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Competition: revised Commission Guidelines for setting fines in antitrust cases – frequently asked questions

European Commission - MEMO/06/256   28/06/2006

Other available languages: FR DE

MEMO/06/256

Brussels, 28th June 2006

Competition: revised Commission Guidelines for setting fines in antitrust cases – frequently asked questions

(see also IP/06/857)

Do the Guidelines affect the maximum level of fines that can be imposed?

No. The ceiling of fines that can be imposed on companies is fixed by Article 23(2) of Council Regulation No 1/2003 (10% of the undertaking’s total turnover in the preceding business year).

What will be the impact of the new Guidelines on the level of fines?

The new Guidelines refine the methodology which has been applied so far (since 1998) to set fines for infringements of the competition rules. They provide a revised framework for the setting of fines. As there are a number of factors which need to be taken into account when setting a fine, it is not possible to comment in the abstract on the impact of the revised fines Guidelines in particular cases. However, the main changes incorporated in the notice mean that companies involved in a long lasting infringement in a large market should be prepared to receive significantly higher fines than in the past.

What are the main differences compared to the existing fines Guidelines?

The main differences concern:

  • the starting point for setting the fine will take into account a percentage of the value of sales to which the infringement relates, multiplied by the number of years of participation in the infringement. Under the fines Guidelines in force since 1998, the starting point of the fine is based on a lump sum, depending on the degree of gravity of the infringement, to which a 10% increase is added per year of infringement.
  • the new Guidelines create a mechanism of a so-called “entry fee”. According to this mechanism, the simple fact that a company enters into a cartel will cost the company 15 to 25% of its annual sales in the relevant sector. A similar “entry fee” may be applied to other types of infringements.
  • the new Guidelines foresee a significant increase in the level of fines to be imposed on repeat offenders and, even more, on multiple repeat offenders. In addition, in deciding whether a company is a repeat offender, the Commission will also take into account decisions by national competition authorities adopted under Articles 81 or 82 of the EC Treaty.

Are the Guidelines binding on national competition authorities?

No. National competition authorities retain full discretion as to their fining policy, even when they are applying Articles 81 and 82 of the EC Treaty.

What is the relationship between the new fines Guidelines and the Leniency Notice?

The new fines Guidelines set the methodology that the Commission will apply in order to determine the level of fines to be imposed on companies or organisations that violate EU anti-trust law (cartels, other restrictive business practices, abuses of dominant positions).

The Leniency Notice serves a different purpose, which is to “reward” companies which, in cartel cases, cooperate with the Commission, thereby justifying an immunity of fine or reduction of the fine set in accordance with the Guidelines adopted today. The 2002 Leniency Notice is therefore not affected and continues to apply.
Draft amendments to the Leniency Notice have been published for public comment and are available at:

http://ec.europa.eu/competition/antitrust/legislation/leniency.html

When will these new fines Guidelines be published?
The new fines Guidelines will be published shortly in the EU’s Official Journal, probably within the next two months. The text is already available in English, French and German on the website of DG Competition.

http://ec.europa.eu/competition/antitrust/legislation/fines.html

When will these Guidelines be applied for the first time?

The Guidelines will apply to every anti-trust fines decision for which a Statement of Objections is notified to parties after their publication in the Official Journal. Considering that companies have a full opportunity to defend themselves afterwards, in writing and orally if they so wish, the first decisions applying these new rules will only be adopted in a few months from now.

Do the Guidelines apply to fines imposed by the Commission for failure to comply with a decision (periodic penalty payments under Article 24 of Regulation 1/2003)?

No, the Guidelines relate only to fines imposed in decisions finding an infringement of the competition rules.

What happens to the proceeds from fines?

The amount of the fines is paid into the Community Budget. The fines therefore help to finance the European Union and reduce the tax burden on individuals.


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