Lincoln’s Inn lecture on public and private enforcement: part 2 – the Damages Directive and the protection of leniency statements and settlement submissions

Thomas Sharpe QC and James Flynn QC invited me to speak to the Lincoln’s Inn Eurogroup on the relationship between public and private antitrust enforcement.

This is the first main section of the speech. on the damages directive and the protection of leniency statements and settlement submissions. The others are:
Publications and the content of decisions;
Single and continuous infringement.

For those who prefer to read paper documents, I attach PDFs of the full prepared remarks and the handout.


In terms of setting the policy framework, as you all know the Damages Directive was agreed between the Council and European Parliament earlier this year and formally adopted earlier this month.1  I will not go through all of the details, but want to highlight one important point: the absolute protection of corporate leniency statements and settlement submissions contained in Article 6 of the Directive.

This was a controversial area, in light of the Pfleiderer2 and Donau Chemie3 rulings of the Court of Justice that held that a national court had to carry out a balancing exercise in deciding what protection to give to corporate statements that were in the possession of the national competition authority. Both rulings made clear that this balancing exercise was necessary in the absence of EU law on disclosure. Nevertheless, some interpreted the rulings as setting out a principle that national judges should always be in a position to carry out a balancing exercise; this, notwithstanding that explicit reference in both rulings to the absence of EU legislation.

With the Damages Directive, the Commission proposal and the Council and Parliament final text have met the principled requirements of these rulings by carrying out a balancing exercise when looking at the file as a whole: for the Commission’s file, some documents – leniency statements and settlement submissions – are never, pursuant to Article 6, disclosable; some are disclosable, pursuant to Article 5, after the proceedings are finished.

And, of course, pre-existing documents are always disclosable from the parties/ third parties in accordance with the national rules in force. That a document has been submitted to the Commission as part of an immunity or leniency application does not give that document any special status or protection.

So even ignoring the letter of what the Court said in Pfleiderer and Donau about the absence of EU legislation – which the damages directive now provides – we have met the spirit of what the Court was concerned about by balancing the various interests at stake here – those of public enforcement and the maintenance of leniency on the one hand and those of damages claimants on the other.

Perhaps inevitably, one of the consequences of this absolute protection for corporate statements is a necessarily clearer definition in the directive of what can be included in a corporate statement:

A leniency application is defined at Article 2 of the directive in part as a voluntary submission “describing the undertaking’s or a natural person’s knowledge of a cartel and its role therein, which was drawn up specifically for submission to the authority with a view to obtaining immunity or a reduction of fines under a leniency programme”

A leniency programme is in turn defined as a programme where a participant “in a secret cartel, independently of the other undertakings involved in the cartel, cooperates with an investigation of the competition authority, by voluntarily providing presentations of his knowledge of the cartel and his role therein.”

The voluntary aspect mentioned in both of these definitions is important; these are not submissions that the European Commission – or any court or authority – could compel. So it is entirely appropriate that these wholly voluntary submissions should receive absolute protection.

It is also clear from the above definitions that a leniency application must be focussed on inculpatory information.

Pre-existing documents, including translations of documents in non-EU languages, should not be provided by way of a corporate statement.  Similarly product information and market information should be provided separately. Generally all other information relevant to the case that is not inculpatory should be provided to the Commission separately to the corporate statement itself.

We have published brief guidance – in October 20134 – on the practical aspects of making corporate statements, as well as what should and should not be included as a way of helping companies and their advisers, and this does make clear that general market information or other publicly available information should not be included.

The damages directive means that this is not an optional exercise for us.  In order to ensure continued protection of corporate statements, we have to make sure that the corporate statement procedure is used only for materials within the definition of the damages directive; essentially inculpatory information about secret cartels.

There is also a general efficiency point as well – the oral statement procedure is lengthy and time consuming. We have limited resources and we have to use them efficiently. In recent months I have had to tell lawyers not to use it to dictate a letter requesting an extension of deadline for a request for information, or to dictate a procedural waiver allowing us to co-operate with other authorities. Other colleagues have had to refuse to allow the procedure to be used for English translations of pre-existing documents in non-EU languages.

Turning to settlement submissions, essentially the same principles apply as they do to corporate statements, with one provision added to Article 5 of the Directive by the Council and Parliament to the Commission’s original proposal – the treatment of withdrawn settlement submissions.

If we offer the settlement route to parties in a Commission case, it is for the Commission first to set out its case, and if the parties agree, they then provide a settlement submission. The various settlement submissions are then incorporated into a statement of objections to which the parties must acknowledge their agreement.  There is therefore no scope in the procedure for a draft submission. Though were a party to submit a draft then, in my personal view, that should – given the spirit of the directive – be covered by the same protection afforded to final submissions.

The Council and Parliament introduced a provision into the adopted directive which provides that withdrawn settlement submissions are not given the absolute protection afforded to settlement submissions that are not withdrawn. I cannot comment on what implications this might have for settlement procedures at the national level, but for the European Commission, our procedure does not allow for withdrawn settlement submissions; we have never had such a case and do not, given our rules, expect one.

Technically, it is important, however, to distinguish the possibility that parties withdraw settlement submissions – again not permitted in our settlement system – from situations where the Commission decides that it does not accept the settlement submission, perhaps because the Commission believes it does not fully reflect the Commission’s understanding of the case. The Commission then will reject the option of pursuing a settlement case and will revert to a normal, contested, procedure. This is not a case of a settlement withdrawn by the party, however, but of one rejected by the Commission. In those circumstances, the Commission would regard the rejected settlement submissions as meriting the protection afforded by the directive. I say it is technically important to make this distinction, because in practice this has again never happened and is again never likely to.

If the Commission has set out its position on the case, and the parties have agreed and submitted a settlement submission, it is hard to see why a party would then want to withdraw it.

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