Opinion of the Economic and Social Committee on the "Draft Commission Notice on immunity from fines and reduction of fines in cartel cases"

(2002/C 48/20)

On 18 October 2001, the Economic and Social Committee, acting under Rule 23(2) of its Rules of Procedure, decided to draw up an opinion on the "Draft Commission Notice on immunity from fines and reduction of fines in cartel cases".

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 21 November 2001. The rapporteur was Mr Sepi.

At its 386th plenary session (meeting of 29 November 2001), the Economic and Social Committee adopted the following opinion by 52 votes to 6, with 10 abstentions.

1. Introduction

1.1. The Committee has examined the draft notice on immunity from fines and the reduction of fines for undertakings that disclose secret cartels between undertakings that infringe competition rules.

1.2. This notice, which replaces the previous notice adopted in 1996(1), is intended to improve efficiency in terms of establishing the facts surrounding what remains the most serious infringement of competition rules.

2. Summary of the notice

2.1. The Commission is convinced that by limiting competition, secret cartels between undertakings effectively push prices up, restrict choice and have a detrimental effect on European industry. They enable undertakings to escape the market pressure that would otherwise encourage them to innovate, and the result is increased raw material prices and a negative impact on employment.

2.2. The Commission believes that some undertakings would be prepared to end their participation in these cartels and inform it of their existence, but are dissuaded by the risk that they will have to pay high fines. After five years of implementing the 1996 notice, the Commission has the practical experience necessary to propose major changes based on the criteria of transparency, certainty and a closer correlation between the levels of fine reductions and the significance of the contribution made by the undertaking. The reductions will apply only to undertakings that supply significant evidence.

2.3. Lastly, the Commission takes the view that the benefit to citizens and consumers outweighs the interest in fining those undertakings that enable it to detect unlawful practices. On the basis of this reasoning, the Commission has presented a draft notice on immunity from fines and the reduction of fines, making the following specific points:

- The new notice will replace the 1996 notice and after a sufficient period of implementation the Commission will decide whether further modifications are required.

- If at any point in the procedure the undertaking does not fulfil the conditions listed, it will no longer receive favourable treatment.

- The level of cooperation is only one of a number of elements to be taken into account by the Commission, which will reserve the right to grant reductions for other reasons too.

- Given that an undertaking benefiting from this procedure is nevertheless not protected legally or judicially, the Commission will take a decision, pursuant to Article 81(1) of the Treaty, describing in full the part which the undertaking played in the illegal practice and explaining the reasons for immunity or reduction of the fine.

2.4. Immunity

2.4.1. An undertaking may benefit from immunity if, having met the requirements listed below, it is the first to disclose a secret cartel of which the Commission is not aware. The requirements are the following:

- It must provide evidence and information that enable the Commission to order a verification under European law.

- It must provide the Commission with all evidence and information in its possession.

- It must end its involvement in the illegal activity from the moment that it makes its disclosure.

- It must not have coerced other undertakings to participate.

2.5. Reduction of fines

2.5.1. Once the Commission has granted conditional immunity, or is aware of the alleged cartel, other undertakings may benefit from a reduction. In order to qualify, the undertaking must provide evidence that represents real added value with respect to the evidence already in the Commission's possession. The concept of added value refers to the extent to which the evidence provided enables the Commission to prove beyond doubt the existence of the cartel. Provision is made for three levels of reduction, taking into account the date on which evidence was presented and the degree of added value, and ranging from 20 % to 50 %.

2.6. Procedures

2.6.1. In both cases, in the interests of transparency and certainty, the procedures concern: written confirmation of receipt of the request, a description of the infringement, the number and identity of the participants, the size of the market concerned, etc.

3. General comments

3.1. It is always difficult to find proof of an illicit cartel, and the opportunity for a member to cease involvement in an illegal activity with immunity or a reduced fine will facilitate investigations and deter those intending to set up new cartels.

3.1.1. The Committee would nevertheless ask the Commission to consider two precautionary measures and to alter certain rules that make the disclosure of these illegal cartels less attractive.

3.1.2. The first precautionary measure concerns the need to limit the recompense for offenders to the minimum which is necessary to detect and prohibit secret cartels, without losing sight of the fact that it is in the public interest to punish infringements of Community competition rules. Hence the concessions offered under the notice must only be granted in return for a substantial contribution to the establishment of the facts and the punishment of offenders.

3.1.3. Secondly, the disclosures should be complete and exhaustive and bring to light all the information available to the undertaking in question.

3.2. Comparison with the rules set out in the 1996 notice highlights a number of gaps that could prejudice the effectiveness of the new provisions.

3.2.1. For undertakings to benefit from immunity, for instance, the new notice requires that the Commission be unaware of the illegal cartel, whereas the previous notice also covered cases in which the Commission did not have "sufficient information" to prove the existence of a cartel.

3.2.2. This clearly restricts cases of immunity and makes disclosure less attractive. The Committee therefore believes it would be worthwhile returning to the 1996 version.

3.2.3. The condition imposed by the Commission for undertakings to benefit from a reduction in the fine is less flexible than the 1996 notice, as undertakings making disclosures must now provide "evidence", and the documents and information required in the past will no longer suffice. The notice does not specify the scope of the pieces of evidence which undertakings are to provide.

3.2.4. Once again, this limits the opportunities and incentives for undertakings to act as intended. The Committee is of the view that the Commission should reinstate the 1996 wording or specify in the notice the scope of the pieces of evidence or information that can be deemed to qualify for a reduction in a fine.

3.3. With regard to the legal consequences of the Commission publicising a secret agreement, after the necessary verifications, the notice should give a clearer indication of its willingness to provide useful and reasoned evidence in order to ease the position of undertakings making disclosures should third parties sue them for damages.

Brussels, 29 November 2001.

The President

of the Economic and Social Committee

Göke Frerichs

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

APPENDIX

to the opinion of the Economic and Social Committee

The following amendment, which received over a quarter of the votes cast, was rejected during the debate.

Points 3.1.2 and 3.1.3

Delete the above points.

Reason

There is a serious risk that these proposals could undermine the purpose of the changes which the Commission is proposing to the Notice. The aim is to make it easier for undertakings to anticipate how the rules will be applied and hence to encourage them to help in exposing and putting an end to cartels. Admittedly the thrust of point 3.1.2 is not entirely clear but the recommendation made in point 3.1.3 would seem either impracticable for the Commission to implement or make it impossible for undertakings to assess whether immunity from, or a reduction of, fines will be granted when an undertaking considers notifying the Commission of a particular cartel in which it has participated.

Results of voting

For: 23, against: 28, abstentions: 4.