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EU Cartel Enforcement: Fine Guidelines & Leniency Trends

Explore EU cartel enforcement developments, including massive fines imposed from 2001-2006 and the impact of new fining guidelines introduced in 2006. Learn about the key aspects of the EU response to cartels, such as plea bargaining considerations and leniency calculus enhancements. Discover hot topics in cartel enforcement, such as proving cartel existence, parental liability issues, and the discoverability of leniency materials. Join the International Cartels Law Seminars at the International Conference in Washington, DC on 7-8 September 2006, featuring expert Howard T. Rosenblatt from Howrey LLP Brussels.

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EU Cartel Enforcement: Fine Guidelines & Leniency Trends

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  1. International Cartels Law Seminars International Conference Washington, DC, 7-8 September 2006 The EU Response Developments in EU Cartel Enforcement Howard T. Rosenblatt Howrey LLPBrussels

  2. The EU Backdrop • Between 2002 and 2005: 165 applications (80 cartels). But few decisions. • Dedicated cartel directorate established, three units with 40 case handlers. • Plea bargaining? Wait and see approach.

  3. Massive Fines2001 - 2006 Hoffman-La Roche €462 million Lafarge SABASF AG €249 million BASF AG €237 million Total €219 million Arjo Wiggins Appleton €184 million Solvay €167 million BPB PLC €138 million Hoechst € 99 million

  4. New Fining Guidelines • Published in the O.J. on 1 September 2006 • Likely effect: Substantial increase in most cases, especially for large companies in long cartels. • Neely Kroes: “Don’t break the antitrust rules; if you do, stop it as quickly as possible, and once you’ve stopped, don’t do it again....If companies do not pay attention to these signals they will pay a very high price.”

  5. 1998 Guidelines Silent on methodology for calculating start point. Start point is increased by 10% for each year of infringement. No “entry fee”. Recidivism typically increases basic amount by a total of 50%. 2006 Guidelines Percentage sales of relevant product (<30%). Start point is multiplied by number of years of infringement. New “entry fee”. Recidivism increases basic amount by 100% for each prior act. New Fining Guidelines

  6. Hypothetical: Le Prix, SA • Five-year cartel • EEA Sales of €100 million • Second offense

  7. 1998 Guidelines Start Point: 30% x €100 million = €30 million. Duration: €30 million x 1.5 = €45 million. Recidivism: €45 million x 1.5 €67.5 million 2006 Guidelines Start Point: 30% x €100 million = €30 million. Duration: €30 million x 5 = €150 million. “Entry fee”: €150 million + €25 million = €175 million. Recidivism: €175 million x 2 €350.0 million Le Prix, SA

  8. New Fining Guidelines • Premium on keeping a clean record. • Premium on discovering and ending ongoing cartels. • Leniency calculus even more critical. • Prelude to plea bargaining?

  9. Hot Topics • Sufficient evidence to prove a cartel • Relying on (increasingly oral) “corporate statements” in leniency applications as proof against all. • This issue is currently on appeal to the CFI in at least two cases. • Commission already imposing tougher standards to obtain immunity or leniency.

  10. Hot Topics • Parental liability • Extreme willingness to disregard corporate structures • Even more relevant after the new fine guidelines: disregarding the corporate structure raises the 10%-of-turnover ceiling.

  11. Hot Topics • Discoverability of leniency materials • Amended 2002 Leniency Notice formalizes use of oral applications: • No need to sign transcript • Other parties can read, but not copy • Implications

  12. International Cartels Law Seminars International Conference Washington, DC, 7-8 September 2006 The EU Response Developments in EU Cartel Enforcement Howard T. Rosenblatt Howrey LLPBrussels

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