Abstract 

Based on an analysis of cartel prosecutions since 2007, this article assesses the way the European Commission has built up its fines in practice. The fines are compared with those imposed by the European Commission over the period from 1999 to 2006. The main findings are that, while fines have increased significantly, this trend is due not to harsher fines but to less generous reductions under the Commission’s leniency program. In some areas, the European Commission has not followed its own guidelines—fines are generally lower than set out, the way recidivism is penalized is incoherent, and many aspects of the fining process are unexplained or redacted. Estimated fine-to-sales ratios together with new research on overcharges and detection rates suggest that fines may be closer to those for optimal deterrence than previously thought.

1. INTRODUCTION

The European Commission’s cartel fines have deterrence at their heart. This is made crystal clear in the 2006 Penalty Guidelines1 In comparison to the 1998 guidelines and other statements by senior Commission officials. The 2006 Penalty Guidelines state (Point 4):

‘Fines should have a sufficiently deterrent effect, not only in order to sanction the undertakings concerned (specific deterrence) but also in order to deter other undertakings from engaging in, or continuing, behaviour that is contrary to Articles 81 and 82 of the EC Treaty (general deterrence)’.

The accompanying Press Release (IP/06/857) states:

‘Fines are one of the means to ensure that companies do not engage in anticompetitive behaviour. To that end, fines must be set at a level that ensures sufficient deterrence. This implies that fines should not only punish past behaviour, but also that their level will deter that particular company, or any other, from entering into illegal behaviour in the future.’

In comparison to the 1998 guidelines2:

‘The three main changes – the new entry fee, the link between the fine and the duration of the infringement, and the increase for repeat offenders – send three clear signals to companies. Don’t break the anti-trust rules; if you do, stop it as quickly as possible, and once you’ve stopped, don’t do it again.’

In particular Commission will bear down heavily on repeat offenders:

‘The new Guidelines change this approach in 3 ways:
1) the Commission will take into account not only its own previous decisions, but also those of National Competition Authorities applying Articles 81 or 82;
2) the increase may be up to 100%;
3) each prior infringement will justify an increase of the fine. Multiple offenders will therefore be fined more heavily, in line with Commissioner’s Kroes’s repeated wish (see IP/05/61, IP/06/560, IP/06/698).’

In this paper the Commission’s words are compared with its deeds based on original research on data in the Commission’s decisions on cartel prosecutions between 2007 and 2010, and for comparative purposes prosecutions under the previous guidelines for the period 1998 to 2006.


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