, lack of
certainty and transparency in the 1996 Notice, notwithstanding the differences in procedures
and penalties between the Community and US antitrust laws, significantly undermines its
effectiveness. Recently the European Commission published a new notice which represents a
radical break with the 1996 Notice. The Commission Notice on Immunity from fines and
reduction of fines in cartel cases6 (hereafter the Valentines Day Notice, or VDN)7 in
particular provides for immunity even after investigations have commenced; provides a
conditional guarantee of immunity upfront and abolishes the decisive evidence test. The
Valentines Day Notice does deal with many of the criticisms levelled at the 1996 Notice.
However, a number of issues of concern remain, including prosecution and citation of
immunity applicants, and focus on documentary evidence, which is likely to undermine the
effectiveness of the VDN. It is argued that the European Commission should amend its
leniency programme directly along US lines. Furthermore, it is contended that the proposed
replacement of Regulation 17/1962,8 provides an opportunity to include additional
provisions which will enhance the operation of the newly adopted VDN.
This paper is divided into seven sections. Part two discusses the US model. It first outlines
the US model itself and then assesses its impact. Part three provides a similar outline and
impact assessment for the 1996 Notice. Part four provides an overall assessment of the
Commission’s approach to leniency to date compared with the American model. Part five
examines the Valentines Day Notice and part six, raises concerns as to how the Commission
procedures fit with the evidence generated from leniency applications and the impact of
decentralization. Part seven offers a conclusion and considers the future development of
leniency programmes, principally the development of multi-state applications.
§ 2. The US Model
A. THE CORPORATE LENIENCY PROGRAMME9
Under the CLP, leniency is defined as not charging an undertaking criminally, the most
significant effect of which is that the undertaking is not required to pay heavy criminal fines
to the Antitrust Division of the US Justice Department. Where a leniency application has
been made under Part A of the CLP, leniency is also extended to all directors, officers and
5. Commission Notice on the Non-Imposition or Reduction of Fines in Cartel Cases, [1996] O.J. C207/4
(hereafter the 1996 Notice).
6. [2002] O.J. C45/3, 19 February 2002.
7. The Notice will inevitably be dubbed the ‘Valentines Day Notice’ as point 28 of the VDN expressly provides
for it to come into effect on 14 February 2002.
8. For a discussion of the modernization programme see Ehlermann, ‘The Modernisation of EC Antitrust Policy:
A Legal and Cultural Revolution’, 37 Common Market Law Review 3 (2000), 537 and Proposal for a Council
Regulation on the implementation of the rules on competition laid down in Articles 81 and 82 of the EC
Treaty, COM (2000) 582 final, (the latter hereafter the Draft Regulation).
9. CLP.
Alan Riley
9 MJ 1 (2002) 69
employees of the undertaking who admit their involvement in the illegal antitrust activity as
part of the corporate confession. The most important effects of leniency for corporate
officers is that they will not face individual criminal fines, nor gaol sentences. Leniency
applications made under Part B are treated slightly different. With such applications the
Division takes the view that the directors, officers and employees who come forward with
their undertaking will be considered for leniency from criminal prosecution on the same
basis as if they had approached the Division individually,10 in return the applicant
undertaking reports illegal antitrust activity. The programme then sets out alternative sets of
conditions under which leniency is made available.
1. Leniency Before an Investigation has Begun
Leniency will be granted to a corporation reporting illegal activity before an investigation
has begun, if the following six conditions are met:
1. At the time the corporation comes forward to report the illegal activity, the Division has
not received information about the illegal activity being reported from any other source;
2. The corporation, upon its discovery of the illegal activity being reported, took prompt
and effective action to terminate its part in the activity;
3. The corporation reports the wrongdoing with candour and completeness and provides
full, continuing and complete co-operation to the Division throughout the investigation;
4. The confession of wrongdoing is truly a corporate act, as opposed to isolated confessions
of individual executives or officials;
5. Where possible, the corporation makes restitution to injured parties;
6. The corporation did not coerce another party to participate in the illegal activity and
clearly was not the leader in, or originator of, the activity.
10. See Part C of the CLP. Leniency extended to individuals under the CLP is distinct from individual leniency
granted under the 1994 Leniency Policy for Individuals notice. This latter notice only applies to individuals
who approach the Division on their own behalf, not as part of the corporate proffer or confession. Notice of
August 10 1994, .
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