Anti-Cartel enforcement in the EU Presentation at BRIC by bud19087

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									 Anti-Cartel enforcement in the EU
Presentation at BRIC International Competition
                 Conference
         1-3 September 2009, Kazan


                        Kirtikumar Mehta
                         Principal Advisor
                   International issues, cartels
                         DG Competition
   Views expressed are purely personal and do not necessarily reflect the position of the EU Commission




                              K. Mehta, EU Commission                                                     1
         Collusion and industry
             characteristics
•   Number of firms                 insignificant
•   Profit rate                           -
•   Rate of demand growth                 -
•   Company size                         +
•   Producer goods                        +
•   Profit variability                    +
•   Concentration                         +
•   Combined market share                 +
                 K. Mehta, EU Commission            2
                Typology of Cartels
 Processors’ cartels - fix max. prices of raw
  materials -e.g milk, sugar, base chemicals
 Trade association cartels - agreements on annual
  price hike - e.g glass, haberdashery
 Allocation of contracts e.g - plasterboard, fine arts
  auctions
 Market/Customer allocation- cement, fertilisers,
  steel tubes, performance chemicals
 annual price hike –e.g seamless tubes
 Services -e.g elevators, transport services,
  Greek ferries
                    K. Mehta, EU Commission         3
Typology of recent prosecuted
  cartels by the commission
•   Processor cartels                      5%
•   Trade association cartels             14%
•   Contract allocation                    5%
•   Customer/market allocation            25%
•   Annual price hike                     40%
•   Services cartels                      11%

                K. Mehta, EU Commission         4
  EU law and policy related to
           cartels
• Cartel conduct by undertakings and association
  of the same prohibited
• Restricton by object - effects presumed
• Commission powers :
• Unannounced inspections of businesses
• Oblige parties to reply to Request Information
• Inspection of private homes,
• Power to make forensic IT searches
• Commission has burden of proof
• Parties have the Right to be Heard
                K. Mehta, EU Commission      5
           Procedural steps
• Case initiation followed by investigation
• Normal statement of Objection or Settlement
  procedure
• Access to file- access to oral submissions on
  commission premises
• Oral Hearing → decision imposing fines
• Administrative procedure:3-4 years; size of file-
  upto 200000 pages; languages :5-8
• Appeals before the Courts
                  K. Mehta, EU Commission        6
          Detection methods
•   Leniency programme
•   Complaints, referrals, informants
•   Follow-on of investigations elsewhere
•   Economic approach based on
•    market monitoring



                 K. Mehta, EU Commission    7
       Leniency Notice 2006
•   Successor to leniency notices of 1996, 2002
•   Immunity applicant must make possible
    targeted inspection
•   Second applicant: up to 50% reduction
•   Third: up to 30% reduction, all subsequent
    applicants can get up to 20% if qualifying
•   Oral Leniency submissions;confidentiality
•   International cartels: consistency between
    Leniency programmes in civil/criminal regimes
                 K. Mehta, EU Commission
        Investigative steps
case initiation depends on:
-leniency or ex-officio ?
-international or EEA cartel or National ?
-evidence located in EU jurisdiction ?
-ongoing cartel or terminated ?
further steps depend on :
-inspection results
-follow up leniency applications
               K. Mehta, EU Commission       9
       2006 Fines guidelines
• Fines calculated on the value of sales directly
  or indirectly affected by cartel
• Fines capped by 10% of global turnover of
  Group-not just the infringing company
• Rate of fine on annual cartel sales of
  company = 15-30%
• Basic fine = fine rate * annual sales
  *duration
• Total fine = Basic fine plus
  aggravation/mitigation factors less
  leniency reduction if any .
                  K. Mehta, EU Commission       10
          Private litigation
>Growing importance of private actions
>measures to facilitate customer actions
>Standing of plaintiffs : representative actions
Opt-in to collective actions
Access to evidence – interpartes
Damages ---full compenation
Leniency applications protected
Limiting Civil liability of immunity applicant?
                K. Mehta, EU Commission
        Policy evaluation
>measures to evaluate leniency program
-number of applications?
-number granted immunity?
-number of prohibition decisions?
>Measure of evaluating Fines policy:
>Overall policy evaluation:
Rate of cartel formation?
              K. Mehta, EU Commission    12
    Enforcement record (1)

   1960 - 1969                         2
  1970 – 1979                           3
   1981 - 1989                          17
   1990 - 1999                          21
2000 – 2009 (July)                      61
      total                            104


             K. Mehta, EU Commission         13
                 Enforcement record (2)
                       – overview
                      1996         1999          2002          2005          2006            2007           2008           2009 (July)


n° of undertakings
fined                        6            10            40            33             39              41              33              5




Accumulative total
of undertakings
fined since 1995             8            60          178           258             297             338             371            376


fines imposed in
EUR                   646.000    105.550.000   944.781.000   683.029.000   1.846.385.500   3.338.427.700   2.271.232.900    131.510.000

Average fine /
Undertaking           107.667     10.555.000    23.621.775    20.697.848     47.343.218      81.425.066      68.825.239      26.302.000

Highest fine during
the year              400.000     13.500.000   249.600.000    84.380.000    272.250.000     479.669.850     896.000.000      58.500.000




                                               K. Mehta, EU Commission                                                              14
         Cartel statistics (3) –
       Ten highest cartel fines –
Year   Undertaking          Case name                  Amount in €

2008 Saint Gobain           Car glass                  869.000.000

2007 Thyssen Krupp          Elevators and escalators   479.669.850

2001 Hoffmann-La Roche AG   Vitamins                   462.000.000

2007 Siemens AG             Gas insulated switchgear   396.562.500

2008 Pilkington             Car glass                  370.000.000

2008 Sasol Ltd              Candle waxes               318.200.000

2006 Eni SpA                Synthetic rubber (BR/ESBR) 272.250.000

2002 Lafarge SA             Plasterboard               249.600.000

                      K. Mehta, EU Commission                        15
                                     Cartel statistics (4)
                                                        Fines imposed


                       14.000
                                                                                             11.968
                       12.000
amount in millions €




                       10.000

                        8.000

                        6.000

                        4.000

                        2.000
                                                                                864
                                    1             9                174
                           0
                                1960 - 1969   1970 - 1979      1980 - 1989   1990 - 1999   2000 - 2009
                                                                 period
                                                  K. Mehta, EU Commission                                16

								
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