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Trends and climate
Have there been any recent changes to the cartel regime? If so, have they had a significant impact on enforcement activity?
In November 2014 the EU Damages Directive, which covers damages actions for violations of EU competition law, was adopted. The deadline for member states to implement the directive was December 27 2016. As of February 2017, 10 member states have fully transposed the directive. On January 24 2017 letters of formal notice were sent to all member states which failed to communicate full transposition by January 18 2017. The directive establishes common limitation periods for actions and a rebuttable presumption that cartels cause harm. It also clarifies the passing-on defence and the binding nature of national competition authority (NCA) decisions. In August 2015 the European Commission adopted amendments to EU Regulation 773/2004 and four related notices to reflect the provisions of the new directive on accessing and using information in NCAs’ files for damages actions.
In June 2015 the commission published guidance on the data that can be released to the public in relation to non-confidential antitrust decisions, and in September 2015 the commission updated its explanatory note on the conduct of dawn raids.
Are there any proposals to reform or amend the existing cartel regime?
Have there been any recent key cases?
Recent cases have exhibited two key trends:
- There has been an increase in the number of so-called ‘hybrid’ cases, where the European Commission pursues settlements in instances where some parties choose to remain outside the settlement procedure and continue their cases in the conventional procedure. For example, hybrid cases were pursued in Trucks (2016), Euro Interest Rate Derivatives (2016), Steel Abrasives (2016) and Mushrooms (2016). This is despite the fact that hybrid cases usually undermine the efficiencies associated with the settlement process, so the commission generally tries to avoid them.
- Following an announcement in February 2016, Commissioner for Competition Margrethe Vestager has been pursuing cases that will set precedents and prioritising cases in sectors with a direct impact on consumers. The results can be seen in the record fines (over €2.9 billion in total) imposed on four truck producers for their participation in a cartel for medium and heavy trucks in the European Economic Area. This follows a number of other cartel cases involving the automotive sector, including Alternators and Starters (2016), Heat Stabilisers (2016) and Thermal Systems (2017).
Which legislation applies to cartels and what are the relevant substantive provisions?
Within the European Union, both national and EU competition laws apply to cartels. As far as EU law is concerned, the relevant provision is Article 101 of the Treaty on the Functioning of the European Union.
Article 101(1) provides that “all agreements between undertakings, decisions by associations of undertakings and concerted practices that may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the internal market” are prohibited. Article 101(1) provides a non-exhaustive list of prohibited practices, including agreements, decisions or concerted practices relating to price fixing and output restrictions.
Any secret agreement or understanding between competitors that seeks to fix prices, limit output or share markets, customers or sources of supply (or involves other cartel behaviour such as bid rigging) will almost inevitably be regarded as an agreement restricting competition. These types of restriction are generally viewed as hardcore infringements of the competition rules with negative market effects (European Court of Justice, Dole (2015)).
Article 101(2) provides that agreements prohibited by Article 101(1) will be automatically void and unenforceable without there being a need for a prior finding by the European Commission that the agreement breaches Article 101. Article 101 can also be enforced before the national courts and national competition authorities.
According to Article 1(2) of EU Regulation 1/2003, agreements that satisfy the conditions of Article 101(3) of the treaty are not prohibited, and no prior decision to that effect is required. This requires that the efficiencies flowing from the agreement outweigh the anti-competitive effects. It is highly unlikely that any hardcore infringements would meet this exemption criteria.
Which bodies are the relevant regulatory and prosecutory authorities and what are their specific roles?
The principal EU enforcement agency is the European Commission, in particular the Competition Directorate General. In accordance with Regulation 1/2003, the commission can impose substantial fines for breaches of the procedural rules (eg, failure to provide information) and has the power to impose structural remedies (eg, divestments) and fines for breaches of Article 101. The commission has also adopted EU Regulation 773/2004, further clarifying the proceedings under Regulation 1/2003. This lays down rules concerning the initiation of proceedings and the conduct of investigations by the commission, as well as the handling of complaints and the hearing of the parties concerned.
Are there any sectoral regulators with concurrent powers?
Does the legislation apply to both formal agreements and informal practices?
Yes. Article 101 applies to “all agreements between undertakings, decisions by associations of undertakings and concerted practices”. In practice, this will include any agreement that fixes prices, limits output, shares markets, customers or sources of supply or involves behaviour such as bid rigging. ‘Concerted practices’ also cover any form of practical coordination between companies that has not reached the stage of a formal agreement (T-Mobile Netherlands, 2009).
In recent years there has also been a trend towards targeting looser forms of anti-competitive coordination between competitors, such as informal, indirect or one-way disclosures of information or infringements by participants active in different markets (European Court of Justice, AC Treuhand II (2015)).
Does the legislation apply to individuals, companies or both?
Article 101 applies only to undertakings, not to individuals, employees or officers of undertakings. However, the concept of ‘undertaking’ is defined broadly and can extend to any legal or natural person engaged in economic or commercial activity (eg, limited companies, partnerships, trade associations, sole traders and non-profit bodies).
Criminal penalties for individuals involved in conduct which infringes Article 101 exist in certain member states (eg, the United Kingdom).
Does the legislation subject companies to civil liability, criminal liability or both?
Undertakings are subject to civil fines imposed by the commission.
Does the legislation subject individuals to civil liability, criminal liability or both?
No. EU law punishes only undertakings. However, criminal penalties can be imposed on individuals in certain member states (eg, the United Kingdom).
Where cartel conduct is punishable by both civil and criminal penalties, can the enforcement authority pursue both types of penalty? How does the authority decide which penalties to seek?
This is not applicable at the EU level (see above).
Are there any sector-specific offences or exemptions?
There are specific rules about the application of Article 101(1) to the agricultural and transport industries which exempt certain agreements in those industries from the prohibition in Article 101(1). Previously, there was also an exception for insurance; however, this expired on March 31 2017.
To what extent, if any, does the legislation apply to extraterritorial conduct?
Article 101 can apply to agreements and conduct outside the European Union if they could have effects on competition within the European Union. The European courts have recognised that companies implicated in alleged cartel activity need not be based inside the European Union; nor is it necessary for the restrictive agreement to be entered into inside the European Union or the alleged acts to be committed or business conducted within the European Union.
Initiating an investigation
Who can initiate an investigation of potential cartel conduct?
The European Commission and national competition authorities (NCAs) have wide powers of investigation under EU Regulation 1/2003. Investigations may be triggered as a result of:
- one or more of the parties to a cartel or anti‑competitive agreement approaching the commission or the NCAs (eg, as a whistleblower under applicable leniency programmes) (see below);
- a third party making a complaint (eg, customers, competitors, consumers, employees or any other party with information);
- the commission or an NCA launching an inquiry of its own initiative; or
- an NCA referring a case with a cross‑border element to the commission (or vice versa) through the structures of the European Competition Network.
If an investigation is initiated by complainants or third parties, what rights (if any) do they have?
See “Immunity and leniency” below.
What obligations does a company have on learning that an investigation has commenced?
If an undertaking is subject to a dawn raid, it must cooperate fully and actively with the commission’s inspection. This means that the undertaking may be required to provide appropriate representatives or members of staff to assist the inspectors with:
- explanations on the organisation of the undertaking and its IT environment; and
- specific tasks such as temporarily blocking of individual email accounts, temporarily disconnecting running computers from the network, removing and re-installing hard drives from computers and providing administrator access rights support.
When such actions are taken, the undertaking must not interfere in any way with these measures and it is the undertaking's responsibility to inform the employees affected accordingly.
Under Article 18 of Regulation 1/2003, the commission has extensive powers to request information from companies and undertakings must comply with Article 18 information requests as fully and as accurately as possible.
What obligations does a company have if it believes that an investigation is likely?
There are no formal obligations if an investigation is likely; however, an undertaking would be wise to pay attention to the wider context, including the possibility that multiple investigations or court proceedings could be triggered in different jurisdictions (see “International cooperation” below). Moreover, the undertaking should begin to develop a tailored strategy, establish facts, identify risks and consider its document creation and retention policies.
What are the potential consequences of failing to act or delaying action?
Formal stages of investigation
What are the formal stages of and approximate timeframe for investigations?
Once a case comes to the commission’s attention, it will collect further information, either informally or using its formal powers of investigation laid down in Regulation 1/2003 (see below). Information may also be offered by third parties or the cartel participants themselves under the commission’s immunity or leniency programmes (see “Immunity and leniency” below). If the commission considers that there is evidence of an Article 101 infringement that should be pursued, it may decide to open formal proceedings itself or it may refer the case to one or more of the NCAs through the European Competition Network.
Where proceedings are brought at the commission level, this may lead to the commission formally addressing a written statement of objections to the parties setting out the commission’s case. The parties are then allowed to examine the documents on the commission’s file and respond to the statement of objections (in a written reply and at an oral hearing).
Before the commission takes its final decision, it must consult the Advisory Committee on Restrictive Practices and Dominant Positions, which contains officials from each NCA. The commission’s final decision is then taken by the full College of Commissioners and is notified to the undertakings concerned.
From initial investigation to final disposition a cartel case usually takes several years.
What investigative powers do the authorities have?
The commission’s principal powers of investigation under Regulation 1/2003 are the power to:
- require companies to provide information (Article 18);
- conduct voluntary or mandatory on-the-spot investigations (dawn raids) on company premises (Article 20);
- inspect employees’ homes and cars (Article 21); and
- take voluntary statements for the investigation (Article 19).
Dawn raids Commission officials can enter the premises, land and means of transport of a company, examine its books and other business records (including computer records), take copies from books and records and ask for oral explanations on the spot. Regulation 1/2003 also provides for the power to seal premises and records. The commission can also inspect any other premises (including the homes of directors and employees), subject to obtaining a court warrant, if there is reasonable suspicion that books and other records related to the business and to the subject matter of the inspection are kept at the premises.
Commission officials will usually tolerate a short delay in order to allow the undertaking to contact its lawyers.
The commission has no power to require individuals to make statements or provide evidence under oath. Under Article 19 of Regulation 1/2003, the commission only has the power to take statements from any natural or legal person on a voluntary basis (ie, such persons cannot be summoned to testify). Commission investigations therefore tend to focus heavily on documentary evidence. Consistent with the interpretation of the European courts, Regulation 1/2003 grants the commission the power to interrogate a company’s representatives and staff for explanations only on facts or documents relating to the subject matter and purpose of the inspection.
Commission officials have no power to force entry; however, where an investigation is obstructed, the NCA officials assisting the commission in its investigation may use force to gain entry, provided that they have obtained the necessary warrant (under national procedures). In practice, as a precaution, the NCA officials generally have such a warrant.
Information requests Under Article 18 of Regulation 1/2003, the commission also has extensive powers to request information from companies. These requests for information are addressed in writing to the companies subject to the investigation or to third parties (eg, competitors and customers). They must set out the legal basis and the purpose of the request, as well as the penalties for supplying incorrect information.
What is the geographic reach of public enforcement actions?
Commission officials can conduct dawn raids anywhere in the European Union. The commission can also request that the European Free Trade Area Surveillance Authority conduct a dawn raid in respect of undertakings located in Iceland, Liechtenstein or Norway.
With respect to non‑EU companies, the commission often exercises its enforcement jurisdiction by sending the request for information within the European Union to a subsidiary company of the non‑EU parent firm or group. However, where a firm has no physical presence in the European union, this will not be possible. In the latter case, the commission usually sends out informal requests for information (without reference to its fining powers under Regulation 1/2003); it would be normal for addressees to cooperate in the provision of information in response to such requests.
When is court approval required to invoke these powers?
The commission has wide discretion to collect any information that it considers necessary. However, the commission’s powers are subject to the general principles of proportionality and the rights of defence (see below). Dawn raids may be conducted either pursuant to written authorisation or pursuant to a formal commission decision.
Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?
Yes. See “Dawn raids” above.
What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?
If a dawn raid is conducted pursuant to a commission decision, the undertaking must permit the investigation to proceed and a fine may be imposed for refusal to submit. However, if the investigation is conducted only by written authorisation, the company need not comply but is asked to submit voluntarily.
An undertaking may be fined for breaking the seal on premises and records following a dawn raid. In 2012 the European Court of Justice (ECJ) imposed a fine of €38 million for breaking a seal on E.ON.
If an undertaking refuses to comply with an Article 18 information request, or submits incorrect or misleading information, fines will be imposed under Article 23(1) of EU Regulation 1/2003. The commission may impose fines up to 1% of the total annual turnover. Periodic penalty payments may be imposed as a means to enforce the information request by decision (see Article 24(1)(d) of Regulation 1/2003).
Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?
The commission cannot require the disclosure of written exchanges between a company and its European Economic Area (EEA) – qualified external lawyers seeking or giving legal advice where the exchange:
- follows the initiation of proceedings by the commission and concerns the company’s defence; or
- is linked with the subject matter of those proceedings (even if the exchange occurred before the initiation of proceedings).
The extent of this privilege is therefore limited in scope. In particular, legal professional privilege does not apply to exchanges between a company and its in‑house lawyers (unless they are simply reporting the statements of an EEA‑qualified external lawyer) (ECJ, Azko Nobel (2010), confirming ECJ, AM&S (1982)), or between a company and an external lawyer qualified outside the EEA. Although advice from in‑house lawyers or from lawyers qualified outside the EEA may qualify as privileged under national legislation, caution is still required because of the risk that the commission may investigate.
Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?
During the commission’s investigations, an undertaking has certain fundamental rights of defence, including the right:
- not to be subject to an unauthorised investigation;
- to legal advice;
- not to be required to produce legally privileged documents; and
- not to be required to incriminate itself, meaning that the commission may not compel a company to provide answers that might involve admitting the existence of an infringement that it is incumbent on the commission to prove.
In this context, the European courts appear to draw a distinction between requests intended to secure purely factual information on the one hand, and requests relating to the purpose of actions taken by the alleged cartel members on the other hand. Whereas the former type of questions is generally permitted, the latter infringes the undertaking’s rights of defence.
What is the process for objecting to an authority’s exercise of its claimed powers?
See “Appeal process” below.
Publicity and confidentiality
What information about investigations will be made publicly available and at which stage(s) of the process?
All information and documents communicated to the commission under the leniency notice are treated confidentially. Any subsequent disclosure, as may be required by the proceedings, will be made in accordance with the rules relating to access to the file. Following the adoption of the EU Damages Directive, the commission will not transmit leniency corporate statements or settlement submissions to national courts for use as evidence in support of actions for damages for breach of EU antitrust laws.
In practice, the commission does not publicly reveal the identity of a leniency applicant while the investigation continues. Eventually, however, details of the cartel investigation and the applicant’s involvement may be made publicly available in the final commission decision. Applications may be made to the commission to redact confidential information or business secrets.
Is any information automatically confidential and is confidentiality available on request?
Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?
In accordance with EU Regulation 1/2003, the NCAs throughout the European Union are also fully competent to enforce Articles 101 and 102 (as well as their domestic competition rules) in relation to cartels at the EU level. There is close cooperation between the European Commission and the NCAs, which have established the European Competition Network (ECN). The various authorities exchange information and cooperate through the ECN structures to ensure the efficient allocation of cases. There is also close cooperation between the commission and international competition authorities, particularly in the United States.
Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?
Information may be exchanged informally between competition authorities to permit cooperation. In international cases, waivers are typically granted where an undertaking has applied for immunity or leniency with at least two jurisdictions so that confidential information can be exchanged.
How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?
The commission both investigates and adjudicates on cartel matters. At the end of an investigation by commission officials, the final decision is taken by the College of Commissioners.
The settlement procedure is available in cases where the commission has initiated proceedings with a view to adopting an infringement decision and imposing fines, but has not yet issued a formal statement of objections. Pursuant to the settlement procedure, the parties are expected to acknowledge their participation in and liability for the cartel and reach a common understanding with the commission about the nature and scope of the illegal activity and the appropriate penalty. In return for such cooperation:
- the parties enjoy a 10% reduction in fines (cumulative to any leniency reduction); and
- any specific increase for deterrence used in their regard will not exceed a multiplication of two.
What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?
The commission has a broad margin of discretion to determine which cases may be suitable for settlement. An undertaking has no right to enter into settlement discussions, nor is it under an obligation to do so if invited by the commission. When the commission determines the suitability of a case, account is taken of the probability of reaching a common understanding within a reasonable timeframe in view of factors such as the number of parties involved, the extent of contested facts and the prospect of achieving procedural efficiencies.
Where the commission considers a case to be potentially suitable for settlement, it will request that the parties indicate, in writing, their wish to engage in such settlement discussions. The commission request will set a time limit of up to two weeks in which the parties must respond. This written indication by the parties does not imply an admission of participation in or liability for the cartel. Following receipt of an expression of interest, the commission has discretion as to whether to proceed with the settlement discussions and to determine the appropriateness and the pace of the discussions. The commission may decide at any time during the procedure to discontinue settlement discussions altogether.
The settlement discussions will cover:
- the alleged facts;
- the gravity and duration of the infringement;
- the liability of the undertaking; and
- the potential maximum fine.
The parties do not have full access to the commission’s file, nor do they have the right to negotiate the existence of the infringement or the appropriate penalty. However, the commission will hear the parties’ arguments and disclose some (non‑confidential) information from its file. The content of any settlement discussions with the commission cannot be disclosed by the parties to the proceedings to any other undertaking or third party unless the commission has given its prior consent. A breach of such confidentiality may result in the termination of the settlement discussions and, for the purposes of setting a fine, may be treated as an aggravating circumstance.
Should the commission and the parties reach a common understanding as to the scope of the potential objections and the likely fines, the commission will request a settlement submission from the parties within a set period of at least 15 working days. The settlement submission is an oral or written statement that must contain:
- a clear, unequivocal acknowledgment of the parties’ liability for the infringement;
- an indication of the maximum fine that the parties would accept;
- confirmation that the parties have been sufficiently informed of the commission’s objections and have been given sufficient opportunity to be heard;
- confirmation that the parties do not wish to have an oral hearing; and
- an agreement to receive the commission’s statement of objections and decision in an official EU language.
Once the settlement submission has been received by the commission, the commission will issue its statement of objections, which may endorse the view in the settlement submission. If it does, the parties will have at least two weeks to respond to the statement of objections by confirming that it corresponds to the contents of their settlement submission and they remain committed to the settlement procedure. Following this, the commission can proceed directly to issuing its decision (following consultation with the advisory committee). The decision will reflect the parties’ cooperation, and all parties which participate in the settlement procedure will receive the same reduction of 10%, in addition to any reduction they may receive for leniency.
However, if the statement of objections does not endorse the view in the settlement submission, the parties’ acknowledgments will be deemed to be withdrawn and normal administrative procedures will be followed (ie, the parties will have full access to the commission’s file and there will be an oral hearing).
Even if the commission endorses the view in the settlement submission in its statement of objections, it may nevertheless adopt a decision that departs from this position. This may be a result of the views put forth by the advisory committee or the College of Commissioners. In this event, the commission will issue a new statement of objections and normal administrative procedures will be followed.
If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?
The commission both investigates and adjudicates on cartel matters. At the end of an investigation by the commission officials, the final decision is taken by the College of Commissioners.
Which party must prove its case? What is the relevant standard of proof?
The burden of proof lies with the commission to establish the facts and assessments on which its infringement decision is based. However, if the party is claiming that the relevant agreement or concerted practice falls within an exemption under Article 101(3), the burden of proof lies with the party making that claim.
The legislative framework does not provide for precise rules regarding the standard of proof. Case law emphasises the presumption of innocence and states that the commission must produce precise and consistent evidence to support the conviction that the infringement took place (General Court, Danone (2005)).
Is there a hearing? If so, what is the process for submitting evidence and testimony?
If a settlement is not endorsed in the statement of objections or the settlement procedure is not used, there will be an oral hearing and the parties will have full access to the commission’s file.
What are the accused’s procedural rights?
See “Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?” above.
What is the appeal process?
Commission decisions can be appealed to the General Court in Luxembourg. The grounds for appeal are:
- lack of competence;
- infringement of an essential procedural requirement;
- infringement of the Treaty on the Functioning of the European Union or of any rule relating to its application; or
- misuse of powers.
The General Court has unlimited jurisdiction, as regards matters of fact and law, to review the legality of and reasons for commission decisions regarding fines and to assess the appropriateness of the amount of the fines imposed. It may cancel, reduce or increase the fines imposed. The burden of proof lies with the commission to establish the facts and assessments on which its decision was based. General Court judgments may be appealed (on points of law only) to the European Court of Justice.
Companies do not necessarily have to pay their fines immediately if they lodge an appeal before the General Court. However, in this case, they must provide a bank guarantee covering the full amount of the fine plus interest.
To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?
Penalties for companies
What are the potential penalties for companies involved in a cartel?
The European Commission can impose fines on the undertakings or associations of the undertakings concerned. The commission has wide discretion in setting the level of fines within the limits of EU Regulation 1/2003. The fine imposed can be up to 10% of worldwide group turnover in the preceding business year where an undertaking or association of undertakings has infringed Article 101 of the Treaty on the Functioning of the European Union. The European Court of Justice (ECJ) has confirmed that fines may exceed the turnover in products concerned by the infringement provided that they stay within the 10% ceiling (ECJ, Pre-insulated Pipe Cartel Appeals (2002)).
The commission also has the power to require the parties to terminate infringement and may require them to undertake any action necessary to ensure that their conduct in future is lawful. For this purpose, in some circumstances it has the power to impose structural remedies and accept binding commitments.
Are there guidelines in place for penalties? If not, how are penalties normally calculated?
In general, the European courts have confirmed that the commission has a wide discretion in setting fines, within the limits of Regulation 1/2003. The commission imposes fines according to its Fining Guidelines on the method of setting fines using a two-step method:
- Value of sales – the commission starts by applying a percentage of the undertaking’s value of sales in the market affected by the infringement. The percentage applied in each case is based on the gravity of the infringement and, as a rule, will be set at a level of up to 30% of sales. In determining the proportion of the value of sales, account is taken of:
- the nature of the infringement;
- its actual effect on the market; and
- the size of the relevant geographic market.
- Duration – to take fully into account the duration of the participation of each undertaking in the infringement, the amount determined on the basis of the value of sales is multiplied by the number of years of participation in the infringement.
- Entry fee – in cartel cases (and other hard-core infringements) an additional sum of between 15% and 25% of the infringer’s value of sales is included to deter undertakings from participating in cartels even for only a short period.
- Aggravating or attenuating circumstances and other adjustments – the sum of the value of sales multiplied by the duration, plus the entry fee, is the basic amount. The basic amount is adjusted to reflect a variety of possible aggravating or attenuating circumstances. The Fining Guidelines emphasises recidivism as an aggravating factor. Additional adjustments are possible for other objective factors (eg, the specific economic context).
- Leniency notice – the final (payable) amount is then calculated following the possible application of the commission’s leniency notice (see “Immunity and leniency” below).
Recent years have brought new record fines: in 2016 the trucks cartel was fined €2.93 billion, the largest fine ever imposed by the commission in a single cartel investigation, including a fine of €1.01 billion on Daimler and €753 million on DAF. To date, these are the largest fines imposed on single companies for their involvement in cartel activity.
Given the substantial discretion that the commission has to set fines, in practice it can be difficult to assess with any certainty the basic amount or final (payable) amount in cartel cases. Nonetheless, the commission generally follows the Fining Guidelines and must exercise its discretion in a coherent and non‑discriminatory way.
Do the authorities take into account any penalties imposed in other jurisdictions?
There are no formal rules requiring the commission to take account of penalties in other jurisdictions when determining fines, although the European courts have previously recognised a general principle that any previous punitive decision must be taken into account in determining any penalty that is to be imposed (ECJ, Wilhelm v Bundeskartellamt (1969)). Still, the commission appears to take the view that fines imposed or damages in civil actions paid outside the European Union (most notably in the United States) have no bearing on the fines to be imposed for infringing European competition rules.
How can a company mitigate its exposure to fines?
Cooperation with the commission at an early stage through the settlement and leniency procedures (see “Immunity and leniency” below) are the main methods to mitigate fines.
Penalties for individuals
What are the potential penalties for individuals involved in a cartel?
The European Union does not impose penalties on individuals for involvement in cartels. Some national competition authorities may take criminal or other enforcement action against individuals, depending on their respective national legislation. Further, in international cartel cases executives face the real prospect of extradition resulting in personal fines and imprisonment in jurisdictions outside the European Union (eg, in the United States).
Do the authorities take into account any penalties imposed in other jurisdictions?
Is a company permitted to pay a penalty imposed on its employee?
Is a company permitted to continue to employ an employee involved in cartel conduct?
Private damages actions
Can private actions for damages be brought in your jurisdiction? If so, who may assert such actions?
Third parties (and in certain circumstances, even parties involved in the infringement) which have suffered loss as a result of cartel behaviour in breach of Article 101 can sue for damages before the national courts. For example, the European Commission, on behalf of the EU institutions, filed a claim for damages in Belgium against manufacturers of elevators and escalators that were fined for price fixing in 2007 (Elevators and Escalators (2007)). The commission argued that the price fixing had led to increased costs for equipment installed in institutional buildings; however, its claim was dismissed by the Brussels Commercial Court in November 2014 on the grounds that the commission’s cartel decision provided insufficient proof that the elevators were more expensive and economic evidence did not prove there was any damage linked to the EU institutions.
The precise rules of standing, procedure and quantification of damages vary in the different EU member states. The EU Damages Directive is designed to ensure that victims of competition law infringements in Europe have access to effective mechanisms for obtaining compensation for the harm they have suffered. Victims should obtain full compensation for the actual loss suffered as well as for lost profits. The directive also allows for the use of passing on as a defence, and for commission and national competition authority decisions to be binding on the national courts and to serve as evidence of an infringement.
A further interesting development is that the European Court of Justice (ECJ) recently held that there should be no national rule preventing third parties from seeking compensation from cartelists for loss allegedly suffered due to the surcharge applied by non-cartelists who, independently and rationally, adapted to a price increase resulting from the cartel by increasing their own prices (ECJ, Kone (2014)).
What relief may be awarded to successful claimants (eg, damages, costs, injunctive relief or attorneys’ fees)?
Victims should obtain full compensation for the actual loss suffered as well as for lost profits, plus payment of interest from the time the harm occurred until compensation is paid under Article 3 of the Damages Directive.
How are the amounts of any damages, costs or attorneys’ fees calculated?
The precise mechanism for calculating full compensation is not delineated in the directive and is left for member states to implement in their national legislation. The directive provides for the disclosure of evidence under Article 5 to assist with determining loss.
Have there been any notable recent cases in which a private action was the subject of adjudication?
Can class actions be brought in your jurisdiction? If so, what is the procedure for such cases?
Class action litigation has been slower to develop in the European Union compared with the United States, where there is the risk of treble damages. The Damages Directive does not include provisions opening the possibility for opt-out class actions. However, in July 2013 the commission published a non-binding recommendation setting out common principles regarding collective redress mechanisms, and a communication and accompanying practical guide on quantifying harm in antitrust damages actions. The commission will assess whether any formal legislative measures need to be introduced into this area by July 2017.
Immunity and leniency
Immunity and leniency programmes
Is an immunity and leniency programme available for companies? If so, how does it operate?
In 2006 the commission adopted a revised notice on immunity from fines and reduction of fines in cartel cases (the leniency notice). The leniency notice is essentially based on two principles:
- the earlier that undertakings contact the commission, the higher the reward; and
- the value of the reward will depend on the usefulness of the materials supplied.
Amnesty – full immunity from fines Under Part II, Section A of the leniency notice, full immunity will be granted to either:
- the first undertaking to provide the commission with information and evidence to enable it to carry out a targeted inspection in connection with the alleged cartel (Part II, Section A, 8(a)); or
- the first undertaking to submit information and evidence enabling it to find an infringement of Article 101.
These options are mutually exclusive so only one undertaking can qualify for full immunity. To obtain full immunity, an undertaking must also:
- not have taken steps to coerce other undertakings to participate in the cartel;
- put an end to its involvement in the illegal activity no later than the time at which it discloses the cartel (except where in the commission’s view it would be reasonably necessary to preserve the integrity of the inspections);
- cooperate fully on a continued basis and expeditiously with the commission. The undertaking is expected to provide the commission with all the relevant information and all of the documents and evidence available to it regarding the cartel; and
- not destroy, conceal or falsify any evidence relating to the cartel and not disclose the cartel or the content of its application for immunity, except to other competition authorities.
Leniency – reduction of fines for “significant added value” Under Part II, Section B of the leniency notice, favourable treatment is also available to undertakings that (while not qualifying for immunity) provide evidence representing “significant added value” to that already in the commission’s possession and terminate immediately their involvement in the cartel activity. Provided these conditions are met, the cooperating undertaking may receive a reduction in the level of fine that would have been imposed if it had not cooperated. The envisaged reductions are split into three bands:
- 30‑50% for the first undertaking to provide significant added value;
- 20‑30% for the second undertaking to provide significant added value; and
- 0‑20% for any subsequent undertakings to provide significant added value.
The amount received within these bands depends on:
- the time at which they started to cooperate;
- the quality of evidence provided; and
- the extent to which it represents added value.
Can the enforcement authority decline or withdraw leniency? If so, on what basis?
The commission can decline leniency based on the information provided by the undertaking in its application.
The commission may withdraw an applicant’s conditional immunity if, at the end of the administrative procedure, it determines that the immunity applicant has failed to comply with the conditions. The commission will withdraw an applicant's conditional immunity if the applicant does at least one of the following:
- fails to cooperate genuinely, fully and continuously;
- discloses information concerning its application to third parties (unless authorised by the commission); or
- has coerced other undertakings to join or remain the cartel.
Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?
Yes (see above).
What benefits (if any) are available for employees and former employees of a company that seeks leniency?
Not applicable at the EU level, as the commission cannot impose specific penalties on individuals.
Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?
Have there been any notable recent cases in which a leniency application was the subject of adjudication?
In several recent cases, companies have benefitted from full immunity following a successful application:
- Webasto in Parking Heaters (2015);
- Linpac in Retail Food Packaging (2015);
- Denso in Alternators and Starters (2016); and
- MAN in Trucks (2016).
Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?
Not applicable to undertakings (see above).
What is the procedure for a leniency application?
If an undertaking wishes to take advantage of the commission’s leniency programme, it must contact the Competition Directorate General through its representatives or intermediaries (eg, legal advisers).
The commission will seek to establish its case on the basis of documentary proof. The undertaking must provide the commission with a corporate statement and other evidence relating to the alleged cartel – in particular, any evidence contemporaneous to the infringement. Corporate statements may take the form of written documents signed by or on behalf of the undertaking or, more usually, made orally. They should include:
- a detailed description of the alleged cartel arrangement;
- full contact details of the applicant and the other members of the cartel;
- the names, positions and addresses of all individuals involved in the alleged cartel; and
- information on which other competition authorities have been (or are intended to be) approached in relation to the alleged cartel.
Following initial contact, the commission will immediately inform the applicant if full immunity is no longer available for the particular cartel in question (in which case the applicant may still request that its leniency application be considered for a reduction of fines). If immunity is still available, the undertaking may either initially apply for a marker or immediately proceed to make a formal application to the commission for immunity from fines.
What is the typical timeframe for consideration of a leniency application?
There is no fixed timetable for granting immunity or leniency.
In an attempt to increase legal certainty, for full immunity cases the commission will grant conditional leniency through a formal commission decision. It normally takes at least 14 days to issue such a decision once the evidence has been provided (although in some cases, this period may stretch to a number of weeks). Hypothetical applications take longer to process, as they require two commission decisions. In the past, the commission had been unwilling to offer any assurances until the final decision.
In relation to leniency applications, the commission will inform the undertaking in writing, at the latest, on the date on which the statement of objections is issued.
What information and evidence is required?
An undertaking making a formal immunity application to the commission has two ways to comply with the requirements for full immunity. It may choose to either:
- provide the commission with all of the evidence of the infringement available to it; or
- present this evidence initially in hypothetical terms, in which case the undertaking is further required to list the evidence it proposes to disclose at a later agreed date.
What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?
See “Publicity and confidentiality” above.
What level of cooperation is required from applicants?
See “Application procedure” above.
What confidentiality protection is offered to applicants?
See “Publicity and confidentiality” above.
Can the company apply for a marker? If so, under which conditions?
The commission may grant a marker protecting an immunity applicant’s place in the queue for a period to be specified on a case‑by‑case basis to allow for the gathering of the necessary information and evidence. To be eligible to secure a marker, the applicant must provide the commission with information concerning:
- its name and address;
- the parties to the alleged cartel;
- the affected products and territories;
- the estimated duration of the alleged cartel;
- the nature of the alleged cartel conduct;
- details of any other past or possible future leniency applications to other authorities in relation to the alleged cartel; and
- its justification for requesting a marker.
Where the commission grants a marker, it will specify the period in which the applicant must perfect the marker by submitting information and evidence required to meet the relevant threshold for immunity.