FINES

We recall that under Article 63 of the former Law on Belgian Economic Competition as well as under Article IV. 70 of the new Belgian Economic Code, the Competition College can impose fines on an undertaking restricting competition, of up to 10% of its turnover. Additionally, a penalty capped at 5% of the undertaking’s turnover can be imposed for each day a decision of the College is not respected. The Competition College can furthermore impose a penalty of 1% of turnover for an obstruction of the investigation.

OLD CALCULATION

In its Notice of 19 December 2011, the former Competition Council explained that, for the calculation of the penalty, the turnover that is related to the infringement of the undertaking is taken into account (the “Basis of Calculation”).

In a first step, the Council decided how serious the restriction of competition was before deciding which part of that Basis of Calculation must be taken into account to calculate the penalty. This was capped at 30% of the related turnover for the most serious restrictions.

In a next step, the duration of the restriction was taken into account for a percentage of between 10% and 30% of the amount defined in step 1.

The fine was therefore the sum of those two amounts. The Council could add an amount based on a percentage of the Basis of Calculation in case of ‘aggravating circumstances’.

If a restriction of competition is organized on the market in biscuits for five years and undertaking x sold €100,000 worth of biscuits, the maximum penalty would be:

  • Seriousness: 30% of 100,000 = 30,000
  • Duration: 30% of 30,000 x 5 = 45,000

Total fine: €75,000

NEW CALCULATION

In its press release, the Competition Authority states that this calculation will be abandoned in favour of the calculation method of the European Commission.

The “Basis of Calculation” will be similar to that under the Notice of 19 December 2011.

The seriousness of the restriction is taken into account in the same way as under the Notice of 19 December 2011.

The duration of the restriction of competition is, however, taken into account by simply multiplying this by the number of years the restriction continued.

For price cartels, market repartitions or restrictions of production, 15% to 25% of the Basis of Calculation can be added to create a deterrent effect (§ 25 of the Guidelines).

For our example, the maximum penalty will now be:

  • Seriousness: 30% of 100,000 = 30,000
  • Duration: x 5 =

Total fine: €150,000

  • Possibility of adding another €15,000 to 25,000

CONCLUSION: HIGHER FINES BUT FEWER DISCRETIONARY POWERS FOR THE COMPETITION AUTHORITY

The way the duration of the restriction is taken into account by the Commission thus gives rise to higher fines. The possibility of the Competition Authority adding an additional amount in case of aggravating circumstances will, however, be better defined and restricted. This additional amount is set at 15% to 25% of the Basis of Calculation and can only be imposed for hard core restrictions as defined in paragraph 25 of the Guidelines.

The threshold of 10% of the total turnover, however, remains the upper limit.