1. The Finnish leniency system - experiences and challenges
Estonian Competition Authority’s 15th Anniversary Conference
Tallinn, 11 November 2008
Mika Hermas

2. The leniency framework - main characteristics
Only administrative sanctions for infringements
only against undertakings, only pecuniary sanctions
Division of powers
FCA: proposes fines and reductions, grants immunity
Market Court: decides on fines and reductions
Leniency system:
Immunity to 1st to reveal a cartel
only available before FCA initiated an investigation
Reduction of fines subject to value-added
available for cartels and other infringements
The Finnish leniency system, Mika Hermas, Tallinn

3. Other leniency-related considerations
Amount of fines in serious infringements intransparent – only upper limit stipulated
commentators: level also too low so far – insufficient deterrent effect
Possibility for damages secured by Competition Act
right limited to undertakings
single damages
decided in separate proceedings in a civil court
Criminal charges in blatant infringements cannot be ruled out
bid-rigging = possibly fraud or serious fraud
The Finnish leniency system, Mika Hermas, Tallinn

4. The FCA’s experiences on leniency to-date
Experience relatively limited
No Market Court decisions in leniency cases so far
Less than ten applications for immunity since 5/2004
Two cases currently in market Court
wood procurement, car spare parts
One application for reduction of fines
wood procurement
A number of approaches on a hypothetical basis
potential applicant mirroring availability of immunity, procedure, and pros and cons of applying
cost/benefit calculation
The Finnish leniency system, Mika Hermas, Tallinn

5. The FCA’s experiences (continued)
A number of immunity applications have not led to final decision, or have been rejected
Conditional immunity granted but insufficient proof of infringement found after subsequent investigations
Insufficient/imprecise information to fulfil conditional immunity
Not a cartel at all – application rejected
Procedure lapsed due to no formal application after anonymous first contact
The Finnish leniency system, Mika Hermas, Tallinn

6. The Finnish leniency system, Mika Hermas, Tallinn 11.11.2008
Current challenges
Commentators on immunity:
expected amount of fines unclear as not stipulated by law or decree
at the current (low) level of fines, the risk of damages and associated bad-will act as a disincentive
potential of criminal sanctions on individuals may act as further disincentive (?)
this argument is rare but gaining ground among advisors
personal ties in a small society also an issue
perceived peer pressure may prevent blowing the whistle
The Finnish leniency system, Mika Hermas, Tallinn

7. Current challenges (continued)
Commentators on reductions of fines:
The current rules do not provide for transparent percentages of reduction (nor amount of fines)
Division of powers between Market Court and FCA creates uncertainty
The FCA’s proposal regarding the amount of fines and/or reduction thereof is not binding upon the Market Court
The current rules only reward provision of value-added information but not explicitly speed nor rank (ie. the time and order of coming forward with information)
may lead to investigative inefficiencies as it may pay off to wait until the FCA issues its draft decision (the ”S.O.”)
The Finnish leniency system, Mika Hermas, Tallinn

8. Conclusions and lessons learned
Immunity system technically workable but may require more explicit incentives
The level of expected fines are key
more (and solid) cases to the Market Court
policy change?
The availability of immunity also post-inspection would be beneficial
likely to increase the number of cartels detected/fined
would align the Finnish system with the Commission’s
Reduction system is challenging
requires more transparency and legal certainty
The Finnish leniency system, Mika Hermas, Tallinn

9. The Finnish leniency system, Mika Hermas, Tallinn 11.11.2008
The way forward
Work is underway to amend the Competition Act
a working group chaired by the Ministry of Employment and the Economy
mandate includes
revisions as regards the transparency and the amount of fines
aligning the leniency rules with those of the Commission and the ECN model programme
Amended Act expected in force 2009/2010
Meanwhile, the FCA continues its quest to fight cartels
business as usual!
The Finnish leniency system, Mika Hermas, Tallinn

10. THANK YOU FOR YOUR ATTENTION!
The Finnish leniency system, Mika Hermas, Tallinn