Today the New Zealand Commerce Commission (NZCC) published updated Cartel Leniency Policy Guidelines (Updated Guidelines), updating its previous guidelines from 2011 (2011 Guidelines). While the changes are mostly cosmetic, the Updated Guidelines indicate a potential change in approach by the NZCC towards penalty discounts for "second-in" applicants that seek to fall within the NZCC's cooperation regime.
What is the NZCC's Cartel Leniency Policy?
The NZCC's Cartel Leniency Policy regime grants immunity from NZCC prosecution to the first participant in a cartel to inform the NZCC of that cartel, in exchange for full cooperation with the NZCC.
In addition, even for participants that are not the first to inform the NZCC of a cartel, the NZCC will provide "cooperation concessions" if those participants fully cooperate with the NZCC and provide the NZCC with "information that adds significant value to the investigation".
What are the changes in the Updated Guidelines?
The NZCC's Updated Guidelines do not introduce substantive changes to the NZCC's 2011 Guidelines, but rather reflect efforts by the NZCC to make the guidelines more user friendly – including by making clearer what is expected of parties through the NZCC's immunity or cooperation processes.
There are, however, a couple of changes in the NZCC's process:
- The NZCC's 2011 Guidelines provided an applicant with 28 working days, as a standard rule, from first requesting immunity (known as obtaining a 'marker') to prepare and submit to the NZCC an initial statement outlining a description of the cartel conduct, the key individuals, and the key parties (known as the 'proffer'). Recognising that 28 working days was often a very short timeframe to conduct the necessary internal investigations to prepare that proffer statement, the NZCC has increased the standard timeframe from 28 working days to 40 working days. The NZCC will also allow longer if it agrees that is appropriate in the circumstances.
- The NZCC's 2011 Guidelines said that the NZCC "may consider recommending" reductions in penalties of between 25% to 50% for parties that do not receive immunity but fall within the NZCC's cooperation regime. However, indicating a move away from any form of penalty reduction commitment, the NZCC's Updated Guidelines say that the "courts have typically recognised cooperation discounts of 25-50%, but this indication should not be treated as a commitment by the Commission in any specific case." We see this as a potentially unhelpful change. In particular, this move away from providing any specific indication of likely discount reduction may discourage participants from using the NZCC's cooperation regime, as it increases the uncertainty about whether or not the NZCC will ultimately reward cooperation by supporting sufficiently material penalty discounts.
Where can I see the Updated Guidelines?
The NZCC's Updated Guidelines can be accessed here, and a shorter FAQ document can be accessed here.
If you have any questions on how these developments may affect your business, please contact one of our authors below.
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