Fining methodology
Approach to leniency discounts
Settlement process


Since the first EU cartel settlement cases in 2010, 13 settlements have been concluded. Recent settlements in relation to a wire harnesses cartel and an interest rate derivatives cartel indicate novel approaches by the European Commission in calculating fines according to the circumstances of the case. They also provide an insight into how the commission conducts the settlement process and how this has evolved over the years.

Fining methodology

Single or multiple cartels?
In July 2013 the commission imposed fines of more than €141 million on five suppliers for operating five cartels for the supply of wire harnesses to original equipment manufacturers (OEMs) Toyota, Honda, Nissan and Renault. The cartels covered the whole of the European Economic Area (EEA) and the cartel contacts took place in both Japan and the EEA.

The commission adopted two distinct approaches in respect of the five cartels:

  • A classic fining approach – in two OEM-wide cartels, in respect of Honda and Toyota, it was alleged that all sales to the OEMs of wire harness products were cartelised. The relevant periods were eight and nine years respectively, and covered all relevant sales to each OEM under the concept of a 'single complex and continuous infringement'. This traditional approach effectively allowed the commission to treat multiple infringements as one, on the basis that they were committed by the same parties in pursuit of a common anti-competitive goal.
  • A novel fining approach – the commission found three cartels for specific, isolated bidding processes in relation to Nissan and Renault. The infringement was of a much shorter duration and was limited to the meetings during which the relevant tenders were rigged. Given that the cartelised model was not yet in production (and there were therefore no relevant sales affected by the bid rigging), the commission took the unprecedented step of establishing the value of sales based on estimated sales, as forecast by the relevant OEMs. This was then multiplied by the winning bid price. The idea of asking the cartel victim the volume of sales that it anticipated in order to reach a base sales amount was an innovative approach by the commission.

The interest rate derivatives cartel is another example where the commission looked at specific infringements as separate cartels. In this case, the commission fined eight international financial institutions a total of €1.7 billion for participating in illegal cartels in markets for financial derivatives covering the EEA. Four of these institutions participated in a cartel relating to interest rate derivatives denominated in euros, while six of them participated in one or more bilateral cartels relating to interest rate derivatives denominated in Japanese yen. In particular, in relation to the yen interest derivatives cartel, the commission found that there were seven distinct bilateral infringements lasting between one and 10 months, and that different banks were involved in different infringements. In this case, the commission's penalty calculations were based on the number of infringements in which each bank participated and the duration of each infringement.

Direct sales only
Although the commission can take into account both direct and indirect sales, in the wire harnesses cartel the fines appear to have been calculated on the basis of sales made directly into Europe only. Sales of wire harnesses incorporated into cars in Japan which were then exported to Europe were not apparently factored into the fines. This was because a fine based on direct sales only was considered to have sufficient deterrent effect. However, it is understood that evidence of bid rigging outside of Europe was likely to have been used to calculate the duration of the infringements.

Approach to leniency discounts

All parties in the wire harnesses cartel (except the immunity applicant) received different leniency discounts for each infringement, as opposed to one overall discount for each party based on the evidence provided to the commission in this case as a whole. The commission found that the single infringements constituted separate cartels and accordingly its approach to leniency in respect of each individual infringement varied. The result was that one party was not awarded the maximum reduction available for being 'second in' to apply for leniency, despite apparently submitting its leniency application early in the process. This means that it is important to be the 'second in' in respect of each separate infringement and to provide robust evidence to the commission for each infringement. Being 'second in' for the case as a whole does not necessarily mean that the leniency applicant will be the 'second in' for each infringement, and could end up receiving a significantly different level of discount than expected.

The commission followed a similar approach in the interest rate derivatives cartel where, with regard to the Japanese yen interest rate derivatives, each of the banks received different levels of discount for the seven different infringements. For example, Citigroup received full immunity for one of the three infringements in which it participated, thereby avoiding a fine of around €55 million, and 35% and 40% discounts for the remaining two infringements. This suggests that an immunity applicant might not benefit from immunity for the overall case, and could still be subject to penalties in respect of different infringements within the entire cartel. It is therefore essential for a leniency applicant to give the commission as much information as possible, because even if it is only the third or fourth party to come forward in respect of one infringement, it may be the first or second party to provide evidence of another infringement, and thus benefit from a greater discount for that infringement.

In the steel abrasives cartel, five companies were fined more than €30 million for price fixing. Steel abrasives constituted a large proportion of the total turnover of all the parties to the cartel. For this reason, the fines imposed would have been capped at 10% of the parties' total turnover – the legal maximum. Exceptionally, the commission chose to reduce the fines in a way that took account of the characteristics of the companies and the different levels of participation in the infringement. This demonstrates that the commission may be flexible and allow companies to avoid excessive fines if the bulk of their turnover is derived from a single product or a limited product range.

Settlement process

The settlement discussions in the polyurethane foam and automotive bearings cartel lasted around 10 months and nine months, respectively. In the wire harnesses cartel, the settlement process was relatively quick at around eight months. The process in the interest rate derivatives cartel was also swift at around seven months, which indicates that the commission is moving closer to reaching its stated target of completing settlements within six months. This is a significant improvement on earlier settlement cases, such as the cartel for water management products, which took 13 months. Nonetheless, the overall duration for the wire harnesses cartel (from dawn raids to the final decision) was three years, and the interest rate derivatives and power exchanges cartels were shorter (within two years), which is still a considerable period for a company to be under investigation. However, the handling of a standard cartel case without settlement can take significantly longer.

EU settlements are different from plea bargaining arrangements in the United States. Plea bargaining is viewed by the US Department of Justice as both an investigative tool and an instrument that rewards the cooperation of companies which did not obtain immunity from fines. In contrast, the commission does not view the settlement procedure as an investigative shortcut and will enter into the procedure only after a rigorous cartel investigation, viewing settlement as a tool for relatively swift case closure. In the United States, plea bargains can be concluded with one company at a time, while in the European Union, settlement discussions are conducted with all the companies involved in a cartel at the same time. This may explain why the United States is able to close cases with individual companies in a shorter period compared to the commission.

The key purpose of the settlement procedure is to improve efficiency and enable investigations to be closed relatively quickly. In its recent settlement cases, the commission appears to have adapted the way in which it handles settlement discussions at the outset and the overall process has matured. In its earlier settlements, it would present its assessment of the case to the parties only at the start of the formal settlement process. The commission is now expected to engage with the parties much earlier and to try to formulate its case in discussions with the parties before the formal settlement process begins. There are likely to be a number of meetings (as many as seven or eight) at which the commission will present its case to the parties. This will usually be the first opportunity for the parties to obtain a full picture of the case, including sight of the commission's key evidence. The commission will carry out confidential bilateral discussions in parallel with all parties and reach an agreement with all of them, making this an intense and challenging period.

Hybrid settlements
A striking feature of the interest rate derivatives cartel, in respect of the euro currency cartel, is that three parties did not agree to settle with the commission. The commission has stated that it will continue its investigation against these parties under the standard cartel (non-settlement) procedure.

This is not the first time that the commission has taken on a hybrid case (ie, mixed settlement and standard cartel procedure). It did so in the animal feed phosphates cartel, one of the first settlement cases and the first case in which one of the companies decided to drop out of the settlement process despite already having participated in settlement discussions. In that case, the commission adopted a streamlined statement of objections and decisions addressed to the remaining settling parties, and at the same time issued a separate full statement of objections and subsequent prohibition decision against the non-settling party under the standard cartel procedure.

In contrast, in the interest rate derivatives cartel, the commission did not adopt a decision against all the parties at the same time, which means that the three non-settling parties will be subject to a separate decision. A similar approach has been taken in the steel abrasives cartel, where the commission has settled with some parties while continuing its case against another cartel member. It will be interesting to see the outcome of these cases and the level of any fines imposed, compared with the settlements. Another unusual feature of the interest rate derivatives cartel is that one of the settling parties has appealed the level of the penalty imposed by the commission as part of the settlement. This is the first time that a party has challenged an EU settlement.


These recent cartel settlements indicate the following developments:

  • Settlements happen at the end of the investigative process, by which time the commission has distilled its case. It may decide to drop certain elements during the process – for example, parts of the product or geographic scope of the cartel, particular infringements or cartel members. The commission's case can be expected to continually evolve until settlement. The commission may adopt a narrow approach, focussing on a handful of infringements for which it has good evidence, in order to facilitate swift case closure.
  • The commission is prepared to adapt its fining approach based on factual circumstances. For example, it may categorise specific violations as separate cartels (eg, particular rigged bids) rather than attempting to show an industry-wide cartel. The commission is therefore possibly showing more flexibility in moving away from the classic 'single and continuous infringement' approach. This is a potentially useful negotiating tool, as a single rigged bid would reduce the amount of commerce affected by the cartel and would be limited to a short period. On the other hand, it could also lead to an unpleasant surprise if a leniency applicant thinks it is 'second in' for the overall case, but the commission then decides to apply different discounts to each infringement. The result might be that the leniency applicant is not 'second in' for all the infringements, and could therefore receive a smaller discount than expected.
  • The commission will consider a number of factors when deciding whether a cartel is suitable for settlement. These include the solidity of the case and whether all the parties have applied for leniency or immunity. If the parties have all admitted to the infringement, a higher level of cooperation can be expected as the ultimate shared goal will be to reduce penalties. The commission has indicated that a settlement has more chance of success if it concerns an uncontested infringement which is evidenced by uncontested facts. On the other hand, if a degree of objection can be anticipated, this could weigh against the likelihood of settlement, and in the past the commission has abandoned settlements due to lack of progress in discussions with the parties (smart card chips cartel).
  • It is imperative that leniency applicants provide as much evidence as possible to the commission, even if they are only the third or fourth party in, as they may still benefit from higher reductions on penalties if they are able to provide evidence in relation to a separate infringement.
  • The commission will find creative ways to set the value of sales as the basis of its fines calculation (eg, using estimated forecasts).
  • It is possible that the commission may take account only of direct sales into Europe when calculating fines, notwithstanding that it has the right also to take into account indirect European sales.
  • The commission is getting closer to achieving its aim of concluding settlement procedures within six months. Parties can expect to engage with the commission early on in the process as it tries to establish its case.

For further information on this topic please contact Kurt Haegeman, Ross Denton or Farin Harrison at Baker & McKenzie by telephone (+32 2 639 36 11), fax (+32 2 639 36 99) or email (, or