Office of Fair Trading
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OFT begins supplementary consultation on leniency policy
The OFT yesterday announced a supplementary consultation for its leniency review on a further policy option of not requiring legal professional privilege (LPP) waivers as a condition of leniency in cartel cases, even if there is a related criminal cartel investigation.
It also proposes the use of independent counsel to advise the OFT on the merits of LPP claims made by a leniency applicant in some situations.
This five-week supplementary consultation follows careful consideration of responses to the OFT's October 2011 consultation on draft revised leniency guidance. In that consultation the OFT sought, among other things, views on a clarification of its existing policy on LPP waivers in leniency cases. Some respondents raised concerns about this policy and, having considered these carefully, the OFT sees the merits of consulting on a further possible policy option.
Under the OFT leniency programme, businesses that come forward and report their involvement in cartel activity may avoid a financial penalty or have the penalty reduced substantially. Individuals involved in cartel activity may also be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002.
Jackie Holland, Senior Director, Policy Group at the OFT, said:
'We have considered very carefully the responses to the original consultation and can see the merits of consulting on a further policy option with respect to LPP waivers. Once we have reviewed the responses to this supplementary consultation, we will decide upon our policy and issue final leniency guidance.'
The law on LPP is complex. In very broad terms, LPP subsists in certain confidential communications between a lawyer and his or her client made for the purposes of giving or receiving legal advice. LPP can also subsist in certain confidential communications made in connection with, or in contemplation of, litigation and for the purposes of that litigation. Documents in which LPP subsists are generally excluded from compulsory production in a variety of legal proceedings and are excluded from compulsory production under both the Competition Act 1998 and the Enterprise Act 2002 by virtue of sections 30 and 196 of those Acts respectively.
In the October 2011 consultation, the OFT proposed to clarify its existing policy that LPP waivers would not be required in civil investigations under the Competition Act 1998 but that where the OFT was carrying out a criminal cartel investigation under the Enterprise Act 2002, the OFT could not exclude the possibility of requiring LPP waivers in relation to the criminal case. This was most likely to arise in the context of witness account material that was protected by LPP. In such circumstances, the OFT would seek advice from counsel, and the guidance of the court where necessary, on the need to obtain privileged material before requesting waivers, and would do so only at a late stage in the OFT's investigation when the OFT considered that it had sufficient evidence to charge individuals with a cartel offence.
When finalised, the revised guidance will replace the OFT's existing leniency handling guidance, OFT803, Leniency and no-action. Until the final guidance documents are published, the OFT will continue to apply the existing leniency guidance. When the final leniency guidance is published, the OFT will publish the date from which it will apply to leniency applications.
The OFT is prepared to offer lenient treatment to businesses and individuals that come forward and report their involvement in cartel activity. Under our leniency programme, businesses that have participated in a cartel may have their financial penalty reduced substantially or they may be able to avoid a penalty altogether. Individuals involved in cartel activity may also be granted immunity from criminal prosecution for the cartel offence. To qualify for leniency, applicants must admit their involvement in unlawful cartel activity, cooperate fully with our investigation and stop their involvement in the cartel from the time they come forward.