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Rewards for Admitting Antitrust Violations

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Rewards for Admitting Antitrust Violations

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    1. Rewards for Admitting Antitrust Violations? Experiences from Settlements in Brussels

    2. Ten highest cartel fines per case (since 1969)

    3. Fines imposed - 1990-2010

    4. The main players:

    5. “… there should be no doubt about our determination to unearth and punish cartel members … ". “… the Commission will have no sympathy for cartelists …”

    6. Almunia’s main achievements and new developments

    7. Settlement - Basics A „fast track“ for the imposition of fines „Settlement notice“ and a minor amendment of Council Regulation 773/2004 Intended to simplify and shorten the cumbersome proceedings „Mutual agreement“ between the Commission and parties Commission hopes to free up a substantial part of workforce for investigation and conclusion of more cartel cases

    8. Settlement legal background Clearly inspired by „plea agreements“ (US model) However, different because the Commission is not willing to negotiate or bargain on the scope of the objections (notion of „settlement“ is misleading) Just a reward (10% reduction of fine) for an admission of guilt Not an immediate success Only two cases decided yet (system introduced in July 2008)

    9. Scope of application Only „cartel cases“ Difference settlement vs leniency: leniency programme rewards voluntary contribution to the detection and prosecution of infringement settlement notice merely seeks to reward an admission of an infringement which has already been fully investigated and is established Both systems applicable

    10. Main steps First step: selection of „suitable cases“ Commission is picky (only „clear-cut“ cases) Most likely candidates: horizontal price coordination cases with small number of participants and several leniency applications Reluctant to take on „hybrid“ cases (wants to avoid „two-track procedure“, like animal feed)

    11. Main steps Second step: exploring the willingness to engage in settlement discussions Opening of proceedings under Art. 11(6) Regulation 1/2003 (sole competence of Commission) Parties express willingness to enter into settlement discussions Appointment of joint representative

    12. Main steps Third step: bilateral settlement discussions First meeting: Commission informs parties of its view of the case. Parties come to a “common understanding” that settlement can be reached on the basis of Commission allegations Second meeting: parties can present the defence arguments (mitigating circumstances) Third meeting: disclosure of intended range of the fine (Commission will state minimum and maximum amount - no disclosure of fine calculation)

    13. Main steps Fourth step: settlement submission (admission of guilt) Clear acknowledgement of infringement, incl. main facts, duration, affected markets, legal qualification Indication of maximum amount of acceptable fine „Waiver“ of right of full access to Commission file and Oral Hearing after SO

    14. Settlement submission – the reality Commission has very specific expectations regarding the content of settlement submission (provides a „template“) In theory, parties can always „opt out“ (but de facto binding effect)

    15. Main steps Fifth step: statement of objections and response Streamlined statement of objections Response to statement of objections consists in “two-liner” Final decision (by college) – appeal possible but on very limited grounds

    16. Protection from civil litigation (in particular US discovery) Settlement submissions can be made orally (not subject to discovery in U.S. courts) Reduction of potential risks arising from follow-up damage claims (decision is very short)

    17. Important: confidentiality! Settlement submissions held on a bilateral level and strictly confidential Commission takes it very seriously Any breach can result in withdrawal from the settlement procedure Problems because companies face reporting obligations (SEC)

    18. Was it worth it? Positive: Fixed „reward“ of 10 % fine reduction (Very limited) negotiations on scope and affected turnover (basis for calculations of fines) Streamlined decision without extensive quotation of evidence reduces risk of follow-on damages litigation „Not so positive“: „Take it or leave it“ approach ? for leniency applicants, settlement provides opportunity to further reduce fine; for other parties, it is doubtful whether there are sufficient incentives to settle.

    19. Are settlements the future of European cartel law enforcement? Procedural efficiencies have not yet materialised Commission still very inflexible (no bargaining) But companies do not have a lot of other choices if other parties start settlement discussions („odd one out“ syndrome) Penalty for lack of willingness to settle?

    20. Thank you for your attention

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