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The page was created and is operated by the Competition Culture Centre of the hungarian Competition Authority (GVH VKK)

Informant protection

Anyone submitting a complaint or a report to the GVH may request the authority not to reveal their identity, or the fact that they made a complaint or a report at all in relation to a particular subject. A complaint and action does not yet mean that a Competition Supervision procedure will start, because the GVH procedures start as ex officio procedures with the exception of mergers. A complaint or a report informs the GVH of a potential market problem, and whether a specific procedure will be launched will be decided in the course of the investigation of the problem.

The GVH increases that protection, if it applies its leniency policy, and with regard to informants.

A complainant, a reporting party and a manager applying the leniency policy, as well as an informant may be requested to make a statement as a witness during the competition supervision procedure, but they may also request their personal identification data to be kept confidential. In such cases the GVH manages the identification data and address of natural persons among the documents of the case, yet separately and confidentially. The GVH ensures that confidential data are not disclosed during the actions of its procedures, i.e. only the GVH investigator, the keeper of the minutes and the typist, the head of the authority, the competent prosecutor and the judge proceeding in a judicial review may have access to that information. The GVH documents all details and phases of building contact, witness statements, etc. but that documentation is not accessible to the “defendants”, customers of the Competition Supervision procedures. The GVH prepares extracts of all documents that may be accessed by the “defendants” and respondents of a case (because they may be needed for defence), and in which the complainant, the reporting party, the informant, the witness, etc. is indicated, in order to ensure than no conclusion can be drawn for the existence or the identity of such persons.

What can you do as an outsider?

Complainants and individuals submitting reports can contribute a great deal to the actions of the authority while sending signals and proof of restrictive agreements to the GVH. The GVH has its own instruments to eliminate restrictive agreements; it may impose a fine, or apply other sanctions, by also making it possible to submit compensation claims. If concerted actions of competitors are suspected, you may file a report or may request information from the Competition Authority.

In the case of any suspicion, customers can also act against restrictive agreements and cartels, by responding to an unfair offer and by obtaining lower prices. If a restrictive agreement is suspected in a tender, a new procedure may be announced, in which the suppliers left out from the restrictive agreement could also be encouraged to submit bids. Anyone who was injured or suffered a damage through the operation of a restrictive agreement could claim compensation in front of a court. Any contract that violates the provisions of the Competition Act is deemed null and void, and its legal consequences may also be enforced in a civil lawsuit.

What can you do if you are involved?

Similarly to the European Commission and the competition authorities of other countries, the GVH applies a leniency policy in order to detect and eliminate various restrictive agreements. Under that policy, if any undertaking which is a party to a restrictive agreement, cooperates with the authority, then part of the imposed sanction, or even its total amount can be waived. The waived amount is regulated strictly under the Competition Act.

By hearing the word leniency, many could think that the GVH forgives those who admit their sin, but it is a mistake. By waiving the fine, the Competition Authority does not exercise equity or pardon. The purpose of the leniency policy is to break up the silence, which is typical of the agreement, by making participants interested in cooperating with the authority. It is the mission of the GVH  to detect, reduce and sanction the violations of law on the largest scale, and leniency is one of the most effective instrument in those endeavours.

Leniency

Immunity from the fine

An undertaking wishing to apply for immunity for the fine should conduct the GVH first by providing relevant information of a restrictive agreement, not yet known to the GVH, based on which the authority can launch an investigation. The total fine may also be waived if an undertaking participating in a restrictive agreement is the first to inform the GVH, in an already launched procedure, of any evidence of major importance for establishing the violation of law, providing that when submitted the GVH does not yet have enough information for proving the violation of law. Apart from liability under the Competition Act, the first informant will also be exempted from any criminal law sanction.

Reduction of the fine

An undertaking participating in a restrictive agreement may apply for reduction of the fine, if although it is not the first one to supply conclusive evidence to the GVH, the information supplied by it constitutes significant added value relative to the evidence, already available to the GVH. In practice it may be a written document, acceptable as evidence, from which the facts can be identified much more clearly. If the submitted evidence satisfies that requirement, then following the detection of the restrictive agreement, the GVH may reduce the fine of the undertaking providing relevant information first by 30-50 percent, and the fine of the second undertaking by 20-30 percent, and with regard to any other undertaking by not more than 20 percent.

Informant’s reward

Similarly to the leniency policy, the informant’s reward is one of the most effective tools for the detection and elimination of hard-core restrictive agreements, although that preference is not available to undertakings, only to natural persons providing the information.

As hard-core restrictive agreements are often created in secret and attempts are made to keep them in secret while they exist, it is difficult to detect them. In view of the extremely harmful impacts of restrictive agreements to society and the economy and the difficulties of their detection, as well as the financial risk of any retortion by the parties to the restrictive agreement undertaken by the individuals revealing such agreements (e.g., employees, trading parties) those individuals (informants) should be rewarded and offered some consideration who provide indispensable information for detecting and revealing hard-core restrictive agreements. Consequently, the reward to informants is a kind of reward for the lead.

Naturally, the reward is not paid out in each case (otherwise there would be a queue informant reward claims at the GVH): the reward is payable only to the supply of information, absolutely necessary for revealing the most severe violations of the competition law and detecting hard-core restrictive agreements, if the authority receives a) written evidence deemed absolutely necessary in relation to a hard-core restrictive agreement and/or b) under certain conditions, information indispensable for the basis of a site inspection (generally known as an early morning raid) conducted without prior notification but requiring the permission of a judge. Those categories may be interpreted as follows:

a.

Not all evidence concerning restrictive agreements is rewarded, a reward is paid by the GVH only for “written evidence, deemed indispensable”. It covers any object or document that contains registered data. Such evidence must be indispensable for proving the violation of law, and generally means the supply of internal information concerning the restrictive agreement. It is not enough to reveal general signals indicating a restrictive agreement. According to the main rule, reward may be paid for the supply of evidence relating to the facts of a hard-core restrictive agreement (e.g., participating undertakings, restrictive conduct): the supply of evidence promoting the conclusion of relevant aspects with regard to the fine imposed for the violation of law is not enough.

Consequently, e.g., the disclosure of an agreement leading to a cartel, or the supply of correspondence generated during the operation of the restrictive agreement, or the supply of a document in an already launched competition supervision procedure proving that the restrictive agreement had other participants in addition to those previously assumed or that it was established prior to the time estimated by the GVH, or it extended also to other types of goods, etc. No information, which is relevant in terms of risks of the competition, the market impact of a violation of law, or the relationship of an undertaking violating the law to the violation, constitutes any basis for the reward.

Naturally, the issue of whether any document possessed by a potential informant is eligible for claiming a reward, requires an individual assessment. Although its indispensable nature can obviously be concluded based on the total procedure and all the evidence, as well as the relevant resolution stating the legal facts, in order to provide more information to potential informants, the Competition Act allows enquiries to be made at the GVH without revealing personal identity as to whether a particular document or information constitutes such indispensable evidence or not.

b.

Any information, including also verbal information, is indispensable, based on which the court approves an investigation action (early morning raid), in the course of which the GVH can obtain written evidence of the restrictive agreement, deemed indispensable as indicated above.

In relation to indispensability, it also needs to be stressed that in a competition supervision procedure the same evidence could stem from several sources and the same relevant circumstance may be supported by other evidence too, and therefore the Competition Act introduces also a rule of an order in order to protect the interests of informants: any evidence provided by an informant is deemed indispensable even if it is substitutable by other evidence, but it was obtained by the GVH later. (It is also important that the GVH Competition Council decides on the reward and its payment at the end of the competition supervision procedure.)

However, the Competition Act also makes it possible for individuals taking part in restrictive agreement (e.g., employee, former manager) to receive a reward, but the responsible manager of an undertaking cannot be awarded the informant reward.

Consequently, almost anyone may obtain information, without disclosing their personal identity (!), at the GVH as to whether a document possessed by them would be eligible for a reward.

Why is it worth? The informant reward equals one percent of the fine imposed in the case, but no more than HUF 50 million. Based on the examples indicated above, you could start calculating whether it is worth to provide a lead as a law abiding citizen.

The rules of the informant reward have been applied by the GVH since 1 April 2010.

In an early morning raid, the GVH may conduct a site inspection without any prior notification in any premises, it may conduct a search and seize the files and electronic documents kept in the premises. A raid may be conducted under specific conditions also in premises used for private purposes.

Enforcement of claims in public interest and private law claims

Any unlawful conduct violating the provisions of the Competition Act, the Community competition law, and the Act on the Prohibition of Unfair Trading Practices towards Consumers violate not only public interests protected by the GVH, but may also infringe the individual interests of, and cause damages to, consumers, market operators or to any other individuals affected by the violation of law.  Consequently, there are two ways to proceed against the perpetrators of the violations of law:

  • in case public interest are infringed, the GVH launches a Competition Supervision procedure, for the purposes of eliminating the violation of law and, in justified cases, for sanctioning it;
  • in the case of infringement of individual rights, the suffering legal entities and natural persons may directly launch a civil lawsuit.

Enforcement of claims in public interest

The purpose of competition authority procedures in public interest is to eliminate and, in a justified case, to sanction the violation of law.

The GVH may also launch a lawsuit for the enforcement of the civil law claims of consumers, if the conduct violating the law affects a large yet specific group of consumers. However, the GVH may launch such a lawsuit only if it has already launched competition supervision procedure in relation to the specific violation of law. However, the enforcement of a claim in public interest does not affect the consumer’s right to enforce their claim against the party violating the law individually in compliance with the provisions of the civil law.

In the case of the enforcement of claims in public interest, when the content of the consumers’ claim can be clearly established, the GVH may request the court to oblige, in its ruling, the undertaking to satisfy the claim. Otherwise the GVH may request the court to conclude the fact of the violation of law within a scope, extended to all consumers specified in the petition, which can make it easier for consumers to enforce their claims individually.

Law enforcement under private law

Civil law procedures may be launched to seek remedy for individual violations of law.

In a civil lawsuit the injured party must prove the violation of law and also the consequential damage in case they claim compensation. If as a result of the price increasing impact of restrictive agreements, a consumer claims compensation for damages, the evidence and enforcement are assisted by the provisions of the Competition Act, according to which until proved otherwise, it may be assumed that the violation of law affected the price by ten percent.

In the course of the lawsuit the parties may settle their legal dispute also with an agreement, while in the procedures of an authority it is not feasible and the injured party does not have any impact on the method of completion of the authority procedure either. The injured party may also turn to court for compensation also after the effective closing of the competition supervision procedure, in possession of the GVH resolution declaring the violation of law. In that case the unlawful conduct does not need to be proved, it is certified by the GVH resolution.

In the lawsuit the court may grant direct compensation to the injured party, and may also change the contractual relations. Thus, e.g., the court can establish a contract between the parties and may oblige them to perform or, in addition to the declaration of the unlawful nature of a restrictive agreement, it may also apply the legal consequences of a null and void document.

However, in a civil lawsuit, any member of a restrictive agreement whose fine was waived in the competition supervision procedure for his active cooperation in the detection of the restrictive agreement pursuant to the leniency policy specified in the Competition Act, may refuse to provide compensation for the damage caused by their conduct until the claim can be collected from any other party to the restrictive agreement.