Immunity, Sanctions & Settlements

Introduction

No single development has changed the landscape of cartel enforcement around the world as dramatically as the introduction of corporate immunity programmes.

Corporate immunity or leniency programmes are the most effective investigative tool employed by competition enforcers and have directly led to the detection of the vast majority of the international cartels prosecuted by the world’s major competition authorities over the past two decades.  

Immunity programmes have come of age at the same time as the sanctions imposed against companies and individuals for cartel violations have skyrocketed around the world. By offering a complete pass from rising sanctions as well as other benefits to the first company to self-report, enforcers have created an offer that is often described as too good to refuse. As a result, the lure of full immunity has significantly influenced the way that companies respond when they first discover potential wrongdoing.

Corporate immunity programmes have been adopted by the vast majority of countries around the world with a competition authority. However, it takes more than simply announcing the introduction of an immunity programme to attract leniency applications. To be successful, a jurisdiction must offer a programme that is transparent and predictable in its application. It needs to develop a track record that inspires confidence within the private bar and business community as to the programme’s good faith application. Competition authorities must also develop and publish policies that reduce or eliminate disincentives to self-reporting that might tip the balance and deter a company from coming forward and reporting wrongdoing.

To this end, the world’s major competition authorities have worked to maximise convergence in the eligibility requirements and in the process for obtaining full immunity from prosecution and sanctions. As a result, it has become relatively common for multinational companies, when they discover cartel activity that is international in scope, to file leniency applications simultaneously in multiple jurisdictions. In fact, in some recent high-profile international cartel matters, immunity applicants have self-reported simultaneously or near simultaneously in more than a dozen jurisdictions.

To further fuel the race for full immunity, most competition agencies have established a “marker system” that allows companies to secure a place at the front of the line for immunity in the early stages of its internal investigation. By setting the evidentiary threshold very low for securing a marker, organisations are required to move quickly to assess their exposure to sanctions wherever they do business, often with limited information, and to assess the risks, benefits and consequences of self-reporting. This is a daunting challenge for any company and its legal representatives under any circumstances, but it can grow exponentially if the company has to quickly assess its exposure simultaneously in multiple jurisdictions. Fortunately, GCR Know-how offers a uniquely comprehensive and readily searchable resource that will allow the reader to quickly research and cross-check the conditions, policies and practices of many of the world’s major corporate immunity programmes. For example, the reader will be able to quickly gather and compare information from multiple jurisdictions on such critical issues as what the eligibility requirements are for obtaining a marker and for securing full immunity, whether the identity and the information provided by the applicant will be kept confidential, and what the company’s cooperation obligations are for achieving full immunity.

In addition, the Know-how chapter on immunity addresses the related topics of sentencing reductions and settlements. Companies that lose the race for full immunity and are exposed to sanctions for cartel activity face the dilemma of whether to seek a sentencing reduction in return for full cooperation and acceptance of responsibility or to remain steadfast and defend against any charges that are levied. To make an informed decision when faced with these divergent options, a target of an investigation needs to fully understand the benefits and risks associated with each strategy, including the maximum penalty it is likely to face if it fails to cooperate, the sentencing reduction it can expect to receive if it decides to settle and cooperate, and any other direct and collateral costs or benefits associated with choosing to cooperate or fight. The Know-how chapter on sanctions and settlements provides an outstanding resource for the private bar and the business community to navigate these critical issues in the high-stakes arena of international cartel investigations.

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