Leniency related pitfalls and challenges in a criminal enforcement system Marcus Bezzi Executive General Manager, Enforcement and Compliance

Setting the scene Assume for today that leniency refers to full immunity for first- in parties, as well as subsequent leniency granted in sentencing cooperating parties. In Australia, cartel participants can be subject to criminal prosecutions or civil penalty proceedings. Upfront civil and criminal immunity is available to the first eligible party to self report their involvement in cartel conduct. The ACCC receives and manages all applications for civil and criminal immunity (although criminal matters are prosecuted by the independent criminal prosecutor, the Commonwealth Director of Public Prosecutions or CDPP). The criteria for immunity is set out in the ACCC’s immunity policy. The CDPP applies the same criteria, which is outlined in Annexure B of the Prosecution Policy of the Commonwealth.

Immunity and leniency in Australia Hypothetical approach Marker grantedProffer and applicationACCC considers civil immunity CDPP considers criminal immunity Grant of conditional immunity for civil and criminal ACCC Cartel Immunity hotline Investigation leads to criminal prosecution or civil penalty proceedings against cartel participants not granted immunity

Challenges: coordinating civil and criminal immunity policies Applicants generally seek both civil and criminal immunity – this requires coordination between the ACCC and the CDPP. An MOU between the ACCC and the CDPP sets out the roles and the formal relationship between the agencies, including how first-in upfront immunity will be considered. The ACCC makes a recommendation to the CDPP to grant criminal immunity to an applicant. Criminal standard of proof applies to the CDPP’s consideration of information and documents – the applicant must provide evidence to this standard. The applicant is notified whether it has been granted civil and/or criminal immunity at the same time – this also involves coordination between agencies.

Challenges: managing cases and applicants The ACCC is reliant on the immunity applicant to provide full disclosure in a timely way. Moral dilemma – all parties are culpable but the immune party escapes liability and punishment. We know this can be a challenge in prosecuting criminal conspiracy cases which must be tried by a jury. Generally we grant conditional immunity before all information is disclosed. Evidence can emerge undermining the grant of immunity. For this reason we do take very seriously the option to revoke immunity. Managing ongoing cooperation of parties, including individuals covered by derivative immunity can be complex – particularly in international cases.

Challenges: managing cases and applicants Second applicant sometimes has better information but ACCC bound to provide first-in applicant immunity. The promise of immunity may make some parties complacent and less willing to cooperate (although conditional immunity mitigates this). In cases of cooperation (as opposed to immunity) managing expectations of applicants can be difficult – applicants want certainty as to level of discount but in criminal and civil cases the court orders the sanction.

Australian experience Australia has not yet prosecuted any criminal cartel cases. However, we have had a number of successful civil cartel prosecutions following immunity applications. Most recently the air cargo cartel – the matter is ongoing against two airlines but to date the court has ordered AUD $98.5 million in penalties against 13 airlines. Since 2005 the ACCC has had over 100 approaches under its immunity policy. Over half of those have been since the criminalisation of cartel conduct in July 2009 and half have an international dimension. No criminal prosecutions as yet - we are pleased to see signs since 2009 of greater focus on compliance with cartel laws from many businesses.