What is derived Leniency/Immunity?

Leniency means that the Commission will not take civil enforcement action against an applicant for their involvement in notified cartel conduct. Immunity similarly means that the Solicitor-General will stay any criminal prosecution (by the Commission or otherwise) commenced in respect of an applicant’s involvement in notified cartel conduct.

Where a business successfully applies for Leniency/Immunity, any Leniency/Immunity that is granted to the business will usually extend to individuals within the business (ie, current or former directors, officers or employees) who were involved in the cartel conduct. This is known as derived Leniency/Immunity.

Why should I care about derived Leniency/Immunity?

If a court finds that you have breached the cartel provisions of the Commerce Act, you may face up to seven years in prison and penalties or fines of up to $500,000 per breach. Derived Leniency/Immunity means that the Commission will not take enforcement action (civil or criminal) against you as an individual and allows you to avoid these sanctions in return for providing information and cooperating with the Commission’s investigation.

How do I gain derived Leniency/Immunity?

Any individuals within a business which successfully applies for Leniency/Immunity (ie, current or former directors, officers or employees) who were involved in the cartel conduct and cooperate with our investigation as required will usually be:

  • covered by derived Leniency; and
  • included in any recommendation we make to the Solicitor-General to grant Immunity.

As long as individuals who are eligible for derived Leniency/Immunity cooperate with our investigation as required, they will ordinarily be covered by derived Leniency/Immunity without needing to take any further steps.

What if the business’s Leniency/Immunity application doesn’t cover all of the cartel conduct which I’ve participated in?

Derived Leniency/Immunity only applies to your period of employment at the applicant. As such, you would not ordinarily be covered if you inform us about cartel conduct taking place outside of this period (eg, if you previously worked at another business engaged in the cartel conduct).

Under such circumstances, we may still consider granting Leniency and/or recommending Immunity for all of your involvement in the cartel conduct, but this will be on a case-by-case basis. You, or your legal representative, should contact us as soon as possible to enquire if derived Leniency/Immunity can be extended to provide full coverage for your involvement in the conduct.

We recommend seeking independent legal advice in these circumstances.

What am I expected to do to gain and maintain derived Leniency/Immunity?

In essence, you will need to admit your involvement in the cartel conduct, provide a comprehensive account of, and information in relation to, your involvement in the cartel conduct, and provide continuing cooperation with the Commission’s investigation and any enforcement action (including, if required, appearing as a witness for the Commission). See clause 7 of the Template Leniency Agreement for further details regarding your obligations under derived Leniency/Immunity.

What procedural steps should I expect from the derived Leniency/Immunity process?

If you were directly involved in the cartel conduct and/or hold relevant information in relation to the cartel conduct, the business applicant will likely inform you of the Leniency/Immunity application. You may be expected to assist with the business’s application for Leniency/Immunity, including by searching for relevant information, providing a witness statement, and/or attending an interview with the Commission.

If the business successfully perfects its marker and is granted leniency/immunity, you will likely receive a letter (‘Commission’s Letter to Derived Leniency Holders’) explaining your obligations. If you receive this letter, you will be asked to confirm that you understand and accept these obligations.

At the end of the investigation phase, the Commission will likely write and ask you to confirm that you have made all reasonable endeavours to provide the Commission with evidence of the cartel conduct, including by providing to the Commission all information and documents within your power, custody or control.

If the Commission decides to issue legal proceedings/prosecute at the end of the investigation, you will likely be expected to certify in writing that you have fully complied with your obligations under derived Leniency/Immunity. The Commission will also advise what is expected from you during the proceedings/prosecution, including whether you are expected to give evidence.

If you were not directly involved in the cartel conduct, you may still be required to assist with the Leniency/Immunity application and/or the Commission’s investigation. The business applicant will be in contact with you if this is the case. If you are unsure as to whether you are covered by derived Leniency/Immunity, please check with the business applicant.

What happens if I fail to comply with the conditions for receiving or maintaining derived Leniency/Immunity?

If we reach a view that you have failed to meet the conditions for derived Leniency/Immunity (eg, by refusing to cooperate with our investigation), we will first inform you of this view and allow 10 working days for you to respond to and/or remedy the identified issues. If the issues are not satisfactorily responded to and/or remedied within 10 working days, we will give you written notice of our concerns and allow you a further 10 working days (or a longer period we may specify) to respond to and/or remedy the issues.

If the issues are still not responded to and/or remedied within this timeframe, we may:

  • specifically exclude you from any grant of Leniency and/or any recommendation we make to the Solicitor-General to grant Immunity; or
  • revoke your derived Leniency and/or recommend that the Solicitor-General revoke your derived Immunity.

In those circumstances, you will no longer receive the protection afforded by the derived Leniency and/or Immunity, and the Commission may potentially take civil proceedings and/or criminal proceedings against you.

What should I do if the business’s Leniency/Immunity is revoked?

If the business’s Leniency/Immunity is revoked (ie, withdrawn) through no fault of your own, we will notify you of this. You will have 20 working days (from the date we notify you) to confirm that you wish to retain derived Leniency/Immunity. If you do not provide confirmation within this timeframe, you will lose derived Leniency/Immunity.

What should I do if I change jobs, or my contact details change?

One of the conditions of maintaining derived Leniency/Immunity is that you need to inform the Commission of any changes in your employment situation or contact details within five working days. By doing this, it will also enable the Commission to contact you if the business’s Leniency/Immunity is revoked.

What should I do if I am experiencing stress relating to the Leniency/Immunity process?

Maintaining confidentiality is one of your key obligations under derived Leniency/Immunity. However, we appreciate that the Leniency/Immunity process can be stressful and worrying, and that you may wish to speak to a mental health professional or a support person. If this is the case, please contact us as soon as possible to discuss arrangements.

How do I contact the Commission if I have any questions?

The applicant will be the main contact point with the Commission, and we would expect them (or their legal representative) to ask the Commission questions on your behalf. However, if you have separate legal representation from the applicant, it may be appropriate in some circumstances for you or your lawyer to contact the Commission directly.

If you are uncertain about any aspect of the derived Leniency/Immunity process, you may wish to seek independent legal advice.