A leniency or compensated program is a mechanism through which companies that confess to the Competition Authority to be part of a collusion or other anti-competitive practice, can benefit from a partial or total reduction of the applicable fine for said conduct.
In order for companies to be eligible for a leniency program, they must provide sufficient evidence so that the authorities can clearly demonstrate the existence of the conduct and those who participated in or benefited from it.
What is the goal of a leniency program?
Often it is difficult to prove the existence of illegal conduct because companies, knowing that they are breaking the law, destroy or hide evidence. The leniency program allows the authorities to dedicate a smaller amount of resources to the investigation and sanction activities (prove the existence of the agreement) and use those resources in monitoring activities.
How does a leniency program work?
The leniency program seeks to destabilize the illicit agreement between companies by creating mistrust between them. Each of the firms may consider that it is more beneficial to confess their participation in the expectation of being sanctioned. The program is most effective when only a reduction in the fine is applied to the first company that decides to confess.
What are the requirements for a leniency program to be effective?
It is not enough to establish a leniency program, for it to be effective it must meet three minimum conditions:
- The existence of high fines so that companies are concerned about the possibility of being fined.
- A high probability that the authority, independently, can effectively verify the existence of unlawful conduct and sanction companies.
- Programs must be transparent and credible. Companies must trust that if they join the program they can effectively obtain the promised benefits and that their identity will be protected.