What, if any, criminal sanctions are there for cartel activity?
There are no criminal sanctions for cartel activity at the EU level. However, criminal sanctions might be imposed at the national level in certain member states.Civil and administrative sanctions
What civil or administrative sanctions are there for cartel activity?
The European Commission (EC) derives its power to impose fines from article 23(2) of Regulation No. 1/2003 of 16 December 2002 on the implementation of the rules of competition, which grants it a wide scope in setting the amount of the fine, the only limit being that it shall not exceed 10 per cent of the undertaking’s total turnover in the preceding business year. In this respect, it should be noted that this maximum limit applies to the undertaking’s group turnover and not only to the entity that participated in the infringement.
There has been a clear increase in the amount of the fines in the recent years. The record-breaking total fine imposed in a single case is €3,807 billion in the Trucks decision (2016/2017), where Daimler also received the highest individual fine ever of €1 billion for a cartel infringement.
In addition, while the EC cannot itself impose civil sanctions, EU law encourages victims of cartels to seek indemnification before national courts. Directive No. 2014/104 of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of member states and of the European Union, transposed by all member states since 2020, notably establishes a framework to facilitate damages actions by victims of competition law infringements.Guidelines for sanction levels
Do fining or sentencing principles or guidelines exist? If yes, are they binding on the adjudicator? If no, how are penalty levels normally established? What are the main aggravating and mitigating factors that are considered?
The EC first adopted its guidelines on the method of setting fines in 1998 and updated them in 2006. They are self-binding on the EC, but not on EU or national courts, or national competition authorities (NCAs).
In practice, in setting the amount of a fine, the EC first determines the basic amount of the fine, taking into account the value of the undertaking’s sales to which the infringement directly or indirectly relates in the relevant geographic area, to which it applies a percentage usually ranging from zero to 30 per cent depending on the egregiousness of the infringement (in practice, this percentage usually varies between 15 and 18 per cent for cartels) as well as a multiplying factor reflecting its duration. In cartel cases, the EC applies an additional percentage ranging from 15 to 25 per cent to this basic amount to ensure the deterrent effect of the fine.
The EC then adjusts this basic amount downwards or upwards to take into account aggravating and mitigating circumstances for each undertaking. Aggravating circumstances include the undertaking instigating or leading the cartel, or it being a repeat offender – the EC recently increased a fine by 50 per cent on the grounds that the undertaking concerned had previously been sanctioned for another cartel (EC, 20 April 2021, Freight Forwarding, Case No. AT.39462). Mitigating circumstances include the undertaking’s cooperation with the investigation – the EC recently granted a 45 per cent reduction in fine rewarding such cooperation (EC, 20 May 2021, EGB, Case No. AT.40324), or the fact that the infringement was encouraged or authorised by public authorities or legislation.
Once adjusted, the EC verifies that the amount of the fine does not exceed the legal maximum, (ie, 10 per cent of the undertaking’s worldwide turnover in the last business year). The EC recently reduced to zero the originally €4.8 million fine it had imposed on an undertaking because that undertaking did not generate any turnover during the business year preceding the date of the decision (EC, 20 May 2021, EGB, Case No. AT.40324).
Finally, where applicable, the amount of the fine is further decreased to take into account leniency proceedings (full immunity for the first undertaking that came forward to the EC and reductions of up to 50 per cent for the subsequent ones) or settlement proceedings (a fine reduction of 10 per cent, as recently granted by the EC to all participants in the Car Emissions cartel (EC, 8 July 2021, Car Emissions, Case No. AT.40178)).Compliance programmes
Are sanctions reduced if the organisation had a compliance programme in place at the time of the infringement?
The EC does not have to take into account compliance programmes put in place by an undertaking concerned when it sets the fine. In 2014, the General Court of the European Union (GCEU) clearly excluded that a compliance programme be regarded as a mitigating circumstance. Indeed:
[The] mere adoption by an undertaking of a programme of compliance with the competition rules cannot constitute a valid and definite guarantee of future and continuing compliance by that undertaking with those rules, and consequently the mere existence of such a programme cannot compel the Commission to reduce the fine on the ground that the objective of prevention pursued by the fine has already been at least partly achieved.
See GCEU, 14 May 2014, Donau Chemie, Case No. T-406/09.Director disqualification
Are individuals involved in cartel activity subject to orders prohibiting them from serving as corporate directors or officers?
There is currently no EU legislation prohibiting individuals involved in cartel activity from serving as corporate directors or officers. However, some national legislations provide for director disqualification regimes, either as standalone sanctions that can be imposed by NCAs (eg, in Sweden) or as penalties contingent on being found liable for a criminal law offence for breaching competition laws that can be imposed by the courts.Debarment
Is debarment from government procurement procedures automatic, available as a discretionary sanction, or not available in response to cartel infringements?
While Regulation No. 1/2003 of 16 December 2002 on the implementation of the rules of competition does not list debarment from government procurement procedures as a possible sanction, Directive No. 2014/24 on EU Public Procurement provides for a combination of mandatory and facultative debarment when public authorities have sufficiently plausible indications to conclude that the undertaking has entered into agreements with other undertakings aimed at distorting competition, which can be qualified as ‘grave professional misconduct’ (article 57). The time period for debarment due to anticompetitive conduct is subject to national law and fixed at a maximum of three years by Directive No. 2014/24 where the period of exclusion has not been set by final judgment. It can be terminated earlier if measures taken by the undertaking sufficiently demonstrate its reliability. The debarment rule is seldom enforced throughout the European Union.Parallel proceedings
Where possible sanctions for cartel activity include criminal and civil or administrative penalties, can they be pursued in respect of the same conduct? If not, when and how is the choice of which sanction to pursue made?
Cartels are subject to both administrative penalties, which can exclusively be imposed by the EC, as well as potential civil damages, which can be decided by any national court. In this respect, public enforcement and private enforcement are considered as being complementary tools to effectively tackle cartel infringements and deter anticompetitive conduct.