De danske leniency-regler belyst i et juridisk og økonomisk perspektiv. - Er konkurrencelovens § 23a et effektivt middel mod karteller i Danmark?
This paper concerns the Danish leniency rules. We will through economics and law theory analyze whether the leniency rules have the effect expected. Recently a new major cartel has been discovered in the Danish building industry. With this in mind, we will look through pros and cons for companies to utilize the leniency rules and reveal the existence of the cartel.
The existence of a cartel in the building industry, has led to a limitation in competition, which in disadvantage to consumers, makes the cartel able to raise the asking prices. Agreements limiting the competition are illegal according to the Law of Competition §6. However it is very attractive for the companies to enter into such agreements. The unusually good profit and the elimination of insecurities concerning competitors are two major factors, which make it highly tempting to enter into secret agreements. To prevent this, a new rule was added to the Law of Competition (§23a) in 2007, which was to prevent the initiation of cartels as well as to encourage revealing of existing cartels.
The cartel in the building industry is not yet revealed by means of the leniency rules, which indicates that the leniency rules are not sufficiently effective. We have found a number of reasons explaining the lacking use of the leniency rules.
One of these is that a high degree of transparency in the cartel has led to more stability in the cartel. For this reason the participants in the cartel are surer of each other and the continuous existence of the cartel, and thus no one has ever wanted to reveal the cartel. Furthermore the internal stability is strengthened because of frequent interactions between the participants and because of the small size of the country. The size of the country limits the opportunities for a cartel breakaway company to continue somewhere else in the country.
The way the Danish leniency rules a put together it is possible for a company to receive a reduced punishment or no punishment at all by turning itself in or revealing the cartel to the authorities. To completely escape punishment the company is to lead the authorities to revealing the cartel before the authorities has even got suspicious. On the contrary, to receive only reduced punishment, the company only has to contribute new essential information about the cartel, which is of value for the authorities to draw closer to revealing the cartel. Thus it is possible to achieve a reduced punishment even though the authorities already know about the company participating in the cartel. Another reason why the cartel is not yet revealed by means of the leniency rules is therefore, that between the cartel companies the rules are used as a backup only, as it is always possible to achieve a reduced punishment. This makes the sanctions less effective.
In further concern to the lacking use of the leniency rules, the collaboration with the authorities makes it much easier for an injured to claim for civil damages against cartel participants. This is because the collaboration entails the companies to present all materiel on the existence of the cartel in civil claim. The sums of damages recovered in Danish court has moreover been of such character compared to the fines received for violating the Law of Competition, that the recovered damage has exceeded the fine for the illegal cartel activities.
The level of fining in Danish court is not very high. The law provides options to fine up to more than 15 million kroners, but this amount is far from what is actually fined. The largest fine ever sentenced is a 5 million kroner fine to Arla Foods for having taken advantage of its dominating position. The consequence of such low level fining is that the encouragement for the cartel participants to make use of the leniency rules is lowered, as the winnings for participating the cartel by far makes up for the fine to expect if being caught. Furthermore the risk of being caught is also a factor considered in the risk analysis performed by cartel companies. If the risk is very low, a very large fine reduction is necessary to convince the companies to utilize the leniency rules.
These are the reasons why the participants in the cartel of the building industry has not revealed the cartel and taken advantage of the leniency rules to receive impunity. Thus the Danish leniency rules are not as effective as intended when introduced. For the Danish leniency rules to work the level of fining should be highly increased. The actual rules should not be extended, but the entire span of fining should be taken into use, and furthermore the options of sanction could be extended to also include imprisonment of key persons in the companies. This would have a more discouraging effect on the lawbreakers, and the imprisonment would provide the authorities with more options in investigation, which could likely increase the changes of revealing cartels and hence decrease encouragement to enter into cartel agreements.