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18 February 2019 / article

Leniency and settlement procedures: what you need to know about their impact on cartel damage claim proceedings

Companies targeted by competition authorities can mitigate their exposure to fines by making use of leniency and/or settlement procedures.

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Under these procedures, the parties’ willingness to cooperate with competition authorities is rewarded with a discount on the fine that they would have received otherwise. However, such cooperation may also weaken the position of a company in cartel damage claim proceedings. In this blogpost we will outline the main advantages and disadvantages of these two procedures.

Advantages and disadvantages of leniency procedures under EU and Dutch law

Under leniency procedures, a company may receive (i) a full immunity from fines if (among others) the company is the first to submit a request for immunity from fines with regard to a cartel and (ii) a reduction of fines if the company submits information with “significant added value”.

Since the company cooperates with the competition authority, the competition authority may be willing to provide a less detailed description of the infringement in its decision. However, the competition authority still needs to motivate its decision and may use the information provided by the (alleged) cartelist in its infringement decision. As the contents of an infringement decision are legally binding for a judge in civil law procedures, this may weaken the legal position of a company in (subsequent) cartel damage claim proceedings.

An advantage of leniency procedures is that a company that received a full immunity from fines is in principle relieved from the standard that it is jointly and severally liable for the entire harm. As a general rule, the company that received immunity can only be held liable for the harm caused to its own customers.

Last, as leniency programmes are pivotal programmes for competition authorities to detect cartels, Dutch procedural rules as to the disclosure of evidence provide that leniency statements are exempted from rules as to the disclosure of evidence.

Advantages and disadvantages of settlement procedures under EU and Dutch law

Under settlement procedures, the company acknowledges its participation in a cartel in exchange for a 10% fine reduction. As a consequence, the competition authority benefits from a shorter, quicker administrative process and a reduced number of appeals. This allows competition authorities to take less detailed decisions, which is disadvantageous for claimants in cartel damage claim proceedings.

As with leniency procedures, Dutch procedural rules as to the disclosure of evidence provide that settlement submissions are exempted from rules as to the disclosure of evidence as well. However, this provision does not apply to settlement submissions that were withdrawn.

Effects of leniency and settlement procedures on the compensation

The Netherlands is considered by claimants and defendants as one of the most attractive jurisdictions in Europe for launching civil proceedings for antitrust damages, allowing for the bundling of claims and class actions. Among others, a Dutch court has jurisdiction if a cartelist has its registered office in the Netherlands. It is uncommon for a Dutch court to declare that it lacks jurisdiction in such matters. The Netherlands also is a popular jurisdiction for such procedures due to its efficient court system and experienced judges.

In this respect it is worth noting that in a recent ruling, a civil district court awarded a compensation to a claimant and considered in this respect that it could not be ignored that the defendant participated in the cartel but, unlike the other participants, received a full immunity for fines (TenneT/ABB: ECLI:NL:RBGEL:2017:1724).

Conclusion

For aforementioned reasons, companies should take civil law aspects into consideration when applying for leniency or reaching a settlement. Our Competition Litigation Team has extensive experience as to this topic and what consequences such procedures may have in the context of cartel damage claims launched in the Netherlands. More info? Contact your regular Loyens & Loeff adviser or CLT@loyensloeff.com.



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