Below is a comprehensive post by Avinash Amarnath, attorney with Vinod Dhall & TT&A, New Delhi, India.  Mr. Amarnath covers several subjects including the new Chair of the Competition Commission of India.

India Update 2016 – Vol I

Hello and a happy new year to all readers. There were a few significant cartel developments towards the end of 2015 in India which I will be covering in this post along with some recent administrative developments.

 New Chairman of CCI appointed

Mr. D. K. Sikri, a former officer of the Indian Administrative Service (IAS) has been appointed by the Government of India as the new Chairman of the Competition Commission of India (CCI). Mr. Sikri succeeds Mr. Ashok Chawla, whose tenure ended on 7 January 2016.

COMPAT sets aside cartel fines against cement companies

The most significant cartel development of 2015 happened to come right at the end. On 11 December 2015, the Competition Appellate Tribunal (COMPAT) set aside an order of the CCI imposing fines amounting to approx. USD 945.4 million on 11 cement companies and their trade association for operating a cartel. The order was set aside on due process grounds and the matter was remitted back to the CCI for a fresh hearing and decision. The cement companies, amongst others, argued before the COMPAT that the CCI’s order violated the rules of natural justice and in particular, the rule that he who hears must decide as the Chairperson of the CCI who did not attend the oral hearings of the parties had participated in the decision making process by signing the order. The CCI’s position was that it only performs administrative functions and therefore, the rules of natural justice should not be applied to it in a strict manner. Further, the CCI argued that no real prejudice had been caused to the parties as a result of this alleged violation of the rules of natural justice.

The COMPAT observed that the basic question to be determined was whether the CCI is merely an administrative body or whether the CCI performs quasi-judicial functions and is therefore, bound by the rules of natural justice. After an extensive review and discussion on the powers of the CCI under the Indian Competition Act, 2002 (Competition Act), the procedure for dealing with a case and several case law of the Supreme Court of India on whether the rules of natural justice apply to administrative and quasi-judicial actions, the COMPAT concluded that it was evident that the CCI performed quasi-judicial functions while hearing and disposing off antitrust cases. Accordingly, the CCI was bound by the rules of natural justice including the rule that he who hears must decide. The COMPAT also rejected the argument of the CCI that no prejudice was caused to the parties as a result of this lapse by distinguishing the facts of this case from other precedents relied on by the CCI. Further, the COMPAT found that actual prejudice had been caused by this lapse as the Chairperson had lent his signature to the final order without having heard the various substantive arguments raised by the parties during oral hearing. In any event, it would be very difficult to judge whether prejudice had been caused as it would be impossible to determine the outcome of the case had the Chairperson not participated in the decision making process. Finally, the COMPAT urged the CCI to evolve a comprehensive protocol and lay down guidelines for investigating and hearing a case in consonance with rules of natural justice. [Read more…]

Shipping cartels have been a frequent target of prosecution by the Antitrust Division of the United States Department of Justice. The rules around shipping cartels can be confusing because certain joint pricing activity can be legal and there are also exemptions for other cartels. But, as some companies have found out the hard way, there is no blanket exemption for collusive pricing in the shipping industry. Moreover, the number of enforcement agencies jumping in the water of cartel prosecutions is expanding. The United States has had an active shipping cartel investigation with prosecutions in the car carrier shipping business. Now, China has fined seven shipping companies, a total of 407 million yuan ($65 million) for price-fixing in what appears to be the same cartel.

The National Development and Reform Commission (NDRC) oversee the pricing restrictions of the antimonopoly law. In an announcement today, the agency said that for four years the companies colluded to raise rates on shipments of cars, trucks, and construction machinery across five shipping routes, including between China and North America, Latin America and Europe. The cartel targeted “roll-on, roll-off” shipping rates for cars, trucks and construction equipment. These are specialized cargo ships that can carry hundreds of vehicles.

The NDRC imposed fines of four to nine percent of the companies’ 2014 revenues of their related China business. EUKOR Car Carriers Inc. was hit with the largest fine, 284 million yuan ($45 million). At the other end of the spectrum, Nippon Yusen KK (NYK) said it fully cooperated with the probe and was granted immunity from any fine. Besides Eukor’s $45 million penalty, Wallenius Wilhelmsen Logistics, a Swedish-Norwegian company, was fined 45 million yuan ($7.1 million). Mitsui O.S.K. Lines Ltd. was fined 38 million yuan ($6 million). Other companies penalized were Japan’s K Line and Eastern Car Liner Ltd. and Chile’s CSAV and CCNI.CSAV and its roll-on, roll-off shipping unit were fined the smallest amounts of less than $1 million each.

Several years ago when I was with the Antitrust Division, I led an investigation and prosecution of a global parcel tanker cartel.  At the time, I don’t believe China’s cartel enforcement law was enacted. Now, China has become a serious cartel enforcement agency. The NDRC is believed to be active in the current global capacitors cartel investigation. The Chinese have also fined cartel members in the TFT-LCD cartel.

Never Too Late for a Competition Law Compliance Program

Several of the fined companies issued announcements acknowledging the illegal conduct and vowing that the collusion would not recur. The companies stated that they were taking the action seriously and developing and implementing a competition compliance program. Of course, a compliance program is much better when developed before being fined for collusion, but a prosecution is sometimes what it takes to get the issue to be taken seriously by senior management. A compliance program is not only effective at preventing cartel activity, but even if it fails, having executives knowledgeable about competition law is also the best way to be in a position to be the first to qualify for immunity if there is an investigation.

US Still Main Concern for International Cartels

The biggest reason for an international company to have an effective competition law compliance program may be the aggressive international cartel prosecution program of the Antitrust Division of the US Department of Justice. The United States is not shy about prosecuting foreigners for cartel activity that affects the United States. In the United States price-fixing and bid rigging are criminal offenses carrying jail sentences of up to 10 years. And even if a foreign executive thinks he will never be apprehended by the US, being a fugitive on an Interpol Red Notice puts a serious crimp in any travel plans.

In the Chinese investigation NYK got immunity for their cooperation. This was not the case in the United States.  On October 6, 2015, the US Department of Justice announced that three former ocean freight executives have been indicted for participating in the car carrier cartel:

These executives – Yoshiyuki Aoki, Masahiro Kato and Shunichi Kusunose – have been charged with allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere.  The affected cargo included cars, trucks, construction equipment and agricultural equipment.  Aoki, formerly of Kawasaki Kisen Kaisha (K-Line), and Kato and Kusunose, formerly of Nippon Yusen Kabushiki Kaisha (NYK), are among seven executives who have been charged in the investigation so far.  Four have pleaded guilty and been sentenced to prison.  NYK, K-Line and one other company have also pleaded guilty and paid more than $136 million in criminal fines.

If you have any questions about competition law or compliance programs, please feel free to reach out at Robert.connolly@geyergorey.com or on LinkedIn (here)

Thanks for reading.

If an FTAIA related case is ever taken by the Supreme Court I believe it will be a private civil price fixing damage case like Best Buy Co., Inc. v. Hannstar Display Corporation. The Antitrust Division’s international cartel prosecutions have all involved import commerce; providing a jurisdictional basis without reaching possible FTAIA related commerce. [And if I could decide a case without reaching FTAIA issues, I sure would.]  The recent Antitrust Division case filing in capacitors follows this pattern. The Information alleged that both import commerce and FTAIA related commerce were subject to the agreement to fix prices.

There was a very interesting oral argument before the Ninth Circuit on December 11, 2015 dealing with a civil price fixing damage case related to the TFT-LCD price fixing cartel: Best Buy Co., Inc. v. Hannstar Display Corporation.  The case raises a number of interesting FTAIA related issues, some of which I’ll discuss below.   But if you are interested in viewing the oral argument, the Ninth Circuit makes video available and the Best Buy Co., Inc. v. Hannstar Display Corporation argument can be viewed here.

A couple of key factual notes about the case:

• HannStar, which pled guilty in the criminal TFT-LCD, case only sold panels to foreign entities.  It shipped no price fixed panels into the US, nor finished goods because it did not make those.  But, some HannStar price fixed panels were assembled into finished products, including desktop and laptop computers and televisions, that were imported into the US.  Some of Hannstar’s co-conspirators did sell finished products in the US that contained price fixed screens that were purchased by Best Buy.
• The panel noted that the lack of Hannstar import commerce distinguished this case from the case the United States brought against the cartel, some of whose members imported panels directly into the Unites States so jurisdiction was not based on the FTAIA. United States v. Hsiung,
  758 F.3d 1074 (9th Cir. 2014).
• Also, Best Buy in the US purchased finished products with the price fixed screens, distinguishing the case from Motorola Mobility where Motorola’s foreign subsidiary purchased the panels. Motorola Mobility v. AU Optronics, 775 F.3d 816, 826-27 (7th Cir. 2015).
• Best Buy was an opt out plaintiff.  As such, it had to prove that it suffered injury as the result of the defendants’ anticompetitive conduct.  It could not piggyback on the “class” it had opted out of.

The case involved a special jury verdict form that is at the heart of the appellate argument.  The jury found that Best Buy’s injury arose from a conspiracy involving import commerce despite the fact that it was undisputed that Best Buy purchased no LCD screens that were the subject of the cartel agreement.  Best But bought only the finished products (laptops, etc) that contained the price-fixed screens.   Import commerce comes within in the scope of the Sherman Act without application of the FTAIA. But at the same time, the jury found that the conspiracy did not have a “direct, substantial and reasonably foreseeable effect on trade or commerce.” In other words, jurisdiction could not be based on the FTAIA.

Here are the relevant questions in the Special Verdict form:

Question 1: Did Best Buy prove, by a preponderance of the evidence and in accordance with the instructions given to you, that Toshiba knowingly participated in a conspiracy to fix, raise, maintain or stabilize the prices of TFT-LCD panels?  No.

Question 2: Did Best Buy prove, by a preponderance of the evidence in accordance with the instructions given to you, that HannStar knowing participated in a conspiracy to fix, raise, maintain or stability the prices of TFT-LCD panels?   Yes.

Question 3: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that the conspiracy involved TFT-LCD panels and/or finished products (e.g., notebook computers, computer monitors, televisions, camcorders, cell phones and digital cameras containing TFT-LCD panels) imported into the United States?  Yes.

Question 4: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that the conspiracy involving these imported TFT-LCD panels and/or finished products produced substantial intended effects in the United States?  Yes.

Question 5: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that the conspiracy involved conduct that had a direct, substantial and reasonably foreseeable effect on trade or commerce in the United States?  No. 

Question 8: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that it was injured as a result of the conspiracy in which one or both of the defendants knowingly participated?  Yes.

Question 9: For Best Buy’s direct purchases only, what is the amount of damages Best Buy proved, by preponderance of the evidence and in accordance with the Court’s instructions, that it suffered as a result of the conspiracy?  $ 7,471,943

The FTAIA issues in the case are particularly confusing because Question 3 in the Special Verdict form was in the alternative “did the conspiracy involve panels and/or finished products imported into the United States?” HannStar argued that the jury was wrong in finding that the conspiracy involved import commerce because HannStar never sold panels in the US and Best Buy bought only finished products. “The conduct at issue was the agreement to fix the price of panels—wholly foreign conduct. [The conspiracy was] not to import finished products containing those panels to the US” HannStar attorney Belinda Lee, Latham & Watkins, argued.  Lee noted that HannStar engaged in price-fixing on liquid crystal display panels, not finished goods. HannStar then argued that since the jury did not find an FTAIA basis for jurisdiction [that the conspiracy produced a direct substantial and reasonably foreseeable effect in the United States], there is no jurisdiction. “The jury was asked and they said no; they found no domestic effect,” Lee told the panel. Best Buy, therefore failed to prove that its claims arose from conduct covered by FTAIA.

Because the jury found import commerce, an issue in the case became whether the sale of the finished product (i.e. a laptop with affixed price LCD screen) could as a matter of law constitute import commerce. This invoked the “targeting” theory, i.e. that a cartel could be found to be covered by the Sherman Act even if there was no imports into the US if the cartel “targeted” the US.  Judge Kim Wardlaw said that the jury had found there was substantial intent on the part of the defendants to create price effects in the US market. Was this enough to make the good import commerce (which jury found) or as a matter of law does this evidence only go to the domestic effects test? (and, confusingly, the jury found no domestic effects).

Judge Susan Graber expressed concern that finding import commerce jurisdiction based on a component part price fix could expand Sherman Act jurisdiction over foreign commerce beyond what Congress intended. She gave an example of a $10 foreign-based price fixed gas cap on a $50,000 car that is then imported into the United States. Is that import commerce? What about where the part is little in a big product?  And the harm is quite small? The Court clearly was concerned with drawing the line [but in the instant case, the TFT-LCD screens were a fairly large cost import of the finished product.]

Hannstar attorney Lee argued (correctly I believe) that the issue of whether a component part price fix can provide Sherman Act jurisdiction relates only to whether the FTAIA’s “direct, substantial, and reasonably foreseeable” effect on commerce test is met. And on that question the jury answered “No.” Import commerce is defined as a purchase by a US consumer of the price fixed product.  There is, however, some support for the proposition that in certain circumstances the import commerce exception requires only that the defendants’ anticompetitive conduct “target import goods or services,”  Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462, 470 (3d Cir. 2011); Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, 855 (7th Cir. 2012) (en band).  I don’t think, however, the targeting analysis applies to whether components priced fixed in foreign commerce but imported into the US in a finished product constitutes import commerce.  Such a reading would essentially render moot the FTAIA jurisdictional basis of “direct, substantial and reasonably foreseeable effect” on US commerce.

There were a couple of other interesting features of the case:

• Opt Out: There can be advantages to being an opt out plaintiff, but there may also be some downsides. Plaintiffs in class action just have to prove some import commerce, but since Best Buy was an opt out, it had to demonstrate their own purchases trace back to import commerce or the FTAIA domestic effect.
• Which Best Buy?  Again as an opt out Best Buy had to trace its purchases to one of the conspirator companies and because Best Buy also has foreign subsidiaries it had to establish that the US company made the purchases (To avoid a Motorola Mobility situation). It seemed Best Buy overcame this hurdle, but it is something plaintiffs need to watch out for. B failed to trace the purchases from BB entities in US to HannStar. If foreign entities you have Motorola.

A final note: The jury in Best Buy’s trial ordered HannStar to pay almost $7.5 million in damages. The Court then trebled the award to more than $22 million. But because Best Buy had settled with so many of HannStar’s co-conspirators, the court reduced the award to zero. Ouch!

Best Buy was represented by Katherine Wiik of Robins Kaplan LLP.

Thanks for reading.

Hong Kong’s Competition Ordinance became effective today, December 14, 2015.  The Hong Kong Competition Commission issued a press release: “Competition Ordinance Comes into Full Effect Today.”

I discussed some aspects of Hong Kong’s proposed Competition  Ordinance in an earlier post: “Hong Kong’s Competion Regime Ready for Full Launch.”  The South China Morning Post today published an article by Denise Tsang (denise.tsang@scmp.com) about the Competition Ordinance.  The full article is here.   Some highlights:

• “A law in the making for more than two decades, the Competition Ordinance is set to check anti-competition behaviour as the city joins more than 100 other jurisdictions with such laws.”
• “In Hong Kong, the competition law remains a civil liability. Offenders face a fine of up to 10 per cent of their Hong Kong turnover for each year of the infringement. Company directors face a ban of up to five years and can be sued by clients.”
• “As its first order of business, [Anna Wu Hung-yuk, Chairperson of the Commission],
  said the commission had identified property maintenance firms and fuel suppliers such as petrol stations as top targets of research, as the former were notorious for bid rigging and the latter for cartels.”

The home page of the Hong Kong Competition Commission can be found here.

Thanks for reading.

A news article from the Manawatu Standard in New Zealand reports that “Price-fixing executives will not be subject to jail terms after Government u-turn.”  Paul Goldsmith, the Minister of Commerce and Consumer Affairs said he was stripping criminal sanctions for cartel behavior currently contained in the Commerce (Cartels and Other Matters) Amendment Bill.  He said that after a year of consideration he had made an “on balance decision” that the costs of introducing criminal penalties outweighed the benefits.

The Minister said “If we keep providing new ways for directors to go to prison if the judgements are wrong then overall there’s a potential chilling effect on innovation.”  New Zealand’s decision is counter to the trend toward criminalization of cartel behavior, although in many countries criminal penalties, while available, are rarely imposed.  Countries that do impose criminal penalties, such as the United States, reserve criminal prosecution for “hard-core” cartel conduct (price-fixing; bidding rigging) where there is an element of fraud: i.e. buyers (or sellers) believe there is competition when in fact competition has been reduced or eliminated by a secret agreement among the bidders/vendors.  These types of secret cartel arrangements are deemed to have no pro-competitive benefit as opposed to joint ventures where entities share risk, resources and the buyer can independently weigh the merits of contracting with the joint entity.

The full Manawatu Standard article can be found here.

Below is a guest post from economist Ai Deng, Phd. of Bates White Economic Consulting:

***************************************************************

Hope everyone had a wonderful Thanksgiving holiday.

I thought the readers may be interested in knowing about the recent Global Forum on Competition hosted by OECD.

The event, taking place just a month ago, had a session on cartels titled “Serial offenders: Why do some industries seem prone to endemic collusion?” The panelists included Professor Joseph Harrington (The Wharton School, University of Pennsylvania), Professor Robert Marshall (Department of Economics, Penn State University and Bates White), Professor Valerie Suslow (Carey Business School, Johns Hopkins University), and Mr. Robert Wilson (Webber Wentzel). I did not attend the program in person, but the program materials including the panelists’ presentations are available for download here.

The panelists Professors Harrington, Marshall, and Suslow have all done influential academic research on cartel-related topics. Their work was cited in my own recent research on cartel detection and monitoring. Mr. Wilson, a partner in the Competition Practice at Webber Wentzel, specializes in competition law and international trade.

To give the readers a quick, high level overview,

Professor Harrington’s presentation provides his thoughts on when firms collude. He then describes a 3-step inductive approach to cartel screening and uses the cement market as an example to demonstrate how to apply such an approach in practice.
Using a dataset of cartel participants based on the European Commission (EC) decisions in cartel cases, Professor Marshall specifically notes the role of association management companies (AMC) in cartels. He argues that “it would be valuable to understand the role of AMCs…” and if AMCs compete “with one another to provide this [cartel] services to firms in a product/industry/market, then antitrust policy should be directed toward deterring the role of AMCs with regard to such anticompetitive activities.”
Mr. Wilson’s presentation overviews South Africa’s Competition Act and then specifically focuses on South African construction industry. He identifies possible reasons for the extensive collusion in that industry and makes policy recommendations.
Professor Suslow’s presentation is titled “Serial Collusion in Context: Repeated offenses by firm or by industry?” In addition to address the question raised in the title, she also discusses seven policy tools and emphasized the importance of understanding what leads to collusion in the first place to select appropriate policy tool.

There is a wealth of information in their presentations and supplemental materials. In addition to the panelists’ presentations, also available for download are a “background note by secretariat” and contributions from a number of jurisdictions.

Ai Deng, PhD

Principal

direct: 2022161802 | fax: 2024087838

1300 Eye Street NW, Suite 600, Washington, DC 20005

ai.deng@bateswhite.com

BATESWHITE.COM

I thought readers might be interested in this article “Bring Back Antitrust” by David Dayen in the Fall issue of The American Prospect. The headline paragraph of the article is:

“Despite low inflation and some bargain prices, economic concentration and novel abuses of market power are pervasive in today’s economy—harming consumers, workers, and innovators. We need a new antitrust for a new predatory era.”

The article’s focus is market concentration resulting from mergers and alleged anticompetitive practices.  The article has a decidedly progressive tilt, arguing that the current state of concentration in most industries is harmful for consumers. For example, some may cringe at this statement: “Since the Reagan Justice Department neutered antitrust enforcement, a posture substantially ratified by increasingly conservative courts….”   But the article also cites scholarly studies:

            John Kwoka, an economics professor at Northeastern University, collected retrospective data on 46 closely studied mergers, and found that 38 of them resulted in higher prices, with an overall average increase of 7.29 percent. In cases where the Justice Department imposed some sort of condition for accepting a merger, like divestiture of some product lines or bans on retaliation against rivals, the price increases were even higher, ranging from 7.68 percent to 16.01 percent. By this analysis, consumers don’t benefit at all from merger activity, as market power overwhelms whatever efficiency gains.

Two former colleagues of mine, Allen Grunes and Maurice Stucke were quoted in the article. Despite the merger/concentration focus of the article, I was interviewed by Mr. Dayen about cartel enforcement. I was quoted in the article relating to the Antitrust Division’s closing of four field offices in January 2013, including the Philadelphia Field Office where I was Chief. (They could have just asked me to leave—they didn’t have to close the whole office :-).  “The shuttering of over half of the field offices damaged agency morale. The remaining offices can’t cover the territory,” says Robert Connolly, chief of the field office in Philadelphia when it was closed. “I think there’s a sense that the Antitrust Division is not that interested in local and regional cases.” To me, the bigger picture was also that the regional offices were also incredibly successful in fighting international cartels. For example, the prosecution of international cartels was jumped started with the successful prosecution of the ADM lysine cartel by the [still open] Chicago field office.  The now closed Dallas office prosecuted the vitamins cartel and my office prosecuted the graphite electrodes and related cartels. All of the Division’s criminal enforcement sections, whether in DC or in the field, have had great success prosecuting international cartels. What mattered was not the address of the staff handling the case, but their talent/experience, interest in antitrust enforcement and pride in being a public servant. The Division lost a lot of that “stuff.” But while the field office closings was a setback, obviously the Division marches on with great success.

“Bring Back Antitrust” is full of the history of antitrust enforcement, discussion of important cases, both famous and not so much, and offers a point of view that may get some attention in the upcoming presidential election.

Thanks for reading.

PS.  There is also an opinion piece in the Washington Post (here) that discusses “Bring Back Antitrust.”

Full implementation of Hong Kong’s competition law is scheduled for launch on December 14th.  A new leniency policy is also under consideration.  Nan-Hie In recently published a helpful article, A New Era for Hong Kong Competition Regime, which includes extensive comments from Anna Wu Hung-yuk, Chairperson of Hong Kong’s Competition Commission.

The Competition Ordinance, which was passed by the city’s legislature in 2012, will come into full force on December 14th.  The article describes three key rules:

The First Conduct Rule bars anti-competitive agreements amongst competitors or parties at different levels of the supply chain. “The most serious of these are cartel agreements that seek to fix price, share market, limit output or rig bids; these are regarded as serious anti-competitive conduct and [this rule is] applicable to all businesses, big, small or medium,” explains Wu.

The Second Conduct Rule states that businesses with substantial degree of market power must not abuse that power. For example, exploiting that power to the detriment of consumers or restricting competition is prohibited. “It is only when an undertaking seeks to use that power, for example, to exclude the competitor from the market, that concerns may arise,” she says.

Thirdly there is the Merger Rule, which only applies to the telecommunications industry. “This prohibits mergers that may substantially lessen competition in Hong Kong.”

Chairperson Wu Hung-yuk said:  “It is a very curious anomaly for this place of free enterprise to not have one [a competition law] but we have it today which makes it a bit easier to tell everyone around the world that we have a competition regime that uses the same principles in America, the UK, the EU and Singapore.”  The Chairperson also credited the America Chamber of Commerce–Hong Kong for making valuable suggestions.  Hong Kong’s competition law is referred to as the Competition Ordinance.

In preparation for the full  implementation of the Competition Ordinance,  the Hong Kong Competition Commission announced a Draft Leniency Policy for Cartels in a September 23, 2015 press release.  Under the Draft Cartel Leniency Policy, the Commission will agree not to bring proceedings in the Tribunal for a fine against the first cartel member who reports the cartel conduct to the Commission and meets all the policy requirements for receiving leniency, including full cooperation with the Commission’s investigation.  The Competition Commission Chairperson noted, “Similar policies have proven to be an important tool to help competition authorities around the world combat cartels.”  It is important to note the Hong Kong competition regime and the draft leniency policy are similar to those in the US, EU and there jurisdictions.  But “similar” is not identical and differences may prove to be important under the facts of each matter.

The primary features of the draft leniency policy are:

• The policy only applies to cartels: arrangements between competitors to fix prices, restrict output, share markets and rig bids.
• Leniency will only be offered to the “first-in” cartel member that also meets the other requirements.
• The Commission will operate a “marker” system to establish a queue in order of the date and time that companies apply for leniency. Cartel members must call a “leniency hotline” to obtain a place in the marker queue. If the first marker fails or is terminated, the second marker may be offered leniency.
• Under the draft leniency policy, the leniency applicant must sign a statement of agreed facts admitting the leniency applicant’s participation in the cartel.
• While there is only one leniency per investigation, the Commission may agree to provide favourable treatment in the form of a lower recommended fine to other cartel members that terminate their involvement in the cartel and co-operate with the Commission’s investigation.
• Leniency does not provide immunity from follow-on actions or other orders.

The Commission solicited comments on its draft leniency proposal. The period for comment is now closed.   Some of the comments questioned the requirement that a leniency applicant sign a statement of facts about its involvement in the violation, noting that this may discourage leniency  applicants from coming forward.  The comments the Commission received are published here.

I’ll follow up when the final leniency policy is published.

Thanks for reading.