A flood of antitrust cases at the European Commission is creating a resource crisis within the Commission’s competition directorate that deals with cartel investigations and merger control.
The success of the Commission’s leniency program, which encourages whistleblowers to come forward with evidence of cartel activity, in return for reduced fines, has caused a surge in antitrust cases and lengthy delays. According to an internal report into staffing and resource problems at the Directorate General for Competition, delays in dealing with leniency applications is “undermining the credibility of the Commission’s enforcement”. A lack of staff is preventing the Commission from chasing documents before they are destroyed. The increase in workload and internal forecasts of a rise in competition cases could lead to forced cutbacks and further delays. At present European Union cartel investigations are running at 41 months, compared with half that rate for the German cartel office. Antitrust lawyers complain of ever-lengthening delays in dealing with the Commission.
Alec Burnside, a partner at Linklaters & Alliance, said: “The leniency program has been a runaway success. They need more resources.” According to the internal report, the competition directorate will require a 50 increase in staff by 2010, from existing levels of 720 to 1,070, to cope with the expected rise in the caseload. The Commission wants 20 more senior staff to deal with mergers, another 30 for cartel investigations, 60 extra staff for state aid cases and a further 60 economists. The Commission raised the stakes for cartel members in 2002, offering a more attractive leniency program that gave the first whistleblower complete immunity from fines. Penalties for cartel activity are heavy and can amount to 10% of a company’s turnover. The approach has been hugely successful, persuading about 200 cartel members to apply for leniency since the 2002 reforms. In December, the Commission introduced further reforms to the leniency regime, clarifying the obligations of potential applicants. European briefing, page 64 (The Times)