Recidivism: a Commission fining policy that might not be hitting the mark

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Summary

The short version of this very long post is that the Commission’s current policy of applying the concept of recidivism to the highest level parent that exercises decisive influence over the infringing company appears to unduly punish undertakings that sell a large number of different products as compared to undertakings that sell only a small number. The likelihood of being a recidivist is massively influenced by the product range of the company and not by the propensity of the company to cartelise.

For the sake of simplicity the rest of this post assumes the existence of a multi-product firm with each product being sold in a different subsidiary.

The increase in fine for recidivism under the Commission’s 2006 Fines Notice appears to be imposed more because of the extent of the product range of the undertaking than because of the undertaking’s relative culpability (it’s propensity to participate in a cartel). Obviously, all other things being equal, an undertaking with several subsidiaries is more likely to be a recidivist than an undertaking with a single subsidiary; that would not make a recidivism uplift for the multi-product undertaking unfair. But the increased probability of being a recidivist does not increase linearly with an increase in the number of subsidiaries – it increases far more quickly. You might think that an undertaking with ten subsidiaries is ten times more likely to be a recidivist than an undertaking with a single subsidiary. In fact it is fifty times more likely.

It is this lack of linearity that makes the Commission’s current approach to recidivism dubious. The recidivism uplift is going to be applied to companies with more subsidiaries, rather than companies with greater culpability.

What follows tries to explain this using basic probability. Be warned; it is quite long.

For those happier with probabilities and tables, then attached you will find a spreadsheet – Recidivism-probabilities – where you can alter the basic assumptions and see what impact that has on the probabilities.

Here is a static table, setting out the assumptions and probabilities on which the text below is based.

Probability Equivalent to once every…
Probability of infringement per year 0.0100 100 years
Reduction in probability after first infringement 50% 0.0050 200 years
Reduction in probability after third infringement 50% 0.0025 400 years
Number of subsidiaries (assuming for simplicity one sub=one product)
1 10 38 50 100
Probability of undertaking infringing the competition rules sometime in a ten year period 9.6% 63.4% 97.8% 99.3% 99.996%
Probability of the same undertaking also infringing the competition rules in a second ten year period 0.5% 25.0% 83.2% 91.2% 99.3%
Probability of the same undertaking also infringing the competition rules in a third ten year period 0.0% 5.5% 51.1% 65.1% 91.2%

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Introduction

Many competition authorities punish repeat offenders more severely, but authorities are not consistent in what constitutes a repeat offence in terms of:
– whether a repeat offence should be measured by the product, the company, or the corporate group (the “recidivism entity”); and
– the time between the definitive finding of one infringement and the beginning of the next (the “recidivism time period”).

This post looks only at the first of these, the recidivism entity, and for the sake of brevity does not look into the recidivism time period. There are also many other aspects of recidivism policy not covered in this post – whether a cartel followed by a vertical distribution infringement should be regarded as recidivism, whether a national distribution infringement followed by a global abuse should be regarded as recidivism, whether a comparatively small cartel justifies a recidivism uplift in a comparatively large and later cartel, and so on.

Of course, punishing repeat offenders more severely is generally accepted as a good idea and is far from unique to competition enforcement. If someone breaks a law, the penalty is often supposed to both punish the offender for the particular offence, and deter the offender from committing any future offence (and deter others more generally but that’s not relevant here). So if the same offender reoffends, it is reasonable to assume that the punishment for the first offence was not sufficiently deterrent, and the punishment for the second offence should be increased.

When looking at an individual – say a bank robber – the principle is relatively straightforward. An individual who robs a bank, is then caught and punished, and then robs another bank, is a recidivist.

When applied to corporate law-breaking, it is a little more complicated. When looking at whether an offence is a repeat offence, do you look at whether the conduct was carried out by the same employee, the same division, the same legal entity, or the same undertaking? Which recidivism entity you take into account makes a big difference.

The European Commission’s policy on recidivism is not restricted to the legal entity which was involved in a cartel, but extends to the ultimate parent which exercises decisive influence over that entity, and 100% ownership leads to a presumption of decisive influence which is in practice difficult if not impossible to rebut.

A Simplified Example

So how does that policy affect (1) a single product firm as compared to (2) a corporate group with a parent and, say, 100 subsidiaries? The approach I have taken here is to assume all other characteristics of the firms are the same – so eliminating all variables other than the number of the subsidiaries. I assume that the risk of each subsidiary entering into a cartel is the same, the propensity of all of the industries to cartelise is the same, and so on. Then I look at the probability of recidivism for companies with different numbers of subsidiaries.

The Problem with Probability

One of the problems with probability is that for many people, and certainly for me, it is deeply counter-intuitive. If a roulette wheel comes up black three times in a row, I want to bet on red. But if the wheel is true, then the probability of a red after three blacks is the same as the probability of a black after three blacks. So if a roulette wheel comes up black ten times in a row, there’s a temptation to think that the wheel is rigged. But given the number of casinos and roulette wheels in the world, and spins of those roulette wheels every day, I would guess – and I haven’t even tried to work this out – that a roulette wheel hitting black ten times in a row happens every few days. (This is the same idea as an individual winning a lottery twice; it’s very unlikely to happen to any one individual, but given the number of lotteries and players in the world, it’s also very likely to happen to someone.) Thinking otherwise is often called the gambler’s fallacy. This is how casinos make their money, and is one of the reasons I don’t gamble.

The counter-intuitive nature of probability is one of the reasons that in the rest of this post, I try and express the probabilities in different ways: some readers may find one type of example easier to grasp than another. I express the probabilities as a fraction of 1 (1 being certainty), as a percentage, and as a relationship between a large number of – hypothetical – companies and the subset of those companies that would, probabilistically, engage in cartels. For those readers with a better grasp of probability theory than I, this will likely be annoyingly repetitive. My apologies.

A Single Product Company

Take a single-product company’s likelihood of entering into a cartel. There are many factors that might influence this – the type of industry, the health of the economy as a whole, the health of that particular industry, the corporate culture, the company’s emphasis on competition compliance, and so on. All of these could be combined to come up with a measure of how likely that company is to engage in a cartel in any given year.

A hypothetical probability of it entering into a cartel

In the real world there is no way to look at any company and come up with an even vaguely reliable estimate of such a measure. But for the purposes of this post, the precise number does not really matter. All that matters is that we imagine a hypothetical single product company, attribute to it a probability, and attribute that same probability to each product-selling subsidiary of the 100 product undertaking. That gives you an indication of how, controlling for all other factors, the likelihood of companies entering into cartels is related to the number of products that that company sells. In particular this controls for their propensity to cartelise.

The first cartel

So, for example, a company that manufactures widgets might, taking into account all of the factors above, have a probability of 0.01 of engaging in a cartel in a given year. In the same way that rolling a dice gives a 1 in 6 (roughly 0.17) chance of rolling a 6, a probability of 0.01 is a 1 in 100 chance. After six rolls of the dice, you are very likely to have rolled a six; after one hundred years, our widget company is very likely to have engaged in at least one cartel.

Now 1 in 100 years seems a pretty low probability of entering into a cartel (from the perspective of a competition authority, if a company only engaged in one cartel every one hundred years, then they’re probably quite law-abiding). It seems a low estimate for many companies, particularly as very few companies last for a hundred years. But I’m trying to use numbers that are the least favourable to the conclusion that I draw at the end. I should note though that is one of the assumptions in this post I am most concerned about. Some companies seem to have sufficiently good compliance that they simply do not enter into cartels. If the starting assumption is that perfect compliance is possible, then the conclusions of this post may well be completely wrong.

If our single-product company has a probability of 0.01 of entering into a cartel in any given year, then over ten years, the probability of it entering into at least one cartel is about 0.096 or 9.6%. Roughly a 1 in 10 chance. So far, so, perhaps, obvious.

Put another way, if we take 10 000 single-product companies with the same characteristics, then roughly one in ten of them – around 960 – will enter into at least one cartel in any ten year period. The reason for using such a large number of companies as a point of comparison will, I hope, become clear.

The second cartel

Let’s assume that our company is one of the 960. It enters into a cartel sometime in that ten year period, and is caught and punished. As a result, it works hard at educating its employees about the competition rules, and successfully halves its chances of entering into a cartel in the future. So from a 0.01 probability of entering into a cartel – once in a hundred years – it then has a 0.005 probability – once in two hundred years. All of the other 959 companies do the same.

Bear with me.

What are the chances that our company – or any of the other 959 companies – having entered into a cartel in that first ten year period, and then having improved its compliance, nevertheless also enters into at least one cartel in a second ten year period? About 0.0047, or 0.47%. That’s a pretty low percentage; at about 200/1 against, not something anyone would likely bet on.

We started with 10 000 companies. Of these, 960 would enter into that first cartel in the first ten year period, and 47 of those 960 would enter into a second cartel in that second ten year period.

Round three.

The third cartel

Let’s assume that our cartel-prone company – and the 46 others – is caught, again, and punished for this second cartel. And they redouble their compliance efforts. So from a 0.005 probability of entering into a cartel in any given year, any one company now has a 0.0025 probability. One in four hundred years.

So given this further improvement in compliance, what are the chances of our widget company messing it up once again, and entering into at least one more cartel in a third ten year period? About 0.0001 or 0.001%. Or, of the original 10 000 companies, of which 960 entered into a first cartel, of which 47 entered into a second cartel, only 1 entered into the third.

Probability of cartelizing Equivalent to…
First Cartel 9.56% 960 companies out of 10 000
Second Cartel 0.47% 47 companies out of 10 000
Third Cartel 0.0116% 1 company out of 10 000

That looks good. Our single product company – and its 9 999 equivalent companies – has the incentive to keep improving its compliance, and keep reducing the chances of it engaging in cartels. On the above numbers, only 1 in 10 000 will enter into three cartels.

So much for a single-product company. Most companies produce more than just a single product. As we will see, the more products are produced (assuming for simplicity that each product is produced in a separate subsidiary), the greater the likelihood of a company being a recidivist. But the increase is far from linear.

A 100 Product Company

From a single-product company that just produces widgets, let us take an undertaking that produces one hundred different products, each in a different subsidiary.

The same hypothetical probability

Let us assume that the likelihood of each subsidiary entering into a cartel is the same as the widget company described above – 0.01. Let us also assume that if a subsidiary is caught in a cartel, then not only does that subsidiary increase its compliance efforts, but so does the entire group – which is exactly what a competition authority would want to happen.

Let us also assume that whether one subsidiary does not make it any more or less likely that another subsidiary will also enter a cartel (in terms of probability, that they are independent events), save for the undertaking-wide increase in compliance efforts after the fact.

The first cartel

In a ten year period, what are the chances of this 100-subsidiary company entering into at least one cartel in at least one of its subsidiaries? It is probably no surprise that it’s almost certain – over 99.99% (as opposed to about 9.6% for the single-product widget company). So if we imagine 10 000 one hundred product companies, just as we imagined 10 000 single product companies, then in a ten year period, 9 999 of those one hundred product companies will enter into a cartel (as opposed to about 960 single product companies).

Not so good for the 100-subsidiary company.

Note that the probabilities here are roughly linear – a 100-subsidiary company has roughly 100 times the probability of entering into at least one cartel than a one subsidiary company. The linearity breaks down, however, as soon as we look at recidivism.

Let us assume that the 100-subsidiary company puts in place the same additional compliance efforts as the single-subsidiary company, and does so across all 100 subsidiaries. It works just as hard at educating its employees about the competition rules (harder even, given that it has to roll out this compliance in 100 subsidiaries), and successfully halves any subsidiary’s chances of entering into a cartel in the future. So from a 0.01 probability of entering into a cartel – once in a hundred years – each subsidiary has a 0.005 probability – once in two hundred years. (Just as the single subsidiary company above.)

So what are the chances of a 100-subsidiary company entering into at least one cartel in the second ten year period?

The second cartel

We obviously expect to see the likelihood of it engaging in a second cartel after the first to be much less likely. For our single-subsidiary company above, the probability of it engaging in the first cartel was 9.6%, and a second cartel after the first was only 0.47%. But for a 100 subsidiary undertaking we only get a decrease from 99.99% to 99.33%. For every 10 000 undertakings, 9999 would enter into a first cartel, and 9933 would enter into a second. Not great. And bear in mind that this 100 subsidiary undertaking’s compliance efforts in every one of its subsidiaries are equal to that of the single product company.

The third cartel

OK, but what if our 100 subsidiary company redoubles its compliance efforts once again, just like the widget company? What are the chances that it will enter a third cartel in a third ten year period? 91.2%.

If we were faced with 10 000 undertakings, each of which had 100 subsidiaries, then 9999 would enter into a first cartel, 9933 would enter into a second, and 9120 would enter into a third.

Comparing the single product widget company and the 100-subsidiary multinational:

Probability of cartelizing Equivalent to…
First Cartel 9.56% 99.99%
Second Cartel 0.47% 99.33%
Third Cartel 0.0116% 91.2%

Tentative Conclusions

If the law should try to treat like cases alike and different cases differently, then it’s worth asking how compliant would the 100 subsidiary company have to be at the start, to put their probability of entering the third cartel down to the level of the single product company? Roughly 0.00022, or a cartel every five thousand years. Or, if we assume that a company with that kind of compliance record can’t improve it further, and its compliance therefore cannot not improve after each infringement, then 0.00011, or a cartel every ten thousand years. That is a rather tough objective.

You can look at the same numbers from a different perspective. If we again keep the probability of entering into a cartel at 0.01 as for the single product widget company, how many subsidiaries would a company need for it to become more likely than not (a probability of more than 50%) that a multi-subsidiary company will enter into three cartels on the terms described above? About 38.

You can change the assumptions, and I encourage you to do so. You can download the spreadsheet and change the probabilities for the first, second and third cartels, and change the number of subsidiaries, and see what difference that makes.

There may of course be good reasons why larger undertakings should be held to a higher standard and exposed to a greater risk of a fines increase for recidivism: larger corporations can better afford compliance programmes, training and monitoring, for example. But the way the Commission’s recidivism policy operates doesn’t put a slightly higher standard on multi-product companies, it puts an much higher standard on them, possibly an impossibly higher standard.

But going to the opposite extreme, it is fairly clear that a recidivism policy based solely on the product itself would be too narrow. If a CEO was personally implicated in three cartels, then the fact that the cartels were in three different subsidiaries of his/her 100-subsidiary undertaking should not be enough to escape a recidivism uplift for the group as a whole.

A properly drafted recidivism policy that truly identified recidivists, and properly reflected propensity to enter into cartels would have to look at a range of factors. But ignoring the number of products sold by a company means that the current Commission policy when assessing recidivism seems to punish inappropriately multi-product undertakings.

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Defining a single and continuous infringement in cases with asymmetrical participation

Defining a set of conduct as a single and continuous infringement (SCI) has significant consequences for parties to a cartel, in particular for their exposure in follow-on damages actions. It is no surprise, therefore, that the increased prevalence of damages actions in Europe has led to greater scrutiny of the Commission’s findings about SCI.

In several recent judgements the General Court and Court of Justice have grappled with what to do about cases where the Commission has found a particular company to have participated in only part of a broader set of infringements, that broader set constituting – in the Commission’s view – a single and continuous infringement. We may, for example, be looking at a case where a company participated in one product of a two-or-more product cartel, or where it was a fringe player in terms of either its participation, or its geographic reach.

Consequences of a Finding of SCI

As a reminder, the finding of a single and continuous infringement has broadly three potential consequences for a case.

First, prescription: if earlier conduct can be regarded as a single infringement with later conduct, then earlier conduct that might otherwise be prescribed would still be attackable.

Second, fines: if there is one single infringement, then there is one fine, one entry fee and one ten percent cap. If there are two infringements, then there can be two fines, with two entry fees, each subject to the ten percent cap.

Third, damages: participants in a single and continuous infringement are jointly and severally liable for the damage that they have caused.

If this is a classic multilateral around the table cartel, then the characterisation of the SCI and each undertaking’s part in it is relatively straightforward. The difficulties arise when the participation – and liability – is asymmetric.

So a simplified example would be two undertakings who are deeply involved in all aspects of a cartel, compared to a third which is only peripherally involved, whether that peripheral nature is due to geography, product scope or conduct or potentially other factors.

In the past, when public enforcement was essentially the only concern of defendants, then provided that the fine was appropriately tailored to the particular undertaking’s participation, the finding of that undertaking’s participation in an SCI was of little importance to that undertaking.

In an era of damages actions obviously that changes significantly. A small, peripheral player found to have been part of an SCI in a major cartel is potentially on the hook for all of the damages caused by the cartel as a result of its joint and several liability for the SCI. In practice this is very unlikely to happen (as among other things it would likely require the bankruptcy of the other players), but having to pay a greater share of the overall damages than it believes appropriate is a much more likely scenario.

Because of this concern over the implications for private enforcement, we now have a set of cases – Coppens, Aalberts and Soliver – where the Court expressed discontent, in various ways, as to how the Commission characterised the participation of certain undertakings in the single and continuous infringement.

In Coppens, the Court of Justice found that a company had participated in one product of a two product cartel, and was not a part of the two-product single and continuous infringement. Nevertheless a finding of infringement in respect of that one product was upheld.

In Aalberts, the Court took a different approach, finding that a company had only participated in some of the anti-competitive contacts. The Court – relying on the Commission’s characterisation of the contacts as a single indivisible infringement – annulled the entire decision.

Then in Soliver, the Court found that a fringe player carried out acts that fell short of full complicity in the more extensive single infringement carried out by other players, recognised that those acts were clearly anti-competitive, but nevertheless annulled the decision as a whole indicating that although the anti-competitive nature of those acts was clear, the party had not had an opportunity to respond to objections focused explicitly on those anticompetitive acts during the administrative procedure.

These cases taken together raise two distinct issues in terms of Commission decisions.

First, how should the Commission properly characterise the role of fringe players, or players who only participate in some aspects of the anti-competitive conduct. i.e. If we take the facts of, say, Soliver, how should the Commission have written its decisions in order to meet the approval of the Court. And it’s important to bear in mind here that it’s not (necessarily) just a question of how the Soliver decision should have been written, but also how the other decisions related to that cartel – that affecting St Gobain for example – should have been written.

Second, and allowing for the fact that these are complex issues of fact where reasonable people can disagree, should the Commission improve the way it drafts its decisions such that, if the Court disagrees on the particular characterisation of the single and continuous infringement, the entire decision does not necessarily fall but would be upheld in part.

Properly Characterising the Role of Fringe Players

Looking at the first of these, how should the Commission properly characterise the role of fringe players, together with those that are involved in conduct with fringe players. I do not think Soliver is particularly clear on how the subsequent Commission decision should be drafted.

Let’s take the example of two companies who are central to the arrangements, and one peripheral player.

Soliver says that we should not too quickly find that the peripheral player was liable for the single and continuous infringement. But what does that mean for how the infringement should have been drafted in the first place?

We know that for the peripheral player, they should not be described as being part of the SCI. But what should they be described as? Participating in an infringement separate to the SCI is obviously one possibility. But that has implications for the main players and the drafting of their decision? Are they now implicated in two separate infringements? The main one – the previously characterised SCI less that aspect where the fringe player participated – and then a second one with the peripheral player?

If this is right, then in the Soliver case, should St Gobain have been characterised as being in two infringements? This seems to be simple enough and may work in some cases. But what if, from the point of view of St Gobain, the conduct all looks very closely connected? From its point of view it looks like a single infringement? If from St Gobain’s perspective all of the essentially similar conduct covered the same territory, the same product, with the same anti-competitive object, then is it appropriate to regard that as two infringements simply because it also involved a peripheral player?

And here we have potentially the reverse problem of the peripheral player.

As I said, for the peripheral player, the implications of the finding of the SCI may be limited for public enforcement, assuming the fine was appropriately tailored, but the implications for follow on damages may be significant.

For the main player, there may be no real consequence for follow on damages – whether they are sued for damages for two infringements or one may make little difference as the cumulative damage must be the same. But there may be real consequences for public enforcement. For example if the main player was facing a capped fine for the single infringement, is it really open to the Commission to impose two fines, each with their own 10% entry fee and 10% cap simply because there was a peripheral player involved in part of the conduct?

This concern is perhaps clearly evident when looking at an example of an infringement covering multiple Member States. If these were a single infringement, then there would be a single fine; if there were multiple infringements, then there would be multiple fines with multiple 10% caps. If these were long running infringements, then the total fine could be well in excess of 10% of turnover.

That cannot be the correct result. If two multi-national companies are involved in a cartel covering five Member States, and in each of those Member States they cartelised together with a local company, then that should not lead to a finding of five separate infringements, with five fines and five applications of the 10% cap.

So defining multiple infringements may work for the peripheral player, but the main player risks coming out of this rather badly.

So the right answer is not, I think, to simply define multiple infringements.

Rather it is to define one single infringement – assuming the evidence points in that direction for at least one of the players – and then for those companies that are not involved in the full infringement, to define their participation as being of “part of the single infringement” whether that part is in relation to particular products, particular conduct, or particular territories.

So we might have, for example:
Company A liable for an SCI encompassing ten Member States and three products;
Company B liable for an SCI encompassing ten Member States and only one product;
Company C liable for an SCI encompassing five Member States and three products;
And so on.

Now there are two very different judges that have to be satisfied with this formulation:

  • the judge that reviews the public enforcement decision and needs to see if the liability of all players is properly analysed;
  • the judge that is charged with determining damages on the basis of a follow on action where the judge is bound by a finding of joint and several liability in respect of “the infringement”.

For the first, the General Court and Court of Justice have accepted this type of reasoning in the Bananas cases. But for the second, it is an open question – and likely will be for some years – as to whether this formulation would be sufficient for a national judge to delimit the joint and several liability of a cartelist to that “part” of the infringement which the Commission has defined in the decision.

I hope it would be for two reasons.

First, it makes sense to me because it is analogous to participants being involved for different duration, and a judge would deal with that easily enough with no conceptual difficulty of an undertaking being involved in – for example – only the last five years of a ten year cartel. Surely a judge looking at a Commission decision that, for example, finds an undertaking to have participated in a pan-European cartel save for Germany, would find no real conceptual difficulty in excluding that company from damage caused in Germany.

The second reason I hope it would be acceptable is that I don’t see a better alternative.

Drafting a Decision: Protecting Against Total Annulment

So much for how the Commission should draft its decisions to reflect properly each cartelist’s liability.

Now I want to turn to the question of whether the Commission should take greater steps to draft its decisions in such a way that, if a court disagreed with its characterisation of the single infringement, the Commission would not be facing total annulment but only partial.

Now of course making Commission decisions more resistant to Court review is not historically something that the defendant bar is interested in, but here again I think private enforcement is making a difference to incentives.

For example, imagine once again there are three undertakings implicated in a cartel. Two are clearly central players, one is implicated in only part of the infringement (be it the conduct, the product or the geographic area). The Commission decision characterises all as participants in the single and continuous infringement, the Court disagrees and annuls the decision against the third player in its entirety. Essentially what happened in Soliver.

If we assume that the Commission decision will be followed by follow on damages actions, then the defending lawyers of the main players have two objectives. First, to annul the Commission decision as regards their own client. But second, if the annulment action by the main players fail, they want to make sure that the Commission decision against the peripheral player survives – or at least as much of it as possible does.

So you do not want the decision against that defendant to be struck down because the Commission inappropriately characterised the infringement and the liability, and the Commission drafted the decision so that the entire decision falls if part of it does.

When the Court annulled Soliver it did not do so on the basis that Soliver’s conduct was in fact not anti-competitive. Quite the opposite. The Court clearly indicated that that part of the overall conduct in which Soliver was involved was itself anti-competitive. However the Commission had not characterised that part of the conduct as being anti-competitive in the Statement of Objections or the Decision. So Soliver had not been able to exercise its rights of defence in relation to that part of the conduct by itself.

This contrasts with the reasoning used in Aalberts, where the Court relied on the Commission’s own characterisation of the single conduct as a reason to annul the decision in its entirety. In that case, the Court again disagreeing that Aalberts had been involved in a single infringement encompassing all of the anti-competitive conduct, the Court quoted standard text used by the Commission against the decision itself – if it would, as the decision stated, be artificial to split the conduct into separate infringements, then if part falls, it all falls.

Soliver takes this substantive law argument, and turns it into – or possibly adds to it – a procedural one. What Soliver tells us is that unless the defendant has been adequately able to defend itself against the allegation that its conduct – being something less than the full SCI – was nevertheless anti-competitive then the decision will be struck down in its entirety.

So if the Commission defines a single and continuous infringement, it should also address and characterise “parts” of the single and continuous infringement conduct that could be regarded as standalone infringements.

This might get complicated.

What if the conduct covered ten member states, and the Commission considered it to be a single infringement covering all ten? What level of reasoning in the decision is necessary to justify the possibility that each Member State constituted a separate infringement? A full analysis for each individual Member State on a standalone basis?What about combinations? Benelux might be one infringement, Iberian peninsula might be another. How many alternatives do we need to envisage?

Or what if three products were involved, and again the Commission found that this was a single infringement, but the Court disagreed? Three full sets of legal analysis for the alternative that each product was a separate infringement?

What if we combine the two?
Do we then need to do an analysis of the restrictive effects of the conduct in respect of each of the three products in each of the ten Member States? That’s thirty separate infringements even before we get into the question of regional rather than national infringements.

It doesn’t take much imagination to see that even spotting each possible variant is an onerous task. And full analysis of each possible variant would increase the length of Statements of Objections and decisions quite considerably.

It seems unlikely that the Court had this in mind.

I suspect a more efficient approach, while still acceptable, is to make a judgment call on what needs to be done in each case.

If there is substantially the same conduct and market situation in each Member State, for example, then it’s probably acceptable to indicate rather briefly that although the Commission considers the single infringement to cover all ten Member States, conduct in any one member State, or combination of Member States, would similarly be an infringement.

It’s possible to imagine more complex situations, however, that might need greater elaboration.

An argument in favour of this moderate approach in most cases – aside from the sanity of all those involved – is that the very concept of a single infringement necessarily implies the existence of a set of instances of conduct that analysed separately could constitute separate infringements. In most cases, a simple mention of this should be sufficient to put a defendant on notice that in exercising their rights of defence they need to reply to that possibility.

(This presentation was given at events at Lincoln’s Inn in London and Brussels Matters in Brussels in late 2015. I am grateful to Thomas Sharpe QC, James Flynn QC, and Conor Maguire for the invitations to speak.)

Something old and something new

As avid readers of social media, Politico, Chillin Competition and other places will know, I left the Commission at the end of February. On 4 April I joined Covington’s growing competition team in Brussels.

I will continue to write on this blog – though experience has taught me to make no promises as to whether I will write more or less often than before.

What I write about will change. I tend to write about something I have been involved in, even if only to discuss it, rather than something I’ve merely read about happening elsewhere. So in private practice I’ll have different discussions than I had in the Commission and I hope those discussions will generate new perspectives.

If I disagree with the Commission, I’ll say so. But I already did, even when I was still in the Commission. The Commission has extremely generous rules on publications by staff which mean that already on this blog I criticised a merger decision that was – I think – right in terms of the outcome but poor in terms of reasoning.

So don’t expect to see an enormous change. I’m not going to start writing that the Commission is an out of control institution and many aspects of competition enforcement are flawed. Because I don’t believe either to be true. I worked hard in the Commission to get to what I thought was the right outcome on cases, policies and procedures, and I worked with a lot of other people trying to do the same.

DHL Italy: European Court issues key judgment on overlapping leniency procedures

From Kluwer Competition Law Blog: DHL Italy: European Court issues key judgment on overlapping leniency procedures


“On January 20, 2016, the European Court of Justice (the Court) issued a seminal preliminary ruling on the relationship between EU and Member State leniency programmes in Case C‑428/14, DHL Express (Italy) Srl and DHL Global Forwarding (Italy) SpA v. Autorità Garante della Concorrenza e del Mercato (AGCM).  The Court held that EU and Member…


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