[Vrinda Bagaria is an LL.M. Graduate from National University of Singapore. She has also been a Senior Associate at L&L Partners (formerly known as Luthra & Luthra Law Offices).]
Leniency programmes provide an effective measure for undertakings involved in cartel activities to come forward and inform competition authorities of their cartel activities, however, risks associated with disclosure of information for an undertaking applying for a leniency programme (leniency applicant) may outweigh the incentives and a leniency applicant may have to suffer adverse consequences. This article examines the risks of civil liabilities that may arise in follow-on actions. Part I of this article deals with when information can be confidential. Part II briefly analyses developments under the United Kingdom (UK) and European Union (EU) regime regarding protection from disclosure of confidential information and the position in Singapore, which is largely based on the EU regime.
CONFIDENTIALITY OF INFORMATION
In the absence of any uniform definition of confidentiality under competition law, the scope of when information can be considered confidential varies ubiquitously. Information may be said to be inherently confidential where it is known to a limited number of individuals and where its disclosure is likely to cause harm.
Generally, sensitive information on business strategies, for example, price structures, know-how, and customer data, which may be provided voluntarily by a leniency applicant to fulfill the requirement of full disclosure may be claimed as confidential. However, in the Pilkington Group Ltd v European Commission case, the applicant’s challenge to disclosure of sensitive information in the infringement decision viz. names of customers, descriptions of the product, parts supplied, pricing agreements, allocation of customers between cartel members was dismissed on the ground that such information was factual, historical and could be easily identified on basis of other information.
Moreover, the confidentiality of price agreements, price mechanisms, etc. was denied on the ground that the applicant chose to communicate such information precisely to those persons and entities (competitors) from whom such information was to be secret hence the claim of confidentiality that such information will cause harm was unreasonable. It, therefore, emanates that question of the extent to which an undertaking can claim confidentiality regarding information already shared as part of its cartel activities is a matter of concern for a leniency applicant. Consequently, it has a bearing on the permitted scope of the disclosure in an infringement decision and otherwise.
DISCLOSURE TO THIRD PARTIES IN PRIVATE ENFORCEMENT ACTIONS
Admittedly, the scope of restrictions imposed by most jurisdictions for disclosure of information obtained under leniency programmes is very wide but gateways provided by way of exceptions, the role of courts and subjectivity involved in determining whether disclosure of confidential information to a third party over-rides the need to protect commercial and public interests, raise concerns regarding actual protection provided to a leniency applicant beyond the realms of competition law. In the UK and EU countries, the legal position regarding disclosure of information by competition authorities in private enforcement actions underwent much deliberation through judicial precedents and ultimately culminated in the EU Directives.
EU and UK regime
The rules governing disclosure of confidential information under the EU regime were recognized by the Court of Justice of the European Union (CJEU) in the case of Pfliederer and Donau Chemie. The CJEU established a weighing test which national courts must apply i.e. first courts should determine the interest of the party in obtaining access to documents and secondly, they should weigh the harm such disclosure may cause to the legitimate and public interests of other parties.[i] However, in both cases, the interest in protection outweighed the interest of a third-party and access to documents was rejected.
The test was subsequently applied by the English High Court in National Grid and Emerald Supplies and based on additional factors viz. increase in leniency applicant’s liability vis-à-vis other non-cooperating parties, gravity and duration of the infringement, the proportionality of disclosure etc., the third party was granted access to redacted documents and limited confidential information.[ii] Although in the Emerald Supplies case, these additional factors were not taken into consideration, it was concluded that the release of un-redacted decisions without leniency documents was a satisfactory solution.[iii]
Gradually the EU Directives were released in November 2014 to adopt a coherent approach to balance the conflict of interest between private and public enforcement. Article 6.6 of EU Directives provides complete immunity against disclosure of leniency statements and settlement submissions such that even national courts cannot order its disclosure. However, Recital 26 of the EU Directives limits such exemption only to voluntary and self-incriminating leniency statements and settlement submissions to simultaneously protect the right of third parties. Thus, there still exists a grey area and courts may nevertheless have to use their discretion to determine disclosure of information obtained under leniency programmes on case to case basis. The extent to which courts have actually adhered to the EU Directives is also unclear considering that post-enactment of these Directives there were instances in which the European Commission (EC) was allowed to disclose substantial information in the non-confidential version by rejecting the claim of confidentiality.
The Competition Act, Chapter 50B, enacted in 2004 (Act) governs the competition law regime in Singapore. The Competition and Consumer Commission of Singapore (CCCS) adopted the leniency programme in 2006 in the form of “CCCS Guidelines on Lenient Treatment for Undertakings Coming Forward with Information on Cartel Activity” (Guidelines) under Section 61 of the Act (last revised in 2016).
Section 89 of the Act provides for the preservation of secrecy in respect of information obtained in the course of an investigation and power of the undertaking to claim confidentiality subject to furnishing of appropriate reasons. Nevertheless, it carves out certain exceptions under which CCCS is authorized to share the information which inter alia includes circumstances where the purpose is to enable CCCS to give effect to any provision of the Act[iv] as long as it is not contrary to (i) public interest; (ii) does not result in significant harm to legitimate business interests of the undertaking to which it related; or (iii) interests of a private individual.[v] ‘Recognition of private enforcement action by a third-party’ falls within the scope of this provision. Accordingly, if a third party brings an action against a leniency applicant, CCCS may exercise its discretion to disclose such information as it may deem necessary to give effect to any provision of the Act or for purpose of prosecution under the Act, assuming that conditions mentioned under Section 89(6) of the Act are satisfied.
In Singapore, a third party cannot institute private enforcement action until a decision of infringement has been issued by competition authorities or during the period of an appeal if any filed.[vi] In such cases, the third-party instituting a private action needs to establish a “causal relationship” between such infringement and damages suffered and may be required to gain access to information from competition authorities. Neither the Act nor Guidelines expressly prohibit disclosure of information under a leniency programme. The Guidelines merely limit the scope of confidentiality to the identity of the undertaking until CCCS issues a written notice of its intention to make a decision affirming infringement.[vii] Moreover, the Guidelines explicitly withdraw the protection of a leniency applicant from any liability arising in a private action.[viii] Thus, there is an inherent conflict of interest between a private enforcement action and a public enforcement policy which requires preservation of secrecy in respect of disclosure of information obtained by competition authorities under a leniency programme.
Since no instances of a civil action against an undertaking involved in Section 34 infringement has been initiated till date, the waters in Singapore remain untested. Therefore, it is only prudent for an undertaking to assess the additional risks of civil liabilities as a result of follow-on actions and approach the CCCS only if the benefits of the leniency programme outweigh such risks.
The various competition law regimes exhibit that protection from disclosure of information promised under leniency programmes may be quite misleading. Various gateways provided by way of exceptions pass the baton to competition authorities and courts to determine the protection or disclosure of information, thus exposing leniency applicants to uncalled civil liabilities. Not to mention that disclosure under competition regimes may also be required in circumstances viz. sharing information with other domestic regulatory authorities or as a part of ensuring co-operation with foreign competition bodies. Therefore, the question that really needs attention is whether a leniency applicant is really incentivized or is the leniency programmes a legal web to lure undertakings on the promise of protection and preservation of secrecy. Or is it justified to entangle the corporates given their misdoings?
[i] Sebastian Peyer, ‘Access to competition authorities’ files in private antitrust litigation’ (2015, Journal of Antitrust Enforcement) 3, 58-65, p. 77-78 [ii] Id at 77-78 [iii] Id. [iv] S. 89(5)(b)(ii) of the Act. [v] S. 89(6) of the Act. [vi] Sub-sections (1), (2) and (4) of Section 86 of the Act. [vii] Para 8.1, Leniency Guidelines. [viii] Id., Para 10.1