Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Almunia discusses the EC’s focus on fighting cartels, (Apr 8, 2014)

By Linda O’Brien, J.D., LL.M.

Widely recognized as one of the top cartel busters, the European Commission has a powerful and resilient array of tools to detect and sanction companies that make an ill-considered decision to set up a cartel, Joaquin Almunia, European Commission (EC) Vice President of the European Commission for Competition Policy, stated in an address before the SV Kartellrecht conference in Brussels on April 3.

Almunia began his speech, entitled “Fighting against cartels: A priority for the present and for the future,” by stating that fighting cartels has been a core task of the European Union (EU) competition authority for the past 15 years, when the first team of enforcers devoted entirely to cartels, the first leniency program, and the first guidelines on fines were set up. Over the past five years, the work of the EC has kept pace with the EU Court of Justice’s jurisprudence and the evolution of these illegal business practices.

The EC’s practice shows a growing number of international cartels. Almunia noted that, although economists often claim that expanding industries are not suited to cartels, the EC’s many decisions in the information technology sector show that they are. It appears that, when technology expands, companies are tempted to collude to set prices as high as possible. In the current mandate, the EC has adopted 25 cartel decisions which have produced fines of €8.6 billion - an amount that is both a deterrent and appropriate for the infringements the EC has pursued, according to Almunia.

Detecting cartels is not easy, since they are secret by definition and come in all shapes and sizes, Almunia stated. The EC’s portfolio of cases includes different kinds of infringement - market sharing, price-fixing, and bid rigging. The importance of antitrust compliance is on the increase and now regularly rates as one of the top concerns of general counsels. This is a sign that the EC’s action is having an impact, in Almunia’s view.

Almunia observed that the pressure of worldwide enforcement is pushing cartels to find new and more devious ways to cover their actions. In a review of the EC’s efforts, its leniency programs have produced a consistent stream of immunity applications. The Commission also has developed forensic tools for the digital business environment that can search data in a targeted manner and restore deleted information. The EC also fights cartels through international cooperation and by imposing fines against companies that have formed cartels.

Almunia next highlighted the long-awaited proposal for a Directive on private enforcement. The proposal, which will become law when the Parliament and Council confirm recent political agreements, reaches out to victims of antitrust infringement so they can obtain compensation for the harm suffered. The Directive goes to the core of procedural obstacles that victims face and establishes a minimum standard on which consumers and businesses can rely upon whenever they are in the EU. The Directive will preserve leniency programs, while making more evidence available to victims. The new rules also make cartel enforcement more efficient by not requiring companies that obtain immunity from fines to compensate the customers of other infringers.

The fight against cartels is and will remain a priority for the EC and for national competition authorities in the EU. Prospective cartelists will hopefully understand that the odds are stacked against them and setting up a cartel is illegal and a terrible business decision, Almunia concluded.

News: Antitrust