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 […]
Do the fining rules treat small companies badly? This is an occasional criticism of the 2006 Guidelines on Fines. Is it accurate? Let’s take an intentionally simplified example. Nine companies each have value of sales of 10m euros per year in a product which they cartelise. All are equally culpable (no aggravating or mitigating circumstances to take into account), save for the duration of their participation in the cartel – three had a short duration, three medium, and three long. The only other relevant difference between the companies is their total worldwide turnover; similarly three had a small turnover, three medium, three long. This gives us nine different companies which we can group – for example – by their worldwide […]
I have two speaking engagements in April, both on cartels. The first is for the American Bar Association: Slicing the Pie: Defining the Scope of an International Cartel: April 28, 2014 12:00PM to 1:30PM (EST) / 6:00PM to 7:30PM (CET) The second is at the IBC Advanced EU Competition Law event in London on 29 & 30 April, where I’ll be speaking with Johan Ysewyn on recent cartel developments. IBC bills the conference as “The ultimate review of key developments in EU competition law.” If anyone is organising a penultimate review of developments, please let me know.
The European Commission’s positions on inability to pay competition fines, and on the failing firm defence under the merger regulation are superficially different, but the underlying policy concern is the same. The Commission’s 2006 Fining Guidelines envisaged the possibility that some fines ought to be reduced if a firm is unable to pay: “35. In exceptional cases, the Commission may, upon request, take account of the undertaking’s inability to pay in a specific social and economic context. It will not base any reduction granted for this reason in the fine on the mere finding of an adverse or loss-making financial situation. A reduction could be granted solely on the basis of objective evidence that imposition of the fine as provided […]