This country-specific Q&A provides an overview to cartels laws and regulations that may occur in Belgium.
This Q&A is part of the global guide to Cartels. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/cartels/
What is the relevant legislative framework?
The Belgian rules on competition are to be found in Book IV of the Code of Economic Law (“CEL”).
Article IV.1 §1 CEL contains the general prohibition on anti-competitive practices:
“(…) all agreements between undertakings, all decisions by associations of undertakings and all concerted practices, the aim or consequence of which is to prevent, restrict or distort significantly competition in the Belgian market concerned or in a substantial part of that market are prohibited, and in particular those which consist in:
- directly or indirectly fix purchase or selling prices or any other transaction conditions;
- limit or control production, markets, technical development or investments;
- share markets or sources of supply;
- apply, with regard to business partners, unequal conditions for equivalent services, thus putting them at competitive disadvantage;
- make the conclusion of contracts subject to acceptance, by the other parties, of supplementary services which, by their nature or according to commercial usage, have no connections with the subject of such contracts.”
This article, as its equivalent at the European Union level, Article 101(1) Treaty on the Functioning of the European Union, is the legal basis for the cartel prohibition. As the scope of this publication is limited to cartels, i.e., agreements the object of which is to restrict competition, such as price fixing, or market sharing agreements between competitors, this contribution will not cover the possibility for a legal exception provided for under Article IV.1, §3, CEL – equivalent to the legal exception under Article 101(3) TFEU – or the specific provisions for importing the EU-level block exemption regulations, even where the agreement at hand does not influence trade between member states.
Articles IV.41-50 set out the investigation procedure for cartels including the decision-making procedure of the authorities. This also includes article IV.46 which lays down the rules for leniency. This is further regulated by the 2016 Leniency Guidelines (Clementierichtsnoeren van de Belgische Mededingingsautoriteit). Additionally, the Royal Decree of 30 August 2013 further elaborates on the cartel procedures.
The procedure with regard to settlements is regulated by the articles IV.51-57 and articles 10 and 11 of Royal Decree of 30 August 2013.
To establish an infringement, does there need to have been an effect on the market?
Article IV.1 prohibits practices that have as their object or effect the prevention, restriction or distortion of the competition on the Belgian market. Consequently, there is no requirement of an effect on the market to establish an infringement. It is sufficient that the practice has the object to distort the market. Cartels are considered restrictive of competition by object.
Does the law apply to conduct that occurs outside the jurisdiction?
Belgian competition law applies to conduct that has an effect on the Belgian market or has the objective to affect the Belgian market regardless of where the conduct occurred.
Which authorities can investigate cartels?
As is established in article IV.16 §3, the Belgian Competition Authority (BCA) investigates cartels.
What are the key steps in a cartel investigation?
A cartel investigation can be launched following a complaint by a competitor, supplier or customer of one of the cartel participants, at the BCA’s proper initiative, on injunction from the minister, or – more commonly – following an immunity or leniency application filed by one of the companies part of the cartel or by an individual that participated in the cartel.
In case of a complaint that is filed with the Competition Prosecutor General, such a complaint can be dropped by the College of Competition Prosecutors if they consider that the complaint is inadmissible, not well-founded, or in view of the limited resources and the priorities of the BCA that are set. Such a reasoned decision is open to appeal by the complainant, within 30 days of receipt of the decision. Such an appeal must be filed with the president of the BCA who will then compose the Competition College that will review the appeal. When it comes to complaints relating to cartels, which is rare in any event, it is to be expected that the BCA will take up the case.
Investigations are carried out by the Investigation Service, under the direction of the Competition Prosecutor General. Upon receipt of information, a distinct team will be appointed that will handle the investigation. This team is then led by a Competition Prosecutor.
After internal review of the information at their disposal, which may – among others – be the information contained in an immunity or leniency application, the BCA may organize surprise inspections at the company premises or at the private homes of individuals. This would be the typical first relatively public step in a cartel investigation. The BCA has published guidelines on surprise inspections. They were adopted by BCA decision of 17 December 2013. Any decision to carry out such a surprise inspection is subject to a prior authorisation of the examining magistrate (onderzoeksrechter/juge d’instruction). The guidelines describe in relative detail the investigative powers of the ABC including rules on how to conduct searches of digital information.
Next to surprise inspections, the ABC can also send requests for information to the undertakings concerned. Refusals to respond to such requests for information, late responses or incomplete or wrong responses can result in fines and/or penalty payments.
If the College of Competition Prosecutors considers that the investigation is justified, the Competition Prosecutor General communicates a statement of objections to the undertakings and natural persons involved, and gives access to the evidence that was used to reach their provisional conclusion, and also to all non-confidential versions of documents and information collected during the investigation. The parties will get at least one month to respond to the statement of objections.
At the latest one month upon receipt of the undertakings’ and natural persons’ responses, the Competition Prosecutor, on behalf of the College of Competition Prosecutors, will file a reasoned draft decision with the president of the BCA. Upon receipt of the draft decision, the president without delay will compose the Competition College that will hear the case and he will submit the draft decision as well as the procedural file to the Competition College.
Simultaneous with the filing of the draft decision with the president of the BCA, the parties whose behaviour is investigated also will be informed of this event and will be given access to the investigation file and to the file of procedure. In case of a complaint, the complainant will also be informed of this event and will be given access to a non-confidential version of the draft decision.
As soon as the parties under investigation have been given access to the file, they have two months to submit their written observations and the documents of the investigation file they wish to add to the file of procedure. Upon reasoned request, this period can be extended.
Upon receipt of the written observations of all parties who are qualified to file observations, or after expiry of the deadline for filing such written observations, the written part of the proceedings is closed. The president will then organize a hearing of the Competition College. Such a hearing must take place at least one month and at most two months after closing of the written procedure.
The Competition College takes a decision within a term of one month after hearing the case. This term can be suspended if consultation with the European Commission is required.
At any stage of the investigation, but before filing a draft decision with the Competition College, the Investigation and Prosecution Service can invite the parties under investigation to enter into a settlement with the BCA. If such settlement discussions are initiated, this will suspend all other periods described above until the settlement talks are terminated or lead to a settlement decision. The settlement procedure is described in detail in Articles IV.51 to IV.57 CEL and will be explained under question 4 Settlement below.
The limitation period for finding an infringement is five years, with a maximum of 10 years, after termination of the infringement. An appeal before the Brussels Market Court will suspend this limitation period and will therefore allow a total duration that may exceed 10 years in total.
What are the key investigative powers that are available to the relevant authorities?
The investigation is carried out by the Investigation Service under the direction of the Competition Prosecutor General who will compose a team of Investigation and Prosecution Service personnel members.
The BCA has the power to organize surprise inspections at the undertakings premises, at other locations they suspect they can find evidence and at the private homes of individuals involved. A surprise inspection requires a clear mandate from an investigating judge, as well as a copy of the “ordre de mission” of the Prosecutor that sets out the scope and objective of the inspection.
The guidelines on surprise inspections, adopted by the BCA at its meeting of 17 December 2013 set out in larger detail their powers:
- The Investigation Service can request the production of information and documents. They make copies of these documents, they cannot take the originals with them.
- They can interview persons in charge and personnel in relation to the subject matter of the inspection and in relation to the internal organisation of the undertaking;
- They can search computers, either manually or with a specific software;
- They can seize and seal during the searches, but for no longer than 72 hours;
- All these actions are confined within the purpose of the mission order. The Investigation Service is not allowed to go on a fishing expedition.
Next to surprise inspections, the BCA can also send out requests for information to the undertakings, failure to respond correctly or respond at all may result in additional fines or penalty payments. In addition, breaking seals or otherwise tampering with the investigation will result in additional fines.
On what grounds can legal privilege be invoked to withhold the production of certain documents in the context of a request by the relevant authorities?
It is not disputed that communications between external counsel and a client is covered by legal privilege.
Article 5 of the law of 1 March 2000 (Wet tot oprichting van een Instituut voor bedrijfsjuristen) states that all legal opinions given by in-house lawyers for the benefit of their company are confidential. It is required, however, that the company lawyer in question is a registered member of the Institute of corporate counsel. This has been confirmed by the Brussels Court of Appeal in the Belgacom case of 5 March 2013. The Court explicitly rejected the application of the Akzo Nobel ruling of the CJEU and stated that the CJEU only determined the confidentially rules on European level without precluding national authorities from applying different rules in Member States.
As a consequence, the scope of legal privilege will differ depending on the legal basis for the surprise inspection. If the BCA assists the European Commission in a surprise inspection, then the BCA will not be prevented from looking at in-house counsel communications with their client as legal privilege for in-house counsel does not exist for European Commission surprise inspections. However, the same BCA officials will not be allowed to review communications from the same in-house counsel with its client if that in-house counsel is a registered member of the Institute of corporate counsel and the surprise inspections is based on Belgian competition law.
For external legal counsel, based on the European practice, legal professional privilege is limited to EU-qualified lawyers, although in practice legal privilege would also be granted to non-EU qualified lawyers. The Belgian law does not have different rules governing this.
What are the conditions for a granting of full immunity? What evidence does the applicant need to provide? Is a formal admission required?
The Belgian system provides for full immunity. It distinguishes between type 1A and type 1B immunity depending on whether the undertaking or physical person is first to submit information and evidence that will enable the BCA to carry a surprise inspection, or that will enable the BCA to establish an infringement. In both types of immunity the BCA cannot yet have sufficient evidence to initiate a surprise inspection or establish the existence of an infringement, respectively, before the immunity application. Obviously, Type 1B immunity can be given only when an undertaking has not yet received type 1A immunity.
Full immunity cannot be granted to an undertaking that coerced another undertaking to participate in the cartel.
As also individuals can be fined for participation in a cartel, they can also apply for immunity. Any individual applying for immunity will be granted immunity, regardless of whether a company or another individual already applied for immunity. Immunity will be granted if the individual adduces evidence that the BCA did not possess prior to the immunity application or when the individual acknowledges the existence of an infringement. Important to note is that the existence of an immunity application by an individual will not prevent a company from obtaining immunity as well, provided the conditions as to new information or allowing the organisation of a surprise inspection are met.
What level of leniency, if any, is available to subsequent applicants and what are the eligibility conditions?
Subsequent applicants can be granted a reduction of the fines if they offer evidence of significant added value compared to the evidence the BCA already had in its possession. In addition, the undertakings must comply with the collaboration requirements. These applicants are called Type 2 applicants.
The first Type 2 applicant will get a reduction ranging between 30 and 50%, the second applicant’s reduction will be between 20 and 40%, and the third and following applicants’ reduction will be between 10 and 30%.
Important to note is that any aggravating evidence resulting in a longer duration or more serious infringement will not be used in the calculation of the ultimate amount of the fine for the applicant that adduced that particular evidence.
Are markers available and, if so, in what circumstances?
In order to receive a marker, an undertaking is required to provide the following information to the Competition Prosecutor General:
- His identity;
- The justification for applying for a marker;
- The identity of the parties to the alleged cartel;
- The affected product(s) and territory;
- The estimated duration of the alleged cartel; and
- The nature of the alleged cartel conduct.
The Competition Prosecutor General will then decide whether the marker is granted depending on the reliability of the applicant.
What is required of immunity/leniency applicants in terms of ongoing cooperation with the relevant authorities?
From the moment leniency has been granted until the decision on the alleged cartel, the applicant is required to collaborate with the BCA. In particular, the undertaking needs to provide all the relevant information and evidence in its possession. The applicant cannot challenge the statements and factual elements it shared and on the basis of which the leniency was granted. It needs to remain at the BCA’s disposal in order to quickly answer any question that may help establish the facts. The leniency applicant also needs to ensure the availability of current and if possible former employees and directors to the BCA to collect all relevant information and evidence. Furthermore, the applicant cannot destroy, falsify or hide evidence of the alleged cartel. Lastly, it cannot disclose the content of the investigation until a draft decision has been submitted to the Commission College.
Does the grant of immunity/leniency extend to immunity from criminal prosecution (if any) for current/former employees and directors?
There is no criminal prosecution for cartel infringements.
Is there an ‘amnesty plus’ programme?
The Belgian leniency system does not provide for amnesty ‘plus’.
Does the investigating authority have the ability to enter into a settlement agreement or plea bargain and, if so, what is the process for doing so?
At any stage of the investigation, but before filing a draft decision with the Competition College, the Investigation and Prosecution Service can invite the parties under investigation to enter into a settlement with the BCA. If such settlement discussions are initiated, this will suspend all other periods described under Key steps in a cartel investigation until the settlement talks are terminated or lead to a settlement decision. The settlement procedure is described in detail in Articles IV.51 to IV.57 CEL
If the Investigation and Prosecution Service wishes to enter into a settlement, it sets a deadline before which the undertaking under investigation can indicate that it is willing to discuss a settlement.
Once the undertaking has accepted the offer to settle, the Investigation and Prosecution Service will indicate which objections it might be able to substantiate and it will give access to the evidence used for this purpose. The Investigation and Prosecution Service will also inform the undertaking of the minimum and maximum fine it considers asking the Competition College.
If after providing the relevant evidence and documents, the Investigation and Prosecution Service finds that a settlement is appropriate, it sets a deadline before which the undertaking needs to make the settlement statement. In the statement, the undertaking will acknowledge its involvement and responsibility for the infringement and will accept the proposed fine range. The undertaking can obtain 10% reduction of its fine as a counterpart to the settlement.
Once the settlement has been accepted by the undertaking within the set time limit, the Investigation and Prosecution Service takes a decision, including on the fines. This decision closes the investigation and has the same legal authority as a decision of the Competition College. A Court approval is not required to reach a settlement. A settlement decision cannot be appealed.
The Investigation and Prosecution Commission has been reluctant to consider hybrid settlements, but it has done so in the past.
What are the key pros and cons for a party that is considering entering into settlement?
The main advantage of entering into a settlement discussion is that the company quickly gets a relatively clear picture on what the BCA has against the company, and whether it makes any sense to continue a full cartel infringement procedure. The settlement discussions leave more scope to come to a decision the official wording of which may contain less information for potential damage claimants than a full-fledged cartel decision would contain. Also, accepting a settlement means an additional 10% reduction in the fine and it shortens the entire procedure rather significantly. As a consequence, it provides certainty to the undertakings more quickly and may limit the reputational damage.
The most important disadvantage is the acknowledgment of the involvement and responsibility for the infringement. This of course will be used by damage claimants in subsequent proceedings. Moreover, the settlement cannot be appealed.
What is the nature and extent of any cooperation with other investigating authorities, including from other jurisdictions?
The BCA is part of the European Competition Network (ECN) and therefore the rules laid down in Regulation 1/2003 apply. The BCA also participates in the European Competition Authorities which consists of the head of the competition authorities of the EEA. Lastly, the BCA is a member of the International Competition Network.
Furthermore, the CEL states that the BCA is responsible to conduct assistance, verification and other tasks for competition authorities of other Member States. In addition, the BCA is allowed to share confidential information with the Commission and authorities from other Member States, and to use such information received from the Commission or authorities.
Leniency declarations are only shared with the Commission and the competition authorities of other Member-States. The Leniency Guidelines also provide for a short form application to the BCA when the applicant has already submitted a leniency application to the Commission.
What are the potential civil and criminal sanctions if cartel activity is established?
There are no criminal sanctions for cartel infringements, except when they occur in the area of public tenders.
When cartel activity is established, the Competition College can impose a fine on the undertakings involved of up to 10% of their consolidated Belgian turnover, i.e., turnover from sales in Belgium and exports from Belgium. On top of this, the Investigation and Prosecution Service can add a periodic penalty payment for non-compliance of 5% of the average daily Belgian turnover per day of non-compliance starting on the day the decision is taken.
A physical person infringing Article IV.1§4 can receive an administrative fine ranging between 100 and 10,000 EUR.
What factors are taken into account when the fine is set? In practice, what is the maximum level of fines that has been imposed in the case of recent domestic and international cartels?
The Belgian Fining Guidelines are based primarily on the Commission’s Guidelines. However, to calculate the basic amount of the fine, the BCA will look at the value of the undertaking’s sales in Belgium directly or indirectly relating to the infringement.
When there is no turnover in Belgium relating to the infringement, but there is a consolidated turnover, the following values are taken:
- If the infringement involves a division of markets, in which undertakings have agreed not to sell in Belgium, the value of the sales in the geographic markets where they did offer the product instead is taken;
- For all other infringements, the fine will be based on the average value of sales in Belgium by the other participants to the infringements.
When setting the ultimate amount of the fine, the BCA will look at the severity and duration of the infringement. Aggravating and mitigating circumstances will also be taken into account. Subsequently, reductions relating to leniency and to settlement will also be factored in to come to the final amount of the fine.
Are parent companies presumed to be jointly and severally liable with an infringing subsidiary?
The approach adopted by the BCA is in line with the approach of the European Commission.
Are private actions and/or class actions available for infringement of the cartel rules?
Article XVII.72 CEL states that enterprises and physical persons that suffered damages caused by an infringement of competition law, can request compensatory damages in accordance with general tort law. The victims will have to demonstrate wrongdoing, harm and a causal link between the two.
Following the adoption on 6 June 2017 of an Act implementing the EU Directive on Private Antitrust Damages, it should now be easier for cartel victims to successfully bring damage claims to Belgian courts. The act has introduced the irrefutable presumption that a cartel decision is evidence of a fault for the purposes of a follow-on damage claim. Also the existence of damages and a causal link is presumed.
The act also introduces a general presumption of joint and several liability of infringers, but the rule excludes small and medium-sized undertakings from that presumption when they have a market share of less than 5% and provided that they have not engaged in any coercion or should not be considered as repeat offenders.
What type of damages can be recovered by claimants and how are they quantified?
Although the new act on damages introduces the presumption that a cartel causes harm, it does not give any indications as to how such damage could be quantified. It states that the BCA may be helpful in quantifying the amount of damages. More likely, however, is that the court will appoint an expert to calculate the amount of the damages involved.
Claimants are entitled to full compensation. However, as overcompensation is excluded, the Belgian system does not allow for double or treble damages or any other form of punitive damages.
On what grounds can a decision of the relevant authority be appealed?
A decision of the BCA can be appealed to the Market Court. The appeal is a full appeal, meaning it is not limited to points of law.
What is the process for filing an appeal?
An appeal of a decision by the BCA can be filed with the Market Court within a period of 30 days after notification of the contested decision. Any interested party can file an appeal. These are parties that are the addressees of the decision, but also other parties that can demonstrate an interest in the case (such as, e.g., a complainant). In addition, also the minister can file an appeal. Within 5 days after the submission of the appeal application, the applicant is required to send the application to the secretariat of the College of Competition Prosecutors, informing the President and the competition prosecutor general, as well as the parties to whom the decision was notified, and to the minister (if the minister is not the applicant).
What are some recent notable cartel cases (limited to one or two key examples, with a very short summary of the facts, decision and sanctions/level of fine)?
On 22 June 2015, the BCA imposed a total fine of €174 million on 18 supermarkets and suppliers of drugstore, hygiene and perfumery products, notwithstanding the fine reductions. The BCA had found that the retailers had indirectly coordinated price increases by exchanging information with other retailers through suppliers.
On 2 May 2017, the BCA imposed a total fine of €1.779.000 on ABB, AEG, Siemens, Schneider and Sécheron for bid-rigging. The undertakings had engaged in a cartel in the context of public tenders that were organised by the Belgian railway network, Infrabel. According to the BCA, the undertakings had decided amongst themselves which company should win the bids.
What are the key recent trends (e.g. in terms of fines, sectors under investigation, applications for leniency, approach to settlement, number of appeals, etc.)?
The BCA has recently published its priorities for 2019. It held that it will carry out more investigations in the sectors of telecommunications, the distribution sector, service sector, public procurement, the pharmaceutical sector and the logistic sector. This is more or less in line with the enforcement priorities the BCA identified in the past.
What are the key expected developments over the next 12 months (e.g. imminent statutory changes, procedural changes, upcoming decisions, etc.)?
After finalizing the current contribution, the Belgian parliament has adopted a number of legislative. One introduces the notion of abuse of significant market power. This deals with the situation where an enterprise is dependent upon one or more enterprises, which is notable by the lack of reasonable alternatives for the first enterprise.
The second law that was adopted will replace the entire competition legislation, although largely keeping the current provisions in existence. In particular, the maximum amount of the fines will increase to 10% of the worldwide turnover instead of limiting it to the Belgian turnover.