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Competition: Commission action against cartels – Questions and answers

Commission Européenne - MEMO/06/503   20/12/2006

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MEMO/06/503

Brussels, 20th December 2006

Competition: Commission action against cartels – Questions and answers

(see also IP/06/1851)

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 an illegal secret agreement concluded between competitors to fix prices, restrict supply and/or divide up markets. 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 product or geographic markets or customers, and collusion on the other commercial conditions for the sale of products or services.

Why are cartels harmful to consumers, businesses and to the economy in general?

Cartels shield participants from competition allowing them to charge higher prices and removing the pressure on them to improve the products they sell or find more efficient ways in which to produce them. It is the customers (companies and consumers) who foot the bill in terms of paying higher prices for lower quality and narrower choice. This not only makes consumers and businesses suffer but also adversely affects the competitiveness of the economy as a whole.

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. The fines therefore help to finance the European Union and reduce 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 annul decisions in whole or in part and 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/06/1705, MEMO/06/469 and MEMO/06/470.

Companies wishing to approach the Commission in order to benefit from the Commission notice on immunity from fines and reduction of fines in cartel cases should consult:

http://ec.europa.eu/comm/competition/antitrust/leniency/

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

Since June 2005 an entire Directorate composed of four units (Directorate F, with a staff of around 60) in the Competition Directorate General has been involved exclusively in helping the Commission to detect and punish cartels.

What action is open to consumers and companies who feel that they 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 can also have a certain deterrent effect, 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 was published in December 2005.

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

By company:

Firm
Fine (euros)
Year
Hoffmann-La Roche AG (IP/01/1625)
462 000 000
2001
ENI SpA (IP/06/1647)
272 250 000
2006
Lafarge SA1 (IP/02/1744)
249 600 000
2002
BASF AG2 (IP/01/1625)
236 845 000
2001
Arkema1 (IP/06/698)
219 131 250
2006
Arjo Wiggins Appleton PLC1 (IP/01/1892)
184 270 000
2001
Solvay1 (IP/06/560)
167 062 000
2006
Shell (IP/06/1647)
160 875 000
2006
BPB PLC1 (IP/02/1744)
138 600 000
2002
Shell1 (IP/06/1179)
108 000 000
2006

1 Appeal lodged before the CFI.

2 Following judgment by the CFI.

By sector:

Sector
Year
Total (euros)
Vitamins
2001
790 505 000
Synthetic rubber (BR/ESBR)
2006
519 050 000
Plasterboards
2002
478 320 000
Hydrogen peroxide
2006
388 128 000
Acrylic glass
2006
344 562 500
Copper fittings
2006
314 760 000
Carbonless paper
2001
313 690 000
Industrial bags
2005
290 710 000
Bitumen Netherlands
2006
266 717 000
Copper plumbing tubes
2004
222 291 100

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

Year
Sector covered by cartel
Number of undertakings subject to decision
Total fine (euros)
2006
Alloy surcharge (re-adoption) (IP/06/1851)
1
3 168 000
2006
Synthetic rubber (BR/ESBR) (IP/06/1647)
6
519 050 000
2006
Steel beams (re-adoption) (IP/06/1527)
1
10 000 000
2006
Copper fittings (IP/06/1222)
11
314 760 000
2006
Bitumen Netherlands (IP/06/1179)
14
266 717 000
2006
Acrylic Glass (IP/06/698)
5
344 562 500
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)
6
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)
9
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
Beef2 (IP/03/479)
6
12 690 000


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