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Neelie Kroes

European Commissioner for Competition Policy

Settlements in cartel cases

12th Annual Competition Conference
Fiesole, 19th September 2008

2008 has so far been a very interesting year.

Before this year, if someone has talked to me about settlements I would have said that I never wanted to think about my divorce settlements again! But seeing as our settlements package is one of best policy innovations this year, I think I can make an exception for you.

Why settlements?

For us, the fundamental driver of the settlements package is the need to maximise efficiency in order to improve enforcement.

In that sense, it has nothing to do with softening our policies or cutting deals. If anything, it is a matter of hardening them, as ultimately this policy could mean that more companies are going to get caught for breaking the law.

Settlements are an option for companies which, in full knowledge of the strength of the Commission case and having been able to argue their case, prefer to admit liability and qualify for a reduction in the fine. Companies always have the possibility to dispute the Commission's findings and use all possibilities to defend themselves in the framework of the usual procedure. However, when the companies involved in the cartel proceedings choose to settle, the Commission procedure can be simpler overall, and enforcement can be more efficient. This justifies a 10% reduction in the fine.

But how will implementation work from that starting point?


Firstly it has not required any institutional overhaul. It would not make sense to create such drastic changes for a few efficiencies. On the other hand, we are committed to continually upgrading and improving our means to strike at cartels, which are a "moving target" - and taxpayers rightly expect value for money.

So the right response to this context was to design a settlements package that simply required a dedicated Notice and an amendment of Commission Regulation nº 773/2004.

This is what we did in July of this year. The notice sets out the specifics of the settlement procedure, and offers guidance for the legal and business community to enable companies to know the basic framework, understand what settlement would require of them and what the benefits for them may be.

It is in everyone’s interests for the Commission to be as clear as possible about the system. The ultimate safeguard of course is the voluntary nature of the system. The Commission does not have to propose a settlement discussion and the companies involved in a case have the freedom to use the existing procedure even if the Commission opens the case for settlement – whether they do so or not is a strategic choice on their part.

How settlements will produce efficiencies – a look inside commission processes

Many people are wondering how we will actually obtain these efficiencies and what impact will it have on the companies involved, aside from the potential fine reduction. The technical question is also how the Commission squares the circle by simplifying the procedure and still allowing for the exercise of parties' right to be heard.

An ordinary thorough investigation will still have to precede any decision to explore settlements. Since the settlement procedure does not involve any bargaining or negotiation on charges or evidence, the Commission must investigate and provisionally qualify the facts internally, and be ready to raise formal objections before it explores settlements with the parties.

In taking the decision to discuss settlement we will have considered, amongst other issues:

  • the likelihood of reaching a common understanding of the facts,
  • the scope of the objections or of liability
  • the likelihood of achieving procedural efficiencies.

During settlement discussions, parties will be able to express their views:

  • - on the objections that the Commission intends to raise against them
  • - on the evidence supporting those objections and
  • - on the factors to be taken into account for the calculation of the fine.

The parties have the opportunity to convince the Commission of their arguments, as in any other case. If the parties and the Commission share the same assessment of the case, the parties may then request that the Commission use the settlement procedure. To that end, they would provide the Commission with a settlement submission admitting liability for the infringement and stating the maximum amount of the fine for which their settlement submission is valid, including the reduction in fine for the settlement.

A settlement is reached if the statement of objections and, ultimately, the Commission decision reflects the findings acknowledged in the settlement submission and imposes a fine not exceeding the figure set out in it.

Otherwise, the case reverts to the ordinary procedure. If that happens, settlement submissions cannot be used in evidence.

We are confident that by applying the idea of settlements to cartel cases the Commission is making a more efficient use of resources.

Cartel cases are frequent and complex from a procedural point of view, as they are inherently multilateral. The average cartel file is tens of thousands of pages, even though only a small percentage of this is ever used as evidence.

The settlements package offers an escape from some of this. It means

  • 1) The Commission will be able to produce shorter statements of objections and shorter final decisions, and reduce translation requirements,
  • 2) Reduce the resource intensive efforts of screening tens of thousands of pages of documents for confidentiality,
  • 3) Time saved by reducing the correspondence burden and oral hearings.

Once we gain experience in settlements, we might be able to halve the time taken to complete some cases.

Incentives to settle

The discussion phase will give companies a unique opportunity to be informed of the likely range of fines prior to the adoption of the final decision and they can be informed earlier of potential objections and of the evidence supporting them. By reaching a settlement, companies can put the procedure behind them, reduce the damage to their reputation and obtain a reduction of the fine.

What is harder to measure, but easier to have faith in, is the deterrent effect of this policy.

We believe the settlements package will increase overall deterrence because deterrence is a function of the probability of being detected and prosecuted quickly, as much as it is about fines.

Wide application of settlements?

Most of you will be aware that I am pragmatic about what methods we employ to improve enforcement. So long as the method is just and efficient, it makes sense to me. But methods and means need to suit their object.

Settlements are not a tool suited to be applied to all cartel cases. The settlement discussions phase should be relatively short to obtain procedural efficiencies. If the views of the Commission and of the parties appear to diverge in a substantial way, the ordinary procedure will become a more appropriate choice.

Settlements are compatible with leniency

It is important to distinguish settlement procedures from the leniency programme and commitment decisions.

The Leniency Notice rewards companies for voluntarily disclosing the existence and evidence of a cartel. It is an investigative tool, leniency rewards decrease depending on the order in which companies provide their cooperation, so as to set off a race between cartel members. The initiative to use this instrument lies completely with the companies, which are entitled to a leniency reward if they comply with the requirements.

Settlements are completely different. They offer a reduction in fine that relates to the Commission’s potential to save resources and applies to all parties who settle. One of the reasons why the settlement reduction is set at 10 per cent is to avoid interfering with the incentives to apply for leniency. The two work together.

The similarities between these two instruments are solely that they are both formal, voluntary procedures applicable to cartel cases.

EU Settlements are different from US-style plea bargaining in many ways, even if they have in common that the final outcome is considered appropriate by both the prosecutor and the parties involved.

Likewise, settlements are in a different realm to commitment decisions. Commitment decisions do not formally establish an infringement – they merely bring suspect behaviour to an end by imposing certain commitments on companies. Regrettably, something as pernicious as a cartel is not broken so easily and commitments for the future do not make up for the past. Commitment decisions are also not appropriate in cases where a fine is necessary – and as far as I am concerned fines are appropriate in all cartel cases, as are formal infringement decisions.


So let me sum up by saying that we are very confident of the benefits of the settlements package. We will gain experience by doing.

The package is a particularly pleasing step forward at a time when some interests want us to take a step back.

The settlements package shows that there is always room for improvement, that we are able to engage in self-reflection and that we remain focused on the task of strong enforcement as the backbone of our regime.

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