On 30 June 2008 the European Commission (the “Commission”) introduced a new settlement procedure for companies involved in cartel cases. The settlement procedure offers the parties concerned the opportunity to acknowledge their participation in a cartel in exchange for a reduction in the fine imposed by the Commission. The settlement procedure operates in tandem with the Commission’s leniency policy as a further weapon in the Commission’s “crackdown on cartels”.

This briefing provides an overview of the settlement procedure, together with a summary of the implications for companies considering using the procedure. The key points are:

  • Settlement requires an admission of liability and forfeiture of the rights of defence
  • The ultimate fine will be reduced by 10% for settling parties
  • The Commission retains discretion as to when to apply the procedure, and may still withdraw it after initially agreeing to proceed


The settlement procedure is intended to allow the Commission to deal more quickly and efficiently with cartel cases and reduce litigation before the European courts. Unlike the US style plea-bargaining process whereby the parties engage in negotiated settlement discussions, it is explicitly intended to reduce the Commission’s administrative burden in having to prove cartel infringements.

Main features of the settlement procedure

The Commission has the discretion to determine which cases may be suitable for settlement and with which parties it wishes to explore the possibility of settlement. There is no duty or obligation for parties to settle. Moreover, the Commission retains the right, at any time until the publication of its final decision, to withdraw the offer of settlement and revert to the standard procedure.

Despite previous suggestions, the settlement procedure does not formally require that all parties to an alleged cartel agree to participate for the Commission to proceed with settlement discussions. However, in practice the Commission may be less likely to proceed with settlement where some parties are unwilling to settle the case as the reduction in its administrative burden will therefore be less significant.

If the Commission and the party agree to settle, the party will need to produce a final ”settlement submission”. This must include, in unequivocal terms, an acknowledgement of its participation in the cartel, and also state the maximum level of fine it would be prepared to accept. By making such a submission, the party also waives its right to full access to the Commission’s file and an oral hearing.

If the Commission accepts the settlement submission, it will then issue a statement of objections reflecting the settlement terms, which the parties will confirm. This acknowledgement will allow the Commission to proceed quickly to the final decision. If the Commission proceeds to a decision on the basis of settlement submissions, it will reward each party for settlement by reducing the amount of fine reached under the standard procedure by 10%. This amount is non-negotiable and all parties participating in the settlement procedure will receive the same reduction. Reductions in fine for leniency applicants (if applicable) will be applied in addition to the 10% reduction awarded under the settlement procedure.


The settlement procedure will be attractive to companies which, on the basis of the evidence available, accept their participation in the cartel and do not believe that the likely reduction of fine on appeal will exceed the 10% offered for settling. In addition to the reduction in fine, the new procedure will speed up the process, thereby reducing costs and limiting potential damage to reputation. Moreover, the fact that settlement is complimentary to the leniency procedure makes it especially attractive to leniency candidates, in that no significant further cooperation is required for an additional 10% fine reduction to apply.

It remains to be seen, however, whether these advantages will be enough to offset the considerable uncertainties caused by the new procedure, in particular:

  • The settlement procedure will only benefit a company in specific circumstances, i.e. when it accepts all allegations made by the Commission. There is little scope to challenge the Commission’s allegations without risking a return to the standard procedure.
  • It is for the Commission to initiate the settlement procedure and decide whether to continue with it. This could mean a company willing to settle may not be offered such opportunity where the other parties involved are likely to contest the Commission’s allegations.
  • There is a risk that the admission of infringement required by settlement could be used in other proceedings, for example in follow-on private damages litigation against the company.
  • As a result of increased worldwide cooperation between competition authorities, parties will need to consider how a decision to settle may impact on investigations in other jurisdictions