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the ec's guidelines on fines 18/03/2008 The European Commission's intention, when it introduced its new guidelines on fines in June 2006 (Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003) was that fine levels for long standing infringements in large markets should be increased substantially. The Commission also introduced tougher measures for repeat offenders (paragraph 28, point 1 of the new guidelines). Under the new guidelines, fines may be increased substantially for each additional infringement, for example, in the synthetic rubber cartel (Commission decision of November 2006), the fines for two of the companies involved (ENI and Bayer) were subject to increases of 60% and 50% respectively on the basis that previously both companies had been the subject of European Commission infringement decisions. Another notable innovation of the new guidelines was to introduce an amount payable by any undertaking which was found to have entered a cartel, irrespective of the duration of the involvement, to act as a deterrent to entry in the first place. The level of the fine that can be imposed by the European Commission is capped at 10% of the annual worldwide turnover of the corporate group. However, while the headline fine figures imposed may appear high, generally in the order of millions or tens of millions of Euro, they have generally been far short of the 10% cap. The impact of the new guidelines is now clear, as fines imposed by the Commission are increasing as a percentage of total turnover and it seems likely that this trend will continue. In certain EU member states, cartel participation may now lead to criminal prosecution of the responsible individuals under national law. While there are no criminal sanctions for breach of the European competition rules, it is nevertheless the case that the European Commission has been instrumental in bringing cartel enforcement to the fore within the European Union over recent years by focusing its enforcement resources in this area. The Commission's active role in promoting cartel enforcement has undoubtedly led to a significantly higher level of awareness of the implications of cartel involvement. Perhaps the most notable effect of this has been the change in public perception from a vague understanding that free market competition should not be constrained by anti-competitive behavior to a clear understanding that cartel activities under the Enterprise Act are punished as severely as theft or fraud and that the victims are the public in their role as consumers. The implications in terms of the public perception of a company being involved in a cartel are therefore far more serious today than they were previously.
For further information please contact James Dilley on
james.dilley@martineau-uk.com |
