EU: Settling Antitrust Non-cartel Conduct Matters with the European Commission

Enforcement action taken in respect of anticompetitive agreements contrary to Article 101 of the Treaty on the Functioning of the European Union (TFEU),[2] or abuse of dominant market positions in contravention of Article 102 TFEU,[3] has earned the European Commission (the Commission) a reputation as one of the world’s leading antitrust enforcers. Indeed, matters involving, for instance, Google, concerning abuse of dominance found to foreclose rivals in online advertising,[4] or Servier, regarding agreements found to delay the entry of generic pharmaceuticals,[5] involved extraordinarily high fines. In addition, matters such as these have also addressed industry sectors, fact-patterns and theories of competitive harm that are also relevant to competition authorities in other jurisdictions, and, therefore, influence antitrust enforcement worldwide.[6] However, most antitrust[7] matters in which the Commission takes enforcement action are resolved by way of settlements.

Between 2005[8] and 2019, not less than 53 per cent of the Commission’s antitrust enforcement decisions (42 of 78) did not establish any liability, or impose any fines, on the investigated firms, but rendered remedial commitments binding upon them. For instance, the Commission’s long-running investigation involving Gazprom,[9] as well as container shipping,[10] were concluded by commitment decisions that rendered behavioural commitments binding. Similarly, the investigation into German Electricity Wholesale Balancing Markets[11] was closed, subject to the satisfaction of a commitment given by E.ON to divest electricity generation capacity and an extra-high voltage network. Enforcement decisions adopted in such ‘commitment proceedings’ have regulatory characteristics[12] that potentially affect markets more profoundly than traditional prohibition decisions with fines.

In addition, the Commission has recently adopted several antitrust prohibition decisions with fines, following a streamlined ‘cooperation procedure’ in which investigated firms have been granted fine reductions in exchange for admitting liability and otherwise facilitating the investigations. Since 2016, more than half of the Commission’s antitrust prohibition decisions have been resolved under this antitrust cooperation procedure. This includes categories of infringement that are relatively well established in case-law and decisional practice, such as agreements involving restrictive distribution practices in the form of resale price maintenance[13] and cross-border trade restrictions,[14] as well as practices involving abuse of a dominant position in the form of refusal of access to infrastructure[15] and the imposition of cross-border trade restrictions.[16] In certain cases, the fines imposed have been very significant[17] while in other cases the fines have been more modest.[18] This illustrates that the antitrust cooperation procedure may be suitable in a variety of matters.

Identifying candidate cases for antitrust settlements

The Commission takes antitrust enforcement action by way of two main categories of binding decisions.[19]

  • First, ‘prohibition’ decisions[20] are the traditional, standard form of enforcement. In essence, this establishes that an infringement of Article 101 or Article 102 TFEU has occurred. Most often, fines are also imposed on the infringing firms, in addition to remedies to either end an ongoing infringement or prevent its reoccurrence.
  • Second, ‘commitment’ decisions[21] have become the most common form of enforcement. This does not establish any infringement and imposes no fine; but rather, it closes an investigation on the basis that the Commission’s preliminary competition concerns have been addressed by remedial commitments proposed by the investigated firms. The decision renders the commitments binding, and the Commission may impose fines if the firms fail to comply with the commitments.

Since different objectives are pursued in investigations along these alternative procedural paths, the dynamics of such investigations are also different. Proceedings in prohibition cases are more contentious, resource-demanding and time-consuming than are commitment proceedings.[22] To provide the Commission and investigated firms the option to resolve prohibition matters more expeditiously, a ‘settlement’ process for such cases has developed in the form of an antitrust ‘cooperation’ procedure. In that process, the Commission does adopt a prohibition decision with fines, but the fines imposed are reduced to reflect cooperation on the part of the investigated firms.[23]

The Commission enjoys full discretion as to the choice of procedural path and the form of enforcement action (i.e., prohibition decision, following the standard or cooperation procedure, or commitment decision, following the commitment procedure). There is consequently no exhaustive checklist for the disposition of antitrust investigations, but several factors guide as to whether a matter may be suitable for either the cooperation or commitment procedure. In particular, the following factors are considered.

  • First, for either procedure, the matter should involve an agreement or practice that might be prohibited under Article 101 or Article 102 TFEU, though not a suspected secret cartel.[24] This implies, for instance, that the Commission should be satisfied that the elements of either or both prohibitions might be satisfied, that it has competence to pursue the matter and that it would be in the EU’s interest for it to do so.[25]
  • Second, a precondition for either the cooperation or the commitment procedure is that the route chosen can be expected to generate procedural efficiencies for the Commission, compared with a standard prohibition procedure. Timing is one important factor in this regard: the earlier in an investigation that cooperation or commitment procedures are considered, the greater the potential for procedural efficiencies.[26]
  • Third, the cooperation route would be an option if the Commission’s primary enforcement objectives involve deterrence or punishment (for which fines would be imposed) or the setting of a legal precedent.[27]
  • Fourth, in assessing whether the cooperation procedure is appropriate, the Commission will consider the likelihood of reaching a common understanding with the investigated firms within a reasonable time frame.[28] The objective of the procedure is to reach a common understanding concerning the existence and scope of the infringement, as well as the steps necessary to end and sanction the infringement (i.e., the amount of the fine and the scope of potential remedies).
  • Fifth, the commitment procedure would be more appropriate when the primary enforcement objective concerns future conduct, rather than punishment for past behaviour.[29] The procedure would accordingly not be suitable if the suspected infringement has ended;[30] nor if the potential ‘remedy’ merely involves a cease-and-desist commitment or a promise to comply with its legal and regulatory obligations.[31]
  • Sixth, to follow the commitment procedure, the Commission will need to be ‘convinced’ that the investigated firms are willing to offer commitments that remove the Commission’s preliminary competition concerns.[32]

An investigated firm is free to indicate at an early stage its willingness to explore, or even formally request the Commission to explore, resolutions under either of these pathways. Ultimately, the Commission decides whether to pursue the standard, the cooperation or the commitment procedure.[33] ‘Hybrid’ resolutions, where different investigation procedures are pursued for different parties involved in a matter, are possible,[34] but exceptional.[35]

Antitrust cooperation proceedings

The Commission’s standard prohibition decision procedure for the imposition of fines, which applies to all Commission antitrust investigations, requires the Commission to carefully gather and analyse evidence, prepare a detailed statement of objections (SO), grant the investigated firms access to its voluminous case file, allow them to present views in writing and at an oral hearing, consult the Advisory Committee and finally prepare a decision detailed and solid enough to withstand appellate scrutiny.

The antitrust cooperation process is designed to allow for a truncated investigation. It is inspired by the Commission’s two frameworks for rewarding cooperation in cartel matters: leniency,[36] which rewards an investigated firm that adds significant value (often, self-incriminating evidence) during the Commission’s fact-finding process; and cartel settlement,[37] which rewards a firm that admits liability for a competition law infringement and, thereby, facilitates a streamlined process for the resolution of the matter. The earlier a firm initiates antitrust cooperation, the greater the potential to generate procedural efficiencies for the Commission and, for the firm, the greater the potential for substantial reduction of the fine.

Initiating the cooperation procedure

At the fact-finding stage of an investigation, before antitrust proceedings are formally initiated, the initiative to cooperate is largely with the firm. It is open to the firm to form a view on whether to adopt a proactively cooperative approach in the investigation (i.e., beyond its legal obligation to cooperate)[38] and, if so, when to do so. It may not be clear, at a very early stage of an investigation, whether the case is best suited for the standard, the cooperation or the commitment procedure. Depending on the circumstances of a given antitrust investigation, the firm may be able to influence the direction as well as the outcome of the investigation. The decision concerning the firm’s strategy and approach in the investigation should therefore be considered carefully on the basis of the best available information (including discussions with the Commission’s staff). In many ways, the decision concerning the firm’s cooperative stance is as significant as the decision whether to provide self-incriminating evidence in the hope of securing a reduced fine in the context of a suspected cartel.[39]

Where the firm decides to cooperate proactively, it may, even at an early stage, indicate to the Commission’s staff its interest in exploring cooperation and seeking to establish the appropriate forms to add value and assist the Commission in advancing the fact-finding, analysis and, possibly, resolution of the matter. Those forms would be established in discussion with the Commission’s staff. In recent antitrust cooperation matters, firms have secured rewards for such early stage cooperation; for instance, by submitting further evidence regarding the investigated conduct, beyond what the Commission collected during on-site ‘dawn raid’ inspections at the firm’s premises.[40]

The more formal stages of the antitrust cooperation would typically start shortly after the Commission has formally initiated proceedings in respect of the suspected infringement. The Commission will assess on a case-by-case basis whether a matter is suitable for this form of cooperation; the key consideration in this regard is the probability of reaching a common understanding with the firm in a reasonable time frame. Since the objective is to adopt a prohibition decision (likely with fines and, possibly, remedies), it is vital that the cooperation process complies with all the procedural requirements for the adoption of such decisions, as set out, particularly, in Regulation 1 and the Implementing Regulation.[41] Accordingly, the truncated antitrust cooperation procedure closely follows the well-established cartel settlement process explained in Chapter 2.

Meetings with Commission staff

Generally, the cooperation procedure is flexible. The number, sequence and timing of interactions between Commission staff and the parties may vary depending on the particularities of each case (antitrust cooperation procedures may, for instance, involve only one firm that allegedly has abused a dominant position, or several different firms that allegedly applied an anticompetitive agreement). In any event, as in the cartel settlement procedure, the process of exploring a cooperative resolution typically involves bilateral contacts and meetings in which:

  • the Commission provides a detailed overview of the facts, the evidence and its preliminary objections; the Commission and the parties explore a common understanding on the facts and their legal classification, as well as any fines – including rewards in view of the parties’ cooperation – or other remedies;
  • essential elements of the analysis, such as the facts alleged, the classification of those facts, the scope and duration of the alleged infringement or the estimated range of the fine, are elaborated on (i.e., technical meetings, which may be organised at any time during the cooperation process);
  • the parties gain targeted access to key evidence on the Commission’s file and have the opportunity to make their views known in oral or written submissions;
  • the Hearing Officer is available in relation to any potential due process issues that may arise; and
  • the interaction between the Commission and the firms is expected to be characterised by good faith efforts to reach a common understanding, but the Commission has emphasised that it does not engage in negotiations concerning the question of an infringement of EU law and the appropriate sanction.

There is no obligation, and also no right, for either side to concede to any ‘settlement’. Absent a common view, the matter would continue under the standard investigation process, and the Commission retains discretion to revert to that process at any time. The firm may withdraw from the discussions at any time prior to submitting a cooperation submission.[42]

Cooperation submission, streamlined SO and decision-making process

Where the bilateral cooperation discussions are successful, and the Commission and the party reach a common understanding, the critical next step of the antitrust cooperation procedure would be for the party to formally offer to cooperate in the matter by way of a ‘cooperation submission’.

The cooperation submission would typically contain:

  • an acknowledgment, in clear and unequivocal terms, of the party’s liability for the infringement described in the submission, as regards its object, the main facts and the legal characterisation;
  • an indication of the maximum fine that the party would expect the Commission to impose, and that it would accept, in the context of a cooperation procedure;
  • confirmation that the party has been sufficiently informed of the objections the Commission envisages raising against it and that it has been given sufficient opportunity to make its views known;
  • confirmation that the party does not envisage requesting further access to the file or requesting to be heard again in an oral hearing, unless the Commission does not reflect the cooperation discussions in the SO and the decision;
  • agreement to receive the SO and the final decision in an official EU language; and
  • a statement that the cooperation is conditional upon the imposition of a fine that does not exceed the amount specified in the submission.[43]

In addition, where the party and the Commission have reached a common understanding on a behavioural or structural remedy, the cooperation submission would also include:

  • details of the remedy;
  • an offer by the firm to commit to adhere to the remedy, including any reporting on its implementation; and
  • an acknowledgment by the firm that the remedy is suitable and proportionate in the framework of the cooperation procedure to ensure that the infringement is fully terminated.[44]

An SO adopted on the basis of the cooperation submission of the investigated firm or firms will be a streamlined document. In essence, the SO should reflect the defendants’ statements as per the cooperation submission, which, in turn, should reflect the bilateral discussions with the Commission. The parties’ replies to the SO would essentially be limited to confirming that the SO corresponds to the cooperation submissions.

On successful conclusion of the cooperation procedure, a prohibition decision will be adopted imposing a fine reduced by the appropriate percentage discount and potentially also a remedy. The final decision, like the SO, will be briefer than one adopted under the standard investigation procedure, since there is no need for the Commission to rebut every argument brought forward by the defendants. Cooperation decisions remain subject to judicial scrutiny by the Union courts.[45]

Reduced fines in exchange for cooperation

The Commission is entitled to impose a fine on any party that, negligently or intentionally, infringes Article 101 or Article 102 TFEU. The fine must not exceed 10 per cent of the firm’s aggregate annual turnover.[46] In determining the amount of any fine, the Commission is bound to apply the Commission’s own Guidelines on Fines.[47] These are also applied in antitrust cooperation proceedings, and the Commission also recognises that the cooperation that firms have provided corresponds to grounds for reductions that are normally available only in cartel investigations under the Leniency Notice and the Cartel Settlement Notice.

In practice, firms have been granted reductions of the fines[48] that otherwise would have been imposed because they voluntarily provided new evidence that revealed an infringement that was previously unknown to the Commission;[49] evidence that incriminated other companies;[50] or evidence that strengthened the Commission’s ability to prove the infringement, or expanded the scope and duration of the infringement.[51] In addition, firms that cooperated by acknowledging the need for specific remedies, and assisted in the development of those remedies, have been awarded fine reductions.[52] Finally, the indispensable prerequisite for a fine reduction to be granted is that the cooperating companies acknowledge the underlying facts, their legal qualification and the liability for the infringement.

While the Commission’s decisions specify the aggregate fine reduction granted in view of the firm’s cooperation, the decisions do not attribute a specific reduction to each cooperative element.[53] To date, the Commission has granted aggregate reductions of between 10 per cent and 50 per cent. Decisions also do not always lay out the timing component of cooperation.[54] Still, practice clearly shows that the earlier and more significant the cooperation, the greater the reward. For instance, in Guess[55] and Pioneer,[56] the investigated firms acknowledged their respective liability for the infringements at an early stage of the Commission’s investigations, and prior to any SO. They each provided evidence representing significant added value and waived certain procedural rights. The Commission awarded each firm a substantial fine reduction of 50 per cent. Generally, significant cooperation that occurred before the adoption of an SO has been so far rewarded with fine reductions of between 30 per cent and 40 per cent. In contrast, in MasterCard II,[57] the company expressed its willingness to cooperate only after the Commission had issued an SO, and did not provide any value-added evidence, but did admit liability for the infringement. The fine reduction awarded in this case was 10 per cent.

Behavioural and structural remedies

The Commission has powers to impose ‘behavioural or structural remedies’[58] to end an infringement of Article 101 or Article 102 TFEU. Effective remedies should ‘prevent repetition of the infringement and . . . eliminate its consequences’.[59] However, remedies imposed by a prohibition decision must be proportionate to the infringement and also necessary to bring it to an end. In this context, the principle of proportionality requires that the remedial order does not go beyond what is necessary to end the infringement and that, if there is a choice of several suitable remedies, the least burdensome must be selected.[60]

The appropriate remedy is naturally designed on a case-by-case basis. In many instances, a simple cease-and-desist order (e.g., to cease exchanging information or to refrain from tying practices) is sufficient.[61] But prohibition decisions may also require firms to take some positive action.

As appropriate, investigated firms may canvass such with Commission staff in the antitrust cooperation procedure. For instance, in ARA Foreclosure,[62] the investigated firm, ARA, proposed a structural (divestment) remedy that was deemed necessary and proportionate to prevent the infringement from arising in future. The remedy was then imposed by way of the Commission’s decision. The Commission noted that, in the particular circumstances of that case, ‘no other less burdensome measures can be conceived that would equally effectively remove ARA’s remaining possibility’[63] to engage in the infringing conduct. In AB InBev,[64] the investigated firm, AB InBev, proposed a conduct remedy to remain in effect during a period of five years, regarding packaging and labelling, that was designed to facilitate cross-border trade of beer. The nature of the infringement was such that the Commission imposed a rather tailored remedy in the decision.

Commitment proceedings

The antitrust cooperation procedure and the commitment procedure pursue different objectives: the former ‘aiming to put an end to the infringement that has been found to exist’ and the latter ‘aiming to address the Commission’s concerns following its preliminary assessment’.[65] Due to these differences, the commitment procedure tends to be more flexible[66] and collaborative than the traditional investigation procedure.

Initiating the commitment procedure

The commitment procedure can be initiated at any time by the investigated firms, by indicating to the Commission’s staff that it would be open to exploring that route. Generally, the Commission encourages firms to signal at the earliest possible stage their interest in discussing commitments.

The Commission would thereafter invite the investigated firms to a state-of-play meeting.[67] The main discussion points in that meeting would be the Commission’s preliminary competition concerns and a tentative timetable for concluding discussions on potential commitments.[68] The timetable would account for the possibility that, if discussions of commitments are not successful, the investigation may continue along the standard procedure, ultimately, to a prohibition decision with fines.

Preliminary assessment and commitments

If the Commission is satisfied that the firms are genuinely prepared to propose commitments that effectively address the competition concerns, it will prepare and issue a preliminary assessment (PA). A state-of-play meeting may be held before the PA is issued. The PA is the key document to serve as the basis for the commitments to be developed,[69] and it should therefore summarise the main facts and identify the competition concerns that would warrant a prohibition decision.

The firms should normally submit the formal commitments within one month of the PA being issued.[70] Draft commitments are normally discussed with the Commission’s case team. It is important to note that the submission of commitments does not amount to any admission of liability on the part of the submitting firm, and does not imply that the firm agrees with the analysis set out in the PA. The purpose of the commitments is ultimately to enable the Commission to conclude that the preliminary competition concerns have been removed.

Consultation in a ‘market test’ and decision

If the Commission considers that the commitments that have been offered prima facie address the competition concerns set out in the PA, it will ‘market test’ the commitments in a public consultation.[71] For this purpose, the commitments will be published in the EU’s Official Journal and on the Commission’s website; they will also be made available to, and views will be solicited from, any complainant or other third party admitted to the proceedings. Third parties must be allowed to submit comments within a month of publication.

The firm will be invited to discuss any feedback from the market test at a further state-of-play meeting. Such feedback is crucial for the firm as well as for the Commission.

The market test may have revealed that the commitments, which the firm as well as the Commission considered prima facie effective in removing the preliminary concerns, are unnecessary[72] or ineffective. Unless the firm submits modified commitments to address deficiencies, the Commission would abandon the commitment procedure and revert to the prohibition procedure. If modified commitments are submitted, it may be necessary to conduct a new market test.[73] The Commission may find that the revised commitments are appropriate, and proceed to the adoption of a commitment decision, or that they are not, in which case it may revert to the standard prohibition procedure.[74]

The final commitment decision is relatively brief and essentially describes the procedure, the nature of the Commission’s preliminary competition concerns, the commitments and how the commitments address the preliminary concerns. The operative part of the decision would simply state that the ‘Commitments in the Annex shall be binding on the firm’ and that there ‘are no longer grounds for action by the Commission in this case’, and specify the period during which the decision remains in force.[75]

Behavioural and structural remedies

The commitment procedure involves a trade-off: the firm offers commitments and, in return, must live with the commitments pursuant to a binding decision but avoids a finding of an infringement of competition law and a possible fine. The objective of those commitments is to address the Commission’s preliminary competition concerns, so as to allow the Commission to conclude that grounds for enforcement action no longer exist.

As discussed above, in the design of remedies that are imposed by prohibition decisions, the Commission must explicitly observe the fundamental EU law principle of proportionality: the remedial order must not go beyond what is necessary to end the infringement and, if there is a choice of several suitable remedies, the least burdensome of those must be selected.[76]

The Commission must observe the principle of proportionality also in the context of commitment decisions, but the European Court of Justice has held that ‘specific characteristics of the mechanisms [of prohibition and commitment proceedings] and the means of action available under each of those provisions are different, which means that the obligation on the Commission to ensure that the principle of proportionality is observed has a different extent and content, depending on’[77] the type of proceedings.

More specifically, in commitment proceedings the Commission must verify that the commitments address the identified competition concerns, but do not ‘manifestly’ go beyond what is necessary to do so.[78] In other words, case law affords the Commission a wider margin of discretion in adopting commitment decisions than it does in prohibition decisions imposing remedies. This is important to bear in mind, in particular, since the Commission makes increasing use of this enforcement tool.

The Commission will consider behavioural as well as structural commitments, so long as the commitments are ‘unambiguous and self-executing’.[79] In the decisional practice, several commitment decisions have in fact involved structural (divestiture) commitments,[80] which have been accepted to address preliminary abuse of dominance concerns.

Compliance with commitments is fundamental to the effectiveness of commitment decisions.[81] Many remedies, especially those that involve commitments as to behaviour, include specific terms concerning implementation. In some instances, the Commission may insist that the firm appoint a trustee (monitoring or divestiture trustee) that will oversee the implementation.[82]

Key considerations when exploring antitrust settlements

In addition to the process aspects described above, there are several additional considerations that parties contemplating antitrust settlements should bear in mind. These include, in particular, the following.

  • The Commission leads the process: the Commission ultimately decides whether to pursue a standard antitrust prohibition decision or pursue a settlement under either the antitrust cooperation procedure or the commitment procedure. As in cartel investigations, the Commission adamantly maintains that antitrust cooperation is not a form of negotiation. The commitment process may involve more flexibility in this regard. However, if progress under either procedural path does not align with the Commission’s policy objectives, it maintains the right to revert to the standard process.
  • Leniency and settlement: the antitrust cooperation procedure combines elements of the leniency and settlement procedures that have been developed in the areas of cartels. The reduced fine is, in essence, a reward for self-incrimination and admission of liability. In practice, the main advantage of the cooperation path is that ‘a defendant that wants to settle opens the door for a truly substantial discussion with the Commission’s services’.[83] Although antitrust cooperation proceedings draw inspiration from clearly articulated frameworks applicable to cartels, such an important procedural framework would certainly benefit from further clarification and codification.
  • Duration of proceedings: the antitrust cooperation and commitment procedures would typically be completed quicker, and be less resource-demanding, than the standard investigation procedure. This will be important to a number of parties. However, antitrust cooperation involves unequivocal acknowledgment of legal liability, and a ‘quick’ resolution before the Commission also means that the defendant may also be exposed to civil litigation sooner than if they had opted for the standard process.
  • Limited grounds of appeal: parties that settle under the antitrust cooperation procedure must acknowledge liability and also that their fundamental procedural rights have been sufficiently respected in the truncated process. While parties that settle do not give up their right to appeal to the EU’s General Court against such a settled decision, the acknowledgments given in the cooperation submissions do limit the grounds of appeal.[84]
  • Follow-on civil proceedings: decisions adopted following the antitrust cooperation procedure are relatively brief (often between 20 and 40 pages) and consequently include considerably less information compared with those adopted under the standard procedure. Consequently, such ‘settled’ decisions contain less detail that might be useful to plaintiffs in follow-on civil proceedings before EU Member State courts. However, the decisions confirm that the settling parties unequivocally acknowledged liability for the infringement described in the decision.
  • Disclosure in civil proceedings: under the Damages Directive,[85] EU Member States must ensure that national law on damages actions does not allow national courts to order a party or a third party to disclose either leniency statements or settlement submissions. The framework of the Damages Directive was developed using the terminology of cartel investigations,[86] and some have questioned whether this framework also applies to evidence prepared in the context of the antitrust cooperation procedure.[87] However, rules on disclosure in competition matters before EU Member States’ courts are governed a priori by national law, including national law implementing the Damages Directive, and the disclosure rules in some Member States may well preclude disclosure of such documents. In any event, it would run counter to the effet utile of EU competition law not to afford the same level of protection to documents prepared in the context of cartel and non-cartel investigations. Still, the antitrust cooperation process would be more robust with explicit statutory protections to that effect.
  • Stand-alone civil proceedings: commitment decisions have distinct benefits that make them attractive to defendants: they are brief, do not establish liability and do not impose any fine. However, a commitment decision adopted by the Commission does not bind Member States’ competition authorities and courts: it does not affect their powers either to apply Article 101 or Article 102 TFEU to the conduct that is subject to the decision or to find that the conduct infringed, or still infringes, either prohibition.[88] In theory, it is possible that a firm bound by a commitment decision might face allegations in EU Member States that the ‘settled’ conduct infringes EU or national competition law.[89]
  • Criminal proceedings: EU law does not confer criminal enforcement powers on the Commission. Moreover, EU competition law is directed at ‘undertakings’, rather than individuals, which means that liability to pay fines imposed by a Commission decision falls upon the firms to which those decisions are addressed. Some EU Member States sanction certain antitrust infringements (typically, cartel conduct) with criminal liability and other forms of personal sanctions for individuals. Before acknowledging corporate liability under EU competition law, a firm should consider carefully what impact the acknowledgment may have on any such national proceedings.

Notes

1 Jonas Koponen is a partner and Ariti Skarpa is a managing associate at Linklaters LLP.

2 Article 101(1) TFEU 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 internal market’.

3 Article 102 TFEU states that ‘[a]ny abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States’.

4 In 2017, the Commission fined Google €2.4 billion as it was found to have foreclosed rival comparison shopping internet sites, Google Search (Shopping), OJ [2018] C9/11. The following year, the Commission held Google liable for a fine of €4.3 billion as it was found to have applied illegal tying practices involving the Android mobile operating system, Google Android, OJ [2019] C402/19. In 2019, the Commission found that Google abused its dominant position by imposing exclusivity restrictions on important website partners, and fined the company €1.5 billion, Google Search (AdSense) (COMP/AT.40411), Commission press release IP/19/1770.

5 In 2014, the Commission fined Servier and five producers of generic pharmaceuticals €427.7 million in respect of a series of practices and agreements to delay the entry of generic medicines competing with Servier’s cardiovascular medicine perindopril, see Perindopril (COMP/39.612), Commission press release IP/14/799.

6 Bradford, The Brussels Effect, Oxford University Press (2020).

7 In this chapter, the term ‘antitrust’ refers to infringements of Articles 101 and 102 TFEU other than cartel matters, which are addressed in Chapter 2.

8 The Commission adopted the first formal ‘commitment’ decisions in 2005, see Deutsche Bundesliga, OJ [2005] L 134/46, concerning media rights for football matches; and Coca-Cola, OJ [2005] L 253/21, concerning exclusivity arrangements for soft drinks.

9 The Commission’s preliminary view was that Gazprom abused a dominant position by pursuing an overall strategy to partition the central and eastern European natural gas markets. Gazprom committed to remove contractual restrictions on cross-border resale of gas; facilitate gas flows to and from isolated markets; structure a process ensuring competitive gas prices; and cease leveraging dominance in the supply of natural gas, see Gazprom (COMP/AT.39.816), Commission press release IP/18/3921.

10 The Commission had preliminary concerns regarding periodic announcements of intended future increases made by 14 container line shipping companies. The 14 companies offered commitments aimed at increasing price transparency for customers and reducing the likelihood of price coordination among the firms, see Container Shipping, OJ [2016] C 327/4.

11 The Commission’s preliminary concern was that E.ON abused a dominant position, as a wholesaler, by withholding from sale production of certain power plants, with a view to raising prices; and that it favoured its own production unit, even if it charged higher prices, see German Electricity Wholesale Balancing Markets, OJ [2009] C 36/8.

12 Dunne, ‘Commitment decisions in EU competition law’, Journal of Competition Law & Economics [2014] 10(2), 399.

13 Asus, OJ [2018] C 338/13; Denon & Marantz, OJ [2018] C 335/5; Philips, OJ [2018] C 340/10; and Pioneer, OJ [2018] C 338/19. See also Treacy, Smith and Bond, ‘Maintaining price competition between retailers in e-commerce markets: the European Commission’s recent RPM decisions’, E.C.L.R. [2018] 39(11), 470.

14 Ancillary sports merchandise (Nike), OJ [2019] C 216/7; Film merchandise (Comcast), OJ [2020] C 133/12; Character merchandise (Sanrio), OJ [2019] C 386/24; Guess, OJ [2019] C 47/5; MasterCard II, OJ [2019] C 185/10; and Meliá, OJ [2020] C 182/9.

15 ARA Foreclosure, OJ [2016] C 432/6.

16 AB InBev, OJ [2019] C 407/6.

17 For instance, the fine imposed in MasterCard II, OJ [2019] C 185/10, amounted to €570.5 million; this included a fine reduction of 10 per cent granted to MasterCard in exchange for its cooperation.

18 For instance, the fine imposed in Meliá, OJ [2020] C 182/9 amounted to €6.7 million; this included a fine reduction of 30 per cent granted to Meliá in return for its cooperation.

19 In addition, the Commission may in antitrust matters adopt decisions on interim measures or find no infringement, see Article 8 (Interim measures) and Article 10 (Finding of no infringement) of Council Regulation (EC) No. 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ [2003] L 1/1 (Regulation 1).

20 See, in particular, Article 7 (Finding and termination of infringement) and Article 23 (Fines) of Regulation 1. See also Commission notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU, OJ [2011] C 308/6 (Best Practices).

21 See, in particular, Article 9 (Commitments) and Article 23 of Regulation 1. The process for formal commitment decisions has applied since 2004, when Regulation 1 entered into force. Previously, the Commission occasionally closed investigations after investigated firms committed to terminate or alter the allegedly infringing conduct. See, for instance, the commitments offered by IBM in 1984, see European Commission, XVIth Report on Competition Policy [1984], Paragraph 94.

22 By way of example, in Intel, OJ [2009] C 227/13, the Commission found in 2009 an infringement of Article 102 TFEU and imposed a fine on Intel amounting to €1.06 billion. The investigation had started five years earlier, in May 2004. As at September 2020, 16 years after the investigation started, Intel’s appeal against the decision remains pending in the EU courts.

23 See, in particular, Articles 7 and 23 of Regulation 1. The antitrust cooperation procedure is an adaptation of the Commission’s cartel settlement procedure, which is discussed in Chapter 2. In contrast with the cartel settlement procedure, the legal framework for the antitrust cooperation procedure has not yet been formally codified. In the past, the Commission has occasionally awarded fine reductions in exchange for firms ‘not contesting the facts’ with a view to streamlining investigations. For instance, the fines imposed upon Hilti (see Hilti, OJ [1988] L 65/19) and Tetra Pak (see Tetra Pak II, OJ [1992] L 72/1) in respect of abuses of dominant positions were reduced on that basis; but there was no formal procedure for such resolutions. The current process and practice follow from the Commission’s recent decisional practice and public communications, explained in this chapter; see also Commission Fact Sheets of September 2016, available at http://ec.europa.eu/competition/antitrust/ara_factsheet_en.pdf, and December 2018, available at http://ec.europa.eu/competition/publications/data/factsheet_guess.pdf.

24 Preamble, Paragraph 13 of Regulation 1.

25 Best Practices, Paragraphs 75, 135 et seq., regarding rejection of complaints.

26 Commitment Decisions in Antitrust cases, Note by the European Union, OECD (DAF/COMP/WD(2016)22), Paragraph 38, available at www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD(2016)22&doclanguage=en.

27 Preamble, Paragraph 13 of Regulation 1. See also Competition Policy Brief, Issue 3, March 2014, available at https://ec.europa.eu/competition/publications/cpb/2014/003_en.pdf.

28 In this regard, factors that the Commission takes into account when evaluating candidate cases under the cartel settlement procedure may apply mutatis mutandis; see Chapter 2.

29 Commitment Decisions in Antitrust cases, Note by the European Union, OECD (DAF/COMP/WD(2016)22), Paragraph 34, available at www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD(2016)22&doclanguage=en.

30 In such cases, the Commission may still decide that it is appropriate to establish that an infringement occurred and impose a fine. For example, the Commission found in Google Search (AdSense) (AT.40.411) that Google had abused a dominant position by employing certain exclusionary practices, and fined Google nearly €1.5 billion, despite the fact that the Commission noted that Google ceased the relevant practices after the Commission had adopted a statement of objections (SO) in the matter.

31 See, for instance, Telekomunikacja Polska, OJ [2011] C 324/7, Paragraph 12, where the Commission noted that the ‘commitments proposal repeats to a great extent and in a less precise manner the existing regulatory obligations’ and therefore ‘commitments would not be an appropriate way of concluding the case’. In this case, the Commission fined Poland’s incumbent telecoms operator €127 million for abusing its dominant position, by refusing alternative operators’ access to its network and broadband services, and ordered the firm to cease the relevant conduct.

32 Best Practices, Paragraph 121.

33 The procedural pathway may also change during a matter. For instance, in June 2019, the Commission initiated proceedings against Broadcom in respect of suspected use of exclusionary practices amounting to an abuse of a dominant position, Commission press release IP/19/3410, indicating that a prohibition decision was foreseen. In October 2019, the Commission adopted interim measures against Broadcom, Commission press release IP/19/6109. In April 2020, the Commission launched a market test in respect of commitments proposed by Broadcom, indicating that a commitment decision could be adopted, see Commission press release IP/20/755.

34 For instance, some cartel investigations have been resolved by way of separate prohibition decisions adopted, respectively, under the standard and cartel settlement procedures; see Chapter 2. See also Commitment Decisions in Antitrust cases, Note by the European Union, OECD (DAF/COMP/WD(2016)22), Paragraph 34, available at http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD(2016)22&doclanguage=en.

35 For instance, the Commission in 2013 addressed an SO concerning credit default swaps to 13 investment banks, Markit, and the International Swaps and Derivatives Association (ISDA), see Commission press release IP/13/630. In December 2015, the Commission closed the investigation with respect to the 13 investment banks for lack of sufficient evidence, Commission press release MEX/15/6524; and eventually adopted commitment decisions addressed to Markit and ISDA, CDS-Information market (ISDA), OJ [2016] C 378/7; and CDS-Information market (Markit), OJ [2016] C 378/3.

36 Commission notice on immunity from fines and reduction of fines in cartel cases, OJ [2006] C 298/17 (the Leniency Notice).

37 Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No. 1/2003 in cartel cases, OJ [2008] C 167/1 (the Cartel Settlement Notice).

38 The Commission’s wide powers of investigation impose on the individuals concerned the ‘obligation to cooperate actively in the investigative measures, which means that they must make available to the Commission all information relating to the subject-matter of the investigation’, Orkem v. Commission, Case 374/87, EU:C:1989:387, Paragraphs 22 and 27.

39 In antitrust investigations, cooperation would not take place on the basis that the Commission would grant immunity from fines. Immunity is available only in the context of cartel investigations, see Leniency Notice.

40 See, e.g., Philips, OJ [2018] C 340/10; and Pioneer, OJ [2018] C 338/19.

41 Commission Regulation (EC) No. 773/2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (as amended), OJ [2008] L 171/3.

42 Any evidence that a firm provided to the Commission prior to discontinuation of cooperation discussions remains on the Commission’s files and could be used as part of continued standard prohibition proceedings. The firm may have legitimate expectations that it will receive some fine reduction in view of the cooperation that it, in fact, did provide, but the current framework does not provide explicit guarantees in this regard.

43 See, for example, Guess, OJ [2019] C 47/5, Paragraph 16. Where a cooperation submission is submitted after the Commission adopted an SO, the submission would be adapted to reference the final decision, rather than the SO, see, e.g., AB InBev, OJ [2019] C 407/6, Paragraph 18.

44 ARA Foreclosure, OJ [2016] C 432/6, Paragraphs 19, 139 et seq; AB InBev, OJ [2019] C 407/6, Paragraphs 18, 234 et seq.

45 As at September 2020, no such challenge has been brought.

46 Article 23(2) of Regulation 1.

47 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No. 1/2003, OJ [2006] C 210/2. The basis for reducing fines on grounds otherwise available only in cartel investigations is Paragraph 37 of the Guidelines, which states that ‘[a]lthough these Guidelines present the general methodology for the setting of fines, the particularities of a given case . . . may justify departing from such methodology’.

48 Under the Leniency Notice, the Commission will award ‘immunity’ from any fine that otherwise would have been imposed on a firm that discloses its own participation in an alleged cartel, if that firm is the first to submit evidence that enables the Commission to (1) carry out a ‘targeted inspection’; or (2) find an infringement of Article 101 TFEU, see Leniency Notice, Paragraph 8. Other firms may qualify for ‘leniency’ (fine reductions), if they provide evidence of the alleged infringement that represents ‘significant added value’ with respect to the evidence the Commission already holds, see Leniency Notice, Paragraph 24. In addition, immunity and leniency are conditioned on extensive cooperation obligations set out in Paragraph 12 of the Leniency Notice.

49 In Guess, OJ [2019] C 47/5, the Commission established that five distinct practices infringed Article 101 TFEU; Guess had voluntarily revealed one of those infringing practices (prohibition for authorised retailers to use Guess brand names and trademarks for the purpose of online search advertisement) before it was known to the Commission.

50 For instance, in Pioneer, OJ [2018] C 338/19, Pioneer Europe also admitted liability for Pioneer GB Ltd.

51 For instance, in Ancillary sports merchandise (Nike), OJ [2019] C 216/7, Nike volunteered evidence resulting in expanding the scope of the investigation to include sports merchandise of a number of additional clubs; and in Character merchandise (Sanrio), OJ [2019] C386/24, Sanrio volunteered evidence lengthening the duration of the infringement.

52 ARA Foreclosure, OJ [2016] C 432/6; AB InBev, OJ [2019] C 407/6.

53 This applies also to the ‘cooperation reward’ in exchange for the firm’s acknowledging liability. The Cartel Settlement Notice, Paragraph 32, explicitly specifies a ‘settlement award’ representing 10 per cent of the fine that otherwise would have been imposed.

54 The Leniency Notice, Paragraph 26, states that the level of ‘leniency’ reduction awarded to a firm will be, for the first to provide ‘significant added value’: a reduction of 30 per cent to 50 per cent; second to provide significant added value: a reduction of 20 per cent to 30 per cent; and subsequent that provide significant added value: a reduction of up to 20 per cent. To determine the level of reduction within each band, the Commission will take into account the time at which the evidence was submitted and the extent to which it represents added value.

55 Guess, OJ [2019] C 47/5.

56 Pioneer, OJ [2018] C 338/19.

57 MasterCard II, OJ [2019] C 185/10. See also Suurnäkki and Rodriguez-Toquero Aymerich, ‘MasterCard II: The Commission Pursues Its Antitrust Enforcement in Cross-Border Payments’, Journal of European Competition Law & Practice, 2019, 10(5), pp. 297, 299.

58 Regulation 1, Article 7. Recital 12 of the Regulation also refers to the need to bring infringements ‘effectively’ to an end.

59 AKZO Chemie BV v. Commission, C-62/86, EU:C:1991:286, Paragraph 155.

60 Air Inter v. Commission, T-260/94, ECLI:EU:T:1994:265, Paragraph 144; Van den Bergh Foods v. Commission, T-65/98, ECLI:EU:T:2003:281, Paragraph 201; Commission v. Alrosa, C-441/07, ECLI:EU:C:2010:377, Paragraphs 36 and 39.

61 See, for instance, Ancillary sports merchandise (Nike), OJ [2019] C 216/7; Film Merchandise (Comcast), OJ [2020] C 133/12; and Character merchandise (Sanrio), OJ [2019] C 386/24.

62 ARA Foreclosure, OJ [2016] C 432/6. See also Wollmann, ‘ARA Foreclosure: A Step Towards “consent Decrees” in EU Antitrust Proceedings’, Journal of European Competition Law & Practice, 2019, 8(3), p. 167.

63 ibid., Paragraph 147.

64 AB InBev, OJ [2019] C 407/6.

65 Commission v. Alrosa, C-441/07, ECLI:EU:C:2010:377, Paragraph 46.

66 Parties to commitment proceedings may call upon the Hearing Officer at any time during the procedure in relation to the effective exercise of their procedural rights, Best Practices, Paragraph 124. The Hearing Officer’s role is to safeguard the effective exercise of procedural rights throughout competition proceedings before the Commission, see Decision 2011/695 of the President of the European Commission on the function and terms of reference of the hearing officer in certain competition proceedings, OJ [2011] L274/29.

67 State-of-play meetings are held at different stages of an investigation. The purpose of these meetings is to give ‘parties subject to the proceedings ample opportunity for open and frank discussions – taking into account the stage of the investigation – and to make their points of view known’, Best Practices, Paragraph 60.

68 Best Practices, Paragraphs 63 and 65.

69 If discussions on commitments are initiated after an SO has been issued, the SO fulfils the purpose of a preliminary assessment, Best Practices, Paragraph 123.

70 If an SO has been issued, and the firm later decides to submit commitments, the time limit to reply to the SO would generally not be extended, see Best Practices, Paragraph 126.

71 The Commission must conduct a market test of the commitments before making them binding by decision, Article 27(4) of Regulation 1.

72 Although uncommon, the Commission decided to administratively close the files in Austrian Airlines/SAS (COMP/AT.37749), see https://ec.europa.eu/competition/antitrust/cases/dec_docs/37749/37749_131_2.pdf; Skyteam (COMPT/AT.37984), Commission press release IP/12/79; and Deutsche Bahn III (COMP/AT.39915), see https://ec.europa.eu/competition/antitrust/cases/dec_docs/39915/39915_457_4.pdf.

73 A new market test will be conducted if the modified version alters the very nature or scope of the commitments that were market tested, see Best Practices, Paragraph 133.

74 For instance, after market testing several amended sets of commitments proposed by Google, the Commission abandoned commitment proceedings and later adopted a prohibition decision imposing a fine of €2.4 billion on the firm, see Google Search (Shopping), OJ [2018] C9/11.

75 Article 9(2) of Regulation 1 explicitly provides that the Commission may reopen the proceedings: (1) where there has been a material change in any of the facts on which the decision was based; (2) where the undertakings concerned act contrary to their commitments; or (3) where the decision was based on incomplete, incorrect or misleading information provided by the parties.

76 See Air Inter v. Commission, T-260/94, ECLI:EU:T:1994:265, Paragraph 144; Van den Bergh Foods v. Commission, T-65/98, ECLI:EU:T:2003:281, Paragraph 201; Commission v. Alrosa, C-441/07, ECLI:EU:C:2010:377, Paragraphs 36 and 39.

77 Commission v. Alrosa, C-441/07, ECLI:EU:C:2010:377, Paragraph 38.

78 ibid., Paragraph 120.

79 Best Practices, Paragraph 128. In other words, implementation of the commitments must not depend on the will of a third party that is not bound by the commitments.

80 For instance, German Electricity Wholesale Balancing Markets, OJ [2009] C 36/8; RWE Gas Foreclosure (COMP/AT.39402); BA/AA/IB, OJ [2010] C 248/14; and ENI (COMP/AT.39315).

81 Article 23 of Regulation 1 confers powers upon the Commission to impose fines on firms that fail to comply with a commitment decision, and Article 24 confers powers upon the Commission to impose periodic penalty payments in those circumstances. In 2013, the Commission imposed a fine on Microsoft of €561 million for failing to comply with the commitments in Microsoft (Tying), OJ [2013] C120/15.

82 Best Practices, Paragraph 78. In contrast, as regards prohibition decisions, the General Court held in Microsoft v. Commission, T-201/04, EU:T:2007:289, Paragraph 1278, that the Commission must not delegate to a trustee enforcement powers that have been conferred on the Commission. On that basis, the Court annulled the monitoring mechanism imposed by the decision in Microsoft, OJ [2007] L 32/23.

83 Wollmann, op cit.

84 This is illustrated by appeals brought in the context of cartel settlement decisions, see, for instance Société Générale v. Commission, T-98-14, ECLI:EU:T:2016:131, (withdrawn); Printeos v. Commission, T-95/15, ECLI:EU:T:2016:722; and Icap v. Commission, T-180/15, ECLI:EU:T:2017:795.

85 European Parliament and Council Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (the Damages Directive), OJ [2014] L 349/1, Article 6(6)(b).

86 For instance, a ‘leniency statement’ is defined as ‘an oral or written presentation voluntarily provided by, or on behalf of, an undertaking or a natural person to a competition authority or a record thereof, describing the knowledge of that undertaking or natural person of a cartel and describing its role therein, which presentation was drawn up specifically for submission to the competition authority with a view to obtaining immunity or a reduction of fines under a leniency programme, not including pre-existing information’, Damages Directive, Recital 16.

87 See, for example, Haegeman and Giorghies, ‘European competition law enforcement time to settle our differences,’ E.C.L.R. [2020] 41(2), 63.

88 Preamble, Paragraphs 13 and 22, to Regulation 1. The ‘preliminary’ assessment in a commitment decision does not preclude a Member State authority or court reaching a different conclusion following a more thorough examination, see Groupe Canal + SA v. Commission, T-873/16, EU:T:2018:904, Paragraph 100.

89 If so, the commitment decision’s ‘preliminary’ assessment should at most be taken into account solely as an ‘indication’ of the anticompetitive nature of the agreement or conduct, see Gasorba and Others, C-547/16, EU:C:2017:891, Paragraphs 27 and 29.

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