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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

First Whistleblowers Rewarded by EU Court

(CN) - Corporations that blow the whistle on anticompetitive practices aren't necessarily entitled to full immunity if they're not the first to cry foul, the European Court of Justice ruled Wednesday.

The request for preliminary ruling stems from a 2011 finding by Italy's competition authority that several shipping companies - including DHL, Schenker and Agility Logistics - had participated in a cartel in the Italian road freight-forwarding market.

But while all three companies blew the whistle on the cartel and applied for leniency to both the European Commission and the Italian authority, the Italian authority handed immunity only to Schenker since it was the first to apply under the national leniency program.

DHL sued in an Italian court to annul the competition authority's decision and the accompanying fine, arguing that it had been the first to notify the EU about the cartel and therefore should have received immunity as well.

The Italian court asked the European Court of Justice to weigh in on how the EU's leniency program meshes with similar programs at the member-state level.

In a 10-page preliminary ruling issued Wednesday, the Luxembourg-based high court that EU's leniency program is not binding on national competition authorities who are free to set rules on the qualifications for leniency and immunity in their own member states.

Furthermore, the EU court ruled that there is not connection between the European Commission's application for immunity and those submitted to national authorities - which means member states aren't obligated to consider applications made to the commission when deciding on whistleblower immunity.

However, the court also said that in cases where companies who eventually came clean and were given reduced fines by the commission, member states must allow the companies to apply for full immunity regardless of whether they were the first to blow the whistle.

That approach is in accordance with the underlying purpose and spirit of the establishment of the system of leniency applications. That system is intended to promote the uncovering of conduct contrary to EU law by encouraging participants in cartels to report them. It is therefore intended to encourage the submission of such applications, not to limit their number," the high court concluded.

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