The European Commission yesterday imposed a fine totalling €750 million (£500m) on members of a European gas insulated switchgear cartel. The fine is the largest ever imposed by the Commission on a single cartel.

The cartel, which had been in operation for some sixteen years, had been involved in a litany of anti-competitive conduct – they had coordinated their bids for contracts over the sixteen year period, fixed prices, allocated projects amongst themselves, shared markets and exchanged commercially sensitive information.

The cartel itself was highly organised. Code names were used by the members and they employed sophisticated techniques (such as encrypted e-mail to anonymous addresses) to avoid detection. The Commission only found out about the cartel when one of the participants, ABB, blew the whistle and applied for immunity under the Commission’s leniency programme. The authorities then carried out a series of dawn raids during which a significant amount of evidence of the cartel was uncovered.

ABB’s decision to come clean when it did was clearly a very sensible one. As it was first to blow the whistle the company received 100% immunity from fines and saved itself €215 million as a result!

This shows that, if you are (or have been) part of a cartel, whilst there are very real penalties, there are real benefits of being first to approach the authorities. It also shows that, no matter how cosy or long-lasting the cartel, you never know when one of your co-conspirators may have an attack of conscience. In the UK, the Office of Fair Trading has a very similar leniency regime where the first organisation to repent can look forward to total immunity from fines.

MacRoberts has extensive experience in dealing with cartel investigations and leniency applications. Specialist help is imperative when dealing with the OFT to ensure that your interests are fully protected. We also offer full competition law training, compliance and audit services.

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© MacRoberts 2007