The European Commission's anti-trust arm, DG Competition, has secured a number of high-profile enforcement wins this year against groups of competitors who illegally co-operate, for example, to fix prices, limit production, share markets or rig bids (i.e. cartels).

The last few months alone have demonstrated that the stakes are being raised. Last month, the Commission confirmed that it had been carrying out unannounced inspections (i.e. dawn-raids) -- with national competition authorities -- of polyurethane foam producers regarding alleged cartel activity in several Member States. In July, the Commission fined animal-feed phosphate producers a total of €175 million for price-fixing and market-sharing (the Commission settled the claim in all but one case, with producers receiving a 10 per cent reduction in their fine.)

In June, the Commission fined 17 bathroom equipment manufacturers a total of €622 million for operating a price-fixing cartel. A few days later, pre-stressing steel producers were fined a total of €518 million for a two-decade-long price-fixing and market-sharing cartel. In May, the Commission also fined ten producers of memory chips a total of €331 million in May for price co-ordination (reduced by 10 per cent for companies which acknowledged their participation in the cartel).

Cartels are illegal under EU (and Irish) competition law, and the Commission can fine businesses involved in cartels up to 10 per cent of their worldwide turnover. In practice, this level of penalty is unlikely but the Commission is willing to impose significant fines, even after parties admit wrongdoing and seek to settle the case.

In May, Competition Commissioner Joaquin Almunia stated: "The Commission will continue its relentless fight against cartels." This year has seen the Commission enter its first cartel settlement case which is a process designed to speed-up and improve the Commission's cartel investigation process. The Commission is also looking to expand the range of illegal "information exchanges" between competitors under legislation due to enter into force in January 2011.

The Commission uses a number of tools to investigate cartels, including dawn-raids on businesses to obtain incriminating cartel evidence (either from those suspected of involvement or from third parties who may have relevant information). Companies involved in cartels can seek leniency by providing the Commission with inside evidence. The first company to provide the Commission with evidence of a cartel can obtain immunity, in which case it will not have to pay any fine. Other businesses that give the Commission evidence on the same cartel later on will not obtain immunity but may benefit from a reduction in fines.

Irish businesses involved in cartels face not only the Commission but also the Irish Competition Authority. The Authority investigates Irish-focused cartels (including by carrying-out dawn raids) and then refers the case to the Director of Public Prosecutions. The DPP may then decide to prosecute businesses in the Irish courts and this can lead to fines of up to 10 per cent of their turnover. The Irish courts can also impose custodial sentences of up to five years on senior individuals responsible for cartel offences (a power the Commission and the EU Courts do not possess). Directors can also be disqualified for involvement in a cartel.

Since 2002, convictions in the Irish courts have been secured regarding home heating oil and motor vehicle distribution cartels. In July, the Authority put its current Cartel Immunity Programme out to consultation with a view to modernising and improving its operation.

While it might be thought that the application of cartel enforcement is likely to be less vigorous during the current economic crisis, the opposite is the case. Apart from the Commission's activism, the Authority continues to emphasise its commitment to cartel enforcement, and the recent appointment of a new member of the Authority to head its cartels division underscores this commitment. The Authority stated earlier this year that "competition enforcement....is even more important in difficult economic times".

Irish businesses are on notice. Any agreement between competitors to fix prices, limit production, share markets or rig bids, either between two businesses or in a wider group (eg a trade association), exposes those businesses and individuals within those businesses to significant sanctions under both EU and Irish antitrust rules. Awareness and effective internal compliance programmes are the best safeguards against such risks.