eu cartel enforcement · 5/13/2015 · undertakings had an overview of the information held by the...

EU CARTEL ENFORCEMENTMAY 2018

–MAY 2019

Dirk Van Erps, DG COMP, European Commission

Johan Ysewyn, Covington

1

Overview

1. The Year in Numbers

2. Policy Output

3. Commission Decisions

4. Cartel Cases in the European Competition Network

5. The EU Courts

6. The Crystal Ball

2

1. The year in numbers

3

EC Total Fines & Number of Cartel Decisions

4

5

6

7

4

1

0

1

2

3

4

5

6

7

8

0

500

1000

1500

2000

2500

3000

3500

4000

2015 2016 2017 2018 2019

No.

EC

Dec

isio

ns

Fine

s/EU

R M

EC Total Fines & Number of undertakings

5

21

16

31

20

3

0

5

10

15

20

25

30

35

0

500

1000

1500

2000

2500

3000

3500

4000

2015 2016 2017 2018 2019

No.

Und

erta

king

s

Fine

s/EU

R M

Publicly known ongoing cases

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» Automotive sector

» Car emissions (diesel & petrol; German Car Makers)

» Financial services sector

» Bank Customers’ Account Data

» European Government Bonds

» SSA Bonds

» Forex

Publicly known ongoing cases

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» Styrene Monomer Purchasing

» Metal Packaging

» Sports Media Rights

» Ethanol Benchmarks

» Farmed Atlantic Salmon

» Irish Motor Insurance

» Ethylene purchasing

2. Policy output

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ECN+: Enhancing enforcement by national competition authorities

• Directive (EU) 2019/1– Means and instruments to effectively enforce EU competition rules– Aim: genuine common competition enforcement area in the Single

Market– Improve the enforcement of existing laws by Member States in

partnership with the EC– Provide for minimum guarantees

• Key features– Independence and resources– Effective tools to detect and stop infringements– Ability to impose deterrent fines

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• Leniency– Problem:

leniency programmes key tool to discover illegal cartels,but they work differently across Europe

– Directive: ensure that companies benefit from leniency in the same way

across the EU by translating core principles of ECN ModelLeniency Programme into law

grant leniency and settlement material the same level ofprotection as before the EC

protect employees and directors of immunity applicants fromindividual sanctions if they cooperate

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• Implementation– Published on 14 January 2019– Entered into force on 3 February 2019– Member States have two years to implement the Directive (by 4

February 2021)

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Commission eLeniency tool

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Commission eLeniency tool

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• Enables online submissions in the context of leniency applications,settlement procedures and other non-cartel proceedings underArticles 101 and 102 TFEU

• Removes the need for companies/lawyers to dictate oral statements atEC premises

• Confidentiality and legal privilege remain unchanged– Statements are typed-in directly online on EC’s secure server– All data is transferred securely and can’t be copied or printed– All statement are protected from disclosure

• Use of the system is voluntary; oral submissions are still possible

• eLeniency is available online 24 hours a day, 7 days a week

• https://eleniency.ec.europa.eu

3. Commission Decisions

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European Commission – Cartel Decisions

1. Publication of older decisions

» Retail food packaging (June 2015 – publication May 2018)

» Optical disk drives (October 2015 – publication May 2018)

» Capacitors (March 2018 – publication of summary decision

December 2018)

II. Settlement decision

» Occupant safety systems II (March 2019)

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3.1 Publication of older decisions

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1. Retail food packaging

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1. Retail food packaging (contested)

• COMP/39563 – Decision of 24 June 2015 – Publication 3 May 2018

– 10 producers, 2 distributors of polystyrene foam or polypropylenerigid trays – Linpac (full immunity)

– Customer allocation, bid rigging, information exchange, price fixing– 5 separate cartels, varying duration between 2000 and 2008– Total fine: € 116 mio

• Most interesting features?– 5 cartels re. same products, but no SCI: no overall collusive plan in EEA– Exceptional 5% discount due to “considerable duration of the

investigation”– Reductions of 5% for Magic Pack and Silver Plastics for substantially

limited role– Three inability to pay claims, two approved (reductions by 75% and 25%)

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2. Optical disc drives

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2. Optical disc drives (contested)• COMP/39639 – Decision of 21 October 2015 – Provisional publication

16 May 2018

– 8 participants – 5 undertakings– Information exchange: network of bilateral contacts to avoid

competition in procurement tenders organised by Dell and HP(Philips, Lite-On and PLDS – full immunity)

– Duration of 4.5 years– Total fine: € 116 mio

• Most interesting features?– Application for marker by Philips, full immunity extended also to Lite-

On and PLDS for perfecting the marker application– SCI & Fine reductions (Philips, Sony) of 3% due to lack of awareness

of HP leg of cartel (even though value of sales already reflects this)– Value of Sales: invoices to EEA Entities (not delivery)

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3. Capacitors

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3. Capacitors (contested)

• COMP/40136 – Decision of 21 March 2018 – Publication summary

decision 11 December 2018– 10 Japanese companies - Sanyo (full immunity)– Exchange of commercially sensitive information (future prices, pricing

intentions, supply and demand information), price coordination– Duration of 14 years– Total fine: € 254 mio

• Most interesting features?– Bilateral or trilateral contracts– Multilateral meetings between managers and even presidents– Cartelists were aware of their anti-competitive behavior– 5 appeals lodged

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3.2 Settlement decision

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4. Occupant safety systems II

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Occupant Safety Systems II • COMP/40481 – Decision of 05 March 2019

– 29th settlement– 2 cartels, varying duration between 2007 – 2011– 3 companies – Takata (full immunity)– Exchange of commercially sensitive information and price

coordination for the supply of seatbelts, airbags, and steering wheelssupplied toVolkswagen and BMW

– Total fine: € 368 m• Most interesting features?

– Second fine for car safety equipment manufacturers– Brings fines for EU cartels in the automotive parts sector to over € 2

billion

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Commission decisions – some tentative conclusions

• All cases are based on immunity applications• Only one new decision (settlement) in the last year• Settlement procedure:

– Positive experience– Now covers more than half of the cases– Process getting shorter

• Continued scrutiny of automotive, financial services and industrial sectors

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4. Cartel Cases in the European Competition Network

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Enforcement in the ECN

• 1097 envisaged decisions submitted by NCAs in addition to EC’s own

antitrust decisions (May 2004 - 31 December 2018)

• Many focusing on bid rigging and markets important for public

expenditure (e.g. construction and public procurement)

• Work-sharing / case-allocation – flexible and pragmatic approach

• Assistance in investigations and exchange of information

• ECN report on investigative powers:

http://ec.europa.eu/competition/ecn/investigative_powers_report_en.pdf

and ECN Recommendation on investigative powers:

http://ec.europa.eu/competition/ecn/recommendation_powers_to_investigate_enforcement

_measures_sanctions_09122013_en.pdf

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NCA Decisions May 2004 – December 2018

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0

20

40

60

80

100

120

140

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

ECN Cases – Selected Examples• Finland - Bus companies - € 38,000,000, 25 January 2016

• France - Parcel delivery services - € 672,300,000, 3 March 2016

• Germany - Manufacturers of railway sleepers - € 1,500,000, 3 March 2016

• Germany - Resale price maintenance in food retail sector - € 90,500,000, 28 April 2016

• Spain - Manufacturers of adult diapers - € 128,800,000, 31 May 2016

• Italy - Vending machines - € 100,750,028, 8 June 2016

• Spain - Rail cargo transport services - € 75,600,000, 6 March 2017

• Cyprus - Interchangeable fees - € 31, 000 000, 23 May 2017

• Germany - Battery makers - € 28,000,000, 27 June 2017

• France - Flooring suppliers - € 302, 000, 000, 19 October 2017

• Italy - Steel producers - € 140,000,000, 2 August 2017

• Greece - Construction cartel - € 80,700,000, 3 August 2017

• Italy - Cement cartel - € 184,000,000, 8 August 2017

• Spain - Power cables cartel - € 44,700,000, 28 November 2017

• Lithuania - Wedding dresses - € 1 to 1,260, 31 October 2017

• Spain - Interest rate derivatives - € 91,000,000, 14 February 2018

• Germany - Construction cartel - € 40,800,000, 5 July 2018

• Germany - Stainless steel - € 205,000,000, 12 July 2018

• Spain / Andalusia - Funeral services - €73 to 11,516, 4 September 201830

5. The EU Courts

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Level of General Court Scrutiny

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21 judgments re 7 EC decisions

2018

19 judgments Decision fully upheld 90%

1 judgment Partial annulment 5%

1 judgment Full annulment 5%


2016


3 judgments Partial annulment 20%

0 judgments Full annulment 0%


2017


2 judgments Partial annulment 100%

0 judgments Full annulment 0%

Level of ECJ Scrutiny

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6 rulings on GC judgments re 2 EC decisions

20185 judgments GC judgment upheld 83%

1 judgments GC judgment annulled 17%







Court Review – A Closer Look

1. Investigation issues

2. Single and continuous infringement

3. Parent & successor liability

4. Evidential issues

5. Procedural issues

6. Fining issues

7. Settlements

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5.1 Investigation Issues

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• EC took copies of e-mail sets and hard drives without prior examinationfor further investigation at the EC premises

• GC:– No exceeding of powers under Regulation 1/2003

Power to take copies or extracts is not limited to books orrecords that the Commission has already reviewed at thepremises – if same guarantees are offered

– No breach of rights of defence Undertakings had an overview of the information held by the EC

and could assess the chances of success of a leniency application– No obligation to inform the Belgian Competition Authority

Inspections took place in France – French authorities had beennotified

Continued investigation at EC premisesT-449/14 Nexans; T-475/14 Prysmian (Power Cables - GC 12 July 2018)

5.2 Single and continuous infringement

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• Two cartels composing one single and continued infringement in “powercables” cartel:

– “A/R” cartel: global allocation of “home” and “export” territoriesbetween EU, Japanese, and Korean undertakings

– European cartel: allocation of areas within the EEA between EUundertakings only

• Claim: EC erred in law by finding that “A/R” and European cartels formedone and the same SCI

Participation in SCIT-439/14 LS Cable; T-448/14 Hitachi (Power Cables - GC 12 July 2018)

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• GC applies classic SCI test:– Overall plan pursuing single, common objective

EU market sharing only possible because non-EU firms refrainedfrom competing on the EU market

European cartel subordinate to global A/R cartel

– Intentional contribution to the objective Each intervention in “home territory” aspect of A/R cartel

contributed to implementation of European cartel

– Awareness of other conduct or reasonable foreseeability andwillingness to take the risk Sufficient that non-EU firms knew of existence of EU agreement No need for EC to prove knowledge of detail

Participation in SCIT-439/14 LS Cable; T-448/14 Hitachi (Power Cables - GC 12 July 2018)

5.3 Parent & successor l iabil ity

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Parental liability for institutional investorsT-419/14 Goldman Sachs (Power Cables - GC 12 July 2018)

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• Goldman Sachs (GS) held jointly and severally liable for behaviour ofportfolio company (Prysmian group)

• GS claimed it was a mere financial investor: share of 84.4% to 91.1%

• GC applied presumption of decisive influence (Akzo), despite lessthan 100% shareholding, due to a combination of factors:

– Full control of voting rights– Power to appoint and remove board members– GS representatives on the board– Access to regular updates and reports on commercial strategy

• Lack of evidence that shareholding was a pure financial investment

Successor liability in asset transfersT-531/15 Coveris Rigid France (Retail Food Packaging – GC 6 December 2018)

• Coveris’ assets used for the manufacture of the products concerned bythe infringement were sold to ONO Packaging SAS

• Coveris argued that ONO ought to be liable for the infringement, since itwas its economic successor

• GC: “when the assets of a legal entity that participated in an infringement aretransferred to independent undertakings, liability follows those assets only inexceptional cases” -

i. if the predecessor has ceased to exist either in law oreconomically

ii. in intra-group transfers, where the two entities constitute one andthe same economic entity

iii. if not (i) and (ii), in a transaction between two independent entitiesacting in bad faith, to circumvent the application of EU competitionrules

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Successor liability in damage claimsC-724/17 Skanska Industrial Solutions and Others (ECJ 14 March 2019)

• Finnish asphalt cartel (1994 – 2002)

• All the shares of three of the cartelists were subsequently acquired bythree other asphalt suppliers

• Question: If EU law determines the companies liable for damages, do thesame principles as in determining liability for fines apply?

• ECJ (preliminary ruling):

– The determination of the entities that are liable for damages caused byan infringement of Article 101 TFEU is directly governed by EU law

– “Undertaking”: same scope with regard to the imposition of fines aswith actions for damages; the principle of economic continuity alsoapplies with regard to the determination of the entities liable fordamages

• The three asphalt suppliers can be held liable for damages as the economicsuccessors of the companies which had participated in the cartel

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5.4 Evidential issues

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Corroborating evidenceT-379/10 RENV and T-381/10 RENV Keramag and Others

(Bathroom fittings – GC 3 July 2018)

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• Timeline:– 2010 Bathroom Fittings decision (Sanitec fined € 57.6 million)– 2013: GC reduced fine by € 7 million based on errors of assessment:

incorrect conclusion re. participation of two of its subsidiaries overestimation of period of involvement of a third subsidiary

– 2017: CJEU found examination of available evidence by GC insufficient

• On re-examination, GC reinstated original fine:– Evidence from separate leniency applications, examined as a whole,

confirmed infringement– Holistic examination of several pieces of evidence, which did not in

themselves corroborate an infringement

Use of evidenceC-99/17 RENV Infineon Technologies (Smart Card Chips – ECJ 26 September 2018)

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• Infineon disputed the authenticity of an e-mail before the EC and submittedan expert report

• After conducting its own forensic assessment, the EC dismissed Infineon’sdoubts

• What should the EC do in case a party contests the authenticity ofevidence lawfully obtained?

– ECJ (confirmation of GC): Τhe EC has to investigate this allegation inthe way it considers appropriate

• Did the GC reverse the burden of proof when it rejected the Infineon’sclaim for an independent expert report?

– ECJ: No, Infineon has not shown that the EC did not investigatesufficiently and, therefore, no such need

– Criterion for assessment of probative value of evidence: credibility

5.5 Procedural issues

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Damages for lengthy proceedingsC-138/17 P and C-146/17 P EU v Gascogne Sack; C-174/17 P and C-222/17 P EU v ASPLA; C-150/17 P EU v Kendrion (Industrial bags – ECJ 13 December 2018)

• Parties claimed damages due to excessive duration of the proceedingsbefore the GC

• Claim: losses suffered as a result of making additional bank guaranteepayments beyond a reasonable period

• GC awards damages (€ 50k to Gascogne, € 590k to Kendrion, € 40k toASPLA, and € 100k to Armando Álvarez)

• EU and Parties (except Kendrion) appeal• ECJ annuls the GC’s judgments

– Maintaining bank guarantees is not compulsory – firms’ choiceinstead of paying the fine in full

– Insufficient causal link between breach of the obligation to adjudicatewithin a reasonable time and the damage resulting from the paymentof bank guarantee charges

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Damages for default interestT-201/17 Printeos (Paper envelopes – CG 12 February 2019)

• Timeline– Printeos fined € 4.7m in 2014, pays in 2015– GC annulled EC decision in 2016 for failure to state reasons– EC repayed € 4.7m fine to Printeos, without interest

• Printeos sought 185K default interest (ECB refinancing rate + 2%) forperiod between provisional payment and repayment + default interest(ECB refinancing rate + 3,5%) on 185K for period from repayment untildamage payment (18/day)

• GC ordered EC to pay Printeos those damages– Article 266 TFEU obliges EU institutions to implement annulments

fully and unconditionally – fine void ex tunc• EC has appealed

49

Referral of investigation to the ECT-410/18 Silgan Closures and Silgan Holdings (GC 25 March 2019)

• BKartA investigation into suspected tin plate and aluminum can cartel• BKartA referred case to the EC in 2018, noting possible infringements in

multiple EU member states• Silgan claimed that the EC decision to open the case breached the

principle of subsidiarity

• GC: only acts or decision which affect the legal position of theundertaking concerned can be the subject of an appeal

– Silgan claimed that the referral constituted a change in its legalposition, because its German leniency application would no longerapply

– GC: no change in Silgan’s legal position, because it could still apply forEU leniency

– DHL: coexistence and autonomy of leniency programs

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Publication of decision pending appealC-65/18 P(R) Nexans (Power Cables – ECJ 20 June 2018); C-1/19 P(R) JPM, Crédit

Agricole (Euribor – ECJ 21 March 2019)

• Can the EC publish a non-confidential version of its decision while anappeal on the substance of the case is pending?

– GC & ECJ: Yes, the EC has no obligation to wait for the final judgmenton substance, if the applicant does not substantiate its claims onbusiness secrets or confidential information

• Does this publication harm the rights to be heard, to obtain redress, andto an effective remedy in the main case?

– GC & ECJ: No, those rights will not be harmed by the publication ofthis decision

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5.6 Fining Issues

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Joint and several liabilityT-475/14 Prysmian and Others (Power Cables – GC 12 July 2018)

• Should the EC determine the internal shares of the overall fine to be paidby the companies held jointly and severally liable?

• GC (re-affirmed Siemens Österreich):

– No such obligation is supported by the law (Art. 23(2) Regulation1/2003)

– Joint and several liability: additional legal device to strengthen theeffectiveness of the fines recovery

– Issue to be resolved later between the parties concerned

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5.7 Settlements

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Presumption of innocence in staggered hybrids T-433/16 Pometon (Steel abrasives – GC 28 March 2019)

• GC ruled that the settlement decision did not breach Pometon’s rights ofdefense

• GC concluded that the duty of impartiality cannot be extended to meanthat any reference to the non-settling party in the settlement decision isprohibited

• All references to Pometon were in the "Description of the events”section and did not contain any legal characterization that couldtransform those references into a ‘disguised ruling’ against Pometon

• Implications?– In line with ICAP, different conclusion– Possible to adopt settlement and prohibition decision on different

dates without breaching the presumption of innocence

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6. The Crystal Ball

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The Crystal Ball

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• Increased challenge of investigative acts

• Proof and motivation of decisions: close scrutiny by theCourts

• Cartels on restriction of innovation

• Settlements: established instrument, cases moving morequickly

• Private damages: impact on publications

• More ex officio cases

• Deepening of cooperation within the ECN

• Whistleblower tool

Dirk Van E rp sDG Compe t i t i on , Eu ropean Commis s ionD i rk .VAN-ERPS@ec .europa . eu

Johan Ysewyn , P a r tne rCov in g ton & Bur l i n g LLP, B ru s se l s / Londonj y sewyn@cov. com

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eu cartel enforcement · 5/13/2015 · undertakings had an overview of the information held by the...

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