On the 20 January 2016, the European Court of Justice (ECJ) handed down its ruling on a preliminary reference made by the Italian Council of State on the relationship between EU and national member state leniency applications for cartel activity.
The matter involved the air freight forwarding cartel, and the legal matters in dispute date back to actions taken in 2007-2008. In June 2007, a member of that cartel, approached both the Italian Competition Authority and the European Commission, seeking a leniency application and immunity from fines. The crucial fact in this matter is that the European Commission accepted the cartel member’s full leniency application and granted them immunity, whilst the Italian Competition Authority considered the application incomplete due to the fact that it only requested leniency for air and shipping freight, but not for road. For this reason, in Italy, the authority did not accept a full application until June 2008, when an additional summary application was made by the company.
All would have been well for the cartel member concerned if they had received full immunity from both the European Commission and the Italian authority. However, another member of the same cartel filed a summary leniency application with the Italian Authority in December 2007 . The Authority considered it as the first full application in 2011 when it concluded its investigation. The end result of this was that whilst the first cartel member was granted its full immunity from the European Commission, it only received a 50% reduction in its fine from the Italian authority, and thus no grant of full immunity.
In Italy, full immunity went instead to the second cartel member who had the good fortune of submitting an application which the Authority considered was full and complete, even though in reality it was the second through the door.
The first cartel member therefore appealed their 50% liability for damages in Italy to the Italian Council of State who submitted the matter to the ECJ. The Council asked the ECJ whether the EU’s leniency programme is binding on the national member state competition authorities? In short, the ECJ considered that the national and EU leniency applications were separate and held that one did not bind the other. This was based on paragraph 38 of the EU Commission’s Network Notice which states that a leniency application for one authority is not binding or considered an application to any other authority. Therefore they are separate and independent. It is perfectly permissible under law for the EU to grant full immunity and a member state to only grant a partial reduction in the overall fine.
Therefore when a cartel member is coming clean, they should make sure they should apply for leniency in every jurisdiction where their anti-competitive actions had effect. The case also shows the importance of expert legal advice in every jurisdiction where leniency is sought. Making the exact same application across the EU will not bind all the competition authorities and the EU to reach the same decision as to the status of the application.