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Cartel Leniency and Immunity FAQ
Here we cover frequently asked questions about our Cartel Leniency and Immunity Policy.
These FAQs do not constitute legal advice, or form part of the Cartel Leniency and Immunity Policy.
Potential applicants should consider taking independent legal advice.
What is a cartel?
Cartels are formed when companies or individuals collude with their competitors to increase or maintain prices, divide geographical territories between themselves, agree to limit production, and/ or engage in bid-rigging. Because they are illegal, the arrangements are usually made and maintained in secret.
Cartels may consist of one or more anti-competitive agreements that influence how the involved parties will act (eg, a minimum price to be charged for a product or service, or no discounting) – or in some cases not act (eg, not bidding on a tender). An anti-competitive agreement can be informal (a 'nod and a wink') and still remain illegal. Cartel conduct is prohibited by sections 30 and 82B of the Commerce Act 1986.
Why are cartels a priority for the Commission?
Cartels are a priority for the Commission because they harm New Zealand consumers and businesses. International studies show cartels can cause prices to rise by (on average) between 18–20%. Both domestic and international cartels are a priority for the Commission – whether they are based in New Zealand or involve international parties that participate in, and/or affect markets in New Zealand.
What is the difference between Leniency and Immunity?
The Commission can grant leniency to any individual or company engaged in cartel conduct that meets the requirements in the Commission’s Cartel Leniency and Immunity Policy. Leniency means that the Commission agrees not to take civil enforcement action against a company or individuals for their involvement in the cartel conduct. If leniency is granted by the Commission it does not prevent customers or other parties taking private civil actions in the New Zealand courts against applicants and other participants in respect of the cartel conduct. However, in any proceedings initiated by any other party, the Commission will only make disclosures such as required by law.
The Solicitor-General can grant immunity to any individual or company engaged in cartel conduct. Immunity means that no-one can take criminal proceedings in New Zealand against the company or individuals for involvement in the cartel conduct.
Applicants can obtain both civil leniency and criminal immunity for the same cartel conduct.
The Solicitor-General has published guidance on immunity from prosecution for cartel offences which can be found on our website here.
When will the Commission recommend immunity to the Solicitor-General?
If the Commission is satisfied that an applicant has met the conditions to be eligible for leniency, the Commission will recommend that the Solicitor-General grants immunity to the applicant and any related persons. The Commission will make such a recommendation where:
- some or all of the reported cartel conduct is likely to be prioritised for further investigation; and
- there is a prospect that criminal proceedings may be brought in relation to the prioritised conduct, including because it is serious.
Please see paragraphs 46 – 50 and 89 – 94 of the Cartel Leniency and Immunity Policy.
Why give leniency and/or immunity from proceedings to a party that has broken the law?
The Cartel Leniency and Immunity Policy is a key tool for the Commission (and for other competition agencies overseas) to detect cartels. It is not a reward for applicants. Without the detection that is achieved by parties coming forward to apply for conditional leniency and/or immunity, more cartels would continue to operate and harm the New Zealand economy. Additionally, the knowledge that leniency and/or immunity is available deters competitors from entering into cartel arrangements.
Why would I/my company apply for leniency and/or immunity – what is in it for me/us?
You/your company will not be subject to court action from the Commission provided you fully cooperate with the Commission's investigation and proceedings. Financial penalties under the Commerce Act can be significant: up to $500,000 per breach for individuals; or the greater of $10 million, three times the commercial gain, or 10% of turnover for companies per breach. Individuals may face jail terms of up to 7 years for their involvement in cartel conduct. Individuals can also be disqualified from acting as a director, promoter or manager of a company for up to 5 years.
Initial contact - placing a marker
How do I approach the Commission to enquire if leniency and/or immunity is available?
All approaches must be made in person, by phone or by email to the General Manager Competition (or a delegate if relevant) during the Commission's normal hours of business (8.30am–5pm, Monday to Friday) to enquire if leniency and/or immunity is available in a specified market. This ensures that applicants are treated strictly in order of application. If desired, an enquiry can be made on a hypothetical, 'no names' basis so as not to identify the company who is contemplating applying for leniency and/or immunity. However, a hypothetical enquiry about whether a marker is available does not constitute an application for a marker.
You must contact the General Manager Competition either via:
- telephone (+64 (0) 4 924 3720)
- email (firstname.lastname@example.org)
- in person (Level 9, 44 The Terrace, Wellington 6011).
Enquiries or applications made other than via the methods described above will be disregarded. For more information see paragraphs 150-156 of the Cartel Leniency and Immunity Policy.
How do I approach the Commission to apply for leniency and/or immunity?
You must contact the General Manager Competition, via one of the methods of communication described above, during the Commission's normal hours of business. Enquiries or applications made other than via the methods described above will be disregarded.
For more information see paragraphs 150-156 of the Cartel Leniency and Immunity Policy.
What is a leniency and/or immunity marker?
A 'marker' is the confirmation given to a leniency and/or immunity applicant (company or individual) who is the first party to approach the Commission to request leniency and/or immunity with respect to a particular cartel and who meets the relevant conditions. The marker guarantees the applicant's place at the front of the line and provides for a period of time for the applicant to collect further information to provide to the Commission in a formal application for leniency and/or immunity.
For more information see paragraphs 70-74 of the Cartel Leniency and Immunity Policy.
What if the Commission is already aware of, or is investigating, a cartel when an application for leniency and/or immunity is received?
Leniency and/or immunity may still be available.
The Commission will review all the evidence it already holds at the time of the application for a marker. If the Commission already has sufficient evidence to issue proceedings a marker will not be available.
The Commission will review the proffer when determining whether to grant conditional leniency. If the Commission is not satisfied that the applicant’s evidence is valuable and is of the view that it could reasonably be obtained elsewhere, conditional leniency will not be available. For more information see paragraphs 34 - 36 of the Cartel Leniency and Immunity Policy.
If a marker or conditional leniency is not available, the party concerned can apply to cooperate with the Commission.
What if conditional leniency and/or immunity is not available?
Parties may choose to cooperate when they find that leniency and/or immunity is not available to them, or they may choose to cooperate after they become aware of the Commission's investigation. Applications to cooperate can be made at any point in a cartel investigation, including after proceedings have been instigated.
Further information on the Commission’s approach to cooperation in cartel cases is set out in the Commission’s Cartel Leniency and Immunity Policy at paragraphs 118-134.
Proffer and perfecting a marker
How is the marker perfected?
After the marker is granted, the applicant has 40 working days (unless otherwise agreed with the Commission), to perfect its marker by provision of one or more 'proffers'. A proffer is a written, or oral, statement. It describes the cartel conduct and includes an admission to the conduct and any evidence to support the cartel's existence. Typically, it will include relevant documents or a description of those documents in the applicant's possession, and information from interviews of the applicant's staff and former staff (cartelists and witnesses) in respect of the cartel conduct.
For more information see paragraphs 75-84 of the Cartel Leniency and Immunity Policy.
What about international cartels that affect multiple jurisdictions?
Leniency and/or Immunity applicants can, and do, simultaneously apply for markers in multiple jurisdictions.
The Commission may request leniency and/or immunity and cooperation applicants to provide waivers so that the Commission can share information provided by the party concerned with other competition agencies. This allows the Commission to investigate the cartel more efficiently.
See paragraph 144 of the Cartel Leniency and Immunity Policy.
What happens if a marker is not perfected as required?
If the proffer is not sufficient, or not provided in time, the applicant’s marker will lapse. The next party in line for a marker will be awarded the marker. The former holder of an expired marker is eligible to re-apply for Immunity and/or Leniency, but its original place in the queue is not protected.
A party whose marker has lapsed can still apply for cooperation and enter that process.
For more information see paragraphs 85 to 88 of the Cartel Leniency and Immunity Policy.
Conditional leniency and/or immunity and agreement
What happens after a satisfactory proffer has been delivered and the marker perfected?
Once a marker is perfected, the Commission will grant conditional leniency to the applicant.
If the applicant has also applied for immunity, the Commission will also assess whether it is also appropriate to recommend to the Solicitor-General that the applicant be granted immunity from criminal prosecution. In such cases, the Commission will generally communicate its decision on conditional leniency and the Solicitor-General’s decision on criminal immunity to the applicant at the same time.
When conditional leniency is granted an agreement with the Commission is entered into. This agreement details ongoing obligations for the leniency (and / or immunity) holder to assist the Commission in the investigation and prosecution (where appropriate) of the cartel.
If the Solicitor-General decides to grant immunity, the Solicitor-General will provide an undertaking in writing to stay any prosecution commenced in respect of the applicant’s involvement in the particular cartel conduct.
For more information see paragraphs 89-99 of the Cartel Leniency and Immunity Policy.
What is required on an ongoing basis in order to maintain conditional leniency and immunity?
This is detailed in the Commission's Cartel Leniency and Immunity Policy and includes:
- providing full and ongoing cooperation and assistance during the investigation of the cartel conduct and any subsequent proceedings
- ceasing the cartel conduct unless otherwise directed by the Commission
- accepting the jurisdiction of New Zealand courts
- providing all relevant documents and information
- preserving records and computer-based information, and
- encouraging and requiring staff and officers and former staff and officers to attend interviews with the Commission in the Commission offices and to give evidence in court in any subsequent proceedings.
In relation to parties based overseas, the Commission expects that in most circumstances, the applicant will bring its witnesses to the Commission offices in New Zealand for interviews (or to a mutually agreed location).
For more information see paragraphs 95 – 102 of the Cartel Leniency and Immunity Policy, together with clause 6 of Attachment A to the Cartel Leniency and Immunity Policy.
How do individuals fit into their company's or former company's conditional leniency and/or immunity?
Individuals who have been involved in the conduct will usually be covered by leniency and/or immunity derived from the corporate applicant, but they will be requested to sign a letter that states they have:
- read and understood the agreement with their company or former company, and
- read and understood the Commission's Cartel Leniency and Immunity Policy.
For more information see paragraphs 59 - 63 of the Cartel Leniency and Immunity Policy, together with clause 7 of Attachment A to the Cartel Leniency and Immunity Policy.
Individuals who do not cooperate with the Commission during the investigation and any subsequent proceedings may face revocation of their leniency and/or immunity.
For more information about revocation of leniency and/or immunity see paragraphs 103-108 of the Cartel Leniency and Immunity Policy, together with clauses 15 -18 of Attachment A to the Cartel Leniency and Immunity Policy.
What about confidentiality?
The Commission takes all practical steps to protect the identities of conditional leniency and/or immunity applicants and any confidential information they provide. This is balanced against the need for the Commission to investigate the other members of the cartel and, where relevant, to take proceedings against the cartel.
Conditional leniency and/or immunity applicants are also required to keep the fact of their leniency and/or immunity application confidential and they can only disclose their leniency and/or immunity and/or its status if required to do so by law (or otherwise by consent of the Commission).
Confidentiality helps to maintain the integrity of the Commission's investigation and protects evidence from wilful destruction.
For more information about how the Commission can use an Applicant’s information see paragraphs 109 -112 of the Cartel Leniency and Immunity Policy.
Can conditional leniency and/or immunity be revoked?
Yes. If the conditional leniency and/or immunity applicant does not meet its obligations under the leniency agreement and immunity letter, a warning and rectification process is triggered. If the problems are not remedied, leniency and/or immunity may be revoked.
For more information about revocation of leniency and/or immunity see paragraphs 103-108 of the Cartel Leniency and Immunity Policy, together with clauses 11 - 18 of Attachment A to the Cartel Leniency and Immunity Policy.
Formal cooperation – Cooperation Concessions
Cooperation Concessions are usually formal agreements entered into by the Commission with parties who wish to admit to the behaviour and assist the Commission's investigation. Parties who cooperate with the Commission will usually be entitled to a discount to any penalty to reflect their assistance.
Can cooperation be applied for after cartel proceedings have been initiated?
Yes. The Commission is always prepared to engage with parties who wish to admit to their behaviour.
For more information about cooperation concessions please see paragraphs 118-134 of the Cartel Leniency and Immunity Policy.