How Lenient Should A Leniency Programme Be? A Second Chance For Recidivists

Although the Office for Competition and Consumer Protection (OCCP) states that there shall be no mercy for competition law offenders, recidivists will be granted immunity from a fine if they file for leniency.

Draconian fines

At the end of last year the OCCP took an unprecedented decision about the amount of fines imposed. After years of investigation that started in 2006, the authority found seven Polish cement producers guilty of having been involved in an illegal market sharing and price fixing cartel for over 11 years. The fines imposed totalled ca EUR 100 mln; individual fines were capped at 10% of the respective undertaking's turnover. It was the highest fine ever imposed by the Polish competition watchdog. Pursuant to the leniency regulation, the authority granted full immunity from any fine to one of the seven cartel members, who had been the first to disclose its participation in the cartel. Another received a 50% reduction.

The decision in the Tikkurila case, issued in May 2010, was also remarkable. Several companies were found to have engaged in a resale price maintenance scheme regarding the prices of paints and coatings. They were fined a total of ca EUR 10 mln. Again, one of the offenders applied for leniency and received full immunity, while another implicated undertaking was granted a 50% reduction.

Not only the amount of fines imposed by the OCCP in 2010 is impressive but also the number of culprits. In the Sniezka case, the OCCP penalised Sniezka, a manufacturer of paints and varnishes, and 55 of its distributors. In the Gerda case, fines were imposed on 45 distributors and Gerda, the manufacturer.

The leniency programme: Success or failure?

The large number of cases and significant fines have made the leniency application popular amongst entrepreneurs. Since the adoption of the first leniency law in 2004 until the end of 2009, 19 leniency applications have been lodged. After a rather slow start in 2004–2006, the number of leniency applicants reached its peak in 2007 when companies applied for leniency six times. The number of leniency applications in 2008 and 2009 slightly decreased, to five and three respectively. As of mid- October 2010 there have already been six leniency applications. However, it should be noted that these figures include leniency applications for anti-competitive agreements in both vertical and horizontal cases, as it is possible in Poland to apply for leniency for both.

Interestingly, the same...