Escaping Liability for Antitrust Infringements

Vitaliy Dianov
Senior Attorney
Capital Legal Services

Cartel agreements, price-fixing on products, restricting the access of other players to the commodity market, imposing unfavorable terms on contractors, and other violations of the antitrust legislation pose an absolute threat to dynamic economic growth, these things lead to significant appreciation of products for consumers and adversely affect the competition up to and including the elimination of competition on certain commodity markets and creation of oligopolies and monopolies. Antitrust legislation, enforced in an effective manner, saves consumers millions and billions of rubles, overpaid in non-competitive markets.

At the same time, we believe that imposing severe penalties for infringing the antitrust norms is not the only method for fostering compliance with the antitrust legislation. We are positive, however surprising it may seem, that the legal possibility for avoiding penalties for violations of the antitrust rules, provided that necessary assistance in revealing such offences is rendered, may facilitate prevention of the most grievous offences against competition.

One of the major obstacles to battling anti-competitive agreements is confidentiality and secrecy that is associated with concluding such agreements. In a number of cases, anti competitive agreements are made not by virtue of documents, but through certain verbal arrangements between corporate decision-makers at informal meetings, teleconferences etc., which complicates finding evidence of such arrangements for antitrust authorities.

In order to facilitate the discovery of anti competitive agreements and further combating such agreements, the laws of many countries provide for different programs for releasing from liability for antitrust offences. For convenience purposes, these programs will be united under the term “Leniency Programs”.

In the US, the Leniency Program is known as the Antitrust Division’s Leniency Program, implemented by the Antitrust Division of the US Ministry of Justice. The European Union employs the so-called Leniency Policy implemented by the Competition Commissioner. In professional-oriented legal literature the term cartel-whistle blower programs is often used to denote the Programs.

Leniency Programs, which are to a great extent similar to the EU program, either exist or are in the planning stages of the national laws of European countries. In particular, in Finland, under the auspices of the Ministry of Employment and Economy, a working group was established to amend the national antitrust legislation and, specifically, to bring the national legislation of Finland into compliance with the EU legislation as pertains to releasing from liability for infringing the norms of the antitrust law.

In Russia a Leniency Program for granting a release from penalty for anti-competitive practices does not exist as a separate document covering all aspects of the Program’s implementation. However, under certain circumstances it is still possible for businesses and employees who have violated the antitrust legislation to qualify for release and be excused from penalties. Moreover, in the recent past the terms of release from liability in Russia were rather liberal in comparison to those in the US and the European Union.

In particular, in accordance with the rules which were in effect before August 23, 2009, any company could petition the antitrust authorities at any time to be granted a release from penalty, before the state authority adopts the decision to hold such company liable for infringing the antitrust legislation. Furthermore, if the company provides the state authority with documents available to the company and related to the committed offence, ceases infringing the antitrust rules or refuses any further participation in such offences, the antitrust authority was obliged to release the company and its employees from liability.

However, the rules of the game have changed substantially starting from the end of August 2009. Following entry into force of the so-called “second antitrust package” of amendments to the effective law on protection of competition, the terms of release from liability was made much more severe and only persons or entities who addressed the antitrust authorities for the first time and fulfilled certain conditions established by the law, are able to benefit from such release.

We can only guess how the new procedure for releasing from liability would work in practice, but we hope that the new amendments will not lead to discontinuation of this institution.