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MEMO/08/600

Brussels, 1st October 2008

Competition: Commission action against cartels – Questions and answers

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/cartels/leniency/leniency.cfm

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

Since June 2005 an entire Directorate composed of five units (Directorate G, with a staff of around 70) 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 person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision is binding proof that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without these being reduced on account of the Commission fine. A White Paper on antitrust damages actions has been published (see IP/08/515 and MEMO/08/216). More information, including a citizens' summary of the White Paper, is available at:

http://ec.europa.eu/comm/competition/antitrust/actionsdamages/documents.html

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

By company:

Firm
Fine (euros)
Year
ThyssenKrupp1 (IP/07/209)
479 669 850
2007
Hoffmann-La Roche AG (IP/01/1625)
462 000 000
2001
Siemens AG1 (IP/07/80)
396 562 500
2007
Sasol Limited (IP/08/1434)
318 200 000
2008
ENI SpA1 (IP/06/1647)
272 250 000
2006
Lafarge SA3 (IP/02/1744)
249 600 000
2002
BASF AG2 (IP/01/1625)
236 845 000
2001
Otis1 (IP/07/209)
224 932 950
2007
Heineken NV1 (IP/07/509)
219 275 000
2007
Arkema1 (IP/06/698)
219 131 250
2006

By sector:

Sector
Year
Total (euros)
Elevators and escalators1
2007
992 312 200
Vitamins2
2001
790 505 000
Gas insulated switchgear1
2007
750 512 500
Paraffin waxes
2008
676 011 400
Synthetic rubber (BR/ESBR)1
2006
519 050 000
Flat Glass1
2007
486 900 000
Plasterboard2
2002

458 520 000
Hydrogen peroxide1
2006
388 128 000
Acrylic glass1
2006
344 562 500
Hard Haberdashery1: Fasteners
2007
328 644 000

Fines imposed on cartels by the Commission since 2003:

Year
Sector covered by cartel
Number of undertakings subject to decision
Total fine (euros)
2008
Paraffin Waxes (IP/08/1434)
10
676 011 400
2008
Aluminium fluoride (IP/08/1007)
4
4 970 000
2008
Sodium chlorate1 (IP/08/917)
4
79 070 000
2008
International Removal Services1 (IP/08/415)
10
32 755 500
2008
Nitrile Butadiene Rubber (IP/08/78)
2
34 230 000
2007
Chloroprene Rubber1 (IP/07/1855)
6

247 635 000
2007
Flat glass1 (IP/07/1781)
4
486 900 000
2007
Professional videotape (IP/07/1725)
3
74 790 000
2007
Bitumen Spain1 (IP/07/1438)
5
183 651 000
2007
Hard Haberdashery: Fasteners1 (IP/07/1362)
7
328 644 000
2007
Dutch beer market1 (IP/07/509)
4
273 783 000
2007
Elevators and escalators1 (IP/07/209)
5
992 312 200
2007
Gas insulated switchgear1 (IP/07/80)1
11
750 512 500
2006
Alloy surcharge (re-adoption)1 (IP/06/1851)
1
3 168 000
2006
Synthetic rubber (BR/ESBR)1 (IP/06/1647)
6
519 050 000
2006
Steel beams (re-adoption)1 (IP/06/1527)
1
10 000 000
2006
Copper fittings1 (IP/06/1222)
11
314 760 000
2006
Bitumen Netherlands1 (IP/06/1179)
14
266 717 000
2006
Acrylic Glass1 (IP/06/698)
5
344 562 500
2006
Hydrogen Peroxide1 (IP/06/560)
9
388 128 000
2005
Rubber chemicals1 (IP/05/1656)
4
75 860 000
2005
Industrial bags1 (IP/05/1508)
16
290 710 000
2005
Italian tobacco1 (IP/05/1315)
6
56 052 000
2005
Industrial thread1 (IP/05/1140)
11
43 497 000
2005
Monochloroacetic acid1 (IP/05/61)
4
216 910 000
2004
Choline chloride3 (IP/04/1454)
6

57 884 000
2004
Haberdashery products: needles3 (IP/04/1313)
3

47 000 000
2004
Spanish tobacco1 (IP/04/1256)
9
20 038 000
2004
French beer1 (IP/04/1153)
2
2 500 000
2004
Sodium gluconate1 (IP/01/1355)
1
19 040 000
2004
Copper plumbing tubes1 (IP/04/1065)
9
222 291 100
2003
Industrial pipes1 (IP/03/1746)
3
78 730 000
2003
Organic peroxides1 (IP/03/1700)
6
69 531 000
2003
Carbon and graphite products1 (IP/03/1651)
6
101 440 000
2003
Sorbates2 (IP/03/1330)
5
138 400 000
2003
Viandes bovines3 (IP/03/479)
6
12 690 000

1 Appeal lodged before the CFI
2 Following judgment by the CFI
3 Appeal lodged before the CoJ


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