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MEMO/06/184

Brussels, 3rd May 2006

Competition: Commission action against cartels – questions and answers

(see also IP/06/560)

The most recent version of this MEMO is available at:

http://ec.europa.eu/comm/competition/cartels/overview/faqs_en.html

What is a cartel?

It is a secret agreement concluded between firms carrying out comparable activities with a view to restricting competition and gaining more effective control of the market. The agreement may take a wide variety of forms but often relates to sales prices or increases in such prices, restrictions on sales or production capacities, sharing out of markets or customers, and collusion on the other commercial conditions for the sale of products or services.

Why are cartels harmful to the economy?

Cartel members rely on restrictive agreements and do not supply new quality products or services at competitive prices. It is the customers who foot the bill. They may be consumers who finish up paying more for lower quality and narrower choice or they may be companies too. If it is other companies that suffer, this adversely affects the competitiveness of the economy.

What legal basis underpins the Commission’s action to combat cartels?

Article 81 of the Treaty establishing the European Community prohibits agreements and concerted practices between firms that distort competition within the Single Market. Fines of up to 10% of their worldwide turnover may be imposed on the guilty parties.

What happens to the proceeds from fines?

The amount of the fines is paid into the Community budget, helps to finance the European Union and, in the final analysis, reduces the tax burden on individuals.

Does the Commission have the last word?

All cartel decisions by the Commission may be appealed against before the Court of First Instance (CFI) and then before the Court of Justice of the European Communities in Luxembourg. They can, therefore, be closely scrutinised by these two courts, which are empowered to reduce or increase fines, where this is deemed appropriate.

What is the European Commission’s leniency programme?

It encourages firms to provide the Commission with insider information on cartels. The first firm to do so is granted total immunity from fines. Other firms that follow suit may be granted a reduction in the amount of the fine. This policy is very effective in uncovering cartels but does not prevent the Commission from conducting investigations on its own initiative. For further information, see IP/02/247 and MEMO/02/23.

What practical steps has the Commission taken to step up action against cartels?

Since June 2005 an entire directorate (Directorate F, with a staff of around 60) in the Competition Directorate-General has been involved exclusively in detecting and combating cartels.

What action is open to consumers who feel that have been victims of such illegal agreements?

Any firm or individual adversely affected by practices censured by the Commission, such as those set out in today's decision, may bring the matter before a court in a Member State of the European Union with a view to seeking compensation for damage suffered as a result of such practices. Fines imposed by the Commission are different from the damages awarded by national courts. While action for damages before a court also acts as a deterrent, its main purpose is to compensate victims of anti-competitive behaviour or to secure compensation for damage suffered. A Commission Green Paper on facilitating action for damages before courts in the Member States is due to be published in December 2005.

What are the ten largest fines imposed by the Commission in cartel cases?

By company:

Firm
Fine (€)
Year
Hoffmann-La Roche AG (IP/01/1625)
462 000 000
2001
Lafarge SA1 (IP/02/1744)
249 600 000
2002
BASF AG2 (IP/01/1625)
236 845 000
2001
Arjo Wiggins Appleton PLC1 (IP/01/1892)
184 270 000
2001
Solvay (IP/06/560)
167 062 000
2006
BPB PLC1 (IP/02/1744)
138 600 000
2002
Hoechst AG1 (IP/03/1330)
99 000 000
2003
Degussa AG2 (IP/02/976)
91 125 000
2002
Gebrüder Knauf KG1 (IP/02/1744)
85 800 000
2002
Akzo Nobel NV1 (IP/05/61)
84 380 000
2005

1 Appeal lodged before the CFI.

2 Following decision by the CFI.

By sector:

Sector
Year
Total

Vitamins
2001
790,505,000

Plasterboards
2002
478,320,000

Hydrogen peroxide
2006
388,128,000

Carbonless paper
2001
313,690,000

Industrial bags
2005
290,710,000

Copper plumbing tubes
2004
222,291,100

MCAA
2005
216,910,000

Graphite electrodes
2001
164,372,400

Sorbates
2003
138,400,000

Citric Acid
2001
135,200,000

Fines imposed on cartels by the Commission in the last three years:

Year
Sector covered by cartel
Number of firms involved
Total fine (€)
2006
Hydrogen Peroxide (IP/06/560)
9
388 128 000
2005
Rubber chemicals (IP/05/1656)
4
75 860.000
2005
Industrial bags (IP/05/1508)
16
290 710 000
2005
Italian tobacco (IP/05/1315)
8
56 052 000
2005
Industrial thread (IP/05/1140)
11
43 497 000
2005
Monochloroacetic acid (IP/05/61)
5
216 910 000
2004
Choline chloride (IP/04/1454)
6
66 340 000
2004
Haberdashery products (IP/04/1313)
3
60 000 000
2004
Spanish tobacco (IP/04/1256)
9
20 038 000
2004
French beer (IP/04/1153)
2
2 500 000
2004
Sodium gluconate (IP/01/1355)
1
19 040 000
2004
Copper plumbing tubes (IP/04/1065)
12
222 291 100
2003
Industrial pipes (IP/03/1746)
5
78 730 000
2003
Organic peroxides (IP/03/1700)
6
69 531 000
2003
Carbon and graphite products (IP/03/1651)
6
101 440 000
2003
Sorbates (IP/03/1330)
5
138 400 000
2003
Beef (IP/03/479)
6
1 .680 000


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