On 26 October 2007, the European Commission (Commission) published a legislative package designed to introduce a new rapid settlement procedure for cartel cases. The package consists of proposed amendments to Commission Regulation 773/2004 and a draft Notice on Settlements. The Notice sets out a framework designed to simplify and speed up cartel proceedings by allowing parties to acknowledge their involvement in the cartel and agree to a faster procedure in return for a reduction in their fine. Comments on the proposed legislative package are currently being collected – deadline being 21 December 2007 – with a view to the final set being adopted by the Commission in 2008.


Over the past year, the Commission has been undertaking a review in the area of cartels, which has so far resulted in the adoption of revised Guidelines on setting fines and the publication of a new Leniency Notice. Cartel investigations are the most common but also the most time consuming of all anti-trust cases due to their complexity and susceptibility to litigation. As a result, cartels draw a large amount of Commission resources making anti-trust enforcement less efficient and therefore less effective. With the new settlement procedure, the Commission effectively aims to free up those resources by creating a form of ‘fast-track’ cartel investigation similar to that already in existence in the U.S.


Under the draft Notice, a cartel participant may indicate to the Commission that they would be interested in considering a settlement as soon as they become aware of the existence of an investigation against them. It is at the discretion of the Commission whether to initiate settlement proceedings or not therefore, once an indication is made, the Commission will assess the suitability of the case for settlement based on factors such as the number of parties involved, foreseeable conflicting positions and extent of contestation of the facts.

If the Commission finds the request reasonable, parties will likely be set a time-limit of no less than two weeks to declare in writing whether they envisage engaging in settlement discussions and, if so, will be permitted to begin bilateral discussions with the Commission. Those bilateral discussions will take place after the Commission’s core investigation has taken place and before the Commission issues its statement of objections. Through the discussions, parties will be made aware of the alleged facts against them, their classification, the gravity and the duration of the infringement and their liability for their individual involvement in the cartel. They will also be given an indication of the range of likely fines to be imposed and, upon reasonable request, will have the opportunity to examine non-confidential versions of any Commission evidence supporting the envisaged objections against them. The Commission has stressed, however, that the discussions are not about plea-bargaining or negotiation. Rather, they are designed to allow parties to influence the Commission’s objections through argument before the notification of the formal statement of objections and thereby affect the final decision itself.

By providing parties with such an early disclosure of the facts against them, the Commission hopes that implicated parties will be convinced by the case against them and thus encouraged to settle early. If parties are indeed convinced, they must submit a formal request to settle in the form of a written settlement submission and agree to cooperate in a faster, simplified procedure. The Notice states that the written submission must include, inter alia, an unequivocal acknowledgment of the parties’ liability for the infringement and an indication of the maximum amount of the fine that the parties will accept.

The submission of the formal request does not, however, guarantee that the settlement procedure will be followed. The draft Notice makes very clear that it is, at all times, at the Commission’s discretion whether to proceed with settlement or not. Thus the Commission may adopt a statement of objections, which does not endorse the parties’ settlement submission, in which case it will return to the standard enforcement procedure. It is further entitled to depart from the settlement submissions, even after the statement of objections has been issued, by adopting a final decision that does not follow its preliminary position. In such cases, any acknowledgements provided by the parties would be deemed to have been withdrawn and could not be used against them or any other party. Again the standard enforcement procedure would be followed.

The parties to the cartel investigation, on the other hand, cannot revoke their written settlement request unilaterally once it has been submitted. Rather they can only discontinue the settlement proceedings where the Commission adopts a statement of objections or a final decision which does not endorse the written request and thus effectively terminates settlement itself.

Provided the settlement request is not rejected following submission, the Commission will issue its statement of objections to which the parties must reply within a set time-limit of at least a week and thereby commit to the procedure. The Commission will then, without any other procedural step, adopt its final decision and, in setting the amount of the fine, will reduce the fines to be levied on those parties who have entered into settlement. The amount of the reduction is deliberately left blank in the guidelines but it is clear that the level of reduction will be the same for each of the cartel participants who settle.


The introduction of a settlement procedure is arguably likely to be of great benefit to both the Commission and cartel participants. The Commission will profit from the ability to close cases more swiftly and more effectively and parties under investigation will have another avenue for reducing their potential fine and will be able to view the case against them at a much earlier stage in proceedings. Moreover, the leniency programme remains separate to the new legislation, allowing any reduction in the fine as a result of settlement to be taken in addition to a reduction received under the Leniency Notice. At first glance, therefore, it would appear that the new settlement procedure has something for everyone.

On closer inspection, however, the draft Notice contains considerable flaws. The lack of detail in relation to the likely amount of the reduction in fines and the ability of the Commission to reject settlement requests at any stage of the proceedings makes the procedure extremely unpredictable for those considering settling. Keeping leniency separate also means that companies will have to consider each option in isolation when gathering and submitting information, which will again create uncertainty. Given that it is key for companies to know what they are settling for, it seems likely that this lack of certainty and finality will discourage cartel participants from considering opting for the settlement procedure.

Additionally, the proposals allow no scope for bargaining with the Commission as to the existence of the infringement or the appropriate sanction. There is a risk therefore that parties’ rights of defence will be restricted compared to those under the ordinary procedure as the shorter, simplified procedure is unlikely to accommodate lengthy arguments and disputes. Also, the Commission’s ability to depart from its statement of objections in the final hour will be unsettling for many considering the settlement option as there is no guarantee that their admission will necessarily lead to a reduced fine. This lack of finality may even result in greater litigation as cartel participants challenge the Commission’s decision to ignore their settlement request, which is exactly what the Commission are hoping to avoid.

One other deficit of the current draft version of the settlement procedure was pointed out to be the requirement that submissions must be made in writing. The Commission’s Leniency Notice allows leniency applications to be submitted orally in order to reduce the chances of third parties gaining access to submitted information eg, in the context of a U.S. discovery procedure. A similar protection is missing in the current draft settlement notice and it is arguable that the lack of protection might make parties reluctant to revert to the settlement procedure.

Finally, the shorter investigations, which will no doubt follow from the quicker settlement procedure, are likely to result in less detailed decisions from the Commission. While this will save time and money, it may also reduce the value of precedents set by the Commission and reduce the predictability of future cases even further.


A voluntary settlement procedure will undoubtedly speed up cartel investigations and improve anti-trust enforcement. However, a voluntary procedure such as that proposed by the Commission, is only effective when it is sufficiently attractive to those who must opt to pursue it – the cartel participants. As it stands, the lack of certainty and finality in the proposed guidelines as well as the risk of third party actions are likely to counteract any inclination a participant may have to follow the settlement procedure. These issues will need to be given careful consideration by the Commission before the final adoption of the new legislation.