At a Glance: Sanctions for Cartel Activities in the European Union
What criminal penalties, if any, are provided for cartel activities?
There are no criminal sanctions for cartel activities at EU level. However, criminal sanctions may be imposed at national level in some Member States.
Civil and administrative sanctions
What are the civil or administrative penalties for cartel activity?
The European Commission (EC) derives its power to impose fines from Article 23(2) of Regulation No 1/2003 of 16 December 2002 on the application of the competition rules, which gives it wide latitude to fix the amount of the fine, the only limit being that it must not exceed 10 per cent of the company’s total turnover during the preceding financial year. In this regard, it should be noted that this maximum limit applies to the turnover of the company’s group and not only to the entity that participated in the infringement.
The amount of fines has increased significantly in recent years. The record total fine imposed in a single case amounts to 3.807 billion euros in the Trucks decision (2016/2017), where Daimler also received the highest ever individual fine of one billion euros for a cartel breach.
Moreover, while the EC itself cannot impose civil penalties, EU law encourages cartel victims to seek redress in national courts. Directive No. 2014/104 of 26 November 2014 on certain rules governing actions for liability under national law for infringements of the competition law provisions of the Member States and of the European Union, transposed by all Member States since 2020 , notably establishes a framework to facilitate actions for damages for victims of infringements of competition law.
Guidelines for Sanction Levels
Are there principles or guidelines for fines or sentencing? If so, are they binding on the arbitrator? If not, how are penalty levels normally established? What are the main aggravating and mitigating factors taken into account?
The EC first adopted its guidelines on how to set fines in 1998 and updated them in 2006. They are binding on the EC, but not on European or national courts, nor on national enforcement authorities. competition (ANC).
In practice, to set the amount of a fine, the EC first determines the basic amount of the fine, taking into account the value of the sales of the undertaking to which the infringement relates directly or indirectly in the geographical area concerned, to which it applies a percentage generally ranging from zero to 30 per cent depending on the seriousness of the infringement (in practice, this percentage generally varies between 15 and 18 per cent for cartels) as well as a multiplier factor reflecting its duration. In cartel cases, the EC applies an additional percentage ranging from 15 to 25 per cent to this base amount to ensure the deterrent effect of the fine.
The EC then adjusts this basic amount downwards or upwards to take account of the aggravating and mitigating circumstances specific to each company. Aggravating circumstances include the company instigating or leading the cartel, or whether it is a repeat offender – the EC recently increased a fine by 50% on the grounds that the company concerned had already been sanctioned for another cartel ( EC, April 20, 2021, Freight Shipping, case no. AT.39462). Mitigating circumstances include the company’s cooperation in the investigation – the EC recently granted a 45% reduction in the fine rewarding this cooperation (EC, 20 May 2021, EGBcase no. AT.40324), or the fact that the infringement was encouraged or authorized by public authorities or legislation.
Once adjusted, the EC verifies that the amount of the fine does not exceed the legal maximum (ie 10 percent of the company’s worldwide turnover during the last financial year). The EC recently reduced to zero the fine initially of 4.8 million euros which it had imposed on a company because this company had not achieved a turnover during the financial year preceding the date of the decision (EC, May 20, 2021, EGBcase no. AT.40324).
Finally, if necessary, the amount of the fine is further reduced to take account of the leniency procedures (total immunity for the first company that came forward to the EC and reductions of up to 50% for the following ones) or settlement procedures (a 10 percent fine reduction, as recently granted by the EC to all participants in the Car emissions cartel (EC, July 8, 2021, Car emissionscase no. AT.40178)).
Are penalties reduced if the organization had a compliance program in place at the time of the violation?
The EC is not required to take into account compliance programs put in place by an affected company when setting the fine. In 2014, the General Court of the European Union (GCEU) clearly excluded a compliance program from being considered a mitigating circumstance. In effect:
[The] the mere adoption by a company of a program for compliance with the competition rules cannot constitute a valid and definitive guarantee of future and continuous compliance by this company with these rules and, consequently, the mere existence of such a program cannot compel the Commission to reduce the fine on the ground that the preventive objective pursued by the fine has already been at least partially achieved.
See CGEU, 14 May 2014, Donau Chemistrycase no T-406/09.
Disqualification of director
Are those involved in cartel activities subject to orders prohibiting them from serving as directors or officers of companies?
There is currently no EU legislation prohibiting persons involved in cartel activities from acting as directors or officers of companies. However, some national laws provide for systems of recusal of directors, either in the form of autonomous sanctions which can be imposed by the NCAs (for example, in Sweden), or in the form of sanctions subordinated to the condemnation of an infringement of the right penalized for violating competition laws that may be imposed by the National Competition Authority. courts.
Is exclusion from public procurement procedures automatic, available as a discretionary sanction, or not available in response to cartel violations?
While Regulation No. 1/2003 of 16 December 2002 on the application of competition rules does not mention exclusion from public procurement procedures as a possible sanction, Directive No. 2014/24 on public procurement public authorities in the EU provides for a combination of mandatory and optional sanctions. exclusion when the public authorities have sufficiently plausible indications to conclude that the company has entered into agreements with other companies aimed at distorting competition, which can be qualified as “serious professional misconduct” (Article 57). The exclusion period for anti-competitive behavior is subject to national law and set at a maximum of three years by Directive 2014/24 when the exclusion period has not been set by a final judgment. It can be terminated earlier if the measures taken by the company sufficiently demonstrate its reliability. The exclusion rule is rarely applied throughout the European Union.
Where possible penalties for cartel activity include criminal and civil or administrative penalties, can they be prosecuted for the same conduct? If not, when and how is the choice of the sanction to be pursued made?
Cartels are subject to both administrative sanctions, which can be imposed exclusively by the EC, and possible civil damages, which can be decided by any national court. In this regard, public enforcement and private enforcement are seen as complementary tools to effectively fight cartels and deter anti-competitive behavior.
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