Judgment of the Court of the Justice of the EU in case C-428/14, DHL Express (Italy)


Dr. Anton Petrov*

The fight against cartels has always been one of the main topics in the European competition policy. Unfortunately, the secretive nature of cartel agreements poses formidable challenges to enforcement agencies and the investigations are usually costly, long-lasting and often unsuccessful. For this reason, competition authorities look for alternatives to external monitoring by encouraging insider disclosure (also known as ‘whistleblowing’).

In this respect the practice of leniency programs, which started in the US in 1978 and currently extends to over 50 countries throughout the world, is regarded as a major success, providing unprecedented rate of discovery and termination of anticompetitive agreements. The number of investigations in the EU triggered by leniency applications is constantly rising, reaching almost 100% of all cases reviewed by the European Commission in 2013. It the same time it should be noted that the EU lacks a uniform leniency framework. This is largely the result of decentralization in the application of EU competition rules, since Regulation 1/2003 allows national authorities to pursue cartels independently and adopt their own leniency programs.

The European Competition Network (‘ECN’) was created in order to coordinate enforcement by multiple national authorities and in 2006 it adopted a Model Leniency Programme (‘MLP’, further revised in 2012). However, the usefulness of this model is very limited because it only introduces the basic standards and does not prohibit application of special rules in the respective national programs. Thus the NCAs are able to introduce independent requirements and exemptions for national proceedings.

In this context, the judgment of the Court of Justice of the EU (‘ECJ’) of 20 January 2016 on case C 428/14 demonstrates some of the principal problems of the currently existing leniency system. The case originated as a result of a request for preliminary ruling from the Italian Consilgio di Stato in relation to proceedings between DHL Express (Italy) Srl and DHL Global Forwarding (Italy) SpA (jointly ‘DHL’) and the Italian NCA – Autorità Garante della Concorrenza e del Mercato (‘AGCM’), concerning the authority’s decision to impose fines on DHL for participating in a cartel in the sector of international road freight forwarding to and from Italy. The reference from the Italian jurisdiction posed 3 questions, which in essence deal with the relations between the leniency programs adopted by the Commission and the NCAs and the obligations of enforcement authorities in case of multiple applications.

In response to the first question the Court held that the ECN, being intended to act only as a discussion forum, does not have the power to adopt legally binding rules, and the MLP is only a soft law instrument. Thus, in the absence of a centralised system at the EU level for the receipt and assessment of leniency applications, the treatment of such applications sent to a NCA is determined by that authority under its national law.

The second question explored the potential existence of a legal link between the application for immunity to the Commission and summary applications submitted to NCAs in respect of the same cartel. In this respect ECJ noted that, absent a EU-wide system of fully harmonised leniency programmes, an application for leniency to a given authority is not to be considered as an application for leniency to any other authority, and the treatment of a leniency application is determined by the law of each Member State. NCAs are free to adopt leniency programmes, and each of those programmes is autonomous, not only in respect of other national programmes, but also in respect of the leniency programme of the Commission.

As regards any obligation for the NCAs to contact the Commission or an applicant, where the material scope of a summary application they have received is more limited than that of the application for immunity filed with the Commission, the Court noted that such an obligation could attenuate the duty of cooperation of leniency applicants, and thereby undermine the effectiveness of the leniency programme. It is therefore in the interest of an undertaking wishing to benefit from the leniency system to submit applications for immunity not only to the Commission, but also to all potentially effected NCAs. The applicant bears the burden to ensure that any application which it submits is devoid of ambiguities as to its scope, especially as there is no obligation on the NCAs to assess a summary application in the light of an application for immunity submitted to the Commission.

Finally, on the third question ECJ held that the fact that the MLP (in its 2006 version), did not expressly refer to the possibility for the undertakings that had submitted an application for reduction of fines to lodge a summary application for immunity before a NCA did not preclude the NCA from accepting such an application. Member States are not required to incorporate provisions of the MLP in their leniency systems and, they are not precluded from adopting rules not present in that model programme or which diverge from it, in so far as that competence is exercised in compliance with EU law.

This judgement clearly demonstrates the shortcomings of the current leniency system existing within the EU and highlights the need for reforms. The presence of numerous parallel autonomous national programmes leads to the result that a leniency application filed with one NCA in one Member State applies only there and does not have any effect in other jurisdictions. Moreover, obtaining immunity in a cartel investigation conducted by the Commission does not give automatic entitlement to leniency in related national investigations. Consequently, in order to secure maximum protection in cross-border cartels, potential leniency applicants must submit simultaneously several applications throughout the EU, which gives rise to a series of problems related to uncertainty, increased costs and risk of double jeopardy.

Accordingly, in the context of most cartels submission of a leniency application is a complex task both for the whistle-blowing cartel member and for its legal advisors. In the currently existing heterogeneous regulatory environment undertakings must not only establish within a short time frame the precise scope of the relevant cartel practices they want to distance themselves from (both in product and geographical scope), but must also anticipate and evaluate all possible procedural scenarios – i.e. which of all 29 authorities within the EU (28 NCAs plus the Commission) would take interest in their case and how would they handle it. In practice there is no guarantee that even if a full and all-encompassing application is filed with the Commission it will take the entire case. The opposite is also possible – a cartel, which at first sight seems purely national in scope, may reveal cross-border effects which impact several Member States, thus proving the Commission to take it over. This, in combination with differences in national practices, creates an environment that fuels unintentional mistakes, which can have substantial negative impact on the balance sheet of the undertakings concerned.

Although the statistics indicate a constant increase in the number of investigated cartels within the EU and it is often argued that leniency programmes have material contribution for this, it is difficult to measure the actual rate of their success, since the aggregate number of all cartels currently in existence is completely unknown. The current EU leniency system – which in its core dates back to 2006 – has not been designed to respond to a large number of simultaneous applications. Indeed, confessions do increase the speed of uncovering cartel arrangements, but they do not remove completely the requirement to conduct a full and in-depth investigation. Consequently, many NCAs keep piling leniency application without being able to process everything. Moreover, the economic environment is constantly changing – today we live in a dynamic world which is getting more and more global, where cross-border supply chains are a standard and no longer the exception. In this situation the autonomous existence of multiple national leniency programmes, which often differ from one another (if not in substance, at least in procedural practices and approaches), decreases the incentives for confession and is turning into a hindrance, which impedes the effectiveness of the system. Therefore, it is necessary to change the present rules by introducing better synchronisation between NCAs and replacing the current ‘multi-stop’ leniency system with ‘one-stop-shop’ procedures.


* Senior Associate with Djingov, Gouginski, Kyutchukov & Velichkov, Sofia, Bulgaria. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of the organizations he is affiliated with.