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Concerted action profoundly affects market order and consumer's rights, which is why it has come under close scrutiny by regulators around the world. However, given that concerted action is often carried out clandestinely, and evidence for which is difficult to collect, many countries adopt a leniency program to encourage concerted action participants to provide evidence and assist with the investigation in exchange for exemption from punishment.
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By adopting a leniency program, the U.S. and the E.U. have successfully curbed concerted action in recent years. In Taiwan, a leniency program was introduced through an amendment to the Taiwan Fair Trade Act ("TFTA"), which was promulgated on 23 November 2011. According to Article 35-1 of the amended FTA, if a company is involved in cartel activities and consequently violates Article 14, it could submit an application to the Taiwan Fair Trade Commission (TFTC) to qualify for partial penalty exemption if either of the criteria set out below is met:
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Before the TFTC becomes aware of the cartel activities or commences any investigation into the cartel activities, the applicant files a written complaint describing the illegal cartel activities it is a part of, evidence of such activities, and assists the TFTC with the investigation.
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During the TFTC's investigation, the applicant provides evidence which could prove the illegal concerted action, and also assists the TFTC with the investigation.
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On 2 December 2011, the TFTC published draft regulations for the leniency program (the "Draft Regulations") specifying, among others, qualification and requirements for leniency, maximum number of cartel participants eligible for leniency, fine reduction percentage, required evidence and confidentiality treatment.
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Pursuant to the Draft Regulations, only up to five companies can be eligible for leniency in a single case. While only the first applicant qualifies 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 initiated the cartel, forced others to join the scheme, or 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 application, the applicant will be given a certain period of the time to do that. If the applicant perfects its application within the time limit it can hold its place in the line for leniency.
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As the amended TFTA raises the amount of penalty to as much as 10% of the violating enterprise's revenue in the previous fiscal year, enterprises should carefully review how they communicate with other enterprises, (especially competitors) and make necessary changes to avoid violating the TFTA.
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