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EU To Attract “Whistleblowers”: New Antimonopoly Practice Of United Europe


Mykola Aleksyuk, attorney at Ilyashev & Partners Law Firm
Source: European Pravda

The European Commission announced the launching of the new service for anonymous alerts (anonymous whistleblower tool) regarding the possible secret cartels and types of concerted actions.

The European Commission markets the new service as the additional tool to already existing leniency program, which offers the companies involved in a cartel either total immunity from fines or a reduction of fines in exchange for self-reporting.

The principal difference – if leniency program was established for legal entities, the anonymous whistleblower tool enables the individuals holding the information on the violation of antitrust laws to alert the antitrust regulatory authorities.

In other words the European Commission expects to receive the information on antitrust laws violations not only from management of the companies that breach the competition rules, but also from the employees of lower levels. Moreover, it is expected that such information shall be provided by the employees of the companies participating in cartels.

Therefore, it is quite logical that such alerts shall be anonymous in order to provide the safety for such employees.

To which extent does it comply with Ukrainian laws? The analogue of leniency program was implemented in Ukraine in 2012 when adopting the “Procedures for the Exemption from Liability” of the Antimonopoly Committee of Ukraine.

However, this program is not very successful due to the absence of anonymity guarantees. Ukrainian business entities, taking care about their own image (among other participants of secret cartel), do not wish to alert the AMCU on their participation in anticompetitive concerted actions.

In this context the opportunities for anonymous “communication” with the regulatory authority may become the viable mechanism for economic competition protection in Ukraine. Therefore, the practice of the new European tool may be of an exceptional interest for us.

The economic theory and law enforcement practice define secret cartels as one of the most dangerous features for competition. Secrecy and informality are peculiar to such cartels, and its members usually gain surplus profits from concerted actions. This is the reason why the antitrust regulation authorities spend significant efforts to investigate secret cartels.

However, it should be admitted that currently there are much less opportunities to fight cartels in Ukraine than in the European Union.

The main mechanism to fight cartels is the imposition of extremely high economic sanctions (certain percent of annual turnover of secret cartel participant), personal liability of the management of the participants of concerted actions (administrative or criminal), and the implementation of the program for the exemption from liability of those cartel members that alert the antitrust authorities on the existence of such cartel and cooperate in the course of the investigation of the corresponding case.

Certainly, fighting with secret cartels may be effective only in case of rational combination of the abovementioned methods. Therewith, the measures of state influence should not be of a formal character. They should be the real influence tool for business entities.

A perfect example of absolutely incapable mechanism in the field of the protection against anticompetitive concerted actions in Ukraine is the level of personal liability of the companies’ management. Pursuant to the Code of Ukraine on Administrative Offences the abuse of monopoly in the market, the conclusion of illegal agreements is punishable by a fine of UAH 510.

To compare, in many other countries there is a criminal liability for managers of the companies-members of secret cartel.

Statistically, 87% of judgments delivered by the courts of the United States of America in cartel cases set forth the punishment in the form of imprisonment. Therewith, the average term of imprisonment amounts to 31 month.

The difference is literally gigantic. And this is despite the fact that in spite of high fines and the danger of personal liability, the fight with cartels in the US and the EU is still not successful enough. The prospects of surplus profits are too attractive to refrain from concerted actions and secret cartels.

Therefore, the antitrust regulators are in constant search for the new methods of fighting with the violators of the laws for economic competition protection. And this new mechanism should be the anonymous whistleblower tool.

Coming back to Ukraine, it should be admitted that the domestic legislation demands the further improvement of cartels’ fighting mechanisms. Therefore, the use of anonymous whistleblower tool in Ukraine may be a viable addition to leniency program, which does not have the desired effect so far.

At the same time, there is no point to rely only upon this tool – the strengthening of cartels’ control in Ukraine should be of a complex character.

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