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A key aspect of the EUCAL website is its blog and comment section, which is designed to drive the debate on antitrust reform in Europe among all stakeholders, and especially in political circles at national and EU level, where reforms need to be introduced – ranging from individual sanctions and a more targeted fining policy to parent company responsibility and greater respect for due process.
Guest bloggers and opinion writers are welcome to blog on any aspect of the antitrust reform debate simply by sending an e-mail to info@eucal.org or clicking above on contact. Comments can be posted directly on the blog.
Deficits in Today’s Fining Practice of the European Commission and its Judicial Review
19. April 2010, AdminFines imposed by the European Commission for infringement of the European competition rules have reached a very high level. While no one argues against the need to sanction anti-competitive behaviour, I believe that the legal principles on which the Commission has based its current fining practice are simply wrong. They neither properly consider the damage caused by a cartel nor take into account the anti-trust compliance efforts of companies. Moreover, the failure to review responsibility for a cartel raises serious concerns over the issue of parent company liability.
The right approach to fines
It is necessary now to better balance the level of fines on the one hand with the cartel “rent” and damage claims that may be demanded on the other included private enforcement. In an ideal world, the infringer should be aware that it will not only not keep the not keep the extra revenue accrued from the cartel, but that it will be fined as well. This approach, however, would require changes in the current policy that sets 30 per cent of the concerned sales as the starting point for the basic fine, as set out in the 2006 Fining Guidelines.
Furthermore, EU policy should also take into consideration the existence of best practice compliance programmes to determine whether the infringer is essentially a compliant corporate citizen or not. The Fining Guidelines however do not even mention compliance efforts as relevant for setting the fine, and more recent case law shows that compliance efforts might even be considered as an aggravating factor.
Fact-Finding and Judicial Review
Due to the very high level of fines, I also believe that any proceedings before the Commission must meet the same high level of substantial and procedural standards applied in criminal proceedings in order to safeguard the rights of defence. But currently proceedings are driven by a system of leniency in which the contributions are neither questioned nor carefully scrutinized as to whether they are true and correct. This situation argues for much more objective fact-finding procedure rather than driven by the parties who apply for leniency in order to receive significant reductions in their fines.
Finally, the Community courts should execute a full judicial review of the Commission’s fining decisions. Currently, the Court normally just reviews the documentary evidence produced by the parties, but rarely hears witnesses or takes direct evidence. A far-reaching reform necessary to ensure unbiased EU decisions in the setting of fines would involve the Commission is acting as the investigator and prosecutor while the Community courts impose the fine based on evidence taken and arguments heard.
These thoughts provide just a very rough outline of the procedural reforms that I believe are necessary, but I hope they contribute to an open and dynamic discussion.
The right approach to fines
It is necessary now to better balance the level of fines on the one hand with the cartel “rent” and damage claims that may be demanded on the other included private enforcement. In an ideal world, the infringer should be aware that it will not only not keep the not keep the extra revenue accrued from the cartel, but that it will be fined as well. This approach, however, would require changes in the current policy that sets 30 per cent of the concerned sales as the starting point for the basic fine, as set out in the 2006 Fining Guidelines.
Furthermore, EU policy should also take into consideration the existence of best practice compliance programmes to determine whether the infringer is essentially a compliant corporate citizen or not. The Fining Guidelines however do not even mention compliance efforts as relevant for setting the fine, and more recent case law shows that compliance efforts might even be considered as an aggravating factor.
Fact-Finding and Judicial Review
Due to the very high level of fines, I also believe that any proceedings before the Commission must meet the same high level of substantial and procedural standards applied in criminal proceedings in order to safeguard the rights of defence. But currently proceedings are driven by a system of leniency in which the contributions are neither questioned nor carefully scrutinized as to whether they are true and correct. This situation argues for much more objective fact-finding procedure rather than driven by the parties who apply for leniency in order to receive significant reductions in their fines.
Finally, the Community courts should execute a full judicial review of the Commission’s fining decisions. Currently, the Court normally just reviews the documentary evidence produced by the parties, but rarely hears witnesses or takes direct evidence. A far-reaching reform necessary to ensure unbiased EU decisions in the setting of fines would involve the Commission is acting as the investigator and prosecutor while the Community courts impose the fine based on evidence taken and arguments heard.
These thoughts provide just a very rough outline of the procedural reforms that I believe are necessary, but I hope they contribute to an open and dynamic discussion.
By Wolfgang Bosch, Gleiss Lutz
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