The Leniency Program In Anti-monopoly Law

Illegal cartel is the most common anti-competition practice which has resulted in the most serious harm to competition. Therefore, the illegal cartel practice has always been severely prohibited by the anti-monopoly law all over the world. However, in order to evade the investigation of anti-monopoly law enforcement agencies, the form of agreements by the illegal cartel offenders are always very secretive, which makes it very difficult for law enforcement agencies to find and investigate it. The United States, known for its stringent enforcement of the antitrust law, has adopted a very unique tool for cartel detection——the leniency program. It has been proved that the leniency program is very effective in combating and deterring illegal cartels. Because of the great successes of the United States in implementing the leniency program, some countries and regions where the market economy is mature and competition law is developed, also began to implement their leniency programs. In order to effectively investigate and deal with cartels (the cartel is called agreement monopoly in China), the leniency program has been also introduced in the anti-monopoly law in China. This dissertation, basing on the legislative provisions and the implementation practice of leniency program in foreign countries, explores the theoretical basis, substantive norms and procedural rules of the leniency program, then analyzes the factors and related systems which affect the implementation of the system, finally recommends some improvement after pointing out lack of legislation and implementation difficulties of the leniency program in China. This dissertation follows the research route of from theory to system then to practice and from foreign countries to China, and the dissertation uses many research methods such as interest analysis, value analysis, comparative analysis, historical study and economic analysis and so on. The dissertation consists of six parts.There are several different English expressions of leniency program, and also it has different Chinese expressions. Considering the actual situation and the research needs in China, it is proper to adopt the expression of "leniency program". Currently, most of the market economy countries have implemented leniency program, so there are diverse manifestations of leniency program, which can be classified according to different criteria. While the basic idea of leniency program has a long history, the birth of the background of this system is the strict enforcement of U.S. antitrust period, and rules of origin are the plea bargaining of United States. Under the influence of successful implementation of leniency program in the United States, some other developed countries introduced the system, on which there is a process from immature to mature. Leniency program, which is recent birth and widespread, fully reflects the basic value of anti-monopoly law. From the economic point of view, leniency program can save law enforcement resources, and mechanism of leniency program is by distrust among cartel participants to create a "Prisoner's Dilemma" which can force them to game for interests. However, the leniency program is questioned and criticized in practice. From a legal point of view, critics argue, first, the system violated the principle of fairness, and second, the system may lead to law enforcement agencies to shirk responsibility, and third, the information provided by the whistle-blower is lack of credibility, and firth, the system may cause ethical issues. In addition, from an economic point of view, critics think that leniency program can lower of the penalty level and facilitate the creation and maintenance of cartels.Lenient treatment includes relief administrative penalties and removal of criminal penalties, and in these two situations, implementing agencies and their functions are different. In general, leniency program is applicable to cartel conduct. Serious harm and concealment of cartel and the limited enforcement resources are necessity reasons why leniency program is applicable to cartel conduct and general characteristics of economic organization crime which cartel have and special feature that cartel is cooperation between competitors are potential reasons why leniency program is applicable to cartel conduct. The main objects of leniency program are market players engaged in production and business operations who participate in cartel. To be fair and to prevent improper use of leniency program in practice, every antitrust authority excludes a person who plays an important role in cartel from leniency programs. There are two main types'persons who can not obtain lenient treatment, which are leader and coercer. By comparison, it is more reasonable to exclude a leader from leniency programs, which is more conducive to the implementation of leniency program. According to leniency programs in national anti-monopoly law, the conditions of the applicant to obtain leniency generally include the following aspects:firstly, the applicant is first to apply; secondly, evidence that the applicant provided is consistent with the evidence threshold; thirdly, the applicant should provide evidence that is possessed by himself; fourthly, the applicant should bear the obligation to cooperate; fifthly, the applicants should terminate participation in illegal cartels. The consequences of implementation of the leniency program are reduced and remove the penalties on companies and remove the penalties on staff of companies.There are several procedural rules of consultation, application, acceptance, review, implementation and revocation in the implementation of leniency program. Cartel offenders can consult law enforcement agencies in order to decide whether to apply for leniency before the formal application. Often the case, some applicants, who are not possession of sufficient evidence required for leniency, can apply for marked in order to obtain the location of the first applications. Threshold conditions for markers are lower. The main purpose of these conditions set is to clear identity of the applicant and to allow the agency aware of related information of suspected cartel. The provisions of the limitation period marked in various countries are different. The applicant should submit evidence and information which are enough to meet the conditions for leniency in a formal application. Applicants can apply orally for leniency for confidentiality. The lenient treatment may be given by the anti-monopoly law enforcement agency or the prosecutors, but the agency that can accept applications of leniency is anti-monopoly law enforcement agency. There are two ways to give lenient treatment, which are contract and administrative decisions. Implementing agencies in many countries usually take the two-step approach to implement the leniency program to avoid hurt the enthusiasm of the applicants as a result of long term of leniency program. If the anti-monopoly law implementing agencies have found that the applicant does not meet the conditions of leniency after lenient treatment being given to the applicant, they will withdraw the treatment. Leniency program is a micro system of anti-monopoly law, which can be influenced by related systems and factors in a jurisdiction. There are some prerequisites which are essential cornerstones that must be in place before a jurisdiction can successfully implement a leniency program. First, there must be transparency and predictability to the greatest extent possible, so that companies can predict with a high degree of certainty how they will be treated if they seek leniency. Second, jurisdiction's antitrust laws must provide the threat of severe sanctions. Just facing severe legal sanctions, offenders could consider applying for leniency. Third, cartel detection rates were higher. Only if offenders perceive the risk of being caught by antitrust authorities as very large, can they seek leniency. High cartel detection rate is depends largely on the high authority of the enforcement agency and the effective use of cartel investigative tool. Moreover, there are a number of factors such as the informal system, corruption or not, and legal level, which also can affect implementation of the leniency program in a country. Meanwhile, leniency program is a unique tool for cartel investigation, which should be coordinated with the related legal system, particularly the antitrust civil damage. In practice, follow-on actions for damages can impact on leniency program, therefore, many countries around the world have taken measures to deal with this problem.Compared with the provisions of leniency program in foreign countries, there are some problems in legislation of the leniency program in China. First, individuals, trade associations and offenders who act involved in bid-rigging are not eligible for leniency. Second, as far as lenient treatment is concerned, the anti-monopoly law in China not only does not introduce automatic leniency, but also does not set different ranges of reduce treatment. Third, the anti-monopoly law in China does not specify conditions and procedures of application for leniency. In addition, as far as present situation in China is concerned, there are difficulties in implementation of the leniency program. First, multiple anti-monopoly authorities would undermine the effectiveness of the leniency program. Second, there is the lack of severe punishment for agreement monopoly. Third, agreement monopoly detection rate is not high. Fourth, the informal system is not incompatible with the leniency program, and corruption is serious as well as a lower level of the rule of law. Fifth, there is ambiguous relationship between the leniency program and the system of civil damages. Some measures should be taken to solve these problems on legislation and implementation of leniency program. On the one hand, the rules of leniency program should be improved. Firstly, applicants of leniency should be expanded, which means that the bidding law should be modified to introduce the content of leniency program and individuals and trade associations should be eligible for leniency. Secondly, lenient treatment should be rationally set, which means that the discretion of law enforcement agencies should be limited in determining lenient treatment and reduction of the fines should be differentiated and defined for the object. Thirdly, specific application conditions and application procedures should be clearly defined. In terms of the applicable conditions, some provisions, such as the principle of the first-in-the-door, standards of evidence, obligations of cooperation with law enforcement agencies and obligations of termination of violations, should be clearly defined. At the same time, some rules of the application procedure, of which are consultation, marked, application, acceptance, review, implementation and revocation, should be also established. On the other hand, external environment should be created to promote the effective implementation of leniency. First, antitrust liability should be increased. Second, antitrust enforcement agencies should be re-configured functions. Third, the investigation of the cartel should be strengthened. Fourth, the informal system which is coordinated with leniency program should be build and corruption and evil forces should be dealt with harshly. Fifth, the relationship between leniency program and civil damages should be clarified.