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Norway: Blowing the whistle on cartels

Thomas Sando
One of the changes to the Norwegian Competition Act (the Act) that entered into force on January 1 2014 was the amendments to the leniency scheme available for cartel participants considering blowing the whistle to the Norwegian Competition Authority (the NCA).

Under the previous scheme, the conditions for obtaining leniency were hidden in the Leniency Regulation. From January 1, the conditions are included in the new sections 30 and 31 of the Act, dealing with complete and partial leniency respectively. Besides the relocation of the conditions for obtaining leniency, the amended scheme introduces a marker system in line with the system in the EU. This is an improvement, as it will be possible for leniency applicants to initially bring only limited information, yet receive leniency rights from the time of the initial application.

Although these amendments to the leniency scheme are improvements, the major problem and an inevitable disincentive to come forward under the previous Act, has been the risk of facing criminal prosecution under the Norwegian General Civil Penal Code – even where the company has applied for leniency under the Competition Act. This double track system is missing in the successful EU leniency programme, which may explain why there are only a few decisions from the NCA concerning leniency compared to under the EU leniency scheme.

Companies that are fined by the NCA under the administrative proceedings, as well as companies that obtain complete or partial leniency, are protected against criminal fines for the same offences under the European Convention on Human Rights. Possible conflicts between the Norwegian double track system and the human rights regime are solved under the amended Act, as the new competition rules abolish criminal sanctions for companies in their entirety (compared to the new paragraph in section 32).

Individuals (such as employees in a company that has applied for leniency under the administrative track) are not subject to administrative fines. Such employees could therefore still be prosecuted under the criminal track. This risk of facing criminal prosecution for individuals was not solved under the previous Act, although the NCA attempted to remedy the legal uncertainty by publishing a policy statement in 2008.

The NCA's statement made it clear that it would not report companies, or employees of companies, where they had applied for leniency to the NCA. In its statement, the NCA further referred to a letter from the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM), stating that it would not initiate investigations unless the NCA had reported a case or the NCA was in favour of prosecution.

Despite these attempts by the NCA and ØKOKRIM to remedy legal uncertainty, commentators and practitioners have called for the possibility of granting individual immunity for criminal liability in the Norwegian leniency scheme. The committee selected to review the Act agreed, and proposed to extend the leniency rules to cover criminal sanctions both for companies qualifying for leniency and their employees.

The committee's proposal was not followed by the Ministry, who pointed out that a general protection against criminal prosecution for employees in competition law cases would conflict with fundamental principles of Norwegian criminal law. Therefore, the amended Act introduces a new provision in section 33, where public prosecution of individual competition law offenders is conditioned upon the NCA's application for prosecution.

The new provision in section 33 of the Act merely constitutes a continuation and a formalisation of the procedure already applied before the amendments, being based on the NCA's policy statement in 2008. Accordingly, the leniency rules still apply only to companies and do not affect individuals. Despite the new provision in section 33, employees can still, in principle, be prosecuted even though their employer has qualified for leniency.

Another notable feature from the preparatory works to the amended Act is that the Ministry, in a separate chapter, highlights the need for more use of criminal sanctions against individual competition law offenders. Even though a real threat of individual sanctions will most likely have a preventive effect towards potential wrongdoers, the risk of criminal sanctions for individuals may also lead to fewer whistleblowers and therefore render the leniency scheme ineffective. It remains to be seen how the NCA will carry out its task when balancing the need for more individual criminal sanctions and an effective leniency programme. This may turn out to be difficult in practice.

Thomas Sando, Steenstrup Stordrange

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