RESTRICITVE PRACTICES AND LENIENCY

Zuzana Šimeková

European Union – Opportunities and Challenges 3 - 5 June 2009, Dubrovnik



Agenda

Relationship between EC and national competition rules   Which law to apply?

National Competition Authority (

NCA

) or European Commission (

Commission

)?

 Restrictive practices  Anti-competitive agreements  Concerted practices  Leniency  Leniency application tests  Procedure and Results

EC and National Laws for Restrictive Practices

Two sets of rules

Art. 81 EC Treaty National competition law

NEED TO CONSIDER BOTH

Jurisdiction – Commission or NCA

 Commission:  effect on trade between Member States  EC law applies  NCA:  if effect on trade within the state, national law applies  can also apply EC law, if the infringement has an effect on trade between Member States and the NCA is the best-placed authority to deal with the infringement  Use of EC law as an example or guidance

Anti-competitive Agreements

 Article 81 EC Treaty prohibits anti-competitive agreements which have the object or effect of preventing, restricting or distorting competition  Applies to oral as well as written agreements    Even if not legally binding Even if fail to work in practice Even if inferred from conduct (especially contact with competitors)

Concerted Practices

 Article 81 EC Treaty prohibits concerted practices which have the object or effect of preventing, restricting or distorting competition  Concerted practices:  Fall short of agreement  Involve direct or indirect contact between economic operators  Are most likely in contact between competitors, but can also apply to vertical relationships  No need to specify whether a conduct amounts to an agreement or practice.

Restrictive Practices - Examples

   No exhaustive list of restrictive practices Agreements between competitors and vertical agreements Examples of agreements that infringe Art. 81:  horizontal price fixing between competitors (also covers agreed discounting, limiting output)  market sharing (i.e. dividing up customers or markets between competitors)  resale price maintenance (e.g. telling dealers not to sell [Product Y] below €X)   bid rigging sharing confidential / competitively sensitive information with competitors

Exemptions from Prohibition

 In limited situations, there are exemptions from the prohibition:  If can show agreement satisfies a number of conditions (e.g. efficiencies which result in benefits to consumers)

but burden of proof is high

 Certain agreements will automatically satisfy these conditions if they fall within the scope of a Block Exemption Regulation  “Hard core” infringements such as price fixing are very unlikely to benefit from an exemption

Importance of Leniency

  "

Secret cartels undermine healthy economic activity. To root out cartels we need heavy sanctions to deter cartels and an efficient leniency policy providing incentives to report them.

" Kroes, press release IP/06/1705, Brussels, 7th December 2006 .

Purpose: to reward companies for the value they bring to the Commission’s case  100% immunity from fines  Fixed range of percentage reductions in fines Covers cartel agreements

Leniency Application Tests

Full immunity: Reductions in fines:  Submission of sufficient information to carry out a targeted investigation or come to an infringement decision  Evidence with significant added value  Co-operation obligation  Co-operation obligation

Different Authorities, Different Rules

 Absence of a “One Stop Shop” for leniency applicants  Applications to the Commission: covers EC infringements but not necessarily national infringements  Applications to the national competition authorities may also be necessary  Applications generally include information on the applicant and alleged cartel arrangement, incl. its aims, activities, functioning, duration, geographical scope, etc.

Leniency – Reduction in Fines

Case Professional videotape cartel (2007) Flat Glass cartel (2008) Parties Sony: Fuji: Maxel: Asahi: Guardian: Pilkington: Saint-Gobain: Original Fine/ € 47,19,000 3,20,000 14,400,000 65,000,000 148,000,000 140,000,000 133,900,000 Leniency 40% reduction 20% reduction 50% reduction Rubber cartel (2008) Bayer: Zeon: 28,870,000 5,600,000 30% reduction 20% reduction

Questions?