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 […]
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 […]
The European Commission levies high fines on companies that break the competition rules. Some of those companies argue that the fines are now too high. So what is too high? If a company breaks the competition rule prohibitions on anti-competitive agreements or the abuse of monopoly power, then the Council has given the European Commission the power to fine that company up to 10% of its annual global turnover with the fine based on the gravity and duration of the illegal behaviour. This provision is neither new nor unique: it was first set out in a Council Regulation in 1962, and most competition laws have similar provisions. What is new is that over the last fifteen years, the absolute level […]