EU: Cartels

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This country-specific Q&A provides an overview to cartels laws and regulations that may occur in the EU.

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/

  1. What is the relevant legislative framework?

    Article 101(1) TFEU contains the general prohibition on anti-competitive arrangements between undertakings. Regulation 1/2003 contains the main implementing and procedural rules. Further procedural rules are set out in Regulation 773/2004 and complemented by the Commission’s Best Practices Notice. In additional to these EU-level provisions, national competition laws apply (these are covered in other chapters of this book).

    Substantively, the key infringement is codified in Article 101(1), which provides that ‘all agreements between undertakings, decisions by associations of undertakings and concerted practices that may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the internal market’ are prohibited.

    There is an exemption under Article 101(3), which broadly applies when efficiencies flowing from the arrangement outweigh any anticompetitive effect, but in practice this is very unlikely to be available for cartel conduct, such as an agreement between competitors to fix prices, limit outputs or share markets.

  2. To establish an infringement, does there need to have been an effect on the market?

    Cartel conduct can constitute an infringement irrespective of whether it had an anti-competitive effect on the market.

  3. Does the law apply to conduct that occurs outside the jurisdiction?

    Article 101 can apply to conduct that occurs outside the EU if it is ‘foreseeable’ that the conduct will have an ‘immediate and substantial effect’ in the EU (C-413/14P - Intel v Commission).

    EU courts have recognised that to establish an infringement of Article 101 it is not necessary that the companies involved in the alleged cartel activity have their seats inside the EU, that the relevant agreements were entered into inside the EU, or that the alleged acts were committed within the EU. There are numerous cases in which the Commission assumed jurisdiction over cartel members incorporated outside the EU, including Automotive Bearings (Case COMP/39922), Optical Disc Drives (Case COMP/39639), Alternators and Starters (Case COMP/40028) and Capacitors (Case COMP/40136).

  4. Which authorities can investigate cartels?

    At an EU level, the Commission (DG Competition) is the principal enforcement body. However, Regulation 1/2003 enables national competition authorities in the Member States (NCAs) to enforce Article 101, as well as their domestic competition rules.

  5. What are the key steps in a cartel investigation?

    a) Initiating an investigation

    The Commission may start an investigation on the basis of: (i) an approach by one of the cartel members (i.e. acting as a whistle-blower); (ii) a third-party complaint (using Form C); (iii) an NCA’s raising the matter with the Commission; or (iv) its own initiative.

    b) Key procedural steps

    Once alleged cartel conduct comes to its attention, the Commission will embark on a fact-finding exercise, either informally or using its formal powers of investigation (including through requests for information and ‘dawn raids’ – see further below). Depending on the outcome of this fact-finding exercise, the Commission will decide whether there is sufficient evidence of an infringement that warrants further investigation.

    If the case is pursued, the Commission will in due course formally initiate proceedings (although this may not be until after a long period of intensive investigation). At this point NCAs lose their competence to apply Article 101. The Commission may ultimately adopt its settlement procedure (see further below) or serve a statement of objections on the parties in which sets out its case. If the Commission issues a statement of objections, the parties are granted access to the information on the Commission’s file and have the opportunity to respond in writing and, if they so choose, at an oral hearing.

    After considering the parties' submissions, and assuming its concerns remain, the Commission drafts an infringement decision, which will be reviewed by the Advisory Committee, comprising representatives of the NCAs, before being submitted to the College of Commissioners for formal adoption.

    c) Investigations timeline

    It is difficult to generalise, as the timeline can vary significantly on a case-by-case basis depending, among other things, on factors such as the existence of a leniency applicant supporting the Commission’s case. However, from initial investigation to final disposition investigations usually take several years and the Commission does not work to any target timeframes. Over the 2000-2014 period the average cartel investigation lasted over four years (from initial information-gathering stage to the decision) and there are several cases where proceedings exceeded the five-year mark.

  6. What are the key investigative powers that are available to the relevant authorities?

    The Commission has a wide discretion to collect any information it considers necessary, subject to the general principles of proportionality and the rights of defence. Its principal powers of investigation under Regulation 1/2003 are as follows:

    a) Information requests

    Formal information requests (‘Article 18 requests’) are widely used as a means of obtaining necessary information, including internal documents and data. Information requests may also be addressed to third parties, such as competitors and customers. In practice, these requests can be very burdensome (especially at the initial fact-finding stage), but there is some possibility to negotiate reasonable limitations to their scope and/or extensions to the deadline to respond. Regulation 1/2003 permits the Commission to impose fines of up to 1% of total annual turnover for providing incorrect or misleading information, or for failure to supply information.

    With respect to non-EU companies, the Commission is often able to exercise its enforcement jurisdiction by sending the request to a subsidiary located in the EU. Where this is not possible, the Commission’s practice is to send out informal requests (without the ability to rely on its fining powers in Regulation 1/2003).

    b) Dawn raids

    The Commission can conduct investigations of firms’ premises pursuant to a formal Commission decision or under an ‘authorisation’. If an inspection is carried out on the basis of a formal decision (almost inevitably the preferred route in cartel cases), it is compulsory for the company to allow the investigation to proceed and fines may be imposed for refusal to submit to the investigation.

    When carrying out dawn raids, Commission inspectors are broadly empowered:

    • to examine the books and other records related to the business, irrespective of the medium on which they are stored;
    • to take copies of such books or records;
    • to seal any business premises for the period of the inspection; and
    • to ask any representative for explanations of facts or documents relating to the subject matter of the inspection.

    Commission officials do not have the power to force entry. However, as dawn raids are often carried out in conjunction with NCAs, such entry could be permitted under national search warrants.

    The Commission also has the power – subject to obtaining a court warrant from the relevant national authority – to inspect residential premises if there is reasonable cause to believe relevant evidence is kept there. During the investigation procedures in the Marine Hoses cartel (Case COMP/39406), the Commission carried out an on-the-spot investigation in a private home for the first time.

    c) Power to take statements

    In addition to its power to ask for on-the-spot explanations during an inspection, the Commission is empowered to take statements from any person who is willing to testify. The recent judgment by the Court of Justice (ECJ) in Intel clarified that no distinction will be drawn between ‘formal’ and ‘informal’ interviews for these purposes and that the Commission must record any interview it conducts in the context of an investigation.

  7. 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?

    EU legal professional privilege (LPP) covers written communications between independent EEA-qualified lawyers and their client made for the purposes and in the interests of the client’s rights of defence in the context of a competition investigation (even if the exchange occurred before the initiation of the proceedings). The Commission does not consider that advice provided by in-house legal counsel and/or non-EEA-qualified counsel is protected by LPP (further to Case C-550/07 P Akzo Nobel). However, where an investigation is carried out by an NCA (even if under Article 101) national rules of privilege apply and, in certain cases (e.g. English rules of legal privilege), these may be broader in scope.

  8. What are the conditions for a granting of full immunity? What evidence does the applicant need to provide? Is a formal admission required?

    The principles underpinning the Commission’s leniency programme (as set out in the Leniency Notice) are based on the timing of the approach to the Commission and the type and quality of information provided. Full conditional immunity from fines is available to the first company that provides information enabling the Commission to carry out a targeted inspection in relation to an alleged cartel or to find an infringement of Article 101.

    The evidence provided must generally contain a corporate statement accompanied by other evidence related to the alleged cartel. Corporate statements (in either written or oral form) should generally include:

    • a detailed description of the relevant conduct;
    • contact details of the applicant and other members of the alleged cartel; and
    • information about which other competition authorities have been (or will be) approached.

    In order to protect leniency applications from disclosure in civil proceedings, the Commission accepts oral corporate statements (‘paperless submissions’). In order to further ease the submission of leniency applications as well as facilitate settlement proceedings and proceedings in non-cartel cooperation cases, in March 2019 the Commission launched the “eLeniency” tool which allows applicants and their lawyers to file statements and submissions online. The Commission has confirmed that (in its view) corporate statements under the Leniency Notice that are made via eLeniency are protected against disclosure in civil litigation in the same way as oral submissions.

    Any immunity applicant must also satisfy the following cumulative conditions:

    • it must not have coerced another company to participate in the alleged cartel;
    • it must end its involvement in the alleged cartel immediately following its application;
    • it cannot have destroyed, falsified or concealed evidence or disclosed the leniency application (except to other competition authorities); and
    • it must cooperate genuinely, fully and continuously with the Commission (see further question 3.4).
  9. What level of leniency, if any, is available to subsequent applicants and what are the eligibility conditions?

    Applicants that are not ‘first through the door’ or do not meet the cumulative criteria for full immunity may still obtain a reduction in fines. Leniency is available if the applicant provides evidence which the Commission believes adds significant value, relative to what is already in the Commission’s possession. The reduction in the level of fines depends, among other things, on applicant’s order in the ‘queue’: between 30 and 50 per cent. for the first applicant; between 20 and 30 per cent. for the second; and between 0 and 20 per cent. for any subsequent applicants.

  10. Are markers available and, if so, in what circumstances?

    The Commission operates a discretionary marker process, whereby a party may temporarily secure its position in the immunity queue. An applicant for a marker must provide high-level details of the parties to the alleged cartel, the affected products and territories, the estimated duration of the conduct and details of any parallel leniency applications to other authorities. If the Commission grants the marker, the applicant is granted a set period of time (typically not more than three weeks) to ‘perfect’ it.

  11. What is required of immunity/leniency applicants in terms of ongoing cooperation with the relevant authorities?

    A leniency applicant must continue to cooperate fully throughout the investigation. This includes, among other things, promptly submitting all relevant information that comes into its possession, remaining available to answer any questions, and abiding by very strict confidentiality obligations.

  12. Does the grant of immunity/leniency extend to immunity from criminal prosecution (if any) for current/former employees and directors?

    The Commission has no power to impose criminal sanctions on individuals involved in cartel conduct.

  13. Is there an ‘amnesty plus’ programme?

    Amnesty plus is not available.

  14. 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?

    There is an EU settlement procedure that complements the Commission’s leniency programme, whereby parties admit their participation in a cartel and accept their liability for the conduct.

    The Commission has broad discretion in determining which cases are appropriate for settlement, motivated by the objective of achieving procedural efficiencies. A party under investigation therefore does not have an automatic right to settle, and nor does it have any obligation to engage in settlement discussions if invited to do so. The procedure is (generally) available where proceedings have already been initiated with a view to adopting an infringement decision, but before a formal statement of objections has been issued.

    Notwithstanding the resulting loss in procedural efficiencies, the Commission has recently shown a willingness to countenance 'hybrid' cases, in which it settles with certain parties but not others. In September 2017, for instance, it announced that it had fined Scania €880 million for its part in the Trucks (Case COMP/39824) cartel, unlike the other parties to the cartel which settled with the Commission in July 2016. However, there has been some criticism (including from the General Court in Case T-180/15, Icap and Others v. Commission) of the use of 'hybrid' settlements on the basis that it might infringe the rights of defence of non-settling parties. It is expected that where possible the Commission will seek to address this concern by issuing settlement and infringement decisions simultaneously.

  15. What are the key pros and cons for a party that is considering entering into settlement?

    In return for settling the case, parties receive a 10 per cent. reduction in fines (in addition to any reduction for leniency) and a cap on the multiplier that may be applied to the fine for specific deterrence (to a multiple of two). There are obviously additional cost savings associated with the early termination of what can be a very intensive procedure. Another potentially significant advantage is that the Commission typically adopts a much shorter infringement decision in settlement cases, which provides less ammunition for other authorities and potential civil claimants (albeit that this advantage may be reduced in a hybrid context). Further, the possibility of participating in informal dialogue with the Commission allows the parties to seek to exert some degree of shaping influence over the infringement decision.

    Parties need, however, to consider carefully the wider implications of settlement, including in particular the admission of liability (and how this will be perceived by other regulators, potential claimants and courts) and the limited scope for appeal. To date, only two appeals to the General Court have been made by parties that previously settled with the Commission.

  16. What is the nature and extent of any cooperation with other investigating authorities, including from other jurisdictions?

    The Commission cooperates with other NCAs through the European Competition Network (the ECN). The extent of cooperation extends to the sharing and collection of relevant information for the purposes of applying Article 101 or for parallel proceedings under national competition law.

    The Commission often also cooperates with non-EU competition authorities and has dedicated cooperation agreements with several countries, notably Australia, Brazil, Canada, China, India, South Africa, South Korea, Switzerland and the US.

  17. What are the potential civil and criminal sanctions if cartel activity is established?

    The Commission may impose fines of up to 10 per cent of an undertaking’s total annual worldwide turnover. There are no criminal sanctions at an EU level.

  18. 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 Commission has substantial discretion in setting the level of fines (up to the 10 per cent. cap). The Commission’s Fining Guidelines do, however, provide a methodology for the calculation of financial penalties. Factors taken into account include the value of sales in the market affected by the infringement, the duration of a party’s involvement, an ‘entry fee’ (i.e. an additional 15 to 25 per cent. of the value of sales to deter firms from participating in cartels even for a short period), any aggravating or attenuating circumstances, as well as adjustments for leniency or settlement.

    The Commission has imposed some extremely high fines in recent years. For example, in July 2016, record total fines of €2.93 billion were imposed on four members of the Trucks cartel, with Daimler receiving the highest individual fine (€1.01 billion). However, in 2018, the Commission imposed total fines of approximately €801 million, representing a decrease compared to recent years.

  19. Are parent companies presumed to be jointly and severally liable with an infringing subsidiary?

    The Commission is able to impose fines on a parent company without having to establish its involvement in the infringement if, having regard to the economic, organisational and legal links, the subsidiary does not behave independently in the market. Whilst there is a rebuttable presumption that this is the case in the context of 100 per cent. shareholdings, lesser shareholdings can also suffice for these purposes, depending on the level of influence exercised by the parent.

  20. Are private actions and/or class actions available for infringement of the cartel rules?

    Private actions are not available at an EU level. However, the Damages Directive was introduced to ensure that victims of EU competition law infringements have effective mechanisms to obtain redress in national courts, including for cartel behaviour. The Directive sought to facilitate private damages actions by, for instance, allowing national courts to order parties to the proceedings and third parties to disclose evidence, providing a rebuttable presumption that cartel behaviour has caused harm, etc. At the same time, the Directive sought to preserve the incentives of cartel members to cooperate with competition authorities through either leniency or settlement by including absolute protection from disclosure of corporate statements and settlement submissions.

  21. What type of damages can be recovered by claimants and how are they quantified?

    The Damages Directive allows for victims to obtain full compensation for the actual loss suffered as well as for lost profits. The precise rules vary between Member States.

  22. On what grounds can a decision of the relevant authority be appealed?

    Appeals on the legality and procedural propriety of Commission decisions can be made to the General Court, which can maintain, reduce or increase the level of fine. Further appeals on points of law in the General Court’s decision can be made to the ECJ.

  23. What is the process for filing an appeal?

    A case is considered lodged by the General Court when an application is sent to the Registry. This must be done within two months and ten days from the date of notification or publication of the contested Commission decision.

  24. 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)?

    In December 2018, the EU Directive 2019/1 (the ECN+ Directive) was adopted in order to empower NCAs to be more effective enforcers of the EU competition rules. The ECN+ Directive was published in the EU’s Official Journal on 14 January 2019 and Member States have two years in which to implement it. Essentially, the measures are aimed at ensuring that NCAs have investigative and enforcement powers that mirror those in Regulation 1/2003. This includes protection against disclosure at national level for leniency applicants. In addition, further harmonisation rules require that all Member States implement a marker system for immunity applications and establish a ‘summary application’ system for parties who have already applied for leniency with the Commission.

  25. 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.)?

    In December 2018, the EU Directive 2019/1 (the ECN+ Directive) was adopted in order to empower NCAs to be more effective enforcers of the EU competition rules. The ECN+ Directive was published in the EU’s Official Journal on 14 January 2019 and Member States have two years in which to implement it. Essentially, the measures are aimed at ensuring that NCAs have investigative and enforcement powers that mirror those in Regulation 1/2003. This includes protection against disclosure at national level for leniency applicants. In addition, further harmonisation rules require that all Member States implement a marker system for immunity applications and establish a ‘summary application’ system for parties who have already applied for leniency with the Commission.

  26. What are the key expected developments over the next 12 months (e.g. imminent statutory changes, procedural changes, upcoming decisions, etc.)?

    In December 2018, the EU Directive 2019/1 (the ECN+ Directive) was adopted in order to empower NCAs to be more effective enforcers of the EU competition rules. The ECN+ Directive was published in the EU’s Official Journal on 14 January 2019 and Member States have two years in which to implement it. Essentially, the measures are aimed at ensuring that NCAs have investigative and enforcement powers that mirror those in Regulation 1/2003. This includes protection against disclosure at national level for leniency applicants. In addition, further harmonisation rules require that all Member States implement a marker system for immunity applications and establish a ‘summary application’ system for parties who have already applied for leniency with the Commission.