Public enforcement actions regarding cartels are primarily governed by Article 101 of the Treaty on the Functioning of the European Union (TFEU) (Consolidated version: OJ 2010 C 83, p 47), as well as by Article 53 of the European Economic Area (EEA) Agreement and its related Protocols 21 and 23 (OJ 1994 L 1). These provisions contain a general prohibition of anti-competitive agreements and collusion between undertakings.
Regulation 1/2003 (OJ 2003 L 1, p 1) sets out the powers of the Commission and its relationship with national competition authorities and national courts in the EU with regard to the enforcement of EU competition law. Further procedural rules concerning competition proceedings are set out in Regulation 773/2004 (OJ 2004 L 123, p 18) and complemented by the Commission’s Best Practices Notice (OJ 2011 C 308, p 6). In addition, the Commission has more detailed notices that further describe its relationship with (i) the European Network of Competition Authorities (OJ 2004 C 101, p 43) and (ii) the courts of the EU Member States (OJ 2004 C 101, p 54, as amended).
The foundations of the EU leniency programme are laid out in the Commission’s 2006 Leniency Notice (OJ 2006 C 298, p 17). In addition, the European Competition Network's (ECN's) Model Leniency Programme has been used to promote convergence between the leniency policies of EU Member States.
The EU settlement procedure for cartels is regulated by Regulation 622/2008 (OJ 2008 L 171, p 3) modifying Regulation 773/2004. These provisions are elaborated in the Settlement Notice (OJ 2008 C 167, p 1).
Finally, the Commission’s methodology for setting fines is set out in its 2006 Fining Guidelines (OJ 2006 C 210, p 2).
The Commission enforces the EU competition rules together with the national competition authorities of the EU Member States. These rules also apply in the EEA (ie, the 28 EU member states together with Norway, Iceland and Liechtenstein).
The relevant enforcement authority depends upon which authority is best placed to act, according to the principles set out in the Commission’s Notice on co-operation with the Network of Competition Authorities. Generally, the Commission is considered the best-placed authority to act where a cartel meets any of the following criteria:
At EU level, DG Competition is the service within the Commission responsible for cartel enforcement.
If a national competition authority acts, it is obliged to apply EU competition law (in addition to its national competition law) if the conduct at issue affects trade between EU member states.
At EU level, the prohibition of anti-competitive agreements is enforced as an 'administrative' breach of EU law, such that the Commission carries out the investigation, decides on whether there was an infringement and imposes fines. However, in some Member States, the national competition authority is required to prosecute cartel cases before a national court.
In 2018, the EU adopted a new Directive the better to harmonise and strengthen the powers of the ECN, an information network comprised of the Commission and national competition authorities (OJ 2019 L 11/3). In respect of cartels, the ECN Directive requires member states to put in place leniency programmes to enable national competition authorities to grant firms immunity from fines, or a reduction in fines, to encourage such applications. In addition, national competition authorities must accept summary applications in cases where a parallel leniency application has been made to the Commission. It was felt that pre-existing differences in the leniency regimes at national level in the EU led to legal uncertainty and weakened the incentives for potential leniency applicants to come forward.
Under EU law, competition law infringements are regarded as 'administrative' in nature and are only subject to fines (although these may be significant). However, criminal sanctions may apply to equivalent breaches of national competition law. The position under EU law has been questioned recently in Menarini Diagnostics (2011), where the European Court of Human Rights considered that a significant fine for a competition law infringement may constitute a criminal sanction within the meaning of Article 6 of the European Convention of Human Rights.
Under EU law, any natural or legal person who has suffered harm caused by an infringement of Article 101 of the TFEU can claim compensation for the harm suffered where there is a causal relationship between that harm and the infringement. In particular, this private right of action is now enshrined in the Damages Directive (OJ 2014 L349/1); see 5 Private Civil Litigation Involving Alleged Cartels.
Article 101(1) of the TFEU prohibits “all agreements between undertakings, decisions by associations of undertakings and concerted practices which 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”. This prohibition covers anti-competitive agreements and collusion of both a horizontal and vertical character.
Article 101 of the TFEU provides a legal framework for a balanced assessment taking into account both adverse effects on competition and pro-competitive effects. The Commission has published guidelines on the assessment of horizontal co-operation agreements (OJ 2011 C11, p 1), which address common lawful forms of joint action between competitors, including by means of R&D agreements, production agreements including subcontracting and specialisation agreements, purchasing agreements, commercialisation agreements, standardisation agreements including standard contracts, and information exchange.
The Commission's power to impose fines for infringements of EU competition law is subject to a limitation period of five years, except for infringements of procedural provisions (eg, those concerning requests for information or the conduct of inspections), in which case the limitation period is reduced to three years.
This limitation period is interrupted and starts running afresh whenever at least one of the undertakings concerned is notified of any action taken by the Commission or a national competition authority for the purpose of an investigation or proceedings regarding the infringement. However, any fine will be time-barred where twice the limitation period – ie, ten years (or six years in the case of procedural infringements) – has passed since the end of the infringement.
The Commission has jurisdiction to apply the EU competition rules in relation to any anti-competitive agreement or collusion that is (at least in part) implemented within the EU, even if it originates outside the EU. This was confirmed by the CJEU in its judgment in the Woodpulp I case. For instance, direct sales in the EU of goods subject to a cartel will be regarded as implementation of the cartel in the EU, irrespective of whether the companies concerned are established outside the EU or whether the cartel is organised and orchestrated outside the EU.
On several occasions, the Commission has also sought to rely on an effects-based test to establish jurisdiction over conduct that occurred in foreign jurisdictions. The so-called qualified effects test allows the application of EU competition law under public international law when it is foreseeable that the conduct in question will have an immediate and substantial effect in the EU. The qualified effects test pursues the same objective as the implementation test described above, namely by preventing conduct that, while not adopted within the EU, has anti-competitive effects liable to have an impact on the EU market. Although the application of the qualified effects test is not without controversy, the CJEU suggested in its judgment of 6 September 2017 in the Intel case that it may also be used to determine the Commission’s jurisdiction under Articles 101 and 102 of the TFEU.
The Commission has recognised the importance of respecting the interests of non-EU countries in the application of its competition rules, in accordance with the principle of negative comity. The CJEU has also recognised the principle of non-interference in matters within the jurisdiction of foreign competition authorities, in particular where the non bis in idem principle has been at stake. However, the CJEU has not issued any clear ruling on whether the principle of comity is applicable under EU law. In the cases where this principle has been invoked, the CJEU has found that the Commission had jurisdiction to apply EU competition law in the case at hand, such that there was no interference with the jurisdiction of another competition authority that could potentially justify the application of the principle of comity.
Under the principle of positive comity, the Commission and a non-EU state may act to the advantage of one another in cases where anti-competitive activities carried out in the territory of one of the parties adversely affect important interests of the other party. The Commission has often advocated co-operation with other competition authorities in order to co-ordinate their work under these principles. These principles have also been endorsed in the dedicated bilateral co-operation agreements in competition matters that the Commission has entered into on behalf of the EU with foreign competition authorities in the USA (1991), Canada (1999), Japan (2003), South Korea (2009) and Switzerland (2013).
Cartel investigations are typically triggered in one of four ways:
Once an investigation is opened, the Commission has wide powers of investigation and fact-finding under Regulation 1/2003. It may request information from undertakings and has the power to carry out unannounced inspections (so-called dawn raids). Following its investigation, if the Commission wishes to prosecute the case, it issues a Statement of Objections (SO) to the cartel participants (see 2.6 Role of Counsel) and provides the addressees of the SO with an opportunity to be heard. Ultimately, the Commission issues a decision that can be subject to appeal before the EU Courts.
The Commission can carry out unannounced inspections at companies’ or company employees’ premises.
Clients are strongly advised to co-operate with any Commission inspection. It is of the utmost importance that no documents are destroyed before, during or after the inspection.
If the Commission conducts an inspection, clients should request a copy of the Commission officials’ mandate and review it, paying particular attention to whether its scope is sufficiently defined as to subject-matter and timeframe. The company’s external lawyers should be called immediately and officials should be asked to wait until the lawyers are present (although they may not wish to do so).
Each official should be accompanied by company personnel, who are advised to take notes about what the official does as well as to take a copy of all the documents copied by the official. Should the officials decide to take copies of entire files without previously verifying the relevance of each individual document, they should put the copies in a sealed envelope that is only to be opened in the presence of the company’s lawyers at the Commission’s premises.
The client should avoid answering any substantive and interpretative questions, as well as any questions concerning communications with its external lawyers or questions, the answer to which could potentially incriminate the company.
Should the Commission decide to seal any part of the premises as part of its inspection, clients are strongly advised to ensure that the seal is not broken, either intentionally or by accident.
Inspections may be conducted under a simple authorisation from the Commission, which gives undertakings the right to refuse to submit voluntarily to inspection. However, an inspection may also be conducted under a formal Commission decision, which means that undertakings must submit to inspection.
The Commission is empowered to enter not only the company’s main premises but also, according to Regulation 1/2003, “any other premises”, such as the undertaking’s land and means of transport, including the homes of the undertaking’s staff. However, the inspection of these “other premises” can be carried out only following a formal Commission decision and with the authority of a court in the relevant EU Member State.
Officials of the national competition authority of the EU Member State in whose territory the inspection is to be conducted must, at the request of the Commission, actively assist the Commission in its inspection, in particular where an undertaking refuses to submit to an inspection under a Commission decision.
The Commission is entitled to examine the books and other records related to the business, regardless of the medium on which they are stored. The Commission may take electronic or paper copies of these records and ask the company’s representatives or staff for explanations as to any facts or documents related to the investigation.
In practice, this means that the Commission can access not only paper documents but also network servers, computers, external hard drives, cloud computing services, USB keys, CD-ROMs and DVDs, as well as employees’ personal devices used for professional purposes. The Commission may choose to examine the IT environment and storage media by using built-in search tools (for instance, by conducting a keyword search), but it also may use its own forensic IT tools.
As regards the electronic data collected during the inspection, the undertaking will receive a data carrier (eg, a DVD) on which all copied data is stored. The company will be requested to sign a list of the collected data items.
During a physical on-site investigation, the Commission is empowered to seal any business premises containing books or records that may be relevant to its investigation. Where the Commission has not finished collecting relevant documents during an electronic search, a copy of the data still to be searched is placed in a sealed envelope. The Commission may then open the sealed envelope and examine the contents at its premises in the presence of the representatives of the undertaking concerned.
Under its power to conduct unannounced inspections, the Commission may request any representative or member of staff of the undertaking on site at the companies’ premises to provide explanations of facts or documents relating to the subject-matter and purpose of the inspections.
Under its power to take statements, the Commission may conduct interviews with any natural or legal person who consents to be interviewed for the purpose of collecting information relating to the subject-matter of the investigation.
In either case, the Commission must inform the national competition authority of the EU Member State in whose territory the interview is conducted. The national competition authority may request that its officials assist the Commission in conducting the interview.
There is no limitation concerning where the Commission may or may not conduct interviews. As long as the interviewee agrees, interviews may be conducted at the Commission’s premises. Interviews may also be conducted by telephone or by electronic means.
Due to the voluntary nature of interviews, company employees can decline to be interviewed.
The Commission is not empowered to seize original documents, although it can copy or take extracts of documents containing information that is directly or indirectly related to the subject matter and purpose of the investigation. The company is entitled to receive a copy of all the documents and data copied, and may request a signed list of items seized during the inspection.
Issues relating to individual legal representation are potentially not as common in the EU as in other jurisdictions as there is no personal liability for cartel conduct under EU law. Although the right to legal representation is not specifically stipulated in the legislative framework, in practice the Commission permits an interviewee to be accompanied by a person of their choice, including external outside counsel. To the extent that a company’s legal counsel attends and assists during an interview of an employee, it is permissible for counsel to recommend that the employee provide answers only on matters directly related to the subject-matter of the investigation and only within the employee’s direct knowledge.
However, as for interviews conducted in the course of unannounced inspections, the company’s employees may potentially subject the company to a risk of fines if they decline to respond to, or fail to provide complete and correct answers to, any requests for explanations of facts or documents relating to the subject-matter and purpose of the inspection. In such circumstances, the Commission is not prohibited from questioning the employee in the absence of a lawyer.
As described above, there is no personal liability for cartel conduct under EU law such that it is not typically required for an individual to obtain separate counsel. However, given that certain jurisdictions within the EU (eg, the UK and Ireland) provide for separate individual criminal sanctions for competition law violations, it may be necessary for individuals suspected and/or closely involved in cartel conduct to instruct legal counsel separate from the counsel advising the company.
At the outset, clients should put in place a pre-arranged policy that is ready to implement in the event that the Commission (or a national competition authority) conducts an on-site surprise inspection. For example, reception staff should be provided with a list of contact details so as to allow them to notify internal senior management, IT staff, inhouse counsel and external counsel immediately in the event of an investigation.
On arrival, officials should be asked to wait until the company’s counsel are present (although they may not wish to do so). If the Commission conducts an inspection, clients should request a copy of the Commission officials’ mandate and review it, paying particular attention to whether its scope is sufficiently defined as to subject-matter and time. At the beginning of the investigation, employees should be notified to co-operate with the Commission and to ensure that no documents or data are deleted or destroyed. An internal shadow team should be ready to take note carefully of all the items and information that are subject to investigation.
As well as the possibility of seizing information during on-site surprise inspections, the Commission may issue requests for information to companies, either by simple request or by formal decision. In the case of a simple request, the company is not legally obliged to respond, but if it does so, it must provide full and correct information. In the case of a request made by formal decision, the company is legally obliged to respond to the request.
Regulation 1/2003 empowers the Commission to conduct interviews with any natural or legal persons (ie, an individual representing a company). During an inspection, the Commission may ask for explanations of facts or documents relating to the subject-matter of the investigation. However, the Commission is not entitled to carry out covert surveillance to gather evidence (eg, tapping telephone conversations, emails or faxes, or installing hidden video cameras or microphones).
Although not yet beyond doubt, the Commission regards itself as empowered to require a company located in the EU to provide a document or evidence located outside the EU where that information is available at or from the premises of that entity (ie, the target of the investigation has the power to procure it). In particular, the Commission considers itself empowered to search the IT environment (eg, servers, desktop computers, laptops, tablets and other mobile devices) and all storage media (eg, CD-ROMs, DVDs, USB keys, external hard disks, back-up tapes, cloud services) of a company.
Further, the Commission considers it has the power to issue requests for information to companies located outside the EU and regularly does so in practice. If a request for information is issued by formal decision, the Commission may impose fines if the requested information is not supplied within the specified timeframe, or if the reply is incorrect, incomplete or misleading.
However, as a matter of EU law, it is not settled whether and how the Commission could enforce any such request or fine. In practice, where possible the Commission will address such requests to the foreign company and any subsidiary it has in the EU.
Under EU law, communications between a company and an external lawyer entitled to practise in one of the EU Member States benefit from legal privilege when they are related to the subject matter of the procedure. This protection extends to internal company documents summarising advice from an external lawyer, as well as to internal preparatory documents drawn up for the purpose of seeking external legal advice.
By contrast, under EU law, legal privilege does not extend to communications between a company and its inhouse lawyers, irrespective of whether the inhouse lawyers are entitled to practise in one of the EU Member States.
In practice, where a company invokes legal privilege over a document during an inspection, it must provide Commission officials with the information on which its privilege claim rests (eg, identification of the author, the purpose or the context of the document, etc). Officials may take a cursory look to verify that the document is indeed of a privileged nature, unless the company argues that even this passing glance may reveal the contents of the document.
Should there be a dispute between the company and the officials as to whether a document is legally privileged, the document should be placed in a sealed envelope pending the resolution of the dispute. The Commission must then take a decision, enabling the company to refer the matter to the EU Courts.
With regard to protection against self-incrimination, EU competition law only provides an undertaking with a very limited right to refuse to answer questions from the Commission. Essentially, a narrow privilege exists that allows a company to refuse to answer a question that might lead it to directly admitting having infringed the EU competition rules. However, companies must provide the Commission with the documents or information that the Commission requests even if that information can then be used to establish the undertaking’s participation in an infringement of EU competition rules.
In a small number of cases, firms have successfully resisted overly broad requests for information from the Commission. According to the case law, such requests for information must not be “excessively succinct, vague or generic”. In HeidelbergCement, the CJEU confirmed that, where the Commission issues a request for information, the obligation to state specific reasons for issuing the request for information is a fundamental requirement, designed not merely to show that the request for information is justified but also to enable the firm to assess the scope of its duty to co-operate whilst at the same time safeguarding its rights of defence. In Deutsche Bahn, the CJEU confirmed that, as the statement of reasons ordering an inspection circumscribes the powers conferred on the Commission’s agents, a search may be made only for those documents coming within the scope of the subject matter of the inspection.
The Commission is empowered to fine a company subject to a request for information up to 1% of its worldwide turnover where it supplies incorrect or misleading information. Daily penalty payments of up to 5% of a company’s average daily turnover in the preceding business year may be imposed on a company where it has failed to supply complete and correct information.
Confidential information or proprietary information is not subject to protection from disclosure to the Commission in the course of an investigation.
However, where a target of enforcement action can demonstrate to the Commission that such information constitutes “business secrets” or “other confidential information” within the meaning of the Commission’s guidance in its Notice on Access to the File (Consolidated OJ 2015 C256, p 3), that information may be protected from further disclosure to third parties. According to the Notice on Access to the File, information about a firm’s business activity, the disclosure of which could result in serious harm to the firm, may constitute a “business secret”; this may include, for example, technical and/or financial information relating to an undertaking's know-how, methods of assessing costs, production secrets and processes, supply sources, quantities produced and sold, market shares, customer and distributor lists, marketing plans, cost and price structure, and sales strategy. However, “other confidential information” refers to types of information that, if disclosed, would significantly harm a firm; this may include information provided by third parties about undertakings that are able to place very considerable economic or commercial pressure on their competitors or on their trading partners, customers or suppliers.
Formally, the target of a cartel investigation’s first opportunity to raise legal and factual arguments to persuade the Commission to forgo taking action or modify its prospective action occurs when the Commission issues its Statement of Objections. At this stage, defence counsel may raise legal and factual arguments to persuade the Commission to forgo taking action through submitting a formal reply to the SO as well as in the course of an oral hearing before the Commission. However, in practice, defence counsel for the target of a cartel investigation is typically in close contact with the Commission from the outset of an investigation. Defence counsel representing a company may submit correspondence to the Commission to outline its views on the scope and conduct of an investigation at an early stage.
The framework of the EU leniency programme is very clearly set out in the Leniency Notice. This framework, together with the existing body of precedent concerning leniency cases, provides a high degree of legal certainty for potential leniency applicants.
The Commission will grant immunity from fines to an undertaking that discloses to the Commission its participation in a cartel affecting the EU if this undertaking is the first to provide evidence and information that, in the Commission’s view, will allow the Commission to conduct a targeted dawn raid or find an infringement of Article 101 of the TFEU in connection with the cartel. Immunity from fines will only be available if the Commission does not already have sufficient evidence to decide to carry out an inspection or to find an infringement of Article 101 of the TFEU, and as long as the Commission has not already carried out an inspection and no undertaking has been granted conditional immunity from fines in connection with the cartel.
An application for immunity should contain, to the extent known to the applicant at the time of the submission, information on the following points:
Applicants must also submit to the Commission any evidence in connection with the cartel that they have in their possession or that is available to them at the time of the submission, including in particular evidence contemporaneous to the alleged infringement.
Immunity applicants must also co-operate fully, genuinely, expeditiously and on a continuous basis with the Commission. In practice, an immunity applicant will have to:
In order to obtain immunity, undertakings are expected to end their involvement in the cartel immediately following their immunity application (unless the Commission requests them to act otherwise to preserve the integrity of inspections).
Immunity will not be available to undertakings that have concealed, falsified or destroyed relevant information or evidence concerning the cartel. Undertakings that have coerced other undertakings to join the cartel or to remain in it are not eligible for immunity from fines, although applicants for immunity that have acted as coercers can still obtain a reduction in the fines if they meet the conditions to qualify for a reduction.
Companies applying for immunity from fines may be able to obtain a marker at the discretion of the Commission, which preserves their position in the queue of leniency seekers pending the provision of the full information necessary to qualify for immunity. Markers are not available for companies applying for a reduction in fines.
An application for a marker must contain information on the applicant’s name and address, the parties to the cartel, the affected products, the affected territories, the duration of the cartel and the nature of the cartel’s conduct. Applicants must provide information on any past or potential future leniency applications to any other competition authorities in relation to the cartel. They must also state the reasons why they consider that the grant of a marker is necessary (eg, because the applicant needs to carry out further investigation).
If a marker is granted, the applicant will have to perfect it by supplying the information and evidence necessary to secure immunity before the deadline set by the Commission. This information and evidence will be deemed to have been submitted on the date when the marker was granted. The deadline to perfect the marker is very short (typically under a month). The applicant can formally request for a marker to be extended. However, in practice, such requests are not always granted.
Any company that does not qualify for immunity can still benefit from a reduction in the fine if it provides the Commission with evidence of the cartel that represents significant added value in respect to the evidence that the Commission has already obtained. Evidence will be considered to be of significant added value when it enhances the Commission’s ability to prove the existence of the alleged cartel. The Commission will consider that contemporaneous written evidence in direct connection with the cartel has greater added value than later evidence that relates to the cartel only indirectly. The Commission will also consider the degree of corroboration from other sources that is necessary to rely on the evidence provided in order to determine its added value.
Leniency applicants must also co-operate fully, genuinely, expeditiously and on a continuous basis with the Commission.
In order to obtain a reduction in the level of fines, undertakings are required to end their involvement in the cartel immediately following their immunity application (unless the Commission requests them to act otherwise in order to preserve the integrity of inspections).
Leniency will not be available to undertakings that have concealed, falsified or destroyed relevant information or evidence concerning the cartel. Leniency applicants must refrain from disclosing the existence or contents of their leniency application (except to other competition authorities). The Commission may grant reductions in fines to qualifying applicants within the following bands:
The Commission has discretion to decide the exact reduction to be granted within each of these bands on the basis of when the applicant submits the evidence and the extent to which this evidence represents significant added value relative to the evidence already in the Commission’s possession.
Under EU law there is no provision to increase fines for failing to disclose the company’s involvement in another, unrelated cartel, nor to reduce fines related to one cartel by disclosing involvement in another, unrelated cartel.
Leniency applications may be made in writing or in the form of an oral submission to the Commission, supported by the relevant contemporaneous evidence. Recently, in March 2019, the Commission launched an online ‘eLeniency’ tool to make it easier for companies to submit leniency statements and documents securely. According to the Commission, leniency statements submitted via eLeniency are protected against discovery in civil litigation, in the same way as oral submissions.
The Commission is empowered to question company staff and employees directly. The Commission may request staff to provide explanations on facts or documents relating to the subject matter and purpose of the inspections, and can also conduct interviews of broader scope where the staff consent (see 2.5 Procedure of Dawn Raids and 2.10 Procedure for Obtaining Other Types of Information). The Commission usually permits staff to be accompanied by external counsel (see 2.6 Role of Counsel).
The Commission may seek documentary information directly from a company subject to investigation. The Commission may request information by simple request (ie, voluntary response) or by formal Commission decision (ie, mandatory response); see 2.3 Restrictions on Dawn Raids and 2.10 Procedure for Obtaining Other Types of Information.
The Commission considers it has the power to issue requests for information to companies located outside the EU and regularly does so in practice. If a request for information is issued by formal decision, the Commission may impose fines if the requested information is not supplied within the specified timeframe, or if the reply is incorrect, incomplete or misleading (although whether it may do so in the case of companies outside the EU is subject to controversy). In particular, the Commission has jurisdiction to apply the EU competition rules to any anti-competitive agreement or collusion that is (at least in part) implemented within the EU (see 2.10 Procedure for Obtaining Other Types of Information and 2.11 Obligation to Produce Documents/Evidence Located in Other Jurisdictions).
The Commission co-operates with the national competition authorities of the EU Member States through the ECN. ECN members can exchange information and use the information received from other ECN members under certain conditions, as provided by the Commission’s Notice on co-operation within the Network of Competition Authorities (see 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards).
As noted above, the recent ECN Directive is designed to strengthen the operation of national competition authorities and includes express provisions for mutual legal assistance among national competition authorities. In particular, a national competition authority must be empowered to search businesses, summon staff for interviews, request information and enforce decisions imposing fines on behalf of another national competition authority.
The Commission often co-operates with non-EU competition authorities. In the case of information submitted in the context of leniency, information exchanges between the Commission and non-EU competition authorities will only take place provided that leniency applicants provide the Commission with waivers of their confidentiality rights in relation to other competition authorities to which the undertaking concerned has applied for leniency.
As described above, the EU has concluded dedicated competition co-operation agreements with Canada, Japan, Korea, Switzerland and the USA. These agreements govern exchanges of information between the parties’ competition authorities. In the case of Switzerland, the Commission’s co-operation agreement is innovative as it also includes provisions on the exchange of evidence obtained by the competition authorities when they investigate the same case without the consent of the companies concerned.
Co-operation between the Commission and other competition authorities has been centre stage of several recent cartel cases that have developed across several jurisdictions. For instance, the Commission carefully co-ordinated its inspections in the Marine Hoses cartel with the US Department of Justice and the UK’s OFT (now the Competition and Markets Authority, or CMA). Similarly, in 2014, the Commission issued a decision in the Automotive Bearings cartel, which had ramifications over several jurisdictions and involved co-operation between the Commission and non-EU competition authorities, including the Japan Fair Trade Commission and the US Department of Justice.
As explained above, EU law does not provide for criminal sanctions in respect of infringements of EU competition law.
Under the EU competition rules, it is the Commission (rather than a court) that is empowered both to investigate and decide upon cartel matters, subject to the review of the EU courts. Following an investigation, and where the Commission intends to find a cartel infringement, it must first formally initiate proceedings. At this point, national competition authorities lose their concurrent jurisdiction in favour of the Commission. Next, the Commission must issue an SO to the target company to notify it of the Commission’s objections to the agreement or practice and set out the supporting facts and legal reasoning. As the SO is only a preparatory document, it may not be challenged before the EU Courts. The SO provides the target of the Commission’s investigation with an opportunity to respond to the case against it. Further, the target of the Commission’s investigation will also have an opportunity to access the file of the Commission to review the evidence against it.
Typically, the Commission brings enforcement proceedings against all parties involved in a cartel in a single proceeding. However, for reason of administrative efficiency, in some cases the Commission may open a single case with an overall common theme or subject matter, which covers multiple cartel infringements involving different participants in each individual cartel. A further exception to this general principle may occur where the Commission opens so-called hybrid settlement cases (see 4.2 Procedure for Plea Bargaining or Settlement). In particular, such cases may arise where the Commission seeks to close a cartel proceeding by way of the settlement procedure where certain parties have admitted their involvement in the cartel but other alleged participants contest their involvement. In such cases, the Commission may open both a settlement procedure against the settling parties and a standard infringement procedure against the party or parties contesting their involvement in the cartel.
The Commission bears the burden of proving the key elements of the infringement alleged against a company subject to investigation. According to various formulations emerging from the case law of the EU Courts, the Commission must support its case with “sufficiently precise and coherent proof” or a “firm, precise and consistent body of evidence” that gives “grounds for a firm conviction that the alleged infringement took place”. This requirement is not satisfied “where a plausible explanation can be given for those alleged infringements which rules out an infringement of Community rules on competition”. In relation to cartel cases, where the Commission has established that a company attended obviously anti-competitive meetings, the burden of proof shifts to the company under investigation to provide an alternative explanation for such meetings.
In cartel cases, the Commission acts as the finder of fact and applies EU competition law to those facts.
Regulation 1/2003 provides that information collected by the Commission during the course of an investigation may only be used for the purpose for which it was acquired.
Under EU case law, if there is any doubt as to the actual nature of a contested document and/or whether it was obtained by proper means, the Commission must disregard that document or piece of evidence.
In cartel cases, the Commission does not generally identify in its decision the precise level of harm caused by a cartel, such that economists are more likely to be involved in any follow-on actions for damages in order to assist claimants with efforts to quantify the damage caused to direct and indirect purchasers of the cartel product or service.
Only documents subject to legal professional privilege are recognised as protected against disclosure.
Generally, conduct involving the same or related facts will be subject to a single enforcement proceeding. For example, where the same or related facts are subject to investigation at both national and European level, the Commission is empowered to relieve national competition authorities of their jurisdiction where it formally opens an investigation. At the same time, conduct involving the same or related facts may be subject to multiple enforcement proceedings at national level in different EU Member States. As described in 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards, the Commission’s Notice on Co-operation with National Competition Authorities sets out the procedures as to how co-operation is organised between the Commission and the competition authorities of the EU Member States.
The Commission may impose sanctions itself without having to bring an action against the companies concerned before the EU Courts. However, Commission decisions are subject to appeal before the EU Courts.
Regulation 1/2003 provides that the Commission may impose fines of up to 10% of an undertaking’s total annual worldwide turnover in relation to any one infringement. The Commission has set out detailed criteria for determining the level of fines in its 2006 Fining Guidelines.
Under the Fining Guidelines, fines may be based on up to 30% of the company’s annual sales in the EEA of the goods or services to which the infringement relates (the “relevant value of sales”), or a proxy in certain specified circumstances, multiplied by the number of years of the company’s participation in the cartel. In cartel cases, the Commission typically takes into account between 15-25% of the relevant value of sales. Additionally, in cartel cases, an additional 'entry fee' of between 15-25% of the relevant value of sales will usually be added to the fine irrespective of the duration of the infringement. Aggravating factors (eg, recidivism, refusal to co-operate with or obstruction of the Commission’s investigation, instigator or leader role) and mitigating circumstances (eg, negligence, limited involvement, co-operation with the Commission outside the scope of the Leniency Notice, or state encouragement) will also have an impact on the calculation of a fine. Their impact on the final level of the fine can be considerable; for instance, recidivism may lead to an increase in the fine of up to 100% for each prior finding of infringement against the undertaking concerned. Further, the Commission can specifically increase the fine for companies with a particularly large turnover outside the cartel product or service in an effort to ensure a deterrent effect. The Commission also reserves the right to depart from the above methodology and limits where appropriate in a particular case, which it has done in respect of cartel facilitators.
The Commission may not impose any sanctions other than pecuniary ones.
The EU cartel settlement procedure may be used by the Commission when cartel members agree to admit to the Commission’s objections, acknowledging their participation in a cartel and accepting their liability for this conduct. Through settlement discussions, the Commission reaches a 'common understanding' with the settling parties on the relevant facts, as well as on the scope of the Commission’s objections in the case.
The settlement procedure allows the Commission to achieve procedural efficiencies by speeding up the adoption of a cartel decision through a quicker and shorter administrative process. The settlement procedure also reduces the number of grounds for appeal against Commission decisions.
In return for agreeing to settle, undertakings receive a 10% reduction in the fine, while benefiting from the reduced costs that the simplified settlement procedure entails, as opposed to the much more considerable costs associated with regular cartel proceedings. They are also given an opportunity to know in advance and even discuss the Commission’s potential findings concerning their participation in the infringement and the level of the fines that the Commission intends to set. It should be noted that the Commission enjoys broad discretion regarding whether to pursue settlements and can decide to discontinue the process if it considers that it is unlikely to lead to procedural efficiencies.
The Commission may not impose any sanctions other than pecuniary ones.
The Commission may not impose any sanctions other than pecuniary ones.
The Commission may impose fines on companies. No sanctions can be imposed on company employees under EU law. The Commission can order a company to cease engaging in a certain business practice. Furthermore, cartel decisions typically oblige the addressees to cease the cartel and to refrain from such conduct in future.
The adoption of an antitrust compliance programme is not considered a mitigating factor by the Commission when it sets a fine for a cartel infringement. However, the Commission has pointed out that an effective competition compliance programme may benefit a company by enabling that company to detect and cease its involvement in a potential cartel, and thereby minimise its exposure to a fine.
The Commission does not have the power to order compensation to be paid by companies to direct or indirect purchasers subject to harm caused by a cartel.
Undertakings to whom the Commission has addressed a cartel decision may appeal against this decision on points of fact and law before the General Court, which is empowered to review the Commission’s findings of fact and law. Typically, the General Court will only intervene in relation to the Commission’s findings of fact where it can be shown that the Commission has made a manifest error of assessment of the evidence before it.
Applicants have a deadline of two months and ten days from the date of official service of the Commission decision to file an appeal. The application is served on the Commission, which in turn has two months to lodge its defence. A reply from the applicant and a rejoinder from the Commission will usually follow. The General Court will then open the oral procedure, during which a hearing will be held, where the applicant and the Commission may present their oral arguments. Measures of organisation of procedure and measures of inquiry may be taken by the General Court at the stage of the written or the oral procedure. The General Court will deliver its judgment after the oral procedure is closed. The judgment is binding from the day of its delivery. A further appeal to the CJEU is possible, but on points of law only.
The EU Courts have unlimited jurisdiction on fines, which means they may annul, increase or reduce the sanctions imposed.
Under EU case law, any victim of a breach of EU competition law has a right to claim compensation for harm suffered where there is a causal relationship between that harm and the infringement. This right has now been enshrined in the Damages Directive.
The Damages Directive harmonises the conditions under which actions for damage may be brought before national courts and has now been transposed into national law in each of the 28 EU Member States. In short, the Damages Directive aims to preserve the effectiveness of antitrust enforcement tools by ensuring, inter alia, that those harmed by cartels enjoy a right to full compensation; claimants benefit from minimum standards of disclosure of evidence; final decisions of the Commission or national competition authorities are, as a matter of evidence, legally presumed to have occurred; a minimum limitation period of five years is established in each Member State; cartelists may be held jointly and severally liable for cartel infringements; and national courts may estimate the rate of passing-on and quantify the harm caused by a cartel.
Private actions for damages are brought before national courts. The Damages Directive gives evidentiary value to administrative decisions of the Commission and a national competition authority. The findings made by the Commission in any infringement decision are binding on national courts. Moreover, a final infringement decision of a national competition authority is binding on the national court of that Member State or serves as prima facie evidence of the infringement before the national courts of another member state. As a result, most private actions are brought after a final cartel decision and are known as 'follow-on' actions, rather than 'standalone' actions. The condition precedent to bringing such a follow-on action includes a cartel decision that identifies the material, personal, temporal and territorial scope of the cartel; a causal relationship between the harm suffered by the claimant and the activity of the cartel; and an estimation of the harm caused to the claimant by the cartel.
While the Damages Directive harmonises national rules to the extent necessary to ensure victims of EU competition law infringements have effective mechanisms to obtain redress for harm suffered, it does not require Member States to introduce collective redress mechanisms. Therefore, in the absence of EU rules, damage claims arising from an infringement of EU competition rules are dealt with by the national courts in each EU member state in accordance with national procedural rules.
In 2013, the Commission published a Recommendation that set out common non-binding principles for collective redress mechanisms in the EU. The Recommendation sought to bring more coherence to the different Member States’ systems of collective redress. It also complemented the aim of the Damages Directive to facilitate damages claims by encouraging Member States that have not already done so to put in place collective redress mechanisms.
In January 2018, the Commission published its report on the implementation of collective redress mechanisms in EU Member States. The January 2018 report canvassed the extent to which the principles and recommendations made in 2013 had been incorporated into national law by Member States. The Commission’s report found that there was broad inconsistency and significant differences in national practice across the EU. For example, the report found that collective redress mechanisms are not available consistently across the EU and safeguards against abuse vary from one Member State to another. Nine Member States did not provide any mechanism to claim collective compensation in case of harm. Of the 19 Member States in which compensatory collective redress is available, over half limit the redress to specific sectors, mainly consumer complaints.
In future, recognised consumer associations will have greater possibilities to bring representative actions on behalf of consumers as a result of a new legislative package for consumer protection proposed by the Commission in April 2018, entitled a “New Deal for Consumers”. In this package, the Commission proposed a new Directive to allow for “representative actions” to be brought before national courts by “qualified entities”. These entities (such as consumer organisations) would:
The proposal for representative actions for the protection of the collective interests of consumers is subject to ongoing review by the European legislature; on 26 March 2019, the proposal was adopted by the European Parliament, but further changes are possible as the Council has not yet adopted its position.
The Damages Directive requires all Member States to allow indirect purchasers to claim damages resulting for harm caused by a cartel infringement. Member States must also recognise the passing-on defence in actions for damages. For example, if price increases caused by a cartel have been 'passed on' along the distribution chain, the compensation payable by an infringer to its direct customers may be reduced by the amount passed on. A cartelist bears the burden of proving that a claimant passed on the overcharge. By contrast, a claimant who is an indirect purchaser enjoys a rebuttable presumption that indirect customers suffered as a result of a price increase caused by a cartel. The share of the overcharge that was passed on is to be estimated by the national court.
In addition, in Kone (2014) the CJEU appeared to extend the scope of rules on causation beyond indirect purchasers to include claims for so-called umbrella pricing. The CJEU ruled that there can be no national rule excluding the possibility for third parties to seek compensation from cartelists for harm suffered due to an overcharge by non-cartelists who, independently and rationally, adapted to the existence of the cartel on the market by increasing their own prices. In other words, this ruling opens the possibility for customers of non-cartelists to obtain redress for umbrella pricing.
The Damages Directive prohibits the disclosure of leniency statements and settlement submissions by the Commission or a national competition authority at any time. Where the Commission or a national competition authority has adopted a cartel decision, a national court may order the disclosure of:
Claimants may also seek to obtain other information from governmental investigations or proceedings by relying on the general right of access to the documents of the EU institutions under Article 15 of the TFEU and Regulation 1049/2001 (OJ 2001 L 145, p 43). However, the Commission may refuse access to a document where disclosure would undermine the protection of commercial interests of natural or legal persons, court proceedings and legal advice, or the purpose of inspections, investigations and audits, provided that there is not an overriding public interest in favour of disclosure.
In general, the Commission must carry out an individual and specific assessment before refusing access to the file, subject to certain exceptions. The Commission may consider it obvious that access to a certain type of document must be denied on the basis of a general presumption. This reasoning has been upheld by the CJEU. Even if the documents are not all of the same type, the Commission may apply a single justification, rather than an individual assessment of each document, if they contain the same type of information. In very exceptional cases, the Commission may also refuse access to the documents without individually examining them where this examination entails a particularly heavy administrative burden that exceeds the limits of what may be reasonably required and provided the Commission, after genuinely investigating any other conceivable options, explains why they also entail an unreasonable amount of work.
Although there are some instances where private claimants have gained access to cartel evidence (for instance, in the CDC and Austrian Banks cases), the Commission generally rejects applications for access to evidence by relying on the exception for the protection of the commercial interests of third parties or on the exception for the protection of the purpose of investigations.
Private actions for damages are litigated under national law. As a result, the frequency of completion of follow-on litigation arising from a cartel decision of the Commission depends on various factors at national level.
Private actions for damages are largely governed by national law. Compensation for attorneys of successful claimants is governed by applicable professional rules at national level.
Private actions for damages are largely governed by national law. As a result, the degree to which claimants are obliged to cover defence costs and other fees associated with an unsuccessful claim are governed by applicable costs rules at national level.
Private actions for damages are largely governed by national law. Appeals against a decision of a national court are governed by national law. A national court may refer a question on the interpretation of the Damages Directive or any other matter of EU law to the CJEU.
There are no other items of information that are pertinent to an understanding of the process, scope and adjudication of claims involving alleged cartel conduct in the EU.
The Commission has published a variety of guides and documents relating to cartel investigations, the leniency programme and settlements. These are available at: http://ec.europa.eu/competition/cartels/overview/index_en.html.