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Brussels, 15th October 2008
The most recent version of this MEMO is available at:
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:
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:
What are the ten largest fines imposed by the Commission in cartel cases?
Fines imposed on cartels by the Commission since 2003:
1 Appeal lodged before the CFI