Cartel whistleblower program set in motion
Czeriza Valencia (The Philippine Star) - January 19, 2019 - 12:00am

MANILA, Philippines — The Philippine Competition Commission (PCC) will start enforcing today (Jan. 19) its Leniency Program, a mechanism that allows cartel insiders to come forward in exchange for immunity from prosecution and lighter penalties under the competition law.

PCC Competition Enforcement Office director Orlando Polinar said the effectivity of the program’s guidelines follows its publication last Dec. 29.

“We want to spread the word that there is now a program for past and current cartel participants to break ranks and get immunity or reduction of fines in exchange for their cooperation with the PCC, particularly in providing evidence and information,” he said in a briefing.

The Leniency Program is similar to a whistleblower program except that the informants are themselves members of the cartel in question. It is meant to weaken cartel behavior such as price fixing, bid rigging, output restriction and market allocation, which can hurt consumers and sabotage economic gains.

Under the program, the commission would only provide immunity from suit to the first cartel member to come forward with information; the second member to come forward would only benefit from the disclosure of anticompetitive behavior through the reduction of fines.

This rule is meant to encourage members of the cartel, even those that are already being investigated to immediately come forward and gain immunity from prosecution.

Polinar said the Leniency Program is a unique tool used by competition agencies worldwide to strengthen the detection and prosecution of cartels.

“In other countries, leniency programs are reported to have reduced cartel formation by 59 percent and have increased cartel detection by 62 percent,” he said. “The PCC is bent on cracking down on cartels.”

Cartels pertain to apparently competing business groups that agree to fix prices instead of operating independently. These groups may also rig bids, allowing them to take turns in bagging projects. They may also increase their profits by restricting output, causing prices to skyrocket.

Under the Philippine Competition Act, cartels can be fined between P100 million to P250 million and cartel members can be imprisoned for a maximum of seven years.

When businesses involved are corporations, the penalty of imprisonment shall be imposed on officers, directors and employees holding managerial positions found guilty.

The newly established Leniency Program works alongside the issuance of inspection orders which allow the country’s antitrust authority – upon order of court – to investigate businesses or raid business properties.

PCC Litigation Division chief James Donato said the identity of cartel whistleblowers would be protected for as long as necessary to prevent retaliatory acts from their organizations.

“Under the rules, the identity of applicants and those granted leniency will be kept confidential for as long as possible because of the sensitive nature of the information they are sharing. But in some situations the applicants may be asked to testify before the commission for the administrative cases that will be filed,” he said. “Acts of reprisals against those who come forward is also punishable.”

Depending on the gravity of the case, the whistleblower may be placed under the government’s Witness Protection Program subject to the approval of the Department of Justice (DOJ).

“That would have to be negotiated with the DOJ or the appropriate agencies that implement it,” Polinar said.

If it is found that the beneficiary of the leniency program has been providing misleading information, the PCC would revoke the leniency benefits and penalize the whistleblower.

Whistleblowers coming from cartels that are already undergoing investigation, may still apply for leniency but they may no longer be granted full leniency under the program.

Applicants would also be informed if another member of a cartel has already come forward ahead of them.

“Applicants should consider coming in earlier ahead of other cartel members and ahead of investigation,” Donato said.

The commission has set up a dedicated page on its website containing the specific processes of application. Leniency applicants may contact the PCC at or its Leniency Hotline at (02) 7719-777.

A dedicated team would also be formed to handle applications and information provided by whistleblower. Donato said the information provided would be handled only by this unit and would be treated with the outmost confidentiality.

Whistleblowers who stop cooperating in the middle of the investigation would be stripped of immunity and possibly prosecuted.

The information he provided cannot be used against him. However, information provided by other whistleblowers may be used to prosecute him.

“As a general rule, if they back out after they’ve already been given the benefit, we will consider that as a ground for revocation of the benefit and they may be prosecuted,” said Donato.

“If they back out before the benefit of immunity is given, the information they provide cannot be used against them but the investigation can continue and other information provided by other sources can implicate them and that can be used as basis for prosecuting the,” said Polinar. “But your own information cannot be used against you.”

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