March 30, 2006
A few days ago, the German Federal Cartel Office ("FCO") published on its website an informal notice in which it detailed its willingness and ability to accept anonymous whistleblower information under its new Leniency Program. This notice provides a "manual" for anonymous whistleblowers, primarily setting out the minimum requirements for anonymous information. The notice comes shortly after the FCO published its new Leniency Program which replaces the previous regulation from 2000.
Since 2000, the FCO has operated a Leniency Program which was first applied to a cartel in the paper industry in 2002. While the old regime lagged somewhat behind the EC Commission’s Leniency Program (e.g., full immunity for the first whistleblower was at the FCO’s discretion), the German legislator expressly authorized the FCO last year to issue a new program with which Germany will be catching up with European standards.
The new Leniency Program contains the following novel features:
The first whistleblower to come forward and cooperate with the FCO – enabling the FCO to obtain a search warrant on the other cartel members – can automatically rely on obtaining immunity from fines (this is assured to him in writing);
Even after a dawn raid has been conducted, a cartel member can still obtain full immunity from fines, provided he is the first to cooperate with the FCO and he submits evidence to prove an offence;
The other cartel members who have lost the race for the first place (i.e., the second or third whistleblowers) can have their fines reduced by up to 50 percent (again, the time of the announcement of intent to cooperate is decisive for the level of reduction of the fines);
As a new rule in the race for first place, the FCO will apply a so-called "marker system"; whoever would like to cooperate with the FCO can place a "marker" (even verbally) by providing a necessary minimum of information about the cartel. The marker assures the applicant his status as first applicant if he provides necessary additional information within a maximum period of eight weeks.
The launch of the new Leniency Program is only the latest step in a range of innovations in the FCO’s vigorously intensified fight against cartels. After having formed a special unit for the combat against cartels (especially equipped for rapid dawn raids, e.g., with IT specialists, etc.), a drastic increase of the maximum fines for cartel participants (up to 10 percent of the worldwide annual turnover) and the facilitation of private antitrust enforcement, the brand-new Leniency Program and the newly introduced possibility of anonymous hints is expected to uncover a large number of hitherto "safe" cartels. Taken together, these innovations will have dramatic effects on antitrust enforcement and private antitrust litigation in Germany and throughout Europe.
Consequently, the FCO President Dr Böge stated: “In the last few years, the Leniency Program has become an important instrument in the fight against illegal agreements between competitors about prices, sales quotas and market sharing. With the new version, we intend to build on the experience we have gained in the last few years and make the Leniency Program even more effective.”
English language copies of the FCO’s Notice on the new Leniency Program can be downloaded from the FCO’s website at http://www.bundeskartellamt.de/wEnglisch/
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, or
© 2006 Gibson, Dunn & Crutcher LLP
The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.