CCP introduces whistleblower hotline

The Competition Commission of Pakistan (CCP) in line with the international best practices has revised the Leniency Regulations to achieve efficient cartel enforcement and has also introduced a whistleblower hotline. The CCP learning from the experiences of UK's Competition Market Authority and the EU has introduced a whistleblower hotline through which individual can help in the fight against cartels and other anti-competitive practices. Cartels occur when businesses strike deals not to compete with each other, such as by fixing prices and discounts, agreeing on which customers and areas to supply, limiting the production or supply of a product to drive up prices, or rigging contract bids.
After the introduction of whistleblower programme, the cartels reported to UK's Competition Agency increased 18% in its first year of implementation. Whistleblowers who report cartels or other anti-competitive practices to CCP will be entitled to a reward for an amount ranging from a minimum of Rs 200,000 and maximum of Rs 5,000,000. The basic feature of this hotline is that the anonymity of the whistleblower will be maintained. The Reward Payment to informant scheme is available on the website of CCP and can be accessed.
Revised Leniency Regulations: The introduction of the new and revised Leniency Regulations will bring Pakistan at par with the developed jurisdictions in terms of leniency regime. In addition to the introducing the whistle-blower hotline, the CCP has revised it Leniency Regulations to enhance agency effectiveness and has published the same soliciting comments from the general public in line with the Competition Act, 2010. The draft Regulations, once finalised after the public comments, will replace the existing Competition (Leniency) Regulations, 2013.
Under the Competition Act, the CCP can impose penalties up to PKR 75 million or 10% of the annual turnover. To-date the CCP has imposed total fines of PKR 26.821 billion out of which PKR 17.87 billion fine was imposed on cartels. Encouraging compliance and with the aim to sharpen the tool for cartel detection, the CCP has revised its Leniency Regulations introducing a more transparent and responsive mechanism based on the international best practices.
The competition authorities across the globe use leniency programmes along with the other detection and investigation tools, for fighting cartels. Leniency not only allows competition agencies to pierce the cloak of secrecy in which cartels operate but also to obtain insider evidence of the cartel infringement. The leniency policy also destabilises the operation of existing cartels.
Through the revised Leniency Regulations a 'marker system' is introduced. Many competition authorities (including almost all those who are member countries of the OECD) have adopted the 'marker system' in their leniency policies as an encouragement measure to facilitate the detection, investigation and prosecution of cartels. Markers are seen as a mechanism to spur the race for leniency by reducing the initial barriers to entry into the leniency programme and by providing transparency and predictability to undertakings regarding their leniency status (first-in, second-in, etc).
From the specific viewpoint of the competition authority, a marker system contributes to the optimal functioning of a leniency programme. This is confirmed by the fact that applicants generally tend to make use of marker systems when available under the leniency programme and by the fact that most jurisdictions have reported very positive experiences with their marker systems. For instance, the competition authority in South Africa instituted its leniency programme in 2004 and revised the same in 2008 by allowing paperless applications and a marker system resulting in 54 leniency applications being received as of September 2009, more than two thirds of which were made between 2008 and 2009.
The reason why the CCP opted for a discretionary marker system is that, above all, it is in the public interest to maintain the race between companies to provide the information and evidence required to meet the conditions for immunity and thereby to facilitate the detection and termination of cartels. The interest is not in the race to simply get a place in the queue. If a company does not provide CCP enough information, its application will be rejected and it would need to apply again.
In between, another applicant would then have a possibility to qualify for immunity. Hence the new Draft Leniency Regulations encourage "the race to the door" by enabling those applicants to gather the necessary information and evidence required to complete their immunity application. Successful applicant can benefit from complete immunity from imposition of penalty by the CCP.
In addition to the 'marker system', the CCP has also presented 'Introducing the concept of 'Leniency/amnesty Plus.' Leniency/ Amnesty plus is one of the tools used in the fight against cartels globally. It allows a cartel member who did not manage to secure complete immunity under general leniency, to secure an additional reduction in penalty/fine in exchange for cooperation with the competition authority with respect to operation of another cartel in an unrelated market.
Moreover, the undertaking must fully cooperate with the Commission by providing all the evidence available regarding the alleged prohibited agreement in a timely manner and must not conceal, destroy, manipulate or remove any evidence that may be crucial for the investigation. The undertaking must make current, and if possible, former persons associated with the participants and parties to the alleged Prohibited Agreement available for interviews with the Commission. To qualify for Leniency/amnesty Plus, the companies must satisfy the CCP that the evidence provided relates to a separate cartel than the one previously brought before CCP, and the information provided by the concerned company under the new leniency regulations must be such as to provide the CCP with sufficient basis to take forward a credible investigation or to provide Significant Added Value to the CCP's investigation.
Any application under Leniency/Amnesty Plus will only be entertained, if the applicant admits the infringements of Section 4 of the Act unconditionally; abandons its participation in both cartels forthwith unless otherwise required by CCP; and makes full and true disclosure of all the facts within his knowledge relating to both cartels.
Though the grant of leniency and any reduction in the amount of financial penalty is discretionary; however, in the revised Leniency Regulations, the CCP for the purpose of transparency and effectiveness of cartel enforcement has outlined the parameters which will be factored in for exercise of discretion by the CCP.
The complete procedure for submitting a leniency application with the CCP has been laid down in the Draft Competition (Leniency) Regulations 2019, which have been uploaded on the CCP's website and its official Twitter account for public comments.