Notice of the Commission

relating to the revision of the 1996 notice on the non-imposition or reduction of fines in cartel cases

(2001/C 205/05)

(Text with EEA relevance)

The Commission invites all interested parties to submit their written observations on the following draft notice on immunity from fines and reduction of fines in cartel cases, which is intended to replace the 1996 notice on the non-imposition or reduction of fines in cartel cases. Observations should be sent in the two months following the date of the present publication to the following address: European Commission Directorate-General for Competition

Unit A-1

J 70 - 5/065

Rue de la Loi/Wetstraat 200 B - 1049 Brussels. Internet address: COMP-LENIENCY@cec.eu.int

Draft Commission notice on immunity from fines and reduction of fines in cartel cases

INTRODUCTION

1. The present notice concerns secret cartels between competitors aimed at fixing prices, production or sales quotas, sharing markets including bid-rigging or restricting imports or exports. Such practices are among the most serious restrictions of competition encountered by the Commission and ultimately result in increased prices and reduced choice for the consumer. They also harm European industry.

2. By artificially limiting the competition that would normally prevail between them, undertakings avoid exactly those pressures that lead them to innovate, both in terms of product development and the introduction of more efficient production methods. Such practices also lead to more expensive raw materials and components for the Community companies that purchase from such producers. In the long term, they lead to a loss of competitiveness and reduced employment opportunities.

3. The Commission is aware that certain undertakings involved in this type of illegal agreement are willing to put an end to their participation and inform it of the existence of such agreement, but are dissuaded from doing so by the high fines to which they are potentially exposed. In order to clarify its position in this type of situation, the Commission adopted a notice on the non-imposition or reduction of fines in cartel cases(1), hereinafter "the 1996 notice".

4. In that notice, the Commission announced that it would examine whether it was necessary to modify the notice once it had acquired sufficient experience in applying it. After five years of implementation, the Commission has the experience necessary to modify its previous policy in this matter. In particular, this experience has shown that the effectiveness of the notice would be improved by an increase in the transparency and certainty of the conditions on which any reduction of fines will be granted. A closer alignment between the level of reduction of fines and the value of a company's contribution to establishing the infringement could also increase this effectiveness. The present notice addresses these issues.

5. The Commission considers that the collaboration of an undertaking in the detection of the existence of a cartel has an intrinsic value. A decisive contribution to the opening of an investigation may justify the granting of an immunity from any fine to the undertaking in question, on condition that certain additional requirements are fulfilled.

6. Moreover, cooperation by one or more undertakings after the Commission has begun investigating a suspected infringement may justify a reduction of a fine by the Commission. Any reduction of a fine must reflect an undertaking's actual contribution, in terms of quality and timing, to the Commission's establishment of the infringement. Reductions are to be limited to those undertakings that provide the Commission with evidence that presents a significant added value in relation to that already in its possession.

7. The Commission considers that it is in the Community interest to grant favourable treatment to undertakings which cooperate with it in the circumstances set out below. The interests of consumers and citizens in ensuring that secret cartels are detected and prohibited outweigh the interest in fining those undertakings that enable it to detect and prohibit such practices.

A. IMMUNITY FROM FINES

8. Subject to the requirements below, the Commission will grant an undertaking immunity from any fine which would otherwise have been imposed where the Commission is unaware of the alleged cartel affecting the Community and the undertaking is the first to disclose its existence.

9. The undertaking is to meet the following requirements:

(a) it must provide evidence and information which in the Commission's view may enable it to adopt a decision ordering a verification under Article 14(3) of Regulation No 17(2);

(b) it must provide the Commission with all evidence and information in its possession or available to it relating to the suspected infringement and cooperate fully, on a continuous basis and expeditiously throughout the Commission's administrative procedure. It must not misrepresent any material facts. In particular, it will remain at the Commission's disposal to answer swiftly any request that may contribute to the establishment of the facts concerned;

(c) it must end its involvement in the suspected illegal activity no later than the time at which it discloses the suspected infringement;

(d) it must not have coerced other undertakings, through its economic strength or otherwise, to participate in the illegal activity.

PROCEDURE

10. An undertaking wishing to make a request for immunity from fines should contact the Commission's Directorate General for Competition. It may immediately provide the Commission with all the information and evidence in its possession relating to the suspected infringement. This should generally include a description of the suspected infringement with information on the nature of the infringement, its suspected geographical scope, the number and identity of participants and the size of the market affected. It should also provide a descriptive list of the content of the documents it submits.

11. If necessary, the undertaking may initially present this information in hypothetical terms to enable it to clarify with the Commission whether it is in a position to qualify, at this stage, for immunity from any fine. Should it become apparent that the conditions set out in point 8 are not met, the undertaking will immediately be informed of this situation. Otherwise a deadline of no more than five working days will be set for the undertaking to disclose fully all information and evidence in accordance with the description and lists it has provided previously.

12. The Directorate-General for Competition will provide a written acknowledgement of the undertaking's application for immunity from fines, confirming the date on which the undertaking either submitted information and evidence to the Commission or agreed to do so within five working days.

13. After the Commission has received the information and evidence from the undertaking and has had the opportunity to verify and come to the conclusion that it meets the requirements as set out in points 8 and 9(a), it will grant the undertaking a conditional immunity from fines in writing.

14. The Commission will not consider other applications for immunity from fines before it has taken a position on an existing application in relation to the same suspected infringement.

15. If at the end of the administrative procedure, the undertaking has met the necessary requirements, as set out in point 9, the Commission will grant it an immunity from a fine in the relevant decision.

B. REDUCTION OF A FINE

16. Once the Commission has granted conditional immunity from fines to an undertaking or if the Commission is otherwise aware of the alleged cartel affecting the Community, undertakings may still be eligible to benefit from a reduction of a fine.

17. In order to qualify, an undertaking must provide the Commission with evidence of the suspected infringement which represents significant added value with respect to the evidence already in the Commission's possession and must terminate its involvement in the suspected illegal activity.

18. The concept of "added value" refers to the extent to which the evidence provided strengthens, by its very nature and/or its level of detail, the Commission's ability to fully establish the facts in question. In this assessment, the Commission will generally consider written evidence originating from the period of time to which the facts pertain to have a greater qualitative value than evidence subsequently established. Similarly, evidence directly relevant to the facts in question will generally be considered to have a greater qualitative value than that with only indirect relevance.

19. The Commission will determine in any final decision adopted at the end of the administrative procedure:

(a) whether the evidence provided by an undertaking at a given moment in time represented significant added value with respect to the evidence in the Commission's possession at that same time.

However, information and evidence submitted by an undertaking eligible for immunity within the deadline referred to in point 1, will be considered as having been provided prior to any information or evidence submitted by an applicant for a reduction of a fine;

(b) what level of reduction an undertaking will benefit from on the basis of the timing and the amount of significant added value which the evidence submitted to the Commission represents. For these purposes, the following reductions of the fine which would otherwise have been imposed will be applied. For the:

- first undertaking to meet point 19(a): a reduction of 50 % to 30 %;

- Second undertaking to meet point 19(a): a reduction of 30 % to 20 %;

- subsequent undertakings that meet point 19(a): a reduction of up to 20 %.

20. If an undertaking provides evidence relating to facts previously unknown to the Commission which have a direct bearing on the gravity or duration of the suspected infringement or constitute aggravating circumstances, the Commission will not take into account these elements when setting any fine to be imposed on the undertaking which provided this evidence.

PROCEDURE

21. An undertaking wishing to benefit from a reduction of a fine should provide the Commission with documentary evidence and information that may constitute proof of the cartel in question.

22. The undertaking will receive an acknowledgement of receipt from the Directorate General for Competition recording the date on which the relevant documents were provided. The Commission will not consider any submissions of information or evidence by an applicant for a reduction of a fine before it has taken a position on any existing application for a conditional immunity from fines in relation to the same suspected infringement.

23. If the Commission comes to a preliminary conclusion that the information and evidence submitted by the undertaking constitutes added value within the meaning to point 17 it will indicate in writing its intention to apply a reduction of a fine, within a specified band as provided in point 19(b). The Commission will inform the undertaking concerned of such a position at the latest by the date a statement of objections is notified.

24. The Commission will evaluate the final position of each undertaking which has invoked the benefit of a reduction of a fine at the end of the administrative procedure and reason its conclusions in any decision adopted.

GENERAL CONSIDERATIONS

25. This notice replaces the 1996 notice for all cases in which no undertaking has contacted the Commission in order to take advantage of the favourable treatment set out in that notice. The Commission will examine whether it is necessary to modify the present notice once it has acquired sufficient experience in applying it.

26. The Commission is aware that this notice will create legitimate expectations on which undertakings may rely when disclosing the existence of a cartel to the Commission.

27. Failure to meet any of the requirements set out in sections A or B, as the case may be, at any stage of the administrative procedure may result in the loss of any favourable treatment set out therein.

28. Cooperation by an undertaking is only one of several factors which the Commission takes into account when fixing the amount of a fine. This notice does not prejudice the Commission's discretion to reduce a fine for other reasons.

29. The fact that immunity or reduction in respect of fines is granted cannot protect an undertaking from the civil law consequences of its participation in an illegal practice. In this respect, if the information provided by an undertaking regarding a cartel leads the Commission to take a decision pursuant to Article 81(1) of the EC Treaty, the part played in the illegal practice by the undertaking benefiting from immunity or reduction of the fine will be described in full in the decision. The fact that the undertaking cooperated with the Commission will also be indicated in the decision, so as to explain the reason for the immunity or reduction of the fine.

(1) OJ C 207, 18.7.1996, p. 4.

(2) OJ 13, 21.2.1962, p. 204. (Or the equivalent procedural regulations: Article 21(3) of Regulation (EEC) No 1017/68; Article 18(3) of Regulation (EEC) No 4056/86 and Article 11(3) of Regulation (EEC) No 3975/87).