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30 November 2006
Shortly before the passing of the most recent amendments to the Federal Law on Economic Competition, the plenum of the Federal Competition Commission approved and published an internal policy on granting immunity and/or reductions in fines to economic agents which participate in anti-competitive practices, but decide to cooperate with the commission in its action against such practices and comply with certain requirements. This policy was incorporated into the law on June 28 2006, giving the commission a leniency programme with a basis in legislation.
The programme allows the commission to impose a minimum fine on an economic agent if the agent:
As the law does not set a minimum fine, the commission will likely follow the criteria of its old internal programme, which established a nominal fine of approximately $4.50; under the amended law, the commission has the authority to impose fines of up to approximately $6.7 million.
The leniency programme also allows the commission to reduce the fines it imposes on other cartel participants, provided that they (i) supply information which the commission has not already received from the first applicant for leniency, and (ii) fulfil the other requirements imposed on the first applicant (ie, full cooperation and cessation of the cartel activity). Subsequent applicants may benefit from a reduction of 50%, 30% or 20% of the maximum fine, according to the chronological order in which they apply. However, the law does not make clear whether the term 'maximum fine' refers to the maximum amount permitted by law or the maximum amount in a particular case, as the commission must have regard to other factors when imposing fines, including:
The law further provides that the identity of economic agents which apply for leniency will remain confidential. The commission is likely to face serious difficulties when resolutions involving leniency measures are challenged before the federal courts; the Constitution provides that, in order to guarantee the defendant's right to due process, it may be necessary to reveal the identity of a cooperating party once a presumed responsibility order is issued, as the defendant has the right to counter the accusations against it. This issue will be decisive in testing the effectiveness of the leniency programme in practice.
The law establishes that its implementing regulations, which are being drafted and are due to be published before the end of 2006, will provide a procedure for approaching the commission to apply for leniency. The regulations are expected to clarify the concepts set out in the law and thereby provide economic agents with the legal certainty they need to come forward; if the regulations fail to do so, the leniency programme is unlikely to have the intended results.
For further information on this topic please contact Luis Gerardo García Santos Coy or José Ruíz López at Creel, Garcia Cuellar y Müggenburg SC by telephone (+52 55 1105 0600) or by fax (+52 55 1105 0690) or by email (email@example.com or firstname.lastname@example.org).
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Luis Gerardo Garcia Santos Coy
José Ruiz López