Seven Years of Settlement Decisions: An Appraisal After the Timab Judgment

1. SEVEN YEARS OF SETTLEMENT DECISIONS: AN APPRAISAL AFTER THE TIMAB JUDGMENT76TH LUNCH TALK OF THE GCLC, 29 June 2015Flavio Laina Head of Unit - Cartel Settlements

2. Overview What is the cartels settlement procedure and why was it introduced? An short overview of the settlement practise since 2008. Lessons learned. The Timabjudgement.

3. A little bit of history Instrument created in 2008 First decision in 2010: DRAMs 18 decisions in successful settlements and 1 discontinued settlement

4. DRAMS 19 May 2010 331 million € Animal feed phosphates 20 July 2010 175 million € Consumer detergents 13 April 2011 315 million € CRT glass 19 October 2011 128 million € Refrigeration compressors 7 December 2011 161 million € Water management products 27 June2012 13 million € Automotive wire harnesses 10 July2013 141 million € Euro Interest rates derivatives 4 December 2013 1,04 billion € Yen interest rates derivatives 4 December 2013 669 million € Polyurethane foam 29 January 2014 114 million € Power exchanges 5 March 2014 5,9 million € Bearings 19 March 2014 953 million € Steel abrasives 2 April 2014 30.7 million € Mushrooms 25 June 2014 32 million €

5. CHIRD-Rates 21 October 2014 61,6 million € CHF-Spreads 21 October 2014 32,3 million € Envelopes 11 December 2014 19,5 million € Parking heaters 17 June 2015 68 million €

6. Does it work? 2013: 3 settlement decisions and 1 normal 2014: 8 settlement decisions and 2 normal 2015: 1 settlement decision and 2 normal Average duration of cases reduced by 2 years Fines in settlement cases are about 50% of total fines since 2010 Very different types of cases

7. Identifying procedural efficiencies one procedural language; access to the evidence; a reduced written procedure; low probability of appeals

8. Screening Likelihood of reaching a settlement with all the parties Procedural efficiencies; lack of appeals Number of parties concerned Parties’ spontaneous interest to settle Number of successful leniency applicants Expected degree of contestation Impact of aggravating circumstances Parties’ foreseeable conflicting positions on liability EU/EEA cases or cases already decided/pending in other jurisdictions Novel legal issues

9. How does it work in practice

10. Bilateral talks Participating does not imply an admission of guilt or duty to settle; Disclosure and exchange of arguments on potential objections, liability, fines; Disclosure of evidence supporting potential objections, liability, fines; Disclosure of other evidence upon reasoned request; Commission retains discretion as to the opportunity, order and pace of disclosure and discussions; Discussions are bilateral, frank and non-usable as evidence.

11. Advantages of Settlement For the Commission For the parties Lower fines (10 % reduction) Efficiency gains in terms of faster procedure. Transparent and immediate dialogue on key points of the case. • Efficiency gains in terms of faster procedure. • More streamlined procedural organisation. • Subsequent litigation unlikely

12. Lessons learned (1): rights of defence Balance between procedural efficiencies and rights of defence Parties are guided through the evidence and the conclusions the Commission draws from evidence Requests for additional access, if any, are minor HO always available to the parties Requests to proceed even faster

13. Lessons learned (2): hybrid cases and others Hybrid from the start. Hybrid at a later stage. Smart cards chips case: settlement discussions discontinued for lack of progress and procedure reverted to the standard one.

14. Timab's appeal Timab dropped out from settlement after communication of the fines range; The Commission resorted to the standard procedure (1st hybrid):(para. 117). Timab brought action before the General Court for (i) annulment and (ii) reduction of fine. Main grounds: Commission said to have applied a fine higher than the maximum figure of the range envisaged during settlement discussions  Action dismissed on 20 May 2015 (Case T 456/10)

15. Endorsement of the settlement procedure Endorsement of: the settlement procedure (para. 73) ; the "hybrid" procedure (para. 72); voluntary procedure, parties may drop out (para. 76); According to the Court: The Commission is not bound by the range indicated as part of the settlement procedure as it is an instrument related only to the settlement procedure During the standard procedure, the Commission must also establish the liabilities of the undertakings concerned, and take into account new arguments or evidence brought to its attention  It would be illogical to apply a range of fines falling within the scope of another procedure now abandoned.

16. Reasoning of the General Court The amount of the fine: same method for calculating the fine applied (i) during the settlement procedure and (ii) during the standard procedure against Timab. Where does the difference of some EUR 20 million come from? GC: "It is true that, at first glance, such an increase in the amount of the fine, when the duration of the infringement has been reduced by nearly 15 years, may seem paradoxical" (para. 81). In the standard procedure against Timab, the Commission did not apply reductions initially applied during the settlement phase Commission took into account new information (para. 107):

17. Other (rejected) claims The right not to incriminate oneself(para. 120). Equality of arms (para 122). Legitimate expectations (para 124). Sound administration (para 125). Misuse of powers – EC penalised Timab for not settling (para 126).

18. Interplay with antitrust damages Protection of settlement submissions Streamlineddecision vs normal decision

19. Possible improvements Even faster proceedings? Where to find additional procedural savings? Consolidating trust between the parties

20. Thank you for your attention