The enforcement of competition law in the EU has traditionally been considered to rely on public enforcement having the leniency programme as its main tool for discovering cartels. Preserving the status of this primary enforcement tool has not been a simple process. The conflict between the interests of the leniency programme and private enforcement that materialized in Pfleiderer (C-360/09) and EnBW (C-365/12P) was perhaps the biggest challenge and required a new directive on actions for damages (2014/104/EU) in order to be resolved. The recent case of DHL (C-428/14) is yet another hurdle that the leniency programme will face, only this time it is the procedural incoherency of the leniency programme itself that stands in the way of its own effectiveness. The case of DHL underlines the consequences of a lack of clear hierarchy and a legal link between leniency applications submitted by cartel participants to the Commission and to the national competition authority (NCA) that it almost seems scripted.
In this case, DHL has submitted an application for immunity from fines due to infringements of EU competition law in the international freight forwarding sector to both the Commission and the Italian competition authority (AGCM). In the timeline of submissions, DHL was the first to submit its application to both the Commission and to the AGCM. The Commission granted DHL conditional immunity for the infringements covered by the initial submission in the international freight-forwarding sector. The investigation also included possible infringements in the road freight-forwarding sector, which the Commission decided to leave to the NCAs to pursue. The initial submission of DHL did not, however, cover infringements in road freight forwarding; this information was submitted by DHL at a later date to both the Commission (20 December 2007) and to the AGCM (23 June 2008). Between the initial and the supplementary submissions of DHL, the additional parties to the infringements, Schenker and Agility, also submitted applications for immunity and reduction of fines to the Commission (November 2007) and the AGCM (December 2007 and May 2008 respectively). These submissions did cover the road freight forwarding sector. On 18 November 2009, the AGCM opened a procedure concerning possible infringements of Article 101 TFEU in the international freight transport sector, where DHL, Schenker and Agility were found to have breached Article 101 TFEU by taking part in a cartel in the international road freight forwarding sector, affecting operations to and from Italy. In its decision, the AGCM concluded that DHL only requested immunity for road freight forwarding on 23 June 2008, and therefore was not eligible to receive full immunity but only a reduction in the fines of 49%. DHL’s summary application of 12 July 2007 and its application to the Commission were considered to be separate from the application of 23 June 2008, meaning that DHL was not the first in line to be able to receive immunity.
DHL contested this decision before the Italian Council of State, claiming that the decision of the AGCM should be annulled. The Italian court then referred the following questions to the Court of Justice: (i) Is the ECN model for the leniency programme binding on NCAs? (ii) Is there a legal link between the leniency application submitted to the Commission and that of the NCA as well as an obligation for the NCA to inquire into the content of the leniency application in case the submissions made to the Commission and the NCA do not cover the same scope of infringements? (iii) Whether EU law must be interpreted as meaning that - where a first undertaking has submitted an application for immunity to the Commission - only that undertaking may submit a summary application to a national competition authority or if other undertakings, which had previously submitted an application for a reduction of the fine to the Commission, are also entitled to do so?
The replies of the Court to the posted questions present the problematic nature of the current system in a step-by-step manner where every answer reveals an additional problematic aspect to the current system of leniency programmes in the EU.
In the matter of the first question, the Court found that neither the Commission’s Leniency Notice nor the ECN model for leniency programmes create any legal obligations for the NCAs. The findings are confirmed by earlier findings of the Court in Pfleiderer and the charter of the ECN model, which is intended to serve as a guiding model rather than as a binding one. Consequently, as the ECN does not create a harmonised leniency model across the EU, and in the absence of other legislation intended to provide such harmonisation, each NCA can make its own individual assessment of applications based on its own rules of procedure. The autonomy of the NCA is only limited to the extent that such assessment procedures may not be put into practice in a manner that might undermine the effective application of EU law. Accordingly the findings of the Court, while not new, stress yet again the problematic nature of a discordant system of competition law enforcement, as was the case of private enforcement in the Pfleiderer case. Similar to the Pfleiderer case, the autonomy of the national systems leads to legal uncertainty for the applicants as they may face multiple procedural requirements across the NCA they choose to approach.
In the matter of the second question, the court found that in light of the first paragraph of the ECN model stating that applicants should apply to all the competition authorities that have competence to apply Article 101 TFEU in their case, there is no legal link between submissions made to different competition authorities. According to the Court, the ECN is intended to serve as a non-binding cooperation network where each competition authority preserves its own autonomy. Therefore, accepting that a legal link exists between the initial and summary applications and that competition authorities that receive summary applications must take further steps in cases where the initial and summary applications do not cover the same information is not possible. Accepting such a link and obligation on behalf of NCAs would imply a certain hierarchy between the applications and a limitation of the autonomy NCAs have in the context of the current legal system. Furthermore, an obligation for the NCA to actively seek additional information in case of incoherence between multiple submissions would also relieve the undertaking that applies for immunity from some of its duties to fully cooperate with in the course of the process. This position is also shared by AG Whatelet (C-428/14 AG).
The absence of a legal link or hierarchy between the leniency application submitted to the Commission and across the NCAs of the Member States is further stressed by the findings of the Court with regard to the third question. Accordingly, the Court found that it is possible for a cartel participant to be the first applicant for immunity at the national level despite it not being eligible for immunity under the leniency procedure at the Commission. According to the Court this possibility has the potential to increase the amount of submissions and as such improve cartel discovery and enforcement.
At this stage, the findings of the Court expose the weaknesses in the system more clearly. The lack of hierarchy between applications, especially in terms of time and the absence of a legal link between the applications, substantially reduces the attractiveness of the procedure. It is evident that the quick solution for this problem would be that undertakings submit their application to every competition authority including the Commission that might be relevant to their case. Furthermore, undertakings will also have to ensure that all the applications are as comprehensive as possible to avoid situations such as DHL encountered in this case. Although this option will solve situations such as the one previously outlined, filling such a multi-jurisdictional leniency application in a perfectly coordinated manner will have a deterrent effect on the undertakings concerned. In future cases, the undertakings that are interested in blowing the whistle will only do so when they are capable of doing multiple fillings at once. Furthermore, making a multi-jurisdictional application for leniency will likely involve substantial legal costs. At the same time, making a partial, less expensive submission does not cover all the relevant competition authorities and will be unattractive as the applicant may face a full fine if the case is taken up by the NCA or the Commission and is not the first in line. Therefore, while multiple applications can be beneficial for detecting and enforcing cartels, the possibility of such parallel applications might reduce the willingness of undertakings to make use of the leniency programme in the first place.
In light of the procedural weakness of the leniency programme in the context of EU competition law seen in this case, it might be a good time to consider the possibility that a minimal form of harmonisation as in the case of private enforcement, may be required to maintain the effectiveness of this means of enforcement.