Antitrust

S H E A R M A N & S T E R L I N G L L P | 4 9 It is more likely that the decline in leniency applications and enforcement activity is a result of a number of forces operating in parallel. For example, the factors summarized above are likely interplaying with larger forces. In particular, criminal enforcement is cyclical, as DOJ officials have noted in response to recent questions about the continuing effectiveness of their criminal enforcement program. The DOJ has recently concluded a number of major investigations that were the drivers of the high fine levels in prior years, including investigations of the auto parts sector and the financial industry. The DOJ's enforcement activities before the recent decline may also have had some of the intended deterrence effect in decreasing cartel activity. A SIMILAR TREND IN THE EU The EC's leniency program has also experienced a decline in the number of applications in recent years. The EC received 46 applications in 2014, but only 18 applications in 2017. 2 The decline in leniency applications has been linked to companies' exposure to civil actions following an infringement decision of the EC. The EU Damages Directive, 3 which was designed to facilitate compensation for the victims of an infringement of competition law (Articles 101 and 102 TFEU), has now been fully implemented across the EU. Therefore, companies involved in infringements of competition law are more likely to be subject to civil actions claims following an EC or national competition authority (NCA) decision. Although the Damages Directive acknowledges the importance of leniency programs as a tool to fight against cartels and, in line with this, offers protection from disclosure to the leniency statements themselves, not all documents that are part of leniency applications are protected from disclosure. The protection offered by the Directive mainly applies to self- incriminating documents, which leaves other leniency material at risk of being disclosed in civil actions. This could work as a deterrent for companies that are considering whether to apply for leniency before the EC or NCAs. In addition, because they receive immunity from fines, leniency applicants are less likely than others to apply for an annulment of the EC's infringement decision before EU courts. In this case, the decision of the EC will become final towards leniency applicants before other parties, which will render them an obvious first target for civil actions. Directorate for Competition's Deputy Director General, Cecilio Madero, recently acknowledged the decrease of leniency applications. He explained that the number of leniency applications is indeed not "going up." 4 Nevertheless, the Deputy Director General explained that new enforcement tools, such as the anonymous whistleblower tool that allows individuals to inform the EC anonymously of the existence of cartels 1. Nylen, L. (2018). US Corporate Charges Dip for Third Straight Year. [online] Available at: http://www.mlex.com/GlobalAntitrust/DetailView. aspx?cid=1027151&siteid=191&rdir=1 [Accessed November 12, 2018]. 2. GCR Rating Enforcement 2018.  3. Directive 2014/104/EU of the European Parliament and of the Council of November 26, 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the EU. 4. GCR, Conference Coverage, "Leniency applications are 'not going up', says DG Comp official" February 20, 2018. 5. Ibid. 6. GCR Conference Coverage "Laitenberger: damages directive effect on leniency applications 'speculative'" (September 15, 2017). and other infringements of competition law, are proving successful. 5 As regards the link between civil actions and a drop in the number of leniency applications, Director General Johannes Laitenberger explained that this link is merely speculative — "does it have a chilling effect, or rather the contrary? " 6 In practice, as noted in the section above, companies must balance the costs of a leniency application with the benefits, and exposure to civil actions is certainly a relevant consideration. The costs associated with civil exposure will also need to be considered by the EC as it continues to assess the impact of the new Damages Directive on its leniency program. CONCLUSION As cartel enforcement programs evolve, they may impose new costs on potential leniency applicants. While some have suggested that recent developments have pushed these costs too high, the fundamental benefit of the bargain created by leniency programs remains intact. A successful corporate leniency applicant secures amnesty for itself (and in the U.S. for its current officers, directors and employees), while its co-conspirators are subject to the potentially staggering liabilities. In most cases, the resulting cost-benefit analysis will counsel toward a decision to seek amnesty.

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