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The Corporate Leniency Policy in Nigeria's Competition Law Regime

posted 2 years ago

Corporate leniency policies or immunity regimes are well regarded as critical enforcement tools to detect and successfully prosecute cartel conduct. This is a particularly so in light of the egregious nature of cartels. Cartels inflict considerable harm on consumer welfare whilst being difficult to enforce due to their inherently secretive nature.

 

Leniency programmes typically offer entities the opportunity to disclose their participation in a cartel and receive in return either a reduction or immunity from sanctions. Competition law authorities in over 50 jurisdictions’ have ‘leniency programmes’. These have led to the uncovering of several significant cartels. The imposition of some of the largest financial penalties imposed in the European Commission’s history followed from a leniency applicant coming forward. Leniency policies are premised on the ‘prisoner dilemma’ concept where cartelists confess because it is the optimal decision in the face of a range of uncertain results (and one which provides them with a reward).

 

Turning to Nigeria, in terms of regulation 26 of the Federal Competition and Consumer Protection Commission (“Commission”), Restrictive Agreements and Trade Practices Regulations (the “Regulations”), parties involved in restrictive agreements or trade practices which contravenes the Federal Competition and Consumer Protection Act (“Act”) may apply for immunity from penalties or for decreased sanctions under the Commission’s Leniency Rules (“Rules”). Although the Regulations refers to such Rules, these Rules are not yet drafted. It is expected that the Commission will soon publish the draft Leniency Rules.

 

Notwithstanding that there is no formal leniency regime yet in place in Nigeria, the Commission has indicated that it has an informal leniency regime in place. In this regard, the Commission may grant immunity to parties who are first to disclose relevant evidence intended to assist the Commission in its investigation. Cooperating with the Commission will result in a diminished or no administrative fine. To qualify for this immunity, the Commission requires the leniency applicant to make a full disclosure and formally admit their liability. In other words, the Commission requires an admission of guilt and full disclosure from alleged offenders for it to be granted leniency. This is a hallmark consistent with most leniency regimes.

 

Importantly, the Act makes provision for criminal sanctions related to competition law-related offences. Section 113(2) of the Act gives the Commission discretion to refer such criminal contraventions to the Attorney-General of the Federation and the Minister for Justice. It is the responsibility of the Nigerian prosecuting authorities, and not the Commission, to prosecute a criminal contravention of the Act.

 

Accordingly, the Commission does not appear capable of granting immunity to parties for criminal prosecution. This poses a material risk for parties. This lack of certainty, coupled with the risk of criminal prosecution (which the Commission cannot provide immunity in relation to) may deter parties from coming forward and applying for leniency. One way to manage this risk is for the Commission and the criminal prosecuting agencies conclude a memorandum of agreement which clarifies that parties who qualify for leniency will not be subjected to criminal prosecution.

 

The efficacy of Nigeria’s leniency regime will largely depend on the transparency and certainty associated with the policy and regime. The Rules will go a long way at achieving this.

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