Commerce Commission updates Cartel Leniency and Immunity Policy after almost two decades - what you need to know

The Commerce Commission (Commission) has published an updated Cartel Leniency and Immunity Policy (Policy) and Template Leniency Agreement. The Commission has operated the Policy since 2004 and sees the Policy as one of its most important tools to detect and prosecute cartel conduct.
 
The Policy is designed to destabilise cartels by incentivising cartel participants to disclose the existence of the cartel to the Commission. In return for agreeing to fully cooperate with the Commission's resulting investigation and any enforcement proceedings (including providing documents and making people available for interviews), the Commission will agree not to bring civil proceedings against them (known as granting "leniency"). Leniency is only available to the first eligible cartel participant that notifies the Commission of cartel conduct that the Commission is either (a) not aware of, or (b) is aware of but does not yet have sufficient evidence to issue proceedings and the applicant can provide valuable evidence that could not be reasonably obtained elsewhere.
 
Since the criminalisation of cartel conduct in 2021, the Policy also allows the Commission to recommend to the Solicitor-General to grant "immunity" from criminal prosecution in cases where the Commission refer a cartel case to the Solicitor-General for criminal prosecution.
 
The key changes to the Policy are:

• "Naked attempts" to engage in cartel conduct no longer eligible: Leniency will no longer be available for those who simply attempt, but fail, to engage in cartel conduct. However, leniency will remain on the table where the attempt forms part of a broader set of conduct which includes other cartel agreements. It is therefore more important than ever that businesses are vigilant in having any conversations with competitors and that staff are aware of their competition law obligations.

• Whistleblowing tool is not a route to leniency: The Commission has made clear that use of its secure anonymous whistleblowing reporting tool is not covered by its leniency policy. It is therefore critical that those wishing to report cartel conduct seek legal advice on their options to ensure that the chosen route provides adequate protection.

• Parties who aid or abet cartels also eligible for leniency: The Commission has clarified that for the purposes of the Policy, parties who engage in "ancillary conduct" such as aiding and abetting, counselling, procuring, or inducing a cartel are also eligible to apply for leniency.

• Position of employees who have worked for more than one cartel participant clarified: The Commission has confirmed that derived leniency/immunity for employees only applies to employees for the period they were employed by the leniency applicant and does not extend to any cartel conduct engaged in by the employee at another employer. However, the Commission may decide to extend any leniency to such an employee where they fully cooperate with the Commission's investigation, including in relation to their involvement whilst at another employer.

• Greater clarity on when the Solicitor-General will grant criminal immunity in response to a Commission recommendation: The criminalisation of cartel conduct has introduced added complexity into the Commission's leniency regime in that only the Solicitor-General is able to grant criminal immunity. This puts potential leniency applicants in a difficult position given the (at least theoretical) risk that the Solicitor-General, in exercising their independent decision, may depart from the Commission's recommendation. The new Policy, in an attempt to provide greater comfort to potential applicants, provides greater clarity (by including extracts from the Solicitor-General's Prosecution Guidelines) on how the Solicitor-General will exercise their judgment. Nonetheless, we expect the dual decision-making role to continue to cause unease and frustration amongst potential applicants.

• Commission to record oral proffers: Even where the applicant requests that the Commission adopt a "paperless" process (under which all correspondence with the Commission is conducted orally to avoid creating discoverable documents that a third party may use against the applicant during proceedings for damages), the Commission intends to record the oral reading of the 'proffer', which contains the applicant's confession that their conduct may breach the Commerce Act. However, the Policy fails to articulate the legal basis for which the Commission is confident that such recordings will be protected by the privilege that is afforded to other notes made by the Commission. This requires further attention from the Commission to provide applicants with the confidence to apply for leniency particularly in international cartels where there may be the prospect of treble damages or class action regimes in some jurisdictions. 

• Clarification that revocation of leniency does not reactivate proceedings that were time barred at date at which marker is granted: The updated Template Leniency Agreement confirms that any proceedings that are already time barred at the date an applicant applies for leniency (ie when a 'marker' is granted) shall remain time barred even in the rare event that leniency is revoked.

 
The updated Policy can be found here.
The updated Template Leniency Agreement can be found here.
 
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This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.