Transcript Dia 1 - Konkurentsiamet

The Finnish leniency system
experiences and challenges
Estonian Competition Authority’s 15th Anniversary
Conference
Tallinn, 11 November 2008
Mika Hermas
The leniency framework - main
characteristics
 Only administrative sanctions for infringements
 only against undertakings, only pecuniary sanctions
 Division of powers
 FCA: proposes fines and reductions, grants immunity
 Market Court: decides on fines and reductions
 Leniency system:
 Immunity to 1st to reveal a cartel
 only available before FCA initiated an investigation
 Reduction of fines subject to value-added
 available for cartels and other infringements
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
Other leniency-related considerations
 Amount of fines in serious infringements
intransparent – only upper limit stipulated
 commentators: level also too low so far – insufficient
deterrent effect
 Possibility for damages secured by Competition Act
 right limited to undertakings
 single damages
 decided in separate proceedings in a civil court
 Criminal charges in blatant infringements cannot be
ruled out
 bid-rigging = possibly fraud or serious fraud
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
The FCA’s experiences on leniency to-date
 Experience relatively limited
 No Market Court decisions in leniency cases so far
 Less than ten applications for immunity since 5/2004
 Two cases currently in market Court
• wood procurement, car spare parts
 One application for reduction of fines
• wood procurement
 A number of approaches on a hypothetical basis
 potential applicant mirroring availability of immunity,
procedure, and pros and cons of applying
• cost/benefit calculation
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
The FCA’s experiences (continued)
 A number of immunity applications have not led to
final decision, or have been rejected
 Conditional immunity granted but insufficient proof of
infringement found after subsequent investigations
 Insufficient/imprecise information to fulfil conditional
immunity
 Not a cartel at all – application rejected
 Procedure lapsed due to no formal application after
anonymous first contact
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
Current challenges
 Commentators on immunity:
 expected amount of fines unclear as not stipulated by
law or decree
 at the current (low) level of fines, the risk of damages
and associated bad-will act as a disincentive
 potential of criminal sanctions on individuals may act
as further disincentive (?)
 this argument is rare but gaining ground among advisors
 personal ties in a small society also an issue
 perceived peer pressure may prevent blowing the whistle
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
Current challenges (continued)
 Commentators on reductions of fines:
 The current rules do not provide for transparent
percentages of reduction (nor amount of fines)
 Division of powers between Market Court and FCA
creates uncertainty
 The FCA’s proposal regarding the amount of fines and/or
reduction thereof is not binding upon the Market Court
 The current rules only reward provision of value-added
information but not explicitly speed nor rank (ie. the
time and order of coming forward with information)
 may lead to investigative inefficiencies as it may pay off
to wait until the FCA issues its draft decision (the ”S.O.”)
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
Conclusions and lessons learned
 Immunity system technically workable but may
require more explicit incentives
 The level of expected fines are key
 more (and solid) cases to the Market Court
 policy change?
 The availability of immunity also post-inspection would
be beneficial
 likely to increase the number of cartels detected/fined
 would align the Finnish system with the Commission’s
 Reduction system is challenging
 requires more transparency and legal certainty
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
The way forward
 Work is underway to amend the Competition Act
 a working group chaired by the Ministry of Employment
and the Economy
 mandate includes
 revisions as regards the transparency and the amount of
fines
 aligning the leniency rules with those of the Commission
and the ECN model programme
 Amended Act expected in force 2009/2010
 Meanwhile, the FCA continues its quest to fight
cartels
 business as usual!
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008
THANK YOU FOR YOUR ATTENTION!
The Finnish leniency system, Mika Hermas, Tallinn
11.11.2008