European Union: Cartels & Leniency In The European Union

Last Updated: 18 February 2009
Article by Simon Holmes and Philipp Girardet

This article first appeared in the second edition of The International Comparative Legal Guide to: Cartels & Leniency; published by Global Legal Group Ltd, London ( )

1 The Legislative Framework of the Cartel Prohibition

1.1 What is the legal basis and general nature of the cartel prohibition e.g. is it civil and/or criminal?

Article 81 of the EC Treaty prohibits anti-competitive agreements and arrangements between companies (such as cartel conduct) which may affect trade between EU member states. The prohibition covers both horizontal and vertical conduct. Article 81 only provides for civil sanctions and not criminal sanctions and applies only to companies and not to individuals. However, national legislation may provide for parallel criminal sanctions for individuals who participated in the cartel conduct (see, for example, the chapter on the UK).

The concept of a company (or 'undertaking') for the purposes of article 81 is defined broadly and can in principle cover any legal or natural person engaged in economic or commercial activity. Also, the alleged activities do not necessarily have to involve crossborder trade. The Community Courts i.e. the Court of First Instance (the 'CFI') and the European Court of Justice (the 'ECJ') have held in the past that activities which cover the whole territory of one Member State are in principle capable of effecting trade between Member States.

1.2 What are the specific substantive provisions for the cartel prohibition?

Article 81(1) of the EC Treaty 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 common market". Article 81(1) provides a non-exhaustive list of practices caught by the above provision that includes:

  • price-fixing;
  • output restrictions; and
  • market-sharing;

Article 81(2) provides that any agreements or decisions prohibited pursuant to article 81(1) shall be automatically void and unenforceable without the need for any act or finding of the European Commission (the 'Commission') or any other enforcement agency or court.

Article 81(3) sets out certain exemption criteria from the general prohibition under article 81(1). Agreements or arrangements, which may prima facie restrict competition, may be compatible with the EC Treaty provisions and enforceable if they fulfil the following three cumulative criteria:

they improve the production or distribution of goods or services or promote technical or economic progress, while allowing consumers a fair share of the resulting benefits; they do not impose on the companies concerned restrictions which are not absolutely necessary for the attainment of the above consumer welfare enhancing objectives; and they do not afford the undertakings concerned the possibility of eliminating competition in respect of substantial part of the relevant products or services.

Article 1(2) of Council Regulation 1/2003 ('Regulation 1/2003') removes the old monopoly by the Commission to rule on whether the exemption criteria of article 81(3) apply. Instead, it establishes a system of 'self-assessment' under which companies and their legal advisors must now determine for themselves (and on the basis of Commission's Guidelines on the application of Article 81(3)) whether the exemption criteria apply. Where they apply, no prior decision to that effect by the Commission is required.

However, price-fixing and market-sharing cartels and bid-rigging activities (conduct the Commission refers to as 'hard core' cartel conduct) will never qualify for the above exemption. Further, the Community Courts have established that the Commission does not usually have to prove any actual anti-competitive effects to establish an infringement of the cartel prohibition under article 81 of the EC Treaty where it has evidence that the conduct had an anticompetitive 'object'.

1.3 Who enforces the cartel prohibition?

Regulation 1/2003 implements the general rules governing the enforcement of EC competition law in general and of article 81 in particular. The principal body charged with the responsibility to enforce the cartel prohibition under article 81 of the EC Treaty is the Commission and, more specifically, the Directorate-General for Competition ('DG COMP'). However, Regulation 1/2003 also creates enforcement rights for the national competition authorities of the EU member states (the 'NCAs'). In particular, Regulation 1/2003 establishes the following principal jurisdictional rules:

  • the Commission only applies EC competition law whereas the NCAs can apply both EC and national competition law (subject to the rules set out below);
  • where an NCA investigates cartel conduct which may affect trade between EU member states under national competition law, it must also apply article 81 in parallel or instead of national law (article 3(1)); and
  • NCAs may not prohibit any alleged cartel conduct under national laws, which may affect trade between EU member states (i.e. to which article 81 applies in principle), and which would not be prohibited under article 81 itself (article 3(2)).

As a result, there is the possibility of parallel investigations of alleged cartel conduct, which may affect trade between EU member states by the Commission and one or more NCAs. Regulation 1/2003 therefore creates a multilateral forum consisting of the Commission and all NCAs (the 'European Competition Network' or 'ECN') to coordinate article 81 enforcement activities across the EU and contains a requirement on the Commission and NCAs to inform one another of their respective investigative activities through the ECN. In addition, the Commission's Notice on cooperation within the Network of Competition Authorities (the 'Network Notice') contains guidance on which competition authority is 'well placed' to investigate cross-border EU cartel conduct. The Network Notice specifies, among other things, that the Commission is 'particularly well placed' to investigate cartel conduct which may have effects in more than three EU member states. Where the Commission takes the formal step of 'initiating proceedings' prior to the issue of a statement of objections (see question 1.4 below), NCAs which may be investigating the same conduct in parallel national investigations must terminate their national proceedings (article 11(6) of Regulation 1/2003).

Decisions of the Commission in competition matters are subject to judicial review under article 230(1) of the EC Treaty and appeals are made in the first instance to the CFI and then subsequently to the ECJ. The Community Courts can annul the Commission's decision or review the fines imposed by the Commission, i.e. they have the power to both reduce and increase the level of fines

imposed by the Commission.

1.4 What are the basic procedural steps between the opening of an investigation and the imposition of sanctions?

The Commission can start an investigation on the basis of one or more of the following four grounds: (i) its own market intelligence; (ii) following a complaint; (iii) following a reference from an NCA; and/or (iv) a leniency application. However, over the past few years most EC cartel cases were triggered by leniency applications. Once alleged anti-competitive conduct has come to the Commission's attention and the Commission has internally decided to pursue the matter, it will collect further information, either informally or using its formal powers of investigation. The Commission does not require any external authorisation for the use of its wide formal investigatory powers and has a wide margin of discretion as to when to use its powers. The exercise of the relevant power must be 'necessary' for the effective enforcement of the Community competition rules and must be proportionate. In practice, in cartel cases the Commission will almost invariably adopt inspection decisions for a series of unannounced parallel searches or 'dawn raids' of businesses and, if required, private homes at which the Commission has reason to believe that incriminating information may be held. See Section 2 below for further details on the Commission's investigatory powers.

Where after its initial fact-finding exercise the Commission believes it has sufficient grounds to establish an infringement, it will formally 'initiate proceedings' in accordance with article 2 of Regulation 773/2004 (the "Implementing Regulation"). This is essentially an internal administrative step. The Commission may make public the initiation of proceedings, in any way it deems appropriate. The Commission case team then informs the parties under investigation of the objections raised against them in writing in a 'statement of objections'. The statement of objections sets out the facts the Commission relies on, the conclusions it draws and the actions it proposes to take, e.g. impose fines. The parties are then allowed to review the documents on the Commission's investigation file (the 'access to file' stage) before they are given an opportunity to make known their views on the Commission's allegations contained in the statement of objections in writing (in the 'written response') and orally (at an 'Oral Hearing'). Together, these three rights of defence are referred to as the parties' right 'to be heard'. The Commission has created the office of the Hearing Officer that is charged with ensuring that the parties can exercise their right to be heard effectively. In practice, this allows parties to refer matters concerning, for example, time limits for their written and oral submissions and concerns that the Commission case team may have unduly restricted access to its file to the Hearing Officer for review and a decision. The Hearing Officer also arranges and presides over the Oral Hearing. After the right to be heard has been exercised, the Commission must assess the evidence and the submission in the round. Where it concludes that its original case still stands it will prepare a draft decision setting out the infringement it has found and the action it will take (e.g. the amount of fines it will impose on the parties).

Before the Commission takes its final decision it must consult the Advisory Committee on Restrictive Practices and Dominant Positions that consists of representatives of the NCAs. The final decision is taken by the full College of Commissioners and then notified to the concerned parties. The length of the administrative procedure from the date of the first formal investigatory measures to a final decision varies from case to case and will depend, among other things, on whether there is a leniency applicant that supports the Commission's case. In practice, the time period normally varies between two and half and three and a half years but can be significantly longer. The Commission is currently seeking to reduce this period.

1.5 Are there any sector-specific offences or exemptions?

There are no sector specific offences or exemptions but there are special rules governing the application of article 81 to the following sectors: agriculture, transport, insurance, professional services and telecommunications. Further, the Commission has adopted a number of so-called block exemptions that set out guidelines assisting parties that wish to self-assess whether their commercial arrangements fall foul of article 81. These guidelines cover certain types of horizontal arrangements between companies operating at the same level of the supply chain and certain types of vertical arrangements, between for example, manufacturers and wholesalers. However, they are unlikely to be relevant to classic cartel cases.

1.6 Is cartel conduct outside the EU covered by the prohibition?

Article 81 applies to agreements concluded between companies located outside the EU but which have an effect on competition within the EU. It is established Community case-law that it is not necessary that companies involved in the cartel conduct have their seat inside the EU or that the restrictive agreement was entered into inside the EU or that the alleged acts were committed in the EU. The Community Courts ruled in the past that the crucial element in determining whether EU competition rules apply is whether the agreement, decision or concerned practice was 'implemented'. In practice, the implementation test is an 'effect on trade' test, which is met where parties established in non-EU countries sell their products directly into the EU. The Commission has in the past investigated and fined cartel conduct where all cartel members were exclusively based outside the EU but where there were relevant sales into the EU.

2 Investigative Powers

2.1 Summary of general investigatory powers.

Table of General Investigatory Powers


2.2 Specific or unusual features of the investigatory powers referred to in the summary table

The Commission's powers are set out in Regulation 1/2003 and the Implementing Regulation. In contrast to many NCAs, the Commission can exercise all of its powers of investigation on the basis of internal administrative decisions alone: this means that no court warrants are required (but see below regarding the role of national law search warrants in Commission investigations).

The Commission does not have any power to compel a person to give a statement, i.e. it does not have any compulsory interview powers. The Commission, however, has the power to 'take statements' with the consent of the person interviewed. The Commission also has the power to ask 'oral questions' during an inspection or dawn raid 'on facts or documents relating to the subject-matter and purpose of the inspection' and to record those answers.

Regulation 1/2003 also gives the Commission a new power to inspect residential premises (and private cars) where it suspects that relevant business records are kept at those premises. This power was used for the first time by the Commission in May 2007 when the Commission jointly with the UK's OFT carried out inspections of a residential premise in its investigation into cartel conduct in the Marine Hoses sector.

Also, while the Commission does not have a formal power to 'image' the hard drive of computers, it is now common practice for the Commission investigation team to contain at least one forensic IT specialist which will search the company's computer systems for relevant electronic data (including files which may have been deleted by a user but which may still be stored on the company's main server).

Finally, the Commission does not have the power to force entry. This would need to be effected under national search warrants that the local NCA would normally apply for as a precautionary measure before the Commission inspection. Where an NCA applies for a search warrant on the basis of an existing Commission inspection decision, Regulation 1/2003 sets out the scope of the national court's review (codifying the ECJ's well-established Roquette Frères judgment). In such a case, the national court is entitled to verify that the Commission's decision to conduct an inspection is 'authentic' and that the coercive measures are neither 'arbitrary' nor 'excessive'. The national court may also ask the Commission for detailed explanations on those elements that are necessary to allow its control of the proportionality of the coercive measures.

However, the national court may not call into question the necessity of the investigation nor demand that it be provided with information in the Commission's file. The Commission's decision is, however, subject to a full review by the Community Courts at a later stage.

2.3 Are there general surveillance powers (e.g. bugging)?

The Commission does not have any formal surveillance powers, i.e. powers to observe individuals from a public place and/or to observe or record activities in non-public places (such as business or residential premises).

2.4 Are there any other significant powers of investigation?

There are no other powers of investigation.

2.5 Who will carry out searches of business and/or residential premises and will they wait for legal advisors to arrive?

The Commission team for 'dawn raids' in cartel investigations under article 81 usually consists of between five and ten Commission officials for each business address, of whom at least one is likely to be a forensic IT expert trained in searching for electronic data. The other team members are usually Commission case officers and/or specialist Commission investigators. The numbers can be smaller for residential addresses.

In addition, the Commission case team is always assisted by several officials from the NCA in whose country the searches are taking place. Further, in some countries (such as Germany) the NCA officials will also be accompanied by the police. Where a company or person opposes or obstructs the Commission's inspection, the local NCA must afford the Commission 'the necessary assistance' to conduct its inspection. For example, in the UK, this means in practice that the OFT will have obtained a precautionary search warrant from the High Court, allowing the OFT officials to execute the warrant in the case of an obstruction of the Commission's inspection and to take over the investigation under its national search powers.

The Commission can also ask an NCA to carry out the inspections on its behalf under article 22(2) of Regulation 1/2003. Such inspections would then be carried out by the NCA under its own national investigatory powers. This is, however, relatively rare. It is normal practice, for the Commission to wait for between 30 minutes to an hour for a company's external legal advisors to arrive before commencing the search. The Commission will, however, usually secure relevant offices, etc. to ensure that no potentially relevant material is interfered with during this period (normally by placing a Commission official in that office, etc.).

2.6 Is in-house legal advice protected by the rules of privilege?

The EC privilege rules were originally established by the ECJ in the AM&S case in which the court established that privilege only attached to written communications between lawyers and clients if the following two conditions were met: (i) the communications in question were made for the purposes and in the interests of the client's rights of defence; and (ii) the communications emanate from independent lawyers, that is, those not bound to the client by a relationship of employment. In practice, this means that advice provided by in-house lawyers is not privileged under EC law. The CFI has recently applied and clarified the AM&S position in its Akzo Nobel judgment which is now itself on appeal to the ECJ. In particular, the CFI clarified that when claiming legal privilege over a document the company cannot be compelled to allow the Commission investigators a 'cursory glance' to verify the claim during the inspection. A company can insist that any disputes over legal privilege must be resolved subsequently and any Commission decision on the issue is subject to the possibility of an appeal to the CFI.

Where an investigation of an alleged article 81 infringement is carried out by an NCA on behalf of the Commission (i.e. the investigation is carried on under national powers) national rules of privilege apply. For example, the English rules of privilege are wider and in principle cover in-house legal advice. By contrast, the German rules of privilege are considerably narrower, covering neither in-house legal advice nor most external legal advice kept at the company's premises. See the UK and Germany chapters for details.

2.7 Other material limitations of the investigatory powers to safeguard the rights of defence of companies and/or individuals under investigation.

There is no absolute right to silence under EC law. However, the Community Courts recognise a limited privilege against selfincrimination that can apply both in relation to requests for information and inspections. The Courts have accepted that the Community law principle of respect for the rights of defence prevents the Commission from compelling a company "to provide it with answers which might involve an admission on its part of the existence of an infringement which it is incumbent on the Commission to prove" (Orkem). However, companies must answer requests for information, which are aimed at establishing merely certain factual circumstances. It is, for example, permissible for the Commission to ask who attended a specific meeting but it may not be permissible for the Commission to ask what the purpose of the meeting was if the Commission alleges that, the purpose of the meeting was to fix prices or share markets. Further, the Community Courts have confirmed that the Commission is entitled to request the production of relevant pre-existing documents even if they contain incriminating information.

2.8 Are there sanctions for the obstruction of investigations? If so, have these ever been used?

Regulation 1/2003 provides for one-off financial penalties of up to 1% of the total turnover of a company where the company intentionally or negligently fails to comply with a formal investigatory measure by the Commission. Regulation 1/2003 also gives the Commission the power to impose periodic penalty payments of up to 5% of the average daily turnover of a company where the Commission seeks to compel the company to answer a formal request for information fully or to submit to an inspection. The Commission has recently started to make use of its powers to impose the above penalties for obstruction. For example, the Commission increased the fines for Sony it its Professional Videotape price-fixing decision of November 2007 for obstruction. According to the Commission, during the inspections, a Sony employee refused to answer oral questions asked by the Commission's inspectors and another employee was found to have shredded documents during the inspection. In January 2008, it imposed a record fine of €38 million on E.ON for breaking a seal, which had been affixed by officials during a dawn raid (this decision is currently under appeal).

3 Sanctions on Companies and Individuals

3.1 What are the sanctions for companies?

Regulation 1/2003 specifies that the Commission may impose financial penalties on a company, which has either intentionally, or negligently infringed article 81 of the EC Treaty of up to 10% of its global turnover in the preceding business year. In fixing the amount of the fine the Commission must have regard both to the 'gravity' and the 'duration' of the infringement. The Community Courts have confirmed that within this legislative framework the Commission has wide discretion in setting the level of fines. The Commission exercises its discretion in accordance with the principles set out in its fining guidelines. The Commission adopted revised fining guidelines in September 2006, which state, among other things, that the Commission will have regard to the following aggravating circumstances:

  • where the company is a 'repeat offender' (i.e. has previously been found guilty by the Commission or an NCA of a similar infringement under article 81);
  • where there has been a refusal to cooperate with, or an obstruction of, the Commission's investigatory measures; and
  • where the company has been the leader or instigator of the alleged infringement or has 'coerced' another company into participating in the alleged infringement.

The 2006 fining guidelines also list the following mitigating circumstances:

  • the infringement was terminated as soon as the Commission intervened;
  • the company committed the infringement as a result of negligence;
  • the company's involvement was 'substantially limited';
  • the company's effectively cooperated with the Commission outside the scope of the Commission's leniency notice; and
  • the infringement was authorised or encouraged by public authorities or by legislation.

In each case, the Commission will also pay particular attention to the need to ensure that fines have a sufficient deterrent effect (both on the company being fined and on other companies in a similar position). In exceptional cases, the Commission will also have regard to a company's inability to pay a fine 'in a specific social and economic context'. The threshold for a reduction on this basis is, however, extremely high.

The Commission's current fining practice indicates that there is a clear trend to raise the level of fines for cartel conduct further and the Commission's 2006 fining guidelines are generally perceived as allowing the Commission to impose higher fines than under its previous fining guidelines. In 2007, the Commission issued eight cartel decision, resulting in total fines of over €3.3 billion, the highest ever imposed in a single year. As at 1 October 2008, the Commission has issued five cartel decisions in 2008 resulting in fines of around €827 million. In January 2008, Commission fined synthetic rubber producers €34.2 million for a price fixing cartel; in March providers of international removal services in Belgium were fined over €32.7 million for a complex cartel; in June members of a cartel concerning sodium chlorate paper bleach producers were fined €79 million for market sharing and price fixing; also in June a number of aluminium fluoride producers have been subject to a fine of €4.97 million for a price fixing cartel; and on 1 October the Commission fined nine companies €676 million for their participation in a price fixing and market sharing cartel for paraffin wax. It is likely that further significant fines will be imposed by the Commission before the end of 2008.

EC law also gives the Commission the power to require a company to bring an infringement to an end. For this purpose, it may impose on the company any behavioural or structural remedy, such as a divestment, which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end. However, these additional sanctions are in practice not relevant to 'hard core' cartel conduct and are mainly aimed at infringements of article 82 of the EC Treaty (abuse of a dominant position).

3.2 What are the sanctions for individuals?

EC law does not contain any sanctions for individuals in cartel cases. However, where the investigation was carried out by an NCA on behalf of the Commission under the NCA's national powers or where there is a parallel administrative and/or criminal case at national level, national law may provide for sanctions on individuals for the same alleged cartel conduct.

3.3 What are the applicable limitation periods?

The power of the Commission to impose fines for an infringement of article 81 is subject to a limitation period of five years from (for cartel cases characterised by continuous conduct rather than a single and isolated act) the day on which the infringement ceased. Further, any action taken by the Commission or by an NCA for the purpose of the investigation or proceedings in respect of the alleged infringement interrupts the limitation period.

3.4 Can a company pay the legal costs and/or financial penalties imposed on a former or current employee?

This is not applicable (see question 3.2 above).

4 Leniency for Companies

4.1 Is there a leniency programme for companies? If so, please provide brief details.

In December 2006, the Commission adopted a revised leniency notice on immunity from fines and reduction of fines in relation to 'secret' cartel cases which amended its earlier 2002 notice (the '2002 Leniency Notice' and '2006 Leniency Notice' respectively). The 2006 Leniency Notice introduces, among other things, the following significant changes to the Commission's leniency policy: it introduces a discretionary 'marker' procedure for immunity applicants;

  • it clarifies the information which must be provided to qualify for immunity;
  • it allows immunity applicants to limit their initial evidence submissions with the Commission's consent to protect the element of surprise of any subsequent Commission inspections;
  • it introduces flexibility as to the point in time when applicants should terminate their participation in the alleged cartel activities to protect the element of surprise of any subsequent Commission inspections;
  • it extends the obligation not to destroy, falsify or conceal information to cover the period when the applicant contemplates making an application; and
  • it expressly imposes an obligation of continuous cooperation on applicants for a 'reduction of fines' (rather than just on applicants for immunity from fines).

Under the 2006 Leniency Notice, conditional immunity from fines is available to only one company. That company must be the first to come forward with information of 'secret' cartel activity that, in the Commission's view, will enable it to:

  • carry out a 'targeted inspection' in connection with the alleged cartel ('Point 8(a) Immunity'); or
  • find an infringement of article 81 in connection with the alleged cartel ('Point 8(b) Immunity').

To obtain Point 8(a) Immunity (which generally has a significantly lower evidential threshold), an applicant must approach the Commission before the Commission has sufficient evidence to adopt an inspection decision or already has carried out an inspection in relation to the reported conduct and must provide the Commission with information which allows the Commission to carry out a 'targeted inspection' which will normally involve, among other things, the following:

  • A corporate statement containing, among other things, the following:
  • a detailed description of the alleged secret cartel arrangement, e.g. information about the participants, the relevant markets and products/services, the objectives and the duration;
  • details of the exact location of the offices and, where applicable, homes of the alleged cartel participants (both companies and individuals); and
  • information on which other competition authorities have been or will be approached by the applicant in addition to the Commission.
  • All evidence relating to the alleged cartel in the possession of the applicant or available to it at the time of the application.

Point 8(b) Immunity is available in cases where the Commission has started a cartel investigation on its own initiative (i.e. without a Point 8(a) Immunity applicant) and the first company to apply for immunity after the inspections can provide the Commission with contemporaneous, incriminating evidence, which proves the cartel conduct. This is a high evidential threshold (and much higher than for Point 8(a) Immunity).

Any immunity applicant must also satisfy the following cumulative conditions (in broadly chronological order):

  • The applicant must not have 'coerced' another company to join the cartel or remain in it.
  • When contemplating making an application, the applicant must not have destroyed, falsified or concealed evidence of the alleged cartel.
  • The applicant must have terminated its involvement in the alleged cartel no later than the time at which it reported the cartel to the Commission, except for what would, in the Commission's view, be reasonably necessary to protect the surprise element of the Commission' subsequent inspections. (The extent of any continued participation by the applicant will always need to be agreed with the Commission.)

The applicant must cooperate genuinely, fully and on a continued basis with the Commission's investigation (which includes, among other things, providing the Commission with all relevant information and evidence, making individuals available for interview and not disclosing the application before the statement of objections has been issued, unless otherwise agreed).

A potential immunity applicant can also choose to approach the Commission with an anonymous 'hypothetical application' to establish whether the evidence in its possession is sufficient for the grant of immunity. In practice, this type of approach is relatively rare in 'hard core' cartel cases.

Any company which is not the first to come forward or which may have 'coerced' another company during the life of the cartel into participation, may still be able to obtain a reduction in fines from the Commission under the 2006 Leniency Notice where the company provides the Commission with evidence which 'adds significant value' to what the Commission already has in its possession at the time of the submission. In such a case the above cumulative conditions also apply (save for the 'coercer' condition). The first undertaking to provide 'significant added value' will obtain a reduction of 30-50%, the second a reduction of 20-30% and any subsequent undertakings a reduction of up to 20%. The Commission's final determination of the exact reduction will be set out in the final decision.

4.2 Is there a 'marker' system and, if so, what is required to obtain a marker?

Yes. The 2006 Leniency Notice introduces a 'discretionary' marker system for immunity applicants. The Commission will decide whether to grant a marker on a case-by-case basis, taking into account the specificities of each situation and the justifications that the applicant presents for its request to obtain a marker. An applicant for a marker must provide information about the parties to the alleged cartel, the affected products and territories, the duration of the cartel, the alleged illegal conduct and any parallel leniency applications the applicant is in the process of making in other jurisdictions. If granted, the applicant will be given a specified (relatively short) period of time in which to 'perfect' the marker, i.e. provide the Commission with the evidence and information required to obtain Point 8(a) or Point 8(b) Immunity.

4.3 Can applications be made orally (to minimise any subsequent disclosure risks in the context of civil damages follow-on litigation)?

Yes. The Commission accepts that potential applicants should not be discouraged from making leniency applications by the risk of discovery orders issued in civil litigation (in particular, in the US) for corporate admissions made in support of a leniency application. As a result, the 2006 Leniency Notice allows the submission of oral corporate statements and contains detailed provisions for the relevant procedures. Pre-existing documents must, however, be submitted in the usual way.

4.4 To what extent will a leniency application be treated confidentially and for how long?

The fact that an application has been made must be kept confidential by the applicant itself until the issuance of the statement of objection, unless otherwise agreed with the Commission. The Commission will disclose the identity of leniency applicants in the statement of objections to the other parties and will disclose that information publicly in its nonconfidential version of any final infringement decision at the end of its administrative procedure. Further, corporate statements made in support of a leniency application are given particular protection (see question 4.3 above). Otherwise, the Commission's general 'access to file' rules apply, i.e. access to the Commission's file is only granted to parties to whom the Commission has addressed the statement of objections and only for the purpose of allowing such parties to defend themselves in the Commission's proceedings.

4.5 At what point does the 'continuous cooperation' requirement cease to apply?

The continuous cooperation requirement under the 2006 Leniency Notice ceases with the completion of the Commission's administrative proceedings, i.e. the adoption of a final decision or, less frequently in cartel cases, an administrative case closure decision.

4.6 Is there a 'leniency plus' or 'penalty plus' policy?

There is neither a leniency plus nor a penalty plus policy in the EU. The latter is a US concept which, to date has not been replicated in the EU.

5 Whistle-blowing Procedures for Individuals

5.1 Are there procedures for individuals to report cartel conduct independently of their employer? If so, please specify.

Individuals are free to provide the Commission with information or evidence of cartel conduct at any time, either on a named basis or anonymously. To the extent that the information so provided is sufficient to allow the Commission to adopt an inspection decision, Point 8(a) Immunity (see question 4.1 above) would no longer be available to the first company to report the same cartel conduct.

6 Plea Bargaining Arrangements

6.1 Are there any early resolution, settlement or plea bargaining procedures (other than leniency)?

On 1 July 2008, the European Commission's procedure for the

settlement of cartel cases entered into force, contained in Regulation 622/2008 and Notice 2008/C 167/01. The aim of this procedure is to achieve "procedural economies" in adopting cartel decisions. This is achieved by a streamlined procedure with no oral hearing and limited access to the file. Once (confidential) settlement discussions start, leniency will no longer be available to the settling party. In principle, settlement agreements can be reached with one, some or all of the parties to a cartel.

There is no right or duty to settle, with the Commission benefiting from a broad discretion in deciding which cases are suitable for settlement and defendants having the right to enough time and adequate access to counsel to make an informed settlement decision. Aparty may state in writing that it is interested in entering into a settlement without such a written declaration implying an admission of illegal behaviour.

A fixed 10% settlement discount is available for parties that reach a settlement with the Commission. This is an important difference from leniency where the reductions in fines are higher and can vary, reflecting the specific circumstances of each case. Similarly, in theory, there is no negotiation or plea bargaining over whether there has been an infringement or not. Defendants have to acknowledge the infringement and their liability. However, to protect the rights of defence, defendants are heard on the potential objections and on the range of likely fines during settlement discussions.

Although settlement must take place before the SO is issued (which will endorse the settlement submission), the Commission will not be bound until a final decision has been adopted. If the settlement is abandoned, the settlement submission will be withdrawn and the right to appeal remains intact.

Further details and discussion of settlements can be found in the article at the beginning of this publication.

7 Appeal Process

7.1 What is the appeal process?

Commission decisions can be appealed (in the first instance) to the CFI which has jurisdiction to review the legality of the Commission's substantive decisions, the propriety of its administrative procedure and the appropriateness of the fines imposed. As a general rule, appeals to the CFI must be made within two months of the 'notification' of the decision. The CFI has in the past provided detailed scrutiny of the Commission's factual and legal assessments, with hearings in complex competition cases frequently lasting several days. The CFI has been less willing to interfere with the Commission's exercise of its discretion to determine the appropriate amount of a penalty (in the absence of a previous manifest error of assessment of fact or law). From the CFI, appeals lie on points of law only to the ECJ.

7.2 Does the appeal process allow for the cross-examination of


Yes, cross examination of witnesses is allowed both in the CFI and the ECJ. In Henri de Compte v European Parliament the ECJ expressly acknowledged how such cross-examination may bring new facts to light and may also compel a witness to explain or rectify an inadequate or erroneous statement. That said, the procedures followed by the Community Courts do not allow for the testing of witnesses to the extent that many national courts do.

8 Damages Actions

8.1 What are the procedures for civil damages actions for loss suffered as a result of cartel conduct?

Third parties such as competitors and customers who have suffered loss as a result of cartel conduct in breach of article 81 may bring a civil claim for damages before the national courts of the EU Member States.

The Community Courts have confirmed that the national courts of EU Member States must ensure that they provide effective remedies for redress concerning infringements of article 81 (e.g. Manfredi). The Community Courts themselves do not have jurisdiction to hear such cases.

Generally, such actions can be brought regardless of whether the Commission has already adopted an infringement decision in respect of the relevant conduct. However, where the Commission's proceedings are ongoing or where the Commission decision has been appealed to the Community Courts, national court proceedings are likely to be stayed. In practice, most actions for civil damages will tend to follow a Commission finding of an infringement of article 81 as these findings will be binding on the national courts and the infringement will therefore not have to be re-established in the national proceedings (Masterfoods case law and article 16(1) of Regulation 1/2003) where the key issues will usually be those of causation and quantum.

In 2008, the Commission adopted and published a White Paper on Damages Actions for breach of articles 81 and 82 EC (the "White Paper"). The purpose of this is to establish a minimum level of protection for parties who suffer damages as a result of anticompetitive practises and who want to bring actions for compensation.

In line with the compensatory approach taken by the Commission, a party can obtain full damages (actual loss, loss of profit and interest). Contrary to what had been suggested in the Green Paper of 2005 and US anti-trust laws (where cartelists can see themselves paying damages three times over), the White Paper establishes a principle of single damages. Damages may be awarded without these being reduced to take into account the Commission fine.

The public consultation on the White Paper ended in July 2008. The Commission is now deciding whether a legislative proposal ought to be submitted or not. In the meantime, in July 2008, the Commission itself started proceedings in front of a Belgian court, to claim damages from a lift and escalator cartel that it had previously fined a record €992 million.

8.2 Do your procedural rules allow for class-action or

representative claims?

This is a matter of national law (see the national chapters for the EU Member States).

Whilst ECJ case law has established that any victim of anticompetitive conduct can claim compensation for harm suffered, individual indirect purchasers are unlikely to bring such a claim when the value of their claim is insignificant. The White Paper lays out several ways in which such parties might be able to bring their claims jointly and envisages a system of collective redress consisting of either representative actions brought on behalf of victims by qualified entities, or opt-in collective actions.

8.3 What are the applicable limitation periods?

This is a matter of national law (see the national chapters for the EU Member States).

8.4 What are the cost rules for civil damages follow-on claims in cartel cases?

This is a matter of national law (see the national chapters for the EU Member States).

In its 2008 White Paper (see question 8.1) the Commission, stating that it does not want to be overly prescriptive in this area of national procedural law, explains how it hopes to avoid situations arising in which high costs prevent parties bringing claims. Although in general the Commission wishes to uphold the "loser pays" principle, it also recognises that cost capping orders can help make costs more predictable and thus reduce one factor which inhibits victims of cartels suing for damages.

8.5 Have there been any successful follow-on or stand alone civil damages claims for cartel conduct?

This is a matter of national law (see the national chapters for the EU Member States).

Also, the Commission maintains a register on its website of certain relevant judicial decisions by the Community Courts (on general principles) and by national courts of EU Member States on the merits of particular damages actions: .

In 2008/09, it will be interesting to monitor the progress of the claim of the Commission against the lift and elevator cartel currently filed with the Brussels commercial court (see question 8.1).

9 Miscellaneous

9.1 Provide brief details of significant recent or imminent statutory or other developments in the field of cartels and leniency.

In July, the Commission launched a public consultation on the functioning of Council Regulation 1/2003 that sets out the general rules for the enforcement of the EC Treaty competition rules (see question 1.3 above). Regulation 1/2003 was the most comprehensive reform of anti-trust procedures in Europe since 1962 and the Commission invited views on the practical implementation of the new regime. The consultation period has now closed and the Commission will report on its findings by 1 May 2009.

9.2 Please mention any other issues of particular interest in the EU not covered by the above.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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