Anti-cartel enforcement in the EU law
Collusive practices allow undertakings to exert market power they would not otherwise have, artificially restricting competition and increasing prices. On this context, a cartel is considered as a group of similar, independent companies which join together to fix prices, limit production or share markets or customers between them. Instead of competing between each other, cartels members rely on their agreements, which reduces their incentives to provide new and better products and services at competitive prices. This does not only affect other business, but also consumers.
Accordingly, secret cartels can be seen as a direct assault on the principles of competition law and they are known as one of the most harmful of the different kind of anticompetitive conducts. The main EU law provision on cartels is represented by article 101 TFEU, which deals with restrictive agreements and practices of a group of undertakings, so-called cartels. Undertakings which are not located in the EU, but which have an effect on Europe are also affected by EU anticompetitive law.
The European Commission is the main enforcer of the law against cartels in the EU. The Commission’s powers are established by Regulation 1/2003, which gives the Commission extensive investigatory powers.
The principal sanction available to the Commission is the imposition of fines on the companies engaging in cartel activities. The Commission has no powers to impose criminal sanctions on individuals involved or administrative sanctions to on firm’s managers, in contrast to national laws. In this context, the Commission has a wide discretion in setting the level of fines on companies, within the limits of Regulation 1/2003, which establishes that fines may not exceed 10 per cent of the firm’s turnover in the financial year preceding the decision. Nevertheless, there has been a clear trend towards increasing fines for hard-core cartels in recent years. The largest fine imposed on a single company is over 893 million euros.
Companies which have participated in illegal cartels have a limited opportunity to avoid or reduce a fine: the Commission operates ‘leniency programmes’, whereby companies which collaborate with the authorities, providing information about a cartel in which they participated might receive full or partial immunity from fines.
Leniency policy does not only benefit the companies who inform the Commission about a cartel in which they participated, since they can get either total immunity from fines or a reduction of them, but it also benefits the Commission, allowing it not only to pierce the cloak of secrecy in which cartels operate, but also to obtain insider evidence of the infringement.
Along with other detection and investigation tools, the leniency policy proves very successful in fighting cartels.
EU Commission Manuscript. The EU Explained: Competition.