NMa puts more work into leniency scheme

Today, the Netherlands Competition Authority (NMa) released a special, instructional video about its leniency scheme, which is an important weapon in fighting cartels. The video's objective is to raise awareness of this scheme, both among professionals and undertakings, as well as the public at large. Participants in the scheme may be granted a reduction in fines, or they can even entirely escape the fine, as long as they confess their involvement in the cartel to the NMa in a timely manner, and as long as they provide information to help track down the cartel. 'Withdrawing from a cartel in this way sometimes is a difficult but wise decision for violators. However, time is money – in this case literally. Therefore, we sometimes see in practice that the winner of the race for leniency is determined by a photo finish,' chairman of the Board of the NMa Pieter Kalbfleisch says.

Across the globe, leniency programs significantly contribute to tracking down and terminating cartels. Since the expansion of the NMa's powers in October 2007, the NMa is not only able to fine companies for cartel participation, but the NMa can now fine contracting authorities as well, and it can also personally fine those who de facto coordinated or managed cartel activities. As a result, the leniency scheme was expanded accordingly too, and it will consequently have an even more destabilizing effect on cartels than before. The past few months have seen an increase in the number of leniency applications. The NMa believes it is essential to be as transparent as possible in the Netherlands about its leniency scheme, and it uses several means to this end. The instructional video illustrates how the leniency scheme works in practice. Accompanied by a special brochure, it was presented today for the first time at the annual Market and Competition conference. Professionals and intermediaries who deal with competition issues, such as lawyers, corporate lawyers and trade organizations, can use these information tools in their advice to clients or members.

Race against the clock
A leniency program is an effective tool, since only the first applicant for leniency is eligible for completely escaping the fines (immunity – complete reduction of the fines). As a result, a sort of 'leniency race' is held: if one of the other cartel members beat you to it, you will end up in a lower leniency category (meaning partial reduction of the fines) or you might even miss out on leniency altogether (no reduction of the fines). Furthermore, the number of potential participants per race per cartel has increased because of the NMa's new powers and the NMa's new leniency guidelines: in addition to companies, individuals are now also eligible for first place in the queue. The reason behind the leniency scheme's success is that the NMa adopts a 'zero-tolerance policy' with maximum deterrence against cartels. The odds of getting caught for cartel activities are becoming increasingly short, and cartel participants run a serious risk of being fined and having their reputation damaged.

Cartels put consumers at a disadvantage
A cartel agreement is an agreement between companies that impedes, limits or distorts competition, which is in violation of the Dutch Competition Act. This is the case, for example, when competitors make mutual agreements with regard to prices or to a distribution of the market. This conduct is very damaging to the Dutch economy, as it prevents, among others, other undertakings to enter a market. Fair competition is also important as it stimulates undertakings to put more effort into developing more and better products and services. Competition also has significant benefits to consumers: competition generally leads to more freedom of choice, higher quality, and to lower prices.

Tracking down cartels
The NMa gets its leads on violations of the prohibition of cartels from, for example, complaints from disadvantaged parties, the NMa's own market investigations, indications that the NMa receives from market parties, indications from the media, and from conversations with experts. Information is also exchanged between the NMa and other regulators, both on the national level, such as with the Dutch Fiscal Information and Investigation Service/Economic Investigation Service (FIOD/ECD) and on an international level, such as with other European competition authorities. The leniency scheme has also proven to be a valuable tool for the NMa's work in tracking down cartels in various industries.

Would you like to have more information?
The instructional video can be viewed online on the NMa's website https://www.acm.nl, where it can also be ordered free of charge. The complete text of the Leniency Guidelines can also be found online.