Cartel investigations are incredibly resource-intensive for the European Commission and in the past five years it has only managed to issue decisions in six to eight cases each year. The settlement procedure was introduced in 2008 to simplify the administrative process in clear-cut cases, reduce the number of appeals and free up the Commission’s resources to bring more cases. It has taken some time for settlements to show results, with the first two cases only achieved in 2010. However, the Commission has now declared its commitment to using the settlement process and there are several more settlements in the pipeline for 2011.
If the Commission considers a cartel case appropriate for settlement, it will invite all parties to indicate their interest in settlement before issuing the statement of objections. Parties who confirm their interest will hold discussions with the Commission about facts, evidence, liability and the range of likely fines, and the Commission will make available certain evidence from its file. Parties who then decide to settle must make a ‘settlement submission’, acknowledging liability and indicating the maximum fine they would accept. The Commission will produce a short statement of objections for each settling party to confirm. Unless a party objects, a final fining decision is then taken. Settling parties receive a 10 per cent reduction in the fine. This is separate from and additional to any leniency discount.
The first ever settlement concerned the cartel involving the producers of DRAM memory chips used in computers and servers, in which all 10 companies chose to settle with the Commission. The second settlement, in relation to the animal feed phosphates cartel, was a ‘hybrid’ procedure because one company, Timab, dropped out of the settlement process. The Commission adopted a settlement decision for the five settling parties and a standard decision for Timab under the ordinary procedure. Timab has now appealed the Commission decision. Although none of the settling parties have appealed the decision, one party is challenging the Commission’s requirement that it provide a bank guarantee to cover its payment of the fine.
The length of settlement proceedings depends on the complexity of the case and the number of settling parties. The first few cases are intended to test the procedure, then the Commission will likely follow a more streamlined process. In the DRAM case, it took approximately 15 months. The Commission has indicated it will seek to achieve a settlement decision within six months of the initial invitation, but our experience in the first two cases suggests this will be a challenge.