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.
Over the past five years, two of Europe’s economic engines, France and Germany, saw their companies fined more than those of other countries in the world, according to GCR’s review of EU cartel fines. Combined, the two countries' companies were fined nearly €4 billion over the past half-decade - more than the rest of the EU combined.
What’s more, France and Germany individually saw their companies fined twice as much as companies from the US over the same period, GCR’s data shows. The same can be said for Japan, whose companies were fined at nearly the same level as their US counterparts - just less than €1 billion over the period GCR reviewed.
Before discounts for leniency, EU companies accused of price fixing were fined an average of 3.4 per cent of their annual turnover, the data shows. Companies from outside Europe, meanwhile, were fined only 1 per cent of turnover on average before any reductions for cooperating with the commission.
Dirk Schroeder from Cleary Gottlieb Steen & Hamilton LLP in Cologne says this trend says little about any national preference DG Comp might have.
“It simply means that [non-European companies’] EU turnover affected by the cartel, which is the basis for calculating a fine, is smaller in relative terms,” Schroeder says. “They are more likely to have turnover abroad.”
Margaret Levenstein, a professor of business economics and public policy at the University of Michigan, mirrors Schroeder’s sentiments, saying the data shows “as much about who participates in European markets as who participates in cartels.”
The same could be said when looking at fines against Europe’s largest companies.
Going strictly by the numbers, Europe’s “national champions” received lighter fines as a percentage of their annual turnover than their continental counterparts. Those companies - which GCR defined as European companies with more than €10 billion in average annual turnover - were fined an average of 0.4 per cent of their annual turnover before any leniency discounts, the data shows.
But that doesn’t mean the commission has treated those companies with kid gloves when handing out cartel fines, Schroeder says. “They are simply bigger companies, which means that a cartel will likely only affect a relatively small part of their business,” he says.
In all, the data shows what the commission has been arguing for some time: that it treats all lawbreakers equally - by issuing fines according to the severity of the crime, and its impact on European consumers.
Fines have increased “for everyone, I might add,” the former commissioner of competition, Neelie Kroes, said in a September 2009 speech. “Ask Saint-Gobain, or E.ON or Gaz de France if they think we are soft on European companies!”