Leniency application

2012 CLD 1486 COMPETITION COMMISSION OF PAKISTAN Judicial Precedent

Reglns. 3, 4 & 5Competition Act (XIX of 2010), S.4Leniency applicationBenefits of leniency policyScopeApplicant claimed leniency under Regulations 3 & 4(1) of Competition (Leniency) Regulations, 2007

Regulation 3 of the Regulations empowered the Competition Commission to grant total immunity from financial penalties, whereas under Regulation 4, the Commission would grant reduction in the amount of penalty up to 100%

Total immunity under Regulation 3(1)(i) of Competition (Leniency) Regulations, 2007, was available, if the undertaking was the first to provide the Commission with "evidence of prohibited activity"

Stipulation laid down in Regulation 3(1)(i), was that the undertaking was the first to uncover the prohibited activity

Regulation 4 of Competition (Leniency) Regulations, 2007, manifested that reduction in penalty was available to an undertaking which would come forward before or after the issuance of show-cause notice and submitted corroborative evidence to strengthen the enquiry or proceedings undertaken by the Commission

Level of reduction in penalty would be determined based on stage at which the undertaking would come forward and the quality of evidence

While the objective of both Regulations (3 & 4) was to give incentive to a cartel participant for busting the cartel, their application was different in terms of enforcement of Competition Law

Regulation 3 would operate as an effective tool to investigate by offering incentives to uncover the conspiracy and come forward to admit and implicate conspirators and collect evidence more quickly and at a lower cost

Regulation 4 would operate as an encouragement for parties to break ranks with the cartel members even after the relation was found out or established

Leniency Policy had four basic benefits; (i) deterrence-making cartel membership less attractive; (ii) detection-prompting the discovery of cartels; (iii) desistence-causing cartels to cease operation and (iv) sanctioning-making punishment of conspirators more likely

Said objectives were achieved through the incentives of grant of immunity or reduction in financial penalty

Leniency, seemed to be the single most important tool to be used by Competition agencies to improve cartel detection and to strengthen their proceedings against the cartel members

Whether the applicant was entitled to total immunity from penalty under Regln. 3 or qualified for reduction in penalty up to 100% had to be assessed based on the stage of the proceedings, nature and quality of evidence that the Commission already had in possession; and further provided by the applicant, and the peculiar facts and circumstances of the case

Applicant in the present case, had admitted unconditionally the infringement as alleged against it in the show-cause notice issued to it; and had given the undertaking and commitment that it had abandoned its participation in prohibited activity

Applicant had assured to have made full and true disclosure

Applicant had not been coerced for any undertaking not to take part in any activity prohibited under Competition Act, 2007

All the conditions required to entertain the claim under Regulations had been satisfied

Applicant was entitled for immunity from future proceedings that would be initiated in respect of new prohibited activity

Immunity was granted to the applicant from penalty with respect to price fixing, subject to compliance with the Regulation 3(a) to (d) of Competition (Leniency) Regulations, 2007

Applicant having made full and true disclosure, continuous co-operation and undertaking to refrain from participation in any prohibited activity, his application was granted and he was given 100% reduction in penalty.