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THE FIRST INFORMER OF A CARTEL – ELIGIBLE FOR LENIENCY CLAUSE

12 03 2008

„Can I expect that the company will be entitled to leniency if we notify of an existing cartel?” From now the undertakings will find responses to this or similar questions in the "Rules on the Exemption from Fines of Participants of Prohibited Agreements and the Reduction of the Amount of the Fines". The Competition Council has developed the Rules with a view to regulating the conditions in the presence of which an undertaking being a participant of a prohibited agreement (i.e., the agreement having characteristics defined in Article 5 of the Law on Competition of the Republic of Lithuania and / or Article 81 of the Treaty establishing the European Community) shall be exempted from the fine provided for the infringement in question. The procedure for the exemption from the fine or the reduction of the amount of the fine shall be applicable only in cases of a prohibited agreement between competitors (horizontal agreements).

Although the principal terms of the exemption from the fine or the reduction of the amounts of the fine has been specified in the "Rules Concerning the Setting of the Amount Fines for the Infringement of the Law on Competition" approved by Resolution of 6 December 2004 of the Government of the Republic of Lithuania, the Competition Council resolved to establish a procedure specifying the terms and the provisions of the Resolution.

With a view to alleviating the damage inflicted upon competition and the consumers by the prohibited agreements between competitors the Competition Council developed the Rules essentially designed to encourage the undertakings to terminate the prohibited agreements between competitors (cartels) and thus avoid the sanctions due in the even the cartels are disclosed. The need for the Competition Council to produce such Rules has naturally arisen from having assessed the experience accumulated in the area of the investigation of prohibited agreements. On repeated occasions the undertakings acknowledged to have committed the prohibited actions only after they are submitted the findings of the investigation conducted by the officers of the Competition Council and understood that the infringement had been proven and the fines could not be avoided.

The Competition Council provided a detailed definition of all terms and circumstances the presence whereof authorises the exemption of a participant of the prohibited agreement from the fine. The most important include a requirement for the undertaking to notify the authority prior to the commencement of the investigation, besides the undertakings must be the first to provide all the information at his disposal and cooperate with the Competition Council in the course of the investigation. Furthermore, the participant cannot be the initiator of the prohibited agreement.

The Rules stipulate that the amount of the fine calculated shall be reduced by 50 to 75 percent in the event the undertaking – first from among the participants of the prohibited agreement furnishes any information relevant to the Competition Council following the commencement of the investigation of the alleged infringement of Article 5 of the Law on Competition and (or) Article 81 of the Treaty establishing the European Community.

An undertaking seeking the entitlement to the exemption from the fine or the reduction of the amount of the fine provided for in the Rules shall file an application to that effect with the Competition Council. The Rules also provide the procedure for the examination of the application, also the procedure for the filing of a simplified application for the exemption from the fine to the Competition Council in cases where the undertaking has already or intends to furnish the application to the European Commission where the European Commission is the competent authority in respect of the examination of the specific prohibited agreement case.

In the opinion of the Competition Council the Rules should encourage the acknowledgments by the undertakings which would in turn facilitate the alleviation of the damage produced by the prohibited agreements upon competition and the consumers and, would enable the undertakings, in consideration for their cooperation, to avoid the substantial fines due in case the cartels are proven. The leniency system that is by means of the Rules placed into operation is designed to ensure both a more efficient detection of cartels, and the prevention of such prohibited agreements.

“The Rules on the Exemption from the Fines of the Participants of Prohibited Agreements and the Reduction of the Amounts of the Fines” are posted in the Competition Council’s website at:  www.konkuren.lt

In addition, undertakings are welcome to seek advice and information by applying to the Cartel Division of the Competition Council (tel. 261 5917).

Competition Council Spokesperson