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On 23 November 2011, the President announced the effective of the amended Fair Trade Act ("FTA") by introducing a leniency program for cartel participants (Article 35-1) and imposing a higher fine for cartels violations (Article 41). On 2 December 2011, the Fair Trade Commission ("FTC") published draft regulations for the leniency program (the "Draft Regulations") specifying among others, requirements for leniency, maximum number of cartel participants eligible for leniency, fine reduction percentage, required evidence and confidentiality treatment.
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According to Article 35-1 of the FTA, subject to the consent of the FTC, the fine for cartel activity can be waived or reduced in either of the following two situations: (i) before the FTC becomes aware of the cartel or investigates into the cartel, the company reports the wrongdoing, provides evidence of the wrongdoing, and assists with the FTC's investigation; or (ii) during the FTC's investigation, the company provides evidence that could prove the wrongdoing, and assists with the investigation.
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The order to have a stronger deterrent effect and encourage companies to take advantage of the leniency program, the maximum fine has been increased from NT$25 million to 10% of the relevant enterprise's turnover in the previous fiscal year.
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Pursuant to the Draft Regulations, only up to five companies can be eligible for leniency in a single case. While the first applicant can qualify for fine exemption, the fine reduction percentages for the second to the fifth applicant are: 30%~50%, 20%~30%, 10%~20%, and 10% or less respectively. However, no exemption or reduction would be granted to a participant who has forced others to join the scheme, attempted to conceal evidence or disclosed relevant information to the public before applying for leniency.
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To decide which applicant is eligible for fine exemption or which fine reduction applies, a marker system is adopted. If an applicant needs additional time to perfect its leniency applications, the applicant will be given a certain period of the time to do that. If the applicant can perfect its application within the time limit it can hold its place in the line for leniency.
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It is expected that the effective of the amended FTA will considerably aid the FTC's enforcement of cartel regulations. Furthermore, once whistle-blowers are encouraged to come forward, the enterprises will be compelled to rethink how they interact with each other, particularly with their competitors. It is noteworthy that since the civil liability is not exempted under the leniency program, enterprises need to take into account the risk for following civil claims when they consider applying for leniency.
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If you have any inquiry about the amendments to the FTA, please do not hesitate to contact us.
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