Both at the EU level and in the Member States (including Belgium), a wide variety of authorities and regulators are empowered to supervise, investigate and sanction corporate conduct. Each of these has various and often very intrusive powers; for example, to carry out unannounced inspections and house searches, to seize documents, to trace telecommunications, to access IT systems and to interrogate persons.
Besides the traditional criminal authorities, there are numerous regulators that, albeit strictly speaking active in the regulatory and administrative field, have far-reaching investigative and sanctioning powers as well. These powers often do not differ significantly from the powers of criminal authorities. Because of the nature and effects of the measures taken and sanctions imposed by these regulators on the corporates and individuals (e.g., senior managers) affected by them, these persons often benefit from the same fundamental rights and guarantees under European Union (EU) and national law that apply to purely criminal sanctions.
Well-known examples of regulatory authorities are, at both the EU and national level, the competition authorities (which wield powers across all sectors and areas of economic activity), the financial and banking regulators (which supervise, investigate and sanction the conduct and activities of financial services providers, including banks), and, more recently, the data protection authorities (which investigate and sanction breaches of data protection rules and raise awareness in this respect).
In what follows, particular attention is paid to the powers of competition and financial regulators. This is not to underestimate the role and powers of an increasing number of other regulators of all types, which corporates especially need to take into account. For instance, the Economic Inspectorate (a body attached to the Belgian Federal Public Service of Economy) has powers in areas that concern trade practices and consumer protection, and that will also apply to the conduct and activities of financial institutions (e.g., in the framework of the marketing and distribution of financial instruments to the public). The same applies to tax, labour and environmental authorities, to name just a few. While their prerogatives and powers might often appear to be similar, it remains nonetheless important, for persons affected by them, to properly assess the following:
- which specific statutory and legislative rules govern the scope of their mandate and competences; and
- the precise nature and impact of their powers. This assessment ensures that:
- the actions and measures taken by these regulators remain within the confines of what they are legally entitled to do; and
- these regulators comply with the fundamental rights granted to those affected by these actions and measures. A transgression of these confines or a lack of compliance with this protection renders their actions and measures unlawful.
As a general principle, a person is not obliged to incriminate himself or herself.2 Hence, no duty exists for a party to report its own criminal offences. However, one may choose to report an offence voluntarily to obtain leniency or a settlement (see below). Nor is there a general duty to report criminal offences committed by third parties, with the exception of crimes against public safety or against the life or property of an individual. The latter category of crimes should be reported to the public prosecutor. Failure to do so is criminally sanctioned.
Similarly, a person who is the subject of a regulatory investigation that can lead to the imposition of a financial penalty or fine has a right to silence and a right not to self-incriminate. The regulators have already acknowledged these rights in the context of replying to the written questions asked in the framework of a regulatory investigation. The same right applies in case of an interrogation.
These rights may also be violated if the regulator uses constraints to obtain evidence. A constraint may be to impose a penalty or fine if the entity concerned fails to hand over evidence that the regulator requests. However, constraints may be lawful if their aim is to obtain evidence that exists independently of the will of the entity concerned. In addition, the right to silence cannot be invoked to prevent handing over documents to the regulators if the entity concerned has a statutory duty to keep the documents as records.
Belgian regulators have no duty to caution (i.e., to inform the entity under investigation at the beginning of the interrogation about its right to silence), but as a result of case law, when the regulators remind an undertaking of its right to silence, it prevents any future objection relating to the right not to self-incriminate.
The right not to self-incriminate can normally only be invoked by a person who is facing a criminal charge within the meaning of Article 6 of the European Convention on Human Rights (i.e., when that person can legitimately infer from his or her situation that he or she is suspected of having committed certain offences and that proceedings are likely to be brought against him or her). This means that a request based on this right by an undertaking that the regulator does not use some of the documents that the undertaking previously provided to the regulator will rarely be granted, especially if the undertaking submitted such documents before facing a criminal charge.
Leniency in competition law matters
Undertakings are not obliged to self-report when they discover an internal wrongdoing that could constitute a competition law infringement. They may, however, voluntarily opt to do so in competition cases to benefit from the leniency programme.
Under EU competition law, the conditions and benefits of leniency applications are enumerated in the Commission Notice on Immunity from fines and reduction of fines in cartel cases (Commission Leniency Notice).3 Undertakings that are part of a cartel can apply for leniency. By contrast, abuses of dominant position, vertical agreements and horizontal agreements that are not cartels within the meaning of the Commission Leniency Notice cannot benefit from the leniency programme.
Leniency is granted on a first-come, first-served basis. If an undertaking or association of undertakings wants to obtain full immunity from fines, it must be the first to submit information and evidence enabling the European Commission to carry out a targeted inspection or to establish an infringement. A company that does not qualify for full immunity can apply for a reduction of the fine if it provides evidence that represents significant added value to the evidence already in the possession of the European Commission.
In all cases, the leniency applicant must also end its involvement in the alleged cartel (except when the European Commission decides otherwise to preserve the integrity of inspections), cooperate fully and expeditiously with the European Commission throughout its investigation, and provide all evidence in its possession. The applicant may not destroy, falsify or conceal any evidence relating to the alleged cartel, either prior to the submission of the application or during the investigation.
The regime of leniency under Belgian competition law follows closely the European regime. The rules regarding leniency are contained in Book IV of the Belgian Code of Economic Law and the Leniency Guidelines of 22 April 2016.4 Thus, an undertaking can apply at Belgian level for full or partial immunity of fines, provided it offers sufficient evidence, collaborates fully and ends its involvement in the cartel. However, a few notable differences exist with the EU system. First, leniency under Belgian competition law also applies to 'hub-and-spoke' conspiracies.5 Second, Belgian competition law provides for administrative sanctions for individuals involved in certain serious violations of competition law (in essence hardcore cartels). For these individuals, the Leniency Guidelines provide a regime of immunity of fines, for which the individuals can apply separately or with the undertakings employing them. If granted, the individuals will be fully immune.
In assessing whether the conditions for leniency are satisfied, both the European Commission and the Belgian Competition Authority (BCA) enjoy a margin of discretion. A company cannot be certain whether the competition authorities will consider the information provided to be sufficient to qualify for immunity or fine reduction. Also, leniency applications, both under European and Belgian competition law, provide no protection against private law claims for damages from customers or competitors.
Under the Antitrust Damages Directive,6 implemented in Belgian law,7 final decisions by the competition authorities (e.g., the BCA in Belgium) will constitute irrefutable proof of fault in private damage claims. The Antitrust Damages Directive also facilitates disclosure of evidence. However, leniency statements at both the EU and Belgian levels are shielded from requests from disclosure. Other documents in the investigation file may be disclosed, albeit that the court must balance the interests of the victims with the interest of effective public enforcement of competition law (i.e., keeping the leniency programme attractive for undertakings).
Before deciding to file a leniency application, companies should, therefore, make a careful assessment of all relevant elements, including the likelihood of an investigation or a fine, the risk of a leniency application by another cartel member, the potential impact of a leniency application on the risk of investigations in other countries, the risk of private damage claims from third parties, and the potential effect on relationships with other industry players and with customers.
ii Internal investigations
An undertaking may conduct its own internal investigations. There are several ways to do so, such as interviewing the relevant employees and auditing their paper and electronic files. An undertaking's internal investigation must comply with rules regarding privacy and employee protection, arising from various provisions from employment, telecommunication and privacy law. Moreover, under Belgian law, former workers are not obliged to cooperate with internal investigations, unless their employee contracts include a post-employment cooperation obligation.
An undertaking will often need to conduct an internal investigation when preparing a leniency application (to provide full cooperation) or answer a request for information from the Competition Authority, the financial services regulators and banking supervisors, and criminal authorities. While certain legislation provides, under penalty of sanctions (e.g., fines) in the case of refusal, for an obligation on the undertaking to provide complete and correct information to the authorities, this obligation cannot trump the right for the undertaking concerned not to incriminate itself and to invoke this right by refusing to hand over certain documents. However, as soon as a document or a piece of information is voluntarily provided to the authorities, the undertaking cannot claim any attorney–client or other legal privilege on it.
Among other things, in competition law matters, Book IV of the Belgian Code of Economic Law now introduces administrative fines for individuals (as mentioned above, employees may now also apply for individual leniency in relation to hardcore infringements). In other areas (e.g., market abuse), certain conduct might even be criminally sanctioned. Employees might, therefore, seek the assistance of their own counsel in the event of an internal investigation by their employer.
General: 2019 EU Whistle-blowing Directive
Until recently, there was no cross-sectoral EU legislation dealing with such mechanisms generally. This has changed with the adoption on 7 October 2019 of the Whistle-blowing Directive.8 EU Member States have until 17 December 2021 to implement the Directive into their national legislation.
This Directive lays down minimum standards for the protection of 'reporting persons' (i.e., individuals (natural persons) reporting or publicly disclosing information on breaches acquired in the context of their work-related activities) and 'persons concerned' (i.e., individuals or legal entities who are referred to in the report or public disclosure as persons to whom the breach is attributed or with which they are associated). The employment status of the reporting person, and whether or not that person works in the private or public sector, is irrelevant. The protection also applies to, for instance, shareholders and persons belonging to the administrative, management or supervisory body of an undertaking, including the non-executive members thereof.
The breaches relate to an extensive list of EU legislations in a variety of areas that go beyond financial services or anti-money laundering (AML). They also include, among others, public procurement, product safety, transport safety, protection of the environment, food safety and health, consumer protection, the protection of privacy and personal data, and IT-security. This Directive contains in this sense the 'default rules', whereas the rules on whistle-blowing that are contained in specific EU legislation will continue to apply.
The Directive first obliges EU Member States to ensure that legal entities set up internal reporting channels and procedures. As a rule, this obligation does not apply to legal entities in the private sector with less than 50 employees. As an exception, undertakings that are active in the financial sector or that are otherwise obliged entities for AML purposes are always captured by this obligation. Legal entities in the private sector with 50 to 249 employees are allowed to share resources for the receipt and possibly investigation of whistle-blowing reports.9
EU Member States are also obliged to establish external reporting channels and to designate to this effect the authorities competent to receive, give feedback and follow up on reports. As the Directive captures more areas than those for which there are currently already competent authorities in place for such external reporting, EU Member States will undoubtedly need to establish new authorities that are specifically competent for such reporting.
Besides internal and external reporting channels, the Directive also protects in certain circumstances 'public disclosures' (i.e., persons who publicly disclose information on breaches falling within the scope of the Directive).
Finally, the Directive obliges EU Member States to provide for a wide range of protections for reporting persons and persons concerned. These cover, among others, the confidentiality of their identity (albeit with important exceptions), the compliant processing of their personal data and the protection against retaliation.
EU whistle-blowing legislation in the area of financial services
At the EU level, various legislation in the areas of financial services generally and banking specifically contain rules on the establishment of whistle-blowing mechanisms. These mechanisms also typically have an internal dimension (i.e., procedures for the reporting of possible infringements by employees to their employer) and an external dimension (i.e., procedures with the regulators for the reporting of possible infringements to the regulators by employees or other persons that deal with financial services firms or banks).
Thus, for instance, Article 32 of the EU Market Abuse Regulation10 requires Member States to ensure that the respective national administrative authority that is competent for market abuse infringements establishes effective mechanisms to enable reporting of actual or potential infringements of this Regulation. These mechanisms must include at least:
- specific procedures for the receipt of reports of infringements and their follow-up, including the establishment of secure communication channels for such reports;
- within their employment, appropriate protection for persons working under a contract of employment who report infringements or are accused of infringements, against retaliation, discrimination or other types of unfair treatment as a minimum; and
- protection of personal data both of the person who reports the infringement and the natural person who allegedly committed the infringement, including protection in relation to preserving the confidentiality of their identity, at all stages of the procedure without prejudice to disclosure of information being required by national law in the context of investigations or subsequent judicial proceedings.
The Market Abuse Regulation also obliges Member States to require employers who carry out regulated activities to have in place appropriate internal procedures for their employees to report infringements of this Regulation.
Finally, the Market Abuse Regulation allows Member States to provide for financial incentives to persons who offer relevant information about potential infringements of this Regulation to be granted in accordance with national law if those persons do not have other pre-existing legal or contractual duties to report such information. The conditions for the provision of incentives are that (1) the information is new, and (2) it results in the imposition of an administrative or criminal sanction, or the taking of another administrative measure, for an infringement of this Regulation.
A similar requirement to establish internal and external whistle-blowing mechanisms is also provided for in other EU legislation, such as in relation to MiFID II,11 undertakings for collective investment in transferable securities (UCITS),12 insurance distribution,13 and packaged retail and insurance-based investment products (PRIIPs).14
Finally, this requirement also exists in relation to the activities and supervision of credit institutions. The details of this requirement are laid down in Article 71 of the 2013 EU Banking Directive.15 The whistle-blowing mechanism to be established thereunder is to encourage the reporting of potential or actual breaches of both the national provisions implementing the 2013 EU Banking Directive and the 2013 EU Banking Regulation.16
As regards credit institutions in the eurozone, the European Central Bank (ECB) obviously has an essential supervisory role to play, being at the helm of the Single Supervisory Mechanism (SSM). As 'competent authority' in the meaning of the aforementioned Article 71, the ECB has set up a breach-reporting mechanism. The rules and procedures governing this mechanism are laid down in Articles 36 to 38 of the SSM Framework Regulation.17 They set forth that any person may, in good faith, submit a report directly to the ECB if that person has reasonable grounds for believing that the report will show breaches of the relevant EU law by the institutions supervised by the ECB or by the supervisors themselves (both the ECB and the national competent authorities for banking supervision, such as the National Bank of Belgium (NBB), i.e., the Belgian central bank and banking supervisor).18 All personal data concerning both the person who reports a breach and the person who is allegedly responsible for a breach shall be protected in compliance with the EU data protection framework. Also, the ECB shall not reveal the identity of a person who has made a report without first obtaining that person's explicit consent, unless disclosure is required by a court order in the context of further investigations or subsequent judicial proceedings.
With regard to significant supervised entities, that is, those entities that are directly supervised by the ECB, the ECB itself assesses the report. By contrast, with regard to less significant supervised entities, the ECB only assesses a report for breaches of ECB regulations or decisions. The ECB forwards reports concerning less significant supervised entities to the relevant national competent authority (e.g., the NBB in Belgium), without communicating the identity of the person who made the report, unless that person provides his or her explicit consent.
While everybody who has knowledge of a potential breach may report it to the ECB, the ECB has indicated that compliance officers, auditors and other employees of a bank are the groups that are most likely to have knowledge of possible wrongdoing. In 2018 the ECB received 124 breach reports, an increase of almost 40 per cent compared to the previous year.19 The breaches that are most commonly reported to the ECB concern the inadequate calculation of own funds and capital requirements, and governance issues within credit institutions.
National law on whistle-blowing in EU Member States: the example of Belgium
Belgian law does not contain general rules on whistle-blowing.20 However, particularly in relation to financial services and banking, Belgian law has implemented the relevant EU legislation.
Thus, Article 21, Section 1, No. 8 of the Belgian Banking Law contains a specific requirement that Belgian credit institutions must have an appropriate internal whistle-blowing system in place for the reporting of breaches of rules and codes of conducts.21 The external side of the whistle-blowing system is laid down in Article 36/7/1 of the Belgian Law of 22 February 1998 on the National Bank of Belgium.22 It governs, among others, the good faith reporting to the NBB of an actual or alleged infringement of the rules governing the status and supervision of credit institutions by an employee of the institution. We refer to what is mentioned above on the division of tasks within the SSM between the ECB and national supervisors, such as the NBB, and hence the circumstances in which Belgian law's whistle-blowing system comes into play.
The Law of 31 July 2017 has implemented in Belgian law the whistle-blowing mechanism that EU Member States are required to establish under EU legislation in areas such as market abuse, MiFID II, UCITS and PRIIPs. The rules governing the 'external' dimension of such mechanisms is now addressed in Article 69-bis of the Belgian Law of 2 August 2002 on the supervision of the financial sector and the financial services – with the Belgian Financial Services and Markets Authority (FSMA) functioning as the authority to whom the reporting will need to be done23 – while the 'internal dimension' is laid out in Article 69-ter of this law.
Importantly, these provisions are not limited to implementing into Belgian law the requirements of the EU legislation but go beyond the areas covered by this legislation. Thus, they will introduce both the external and internal dimensions of the whistle-blowing mechanism in a 'transversal' manner (i.e., for the reporting of infringements of any of the rules for which the FSMA has supervisory powers). These rules are enumerated in Article 45 of the Law of 2 August 2002. They concern a wide variety of financial and related services and the institutions providing them. These whistle-blowing provisions address topics such as the duty of secrecy of the FSMA as regards the identity of the reporting person, the protection of this person against claims and sanctions, the protection of this person and of the person affected by the reporting (i.e., the author of the possible infringement) against retaliatory, discriminatory and other forms of unjust treatment, and the financial and other remedies that these persons benefit from in case of such treatment by their employer. Of course, this protection does not affect the possibility of, for example, the employer taking the appropriate measures and actions that are open under statutory law or the contract with regard to a person who has effectively committed an infringement, including when this infringement came to light as a result of reporting by the whistle-blower.
As indicated above, in competition law, the introduction of administrative fines for individuals goes hand in hand with the right for individuals to seek immunity on their own account, besides or alongside a leniency application from the company.
The coordination between these sectoral whistle-blowing rules and the future general rules that will implement the Whistle-blowing Directive into Belgian law remains to be seen.
i Corporate liability and penalties
Under EU competition law, the European Commission may impose fines on corporates of up to 10 per cent of the annual consolidated worldwide turnover of the undertaking. In setting the fine, the European Commission takes into account the gravity and duration of the infringement. The Fining Guidelines provide more guidance on how exactly the European Commission will calculate the fines.24 These Guidelines are not binding on the European courts, who exercise full jurisdiction and can review the fine. However, the instances where the European courts have adjusted fines in competition cases remain exceptional.
A similar system of sanctions is in place under Belgian competition law, albeit with some differences. Until recently, the maximum amount of the fine was set at 10 per cent of the consolidated turnover realised by the undertaking on the Belgian market and through exports from Belgium (and thus not the worldwide turnover). Since the Act of 2 May 2019, fines may not exceed 10 per cent of the undertaking's total worldwide turnover during the financial year preceding the sanction decision. However, the previous system continues to prevail for infringements committed before the Act of 2 May 2019 entered into force.25 The BCA may also impose interim measures and periodic penalty payments of up to 5 per cent of the average daily turnover for each day's failure to comply with the decision. The BCA issued guidelines on the calculation of fines on 26 August 2014.26 These guidelines refer to the calculation method of the European fining guidelines described above. While the Belgian fining guidelines have no binding value, the courts have established that the BCA could not depart from the methods for the calculation of fines set out therein without violating the principle of legitimate expectations.
A 10 per cent reduction of the fine can be granted both under EU and Belgian competition law if an undertaking agrees to enter into a settlement with the competition authority. In doing so, the undertaking concerned must admit its involvement in the infringement.
In cases of private law claims, the regular courts may order the payment of compensatory damages for the harm that the competition law infringement caused to the claimants. Class actions have been introduced into Belgian law by legislation dated 28 March 2014, which entered into force on 1 September 2014. Adequate representatives are able to lodge collective claims on behalf of consumers for breach of contractual commitments or certain legal provisions, such as Book IV of the Belgian Code of Economic Law and some financial law regulations. Despite these procedural adjustments and the adoption of the Antirust Damages Directive, it remains difficult for claimants to quantify the harm caused by a competition law infringement.
There are no criminal sanctions under Belgian law for competition law infringements.27
EU financial services and banking
The SSM started in November 2014 and is one of the four pillars of the EU Banking Union. It is particularly relevant for the supervision of credit institutions in the eurozone. It is composed of the ECB and the national authorities that are competent for the supervision of credit institutions in their respective Member State (for instance, the NBB in Belgium). The ECB has a key role, as it is responsible for the effective and consistent functioning of the SSM. In addition, it has, among the thousands of credit institutions that are established in the eurozone, full and direct supervisory authority over 'significant institutions'.
To ensure compliance with the supervisory rules and its regulations and decisions in this area, the ECB has significant supervisory,28 investigative and sanctioning powers.
The ECB's investigative powers are similar to those that have been granted to other EU financial supervisory authorities, such as the European Securities and Markets Authority in the areas of the supervision of over-the-counter derivatives, central counterparties and trade repositories,29 and of credit rating agencies.30 Thus, the ECB has the right to require legal and natural persons to provide all information that is necessary to carry out its supervisory tasks. It also has the right to require the submission and examination of documents, books and records, to obtain written or oral explanations from the representatives or staff of such persons, and to conduct all necessary on-site inspections at the business premises of the institutions under its supervision, including without prior announcement.
If an institution supervised by the ECB, intentionally or negligently, breaches a requirement under directly applicable EU law for which administrative sanctions are made available, then the ECB has the right to start a sanctioning procedure and impose administrative pecuniary sanctions.31 The same right exists in the case of breaches of regulations or decisions adopted by the ECB in the exercise of its supervisory tasks.32 The ECB also has the right to publish the imposition of such sanctions, irrespective of whether the decision has been appealed. However, in certain exceptional circumstances, publication may be anonymised or delayed.
In other cases – for instance, breaches of national legislation that transposes EU Directives – the ECB only has the option of requiring the national supervisory authorities to open a sanctioning procedure with a view to taking action to ensure that appropriate sanctions are imposed by the national authorities.
The ECB imposes its sanctions in accordance with the ECB Sanctioning Regulation,33 which, among others, sets forth the procedural rules and time limits for the imposition of sanctions, as well as their judicial review.
At the national level, the NBB in Belgium has the option to take a wide range of administrative measures. It has, through its Sanctions Commission, the power to impose administrative fines and penalties of up to €2.5 million per infringement, in cases of non-compliance with the rules under its supervision. The specific procedural rules for the imposition of these sanctions are laid down in Articles 36/9 to 36/11 of the Law of 22 February 1998 on the National Bank of Belgium.34
The FSMA (the Belgian securities and markets supervisor) is also empowered to use a wide range of administrative measures and, through the FSMA Sanctions Commission, to impose administrative fines of up to €2.5 million per infringement, in the case of non-compliance with the rules that fall under its supervision. The specific procedural rules for imposition by the FSMA of administrative fines are laid down in Articles 70 to 72 of the Financial Supervision Act,35 as well as in the provisions of an internal regulation from the Sanctions Commission of the FSMA of 18 September 2017.36
Within the European Union, criminal law is an area that still falls within the remit of the respective Member States. Hence, the rules on whether a corporate can be criminally liable and on the criminal sanctions in the case of such liability vary according to the Member State concerned, including in areas that concern the transposition of EU Directives (for instance on financial services and banking) that require Member States to establish such sanctions.
For instance, corporates in Belgium are, subject to certain conditions, criminally liable for offences that are either intrinsically related to the accomplishment of their corporate purpose or corporate interests or have been committed on their behalf. The criminal sanctions that can be imposed on corporates may, among others, consist of fines, a confiscation of corporate assets, winding up, a prohibition to exercise an activity, dismantling of company branches and publication of the criminal judgment. As a corporate cannot be sentenced to imprisonment, the penalty of imprisonment is converted into a fine in accordance with a complex calculation mechanism.
ii Compliance programmes
A compliance programme is considered neither a mitigating nor an aggravating circumstance by the competition fining guidelines. It is, nonetheless, highly recommended for undertakings to implement competition law compliance programmes, because they aim to reduce the risk of contravention, facilitating immediate cessation of any potential infringing conduct (thus minimising potential penalties), and earlier detection of any potential infringement (thus providing the opportunity to apply for leniency where appropriate).
In the area of financial services, various statutory rules and guidelines by the regulators require financial institutions to have appropriate compliance programmes. The absence of a programme constitutes a regulatory breach, while the existence and effective use of a programme – particularly in terms of compliance, training and monitoring – might, in certain circumstances, constitute a defence or, at least, a penalty-mitigating factor.
The mere existence of a compliance programme does not automatically constitute a mitigating circumstance under Belgian criminal law. However, its existence might be helpful in, for example, the defence of senior managers that they do not have a personal criminal liability, as they tried ensuring compliant behaviour through setting up internal compliance programmes, monitoring the effective functioning of these programmes and following up any issues reported through such programmes.
i Extraterritorial jurisdiction
Belgian competition law applies to any conduct that restricts competition on the Belgian market or a substantial part thereof. The place where the agreement or practice is implemented (irrespective of the registered office of the companies concerned) is relevant in this respect. Certain arrangements within the European Competition Network govern the allocation of cases between the national competition authorities of the EU Member States and the European Commission.
In July 2007, the Belgian financial markets supervisor rendered a landmark decision for the EU financial services landscape. This decision concerns the protection against double jeopardy, that is, the right of a person not to be prosecuted or punished more than once for the same acts (also known as the ne bis in idem principle). The Belgian regulator relied on Article 54 of the 1990 Schengen Agreement to refrain from imposing a sanction for behaviour that would otherwise have fallen within its jurisdiction. The practice under investigation related to possible market abuse by a financial institution based in the United Kingdom. The importance of Article 54 of the 1990 Schengen Agreement is twofold: the ne bis in idem principle is applicable to a cross-border context and it only requires the same facts (i.e., idem factum), and possible differences in the legal qualification of the breach are not relevant (hence, no requirement of idem crimen).
As a general rule, Belgian criminal courts have jurisdiction if the offence is committed in Belgium. A crime or offence is considered to have been committed in Belgium if one of its constitutive elements took place on Belgian territory. However, an offence committed on foreign state territory might be punishable before the Belgian courts in certain circumstances (e.g., bribery).
ii International cooperation
The Belgian Competition Authority does not have investigative powers outside Belgium. Thus, investigations concerning companies located outside Belgium will require cooperation with the competition authorities of other jurisdictions. Within the European Competition Network, cooperation between the European Commission and the national competition authorities of EU Member States is based on the provisions of EU Regulation No. 1/2003.37 The Belgian Competition Authority has the power to exchange all information (even if confidential) with the European Commission and the national competition authorities of other EU Member States, who may also ask the Belgian competition prosecutors for assistance in inspections that are carried out pursuant to EU Regulation No. 1/2003. On 22 March 2017, the European Commission presented a proposal intended to empower Member States' competition authorities to be more effective enforcers and to ensure the proper functioning of the internal market.38 The proposal recognised the key role of the national competition authorities (NCAs) in the enforcement of European competition law rules, the NCAs being responsible for 85 per cent of the more than 1,000 enforcement decisions. Hence, it aimed to ensure that when applying the EU antitrust rules, NCAs had the appropriate enforcement tools, with minimum guarantees and standards, to bring about a genuine common competition enforcement area. The proposed Directive was adopted on 11 December 2018.39
Likewise, financial services and banking supervisors and regulators are often, by virtue of EU or national legislation, in many areas able to exchange information with their foreign counterparts, without the exchange giving rise to a breach of the regulators' confidentiality obligation. Similarly, in various areas, these supervisors and regulators have the statutory authority to cooperate with their foreign counterparts. Particularly within the European Union, this cooperation may include on-site inspections by a foreign regulator in Belgium or vice versa, including for practices that may constitute a breach of foreign law but not the law of the place where the inspection is carried out. In 2018, the FSMA received 17 requests for international cooperation from competent foreign supervisory authorities. The requests often relate to the identification of the beneficiary of an operation. The same year, the FSMA sent 44 requests for cooperation to foreign competent authorities, compared to 30 in 2017.
As Belgium is a member of the European Union, it is bound by EU legislation, as well as the 1990 Schengen Agreement and various other international agreements on extradition and cooperation in criminal matters. In addition, Belgium has concluded several bilateral and multilateral treaties in this respect, including the Benelux Extradition Treaty of 27 June 1962. Belgium has also enacted the Act of 9 December 2004 on mutual international legal assistance in criminal proceedings, according to which it will offer its assistance to foreign investigations on Belgian territory. These investigations will be conducted in accordance with Belgian law and under the authority of the public prosecutor or examining magistrate.
V Year In Review
In 2017, there was an increased activism of the regulators, particularly financial regulators such as the ECB and the FSMA. As regards the latter, we see a focus on regulatory action in Belgium that is intended to, or at least results in, a settlement between the supervised entity and the FSMA. While such a settlement brings an end to the investigation, it is typically published in a non-anonymous manner with increasingly high settlement amounts that the entity needs to pay and with commitments from that entity on how it will deal with customers that were potentially affected by the behaviour that is the subject matter of the settlement. It is expected that this trend will continue going forward. In 2019, the FSMA proposed 13 settlements for a total amount of €2,399,143.56.
1 Stefaan Loosveld is a partner and Sarah Benzidi is an associate at Linklaters.
2 Article 6 of the European Convention on Human Rights and Article 14 of the International Covenant on Civil and Political Rights.
3 Commission Notice on Immunity from fines and reduction of fines in cartel cases (OJ C 298, 8 December 2006, p. 17).
4 Guidelines on Leniency Notice on full or partial immunity from fines in cartel cases (Belgian Official State Gazette, 22 March 2016, p. 19796).
5 These are cartels involving both manufacturers and suppliers, whereby one side of the market acts as a 'hub' to facilitate coordination between players on the other side of the market.
6 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (OJ 349, 5 December 2014, p. 1).
7 On 6 June 2017, Belgium adopted legislation transposing the Antitrust Damages Directive. This legislation became applicable as of 22 June 2017.
8 Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26 November 2019, p. 17). See for what follows: S. Loosveld, 'EU Financial Supervisory Powers, Whistleblowing and Self-reporting', Journal of International Banking Law and Regulation , 320-323. See in this respect S. Loosveld, 'EU financial supervisory powers, whistleblowing and self-reporting', J.I.B.L.R., London, 2019, P.317-324, V. 34, N.9.
9 The Directive provides for the possibility for EU Members to grant similar exemptions for legal entities in the public sector.
10 In full, Regulation No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12 June 2014, p. 1).
11 See Article 73 of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12 June 2014, p. 349).
12 See Article 99-quinquies of Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014 amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities as regards depositary functions, remuneration policies and sanctions (OJ L 257, 28 August 2014, p. 186).
13 See Article 35 of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (OJ L 26, 2 February 2016, p. 19).
14 See Article 28 of Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) (OJ L 352, 9 December 2014, p. 1).
15 The 2013 EU Banking Directive is in full: Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27 June 2013, p. 338).
16 The 2013 EU Banking Regulation is in full: Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012 (OJ L 176, 27 June 2013, p. 1).
17 In full: Regulation (EU) No. 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (ECB/2014/17) (OJ L 141, 14 May 2014, p. 1).
18 The term 'relevant EU law' covers the substantive rules relating to the prudential supervision of credit institutions that the ECB applies when carrying out the tasks conferred on it by the SSM Regulation. These rules are composed of directly applicable EU Regulations such as the Capital Requirements Regulation. When EU Directives are considered relevant Union law, the national implementations of these Directives are also considered to be relevant Union law, e.g., national implementations of the Capital Requirements Directive IV. Furthermore, where directly applicable EU Regulations grant options to Member States, the national legislation exercising those options is considered to be relevant Union law. ECB regulations, such as the SSM Framework Regulation, and ECB decisions, are also considered to be relevant Union law.
19 ECB Annual Report on supervisory activities 2018, paragraph 3.2.
20 Note, however, that on 29 November 2006, the Belgian Privacy Commission issued a non-binding recommendation setting out how a whistle-blowing system could be established in compliance with the Belgian Data Protection Law. Also, specific whistle-blowing rules apply to certain categories of civil servants.
21 In full: Law of 25 April 2014 on the status and supervision of credit institutions (Belgian Official State Gazette, 7 May 2014, p. 36794).
22 Belgian Official State Gazette, 28 March 1998, p. 9377.
23 The FSMA has adopted a regulation specifying the procedural rules applicable to receiving and processing of infringement alerts. This regulation was approved by the Royal Decree of 24 September 2017 (Belgian Official State Gazette, 28 September 2017, p. 89027).
24 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No. 1/2003 (OJ C 210, 1 September 2006, p. 2).
25 Belgian Official State Gazette, 24 May 2019, p. 50073.
26 Belgian Official State Gazette, 10 September 2014, p. 71456.
27 Some exceptions apply, e.g., bid rigging in public procurement and breaking of seals applied by the BCA.
28 e.g., requiring a credit institution to hold own funds in excess of the EU law capital requirements or to use its net profits to strengthen its own funds, requesting the divestment of activities that pose excessive risks to the soundness of an institution, limiting variable remuneration when it is inconsistent with the maintenance of a sound capital base, or removing members from the management of a credit institution.
29 Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on over-the-counter derivatives, central counterparties and trade repositories (OJ L 201, 27 July 2012, p. 1).
30 Regulation (EC) No. 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (OJ L 302, 17 November 2009, p. 1), as among others amended by Regulation No. 513/2011 amending Regulation No. 1060/2009 on credit rating agencies (OJ L145, 31 May 2011, p. 30).
31 The sanctions that the ECB can impose in this case consist of a maximum of twice the amount of the profits gained or losses avoided because of the breach where those can be determined, or a maximum of 10 per cent of the total annual turnover of that institution in the preceding business year. If the institution is a subsidiary, then the relevant total annual turnover is calculated on a consolidated basis.
32 The sanctions that the ECB can impose in this case consist of (1) fines of a maximum of twice the amount of the profits gained or losses avoided because of the infringement where these can be determined, or 10 per cent of the total annual turnover of the undertaking, and (2) periodic penalty payments of a maximum of 5 per cent of the average daily turnover per day of infringement. Periodic penalty payments may be imposed in respect of a maximum period of six months from the date stipulated in the decision imposing the periodic penalty payment.
33 In full: Council Regulation (EC) No. 2532/98 of 23 November 1998 concerning the powers of the European Central Bank to impose sanctions (OJ L 318, 27 November 1998, p. 4). To adapt it to the supervisory tasks exercised by the ECB under the SSM, the ECB Sanctioning Regulation has been amended by Council Regulation (EU) 2015/159 of 27 January 2015 amending Regulation (EC) No. 2532/98 concerning the powers of the European Central Bank to impose sanctions (OJ L 27, 3 February 2015, p. 1).
34 Belgian Official State Gazette, 28 March 1998, p. 9377.
35 Belgian Official State Gazette, 4 September 2002, p. 39121.
36 Belgian Official State Gazette, 16 October 2017, p. 94004.
37 In full: Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4 January 2003, p. 1).
38 Proposal for a Directive of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (COM/2017/0142 final – 2017/063 (COD)).
39 Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (OJ L 11, 14 January 2019, p. 3).