Wednesday, 24 November 2010

An analysis of cartel fines from 2005-2010, updated in 2012.

Contents

1. EU cartel fines - raw data, patterns and trends

   For the past two months, GCR has compiled and analysed EU cartel cases decided between 2005 and now. Ron Knox describes the project and findings.

    “These revised Guidelines will better reflect the overall economic significance of the infringement as well as the share of each company involved. [They] send three clear signals to companies. Don’t break the anti-trust rules; if you do, stop it as quickly as possible; and once you’ve stopped, don’t do it again.” – Neelie Kroes, former EU commissioner of competition, 28 June 2006.

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   In 2006, with Neelie Kroes at its helm, the European Commission’s Directorate General of Competition ratified – somewhat defiantly – a new set of fining guidelines for competition law breakers.

   Those guidelines ushered in three significant changes. First, DG Comp gained the power to peg the fine to 30 per cent of the value of sales affected by the cartel. Second, it gained the power to multiply fines according to the duration of the conspiracy –  the longer the conspiracy, the more offenders could expect to pay. Finally, offenders would face a new penalty, termed the  “entry fee” – a one-off hit for entering the illegal agreement in the first place.

   …read more

2. Is DG Comp more likely to raise a fine than to lower it?

   Arguments for mitigating circumstances are one of the only possibilities a business has to reduce a fine for cartel activity. If persuaded that a cartelist didn’t have a major role in a price fixing conspiracy, or that the firm acted as a “nuisance” to the cartel, DG Comp has slashed the fine by as much as 75 per cent. But reductions of that scale remain rare.

3. Are smaller companies hit harder by DG Comp cartel fines?

   If any complaint has risen above the usual Brussels din since the 2006 fining guidelines took effect, it’s that small businesses, and businesses that produce a limited number of products, are often disproportionately affected by DG Comp cartel fines.

4. EU cartel fines - an analysis of the largest fines

   The largest cartel fines in Europe’s history have all come within the past five years, and most of these have been under the Commission’s new, stricter fining guidelines. In fact, except for one notable exception, the eight largest fines were all handed down in 2006 or later, with six of those coming after 2007.

5. Does DG Comp unfairly target companies from certain countries?

   Whatever beliefs might exist that DG Comp unfairly targets US companies doing business in Europe should probably be dispelled. GCR’s review of EU cartel fines shows that the vast majority of fines for price fixing have been charged to European companies, while their counterparts outside Europe have received generally lower fines that affected their bottom lines far less.

6. Is leniency crucial to DG Comp investigations?

   Like many trustbusters around the world, the European Commission is often chastised for leaning heavily on its leniency programme to identify and prosecute cartels. While the EU's leniency programme is indeed an important tool in DG Comp's tool box, many cartel cases over the past five years have come to pass without a whistleblower.

7. Can companies successfully plead poverty to DG Comp?

   While companies for years have been asking for reductions in fines because of their inability to pay, it took a global financial meltdown to convince the European Commission to begin accepting them. 

8. A guide to the data and our methodology

   During August and September, a  GCR team examined all EU cartel fines handed down by DG Comp since 2005. How exactly did the team break those fines down and what were their sources?

9. Poverty trap

   The European Commission’s primary goal is to protect competition in Europe’s markets. But over the past decade, several companies have complained that the EU’s stringent fining policy has helped push them out of the market – reducing competitors in industries where competition was already compromised. The commission’s approach appears to have softened, but to what extent? Ron Knox and Morris Schonberg investigate

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