Brussels, 19 May 2010
Antitrust: Commission adopts first cartel settlement decision – questions & answers
What is a cartel settlement?
The cartel settlement procedure allows the Commission to settle a cartel case with the companies involved under a simplified procedure. Under this procedure and after having accessed the evidence against them and had the opportunity to express their observations, the companies choose to acknowledge their involvement in the cartel and their liability for it. The Commission created the procedure in June 2008 (see IP/08/1056 and MEMO/08/458) to optimise the enforcement of anti-cartel rules by freeing up resources to deal with more cases, thereby increasing the detection rate and the deterrence of the Art 101(1) of the EU Treaty.
When can companies manifest their interest in a settlement?
Companies may at any time before the adoption of a Statement of Objections approach the Commission to manifest their interest in settling a cartel investigation. If the Commission decides that the case is suitable for a settlement, it will set a time-limit for the parties to declare in writing that they envisage engaging in settlement discussions.
What are the main advantages for companies to settle a case?
Companies obtain a 10% reduction of the fine. The settlement of a cartel case with the Commission also allows companies to put the procedure behind them more quickly, restore their reputation and obtain a "streamlined" (shorter and less detailed) Commission Decision.
Is the reduction of the fine the same for all parties settling?
Yes. The reduction of the fine rewarding the companies for settling the case with the Commission is the same for every party, namely 10%. However, the actual fine they will receive will still reflect the size of their relevant sales, any aggravating or mitigating factors, and the fact of whether or not they obtain a reduction under the Commission's Leniency Notice.
How does the cartel settlement procedure work?
The settlement does not affect the beginning of a cartel investigation, which is triggered by a leniency application, (a) complaint(s) or on the Commission's own initiative.
The bilateral settlement discussions take place between the formal opening of the proceedings, once the Commission has gathered and analysed the evidence, and the issuing of a formal SO at the Commission's initiative. The Commission informs the parties of the objections envisaged against them, makes available the evidence supporting those objections and discloses the applicable fine range calculated on the basis of the relevant turnover in application of the Guidelines on fines. Thus, parties have full opportunity to express their views on the objections and evidence presented to them. Once it appears that there is a consensus with all parties concerned, the Commission sets a time-limit for parties to introduce their settlement submissions. Thereby they formally opt for the settlement procedure and commit to settle, provided that the Commission raises only the objections acknowledged by each party and does not impose a fine exceeding the maximum amount indicated.
Simplified procedure until the Decision: if the parties’ submissions correspond to the understanding reached during the discussions, the Commission will adopt and send them an SO. Provided the parties confirm that the SO reflects their submission, it becomes the basis for the draft decision.
What are the main conditions for a company to obtain a settlement decision?
Companies that want to settle a case with the Commission declare their interest to do so and make a formal settlement submission under the terms discussed with the Commission. This should contain:
the confirmation that they have been informed of the Commission's objections in a satisfactory manner and that they have been given the opportunity to be heard,
an acknowledgement of the infringement,
their agreement to receive the Statement of Objections and the settlement decision in a language chosen from among the official languages of the EU,
the confirmation that they will request neither access to the file nor a formal oral hearing after receiving the SO,
the acceptation of the likely fine to be imposed by the Commission.
By introducing a settlement submission, the parties commit to follow the settlement procedure subject to the condition that the Commission's decision ultimately reflects the contents of the settlement submission.
Will the Commission systematically settle cartel cases from now on?
No. Not every case is suitable for settlement. The Commission has defined a number of criteria, such as the likelihood of reaching a common understanding on the scope of the objections and the prospect of achieving procedural efficiencies, in order to determine whether a case is suitable for a settlement.
Is the Commission under an obligation to settle if all parties so request?
No. Even if all parties request to settle, it remains the Commission's discretion to decide whether the case is suitable for a settlement. The Commission may decide that the case is not suitable for settlement, for example when some particular issues at stake in the case are not yet settled by the Courts.
Are the parties under an obligation to settle?
No. Companies are neither obliged to enter settlement discussions nor to ultimately settle.
What happens if only some parties want to settle?
If only some parties wish to settle, the Commission may decide to end the settlement procedure and apply the ordinary procedure to all parties. Alternatively, it can also continue the settlement procedure with the parties who want to settle and apply the ordinary procedure to those who do not wish to do so (the so-called “hybrid cases”).
What is the average duration for a cartel investigation presently and how much time you expect to save?
The length of settlement proceedings will depend on a number of factors such as the complexity of the case and the number of settling parties. In the DRAMs case, it took around one year from the moment when the Commission took the formal decision to open proceedings, to the adoption of the final settlement decision. It is expected that this period will be shorter in future cases, as more experience will have been gathered with this novel procedure. This case represents an investment in building up trust in this whole new Decision making process.
What is the main difference between the Commission's current leniency programme and the settlements procedure?
The Commission leniency programme is an investigative tool (see IP/06/1705). It aims at discovering cartel cases and collecting evidence. The "Leniency Notice" rewards companies who voluntarily disclose to the Commission the existence of a cartel and bring evidence to prove the infringement. The reduction of the fine varies widely depending on the timing and added value of the information and evidence provided.
In contrast, a settlement aims at simplifying and expediting the procedure leading to the adoption of a final decision. This saves time and allows the Commission to redeploy enforcement resources to other cases. The "Settlements Notice" rewards concrete contributions to procedural efficiency.
Can the reduction of fine under the leniency programme and reduction for settling the case be cumulated?
Yes, the reduction of the fine granted to the parties for settlement will be added to their leniency reward. In practice, this means that the 10% settlement rebate is calculated on the basis of the final amount before the application of the leniency discount.
How are settlement submissions protected against discovery orders from other jurisdictions?
Settlement submissions enjoy the same level of protection as submissions introduced under the Commission's Leniency Notice.
Does the settlement imply that parties cannot make an appeal to the EU Courts?
No. Decisions adopted under the settlement procedure can still be appealed by the parties before the General Court. However, parties having expressly and unequivocally acknowledged their involvement in the cartel, it is expected that the number of appeals would be limited.
How are parties’ rights of defence ensured under the settlement process?
Parties’ rights of defence remain the same as under the ordinary cartel procedure. They are informed of the Commission’s objections and of the evidence supporting them. They are entitled to view the evidence and submit their views and concerns. Parties are also informed of the range of likely fines prior to the adoption of the final decision. Parties are neither obliged to enter into settlement discussions nor submit a settlement submission at the end of the discussions. As in normal cases they can call upon the Hearing Officer during the settlement procedure. Moreover, the Legal Service and the Hearing Officer's service are invited to the meetings with the parties. All this adds to the procedural guarantees to the benefit of the parties.
What is the main difference between the EU settlement procedure and the US plea bargaining agreements?
Under the US system, a company or individual admits an infringement and accepts a sanction in the course of a negotiation process that results in an agreement to make a plea before a judge and to waive their right to appeal. Unlike US settlements, which are also an investigative tool, the EU settlement procedure is not used to gather evidence, but rather as a tool to simplify the procedure and make better use of the Commission's resources. The Commission's settlement decisions may still be appealed to the EU Courts.