On 20 September 2016, the European Commission fined Altstoff Recycling Austria (“ARA”) under Article 102 TFEU for abusing its dominant position in the Austrian waste management market by blocking its downstream competitors from reasonable access to its necessary upstream infrastructure.
What’s unique in this case is that the EC granted ARA a 30% discount for cooperating with the investigation. This has been the first time in over a decade that the Commission reduced a fine imposed in an abuse case, and is a clear signal to dominant companies: The Commission is prepared to acknowledge cooperation – but at the same time it wants to send a clear warning signal to the market by setting out the concrete infringement and fine the company (even if the fine is discounted).
SETTING THE STAGE
In February 2016, Margarethe Vestager, the European Competition Commissioner, publicly stated that she was “open for discussions with [dominant] companies that are willing to cooperate”, while noting that it had been more than a decade since the Commission last used that possibility outside cartels. On the same day that the EC published the ARA decision, Vestager gave a speech at the 10th Annual Global Antitrust Enforcement Symposium, recognising that the statement made in February was an invitation of cooperation to companies under investigation for antitrust abuse, and expressing her hope “that this type of cooperation will be the start of a trend.”
HOW ARA COOPERATED
The Commission indicates in its press release that ARA cooperated with the Commission by:
- acknowledging the infringement;
- ensuring that the decision could benefit from administrative efficiencies; and
- proposing a structural remedy by offering to divest the part of the infrastructure that enabled the abuse.
As a result of ARA’s cooperation, the Commission is able to deal with the case on a shorter time scale and with fewer resources, and can more quickly turn its attention to other important investigations.
THE LEGAL BASIS FOR THE DISCOUNT
The discount was granted on the basis of Paragraph 37 of the 2006 Fining guidelines, which allows for a departure from the general fining methodology due to “the particularities of a given case”. It may seem unusual that this paragraph, which also suggests increasing a fine for deterrence effect, would be used in this way, as the Commission’s regular practice to settle abuse of dominance cases is by accepting commitments pursuant to Article 9 Regulation 1/2003. That provision allows companies to offer commitments that are intended to address the competition concerns identified by the Commission. If the Commission accepts these commitments it adopts a commitment decision making them binding on the parties without establishing an infringement.
The European Commission, in a factsheet about the ARA case, expressly explained that some cases are not suitable for such a commitment decision because the infringement of competition rules has already finished or because the European Commission wishes to establish the finding of an infringement and to impose a fine. So the Commission uses Paragraph 37 as a carrot and a stick: It sends a clear warning signal to companies involved in any abuse of dominance cases that it may bring the respective conduct to an end and may fine them. At the same time, companies that cooperate may benefit from discounts of the fines that can even exceed discounts available at national level.
While the use of Paragraph 37 in this case therefore is of note, it’s not the first time that the Commission has granted a discount to cooperating dominant companies.
The practice of granting dominant companies a cooperation discount existed even before Paragraph 37 came into force. For example, in Hilti (1988), the Commission used the facts that Hilti had cooperated with the Commission and had instigated a compliance programme as mitigating factors when considering the gravity of the infringement as prescribed by Article 15 of the then EEC Council Regulation No.17 1962 (equivalent to Regulation 1/2003). This was despite the fact that the Commission had not at that time issued fining guidelines that formally required taking account of the parties’ cooperation as extenuating circumstances.
FOOD FOR THOUGHT
While a new trend of fine discounts for cooperation in abuse cases is welcome, the use of Paragraph 37 as a legal basis can be challenging for companies as it lacks the clarity and consistency of a leniency or settlement notice. At the same time, abuse cases are notoriously difficult for enforcers as they tend to lack the type of “smoking gun” evidence available in cartels, so developments of procedural efficiency could have a significant effect on the number of cases the Commission is willing to open. It remains to be seen whether the Commission intends to make use of this new form of cooperation “bonus scheme” more regularly and if yes, whether it will issue more guidance in order to legitimise the expectations that dominant companies and their counsel may have when entering into such cooperation.