NMa: leniency scheme also open to those who offer assistance to cartels

As a result of a judgment made on July 8th by the European Court of First Instance, professional services providers that offer their assistance to cartels can also apply for leniency, according to the Netherlands Competition Authority (NMa), because they will be designated as members of a cartel.

The leniency scheme is an important tool for exposing cartels. The scheme offers cartel members the possibility of having their fines reduced if they notify the NMa of the cartel. The possibility of completely escaping the fine is offered to the applicant who is the first one to confess to the existence of a cartel. As members of a cartel, undertakings enter into agreements, for example, on prices or on distribution of the market among themselves. Such agreements are prohibited. Cartels lead to higher prices, lower quality, and they take away the incentive to innovate. All of these effects are harmful to consumers.

The European Court of First Instance rendered judgment on July 8th, 2008, in a cartel case of the European Commission of late 2003. The Commission found five organic-peroxide producers guilty of cartel activities, and it imposed fines on them, totalling approximately €70 million. Dutch multinational AKZO, who was also a member of the cartel, escaped its fine of €240 million, because it was the first one to apply for leniency with the European Commission. AKZO made use of the European leniency scheme.

What makes this case interesting is that the Commission not only fined the cartel members, but also a Swiss undertaking that offered its assistance to the cartel. This undertaking helped the cartel for years by, among other things, keeping incriminating documents of the producers and by booking the flights of the cartel members whenever they would secretly convene. No footprints could thus be found at the producers' locations. The European Commission decided that the Swiss undertaking was also a member of the cartel. However, it imposed a symbolic fine of €1,000, because this was the first time that a party that offered assistance to a cartel was fined. The fine could have been set substantially higher though, as fines can amount to up to ten per cent of an undertaking's global turnover. The Court upheld this approach with the July 8th judgment.

It is actually not that unusual to see professional service providers offer their assistance to cartels. The Commission currently investigates a worldwide cartel case in the market for oil hoses for ships. This case also saw a professional service provider offering organizational assistance to the cartel. This undertaking was given a prison sentence by a UK court for its services to the cartel.

Sentences in cartel cases can be severe. The NMa can also impose hefty fines on the individuals concerned, not just on the undertakings. Cartel members can get their fines reduced by making use of the leniency scheme. Only the first member to come forward may be able to completely escape the fine. Those who offer their assistance to the cartel may thus also be the first ones to come forward.

For more information on the NMa leniency scheme, please visit acm.nl.