Academic Note: Leniency Programme & Bid-Rigging Flashcards
(19 cards)
What is a Leniency Programme?
A leniency programme is a legal framework that encourages companies involved in cartels or anti-competitive practices to self-report their wrongdoing in exchange for reduced penalties or immunity.
EC has operated LP since 1996 (Commission Notice 96/c 207/04) and was revised in 2002 and 2006.
Why were they created?
To: Deter Cartel Formation
Discover “secret cartels”
Destablise current cartels
How does immunity work?
The first member to inform of cartel and provide sufficient info will receive total immunity, while other companies to provide “significantly added value” may receive discounted fines. (2006 revision)
Why have Leniency Application declined worldwide?
It is theorised this is because of the Damages Directive 2014, as this made it easier for 3rd parties to sue once a cartel is discovered, there is legal uncertainty.
Damages Directive 2014 effect: 400 application in 2015 to 150 in 2020 in OECD countries.
A reduction in fines may be obsolete compared to potential lawsuit.
What is Irelands Administrative Leniency Programme?
It was introduced in September 2023, with similar immunity rules to EC LP, except companies after the first can get up to a 50% reduction in fines depending on the value of their information.
Includes offences such as price-fixing, bid-rigging and resale price maintenance agreements.
How does it interact with other programmes?
It operates in tandem with the Cartel Immunity Program or CIP which was previously in place. As companies can apply for leniency under both.
In some cases may need to apply to both ALP and EC for leniency, although ALP is mostly in a national context.
What changes did the ALP introduce?
It reduced the evidentiary burden and offer incentives, with the aim of increasing leniency applications.
It also empowers NCA’s and NRA’s such as Comreg and CCPC with fining and investigative powers.
What are the fining powers granted under the ALP?
Include fining up to 10 million or 10% of worldwide turnover.
Also, periodic payments for non-compliance with requirements of the act (up to 5% of average daily worldwide turnover in preceding year)
Criminal fines for cartel offences up to 50 million euro or 20% of turnover (preceding year)
CCPC can only only fine undertakings, not individuals.
What are the investigative powers granted?
Dawn Raids
Surveillance
Communication Interception
Adjudication Officers (HC JUDGEPOWERS)
Prohibition Notices (mandate measures to remedy infringments)
ALP Concerns
Fears as DPP decides upon prosecution and could result in similar effect that the damages directive had due to legal uncertainty.
Home Heating Oil Example
(2001-2012) price-fixing case
spanned over a decade due to poor investigative powers and proof “beyond reasonable doubt”, with no incentives.
demonstrated the inefficiencies of the system before the ALP.
ALP application
No cases have applied ALP yet but its introduction under the Competition (Amendment) Act 2022 could still prove to be successful.
Bid-Rigging Offence
Competition (Amendment) Act 2022
S4 Amendment Act 2022 “participation or non-participation in a relevant bidding process without informing the person requesting the bids or tenders.”
Types of bid-rigging
Can be participation or non-participation
Agreement not to submit or withdraw a bid (bid suppression)
agreement to submit a bid on terms agreed with another bidder e.g agreement to make an uncompetitive bid so other party wins (complementary bidding)
co-ordinated efforts among bidders to manipulate the bidding process (collusive tendering)
Why is bid rigging bad?
Undermines open market competition and can result in inflated prices, lower quality and restricted innovation, restricting the goals of competition law..
How can it be stopped?
The CCPC can use the fining measures and investigative powers outlined in the Competition (Amendment) Act 2022.
OECD Organisation for economic co-operation and development have aided countries in Eu with fighting bid rigging in public procurement.
Bid Rigging Examples
Bus Contracts Tipperary: Criminal proceedings were brought against 13 defendants accused of bid-rigging in publicly funded school bus contracts in Co. Tipperary.
The Competition and Consumer Protection Commission (CCPC) and Gardaí conducted dawn raids in 2017, leading to a detailed investigation
Aston Carpets: 2017, flooring company, price fixing and market sharing by over bidding on alternating tenders.
Why is it important that it is now an offence?
Wasnt an explicit offence before 2022.
Helps ireland to align with best practice in EU and OECD.
