Guidelines on the method of setting fines imposed pursuant to the EEA competition rules

(2003/C 10/14)

A. The present notice is issued pursuant to the rules of the Agreement on the European Economic Area (EEA Agreement) and the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement).

B. The European Commission has published "Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty"(1). That non-binding act sets out the principles which the European Commission follows in the setting of fines in respect of infringements of the EC and EEA competition rules(2).

C. The EFTA Surveillance Authority considers the abovementioned act to be EEA relevant. In order to maintain equal conditions of competition and to ensure a uniform application of the EEA competition rules throughout the European Economic Area (EEA), the Authority adopts the present notice under the power conferred upon it by Article 5(2)(b) of the Surveillance and Court Agreement. It intends to follow the principles and rules laid down in this notice when applying the relevant EEA rules to a particular case.

1. Introduction

The principles outlined herein should ensure the transparency and impartiality of the EFTA Surveillance Authority's decisions, in the eyes of the undertakings and of the EFTA Court alike, while upholding the discretion which the Authority is granted under the relevant legislation to set fines within the limit of 10 % of overall turnover as regards undertakings found to have infringed the EEA competition rules. This discretion must, however, follow a coherent and non-discriminatory policy which is consistent with the objectives pursued in penalising infringements under the competition rules of the EEA Agreement and with the practice of the European Commission in this field.

The method of determining the amount of a fine will adhere to the following rules, which start from a basic amount that will be increased to take account of aggravating circumstances or reduced to take account of attenuating circumstances.

2. Basic amount

The basic amount will be determined according to the gravity and duration of the infringement, which are the only criteria referred to in Article 15(2) of Chapter II of Protocol 4 of the Surveillance and Court Agreement.

A. Gravity

In assessing the gravity of the infringement, account must be taken of its nature, its actual impact on the market, where this can be measured, and the size of the relevant geographic market.

Infringements will thus be put into one of three categories: minor infringements, serious infringements and very serious infringements:

- minor infringements:

These might be trade restrictions, usually of a vertical nature, but with a limited market impact and affecting only a substantial but relatively limited part of the EEA.

Likely fines: EUR 1000 to EUR 1 million.

- serious infringements:

These will more often than not be horizontal or vertical restrictions of the same type as above, but more rigorously applied, with a wider market impact, and with effects in extensive areas of the EEA. There might also be abuse of a dominant position (refusals to supply, discrimination, exclusion, loyalty discounts made by dominant firms in order to shut competitors out of the market, etc.).

Likely fines: EUR 1 million to EUR 20 million.

- very serious infringements:

These will generally be horizontal restrictions such as price cartels and market-sharing quotas, or other practices which jeopardize the proper functioning of the EEA Agreement, such as the partitioning of national markets and clear-cut abuse of a dominant position by undertakings holding a virtual monopoly.

Likely fines: above EUR 20 million.

Within each of these categories, and in particular as far as serious and very serious infringements are concerned, the proposed scale of fines will make it possible to apply differential treatment to undertakings according to the nature of the infringement committed.

It will also be necessary to take account of the effective economic capacity of offenders to cause significant damage to other operators, in particular consumers, and to set the fine at a level which ensures that it has a sufficiently deterrent effect.

Generally speaking, account may also be taken of the fact that large undertakings usually have legal and economic knowledge and infrastructures which enable them more easily to recognize that their conduct constitutes an infringement and be aware of the consequences stemming from it under EEA competition law.

Where an infringement involves several undertakings (e.g. cartels), it might be necessary in some cases to apply weightings to the amounts determined within each of the three categories in order to take account of the specific weight and, therefore, the real impact of the offending conduct of each undertaking on competition, particularly where there is considerable disparity between the sizes of the undertakings committing infringements of the same type.

Thus, the principle of equal punishment for the same conduct may, if the circumstances so warrant, lead to different fines being imposed on the undertakings concerned without this differentiation being governed by arithmetic calculation.

B. Duration

A distinction should be made between the following:

- infringements of short duration (in general, less than one year): no increase in amount,

- infringements of medium duration (in general, one to five years): increase of up to 50 % in the amount determined for gravity,

- infringements of long duration (in general, more than five years): increase of up to 10 % per year in the amount determined for gravity.

This approach will therefore point to a possible increase in the amount of the fine.

Generally speaking, the increase in the fine for long-term infringements represents a considerable strengthening of the previous EEA practice with a view to imposing effective sanctions on restrictions which have had a harmful impact on consumers over a long period. Moreover, this new approach is consistent with the EFTA Surveillance Authority's new notice on the non-imposition or reduction of fines in cartel cases(3). The risk of having to pay a much larger fine, proportionate to the duration of the infringement, will necessarily increase the incentive to denounce it or to cooperate with the Authority.

The basic amount will result from the addition of the two amounts established in accordance with the above:

x gravity + y duration = basic amount

3. Aggravating circumstances

The basic amount will be increased where there are aggravating circumstances such as:

- repeated infringement of the same type by the same undertaking(s),

- refusal to cooperate with or attempts to obstruct the EFTA Surveillance Authority in carrying out its investigations,

- role of leader in, or instigator of the infringement,

- retaliatory measures against other undertakings with a view to enforcing practices which constitute an infringement,

- need to increase the penalty in order to exceed the amount of gains improperly made as a result of the infringement when it is objectively possible to estimate that amount,

- other.

4. Attenuating circumstances

The basic amount will be reduced where there are attenuating circumstances such as:

- an exclusively passive or "follow-my-leader" role in the infringement,

- non-implementation in practice of the offending agreements or practices,

- termination of the infringement as soon as the EFTA Surveillance Authority intervenes (in particular when it carries out checks),

- existence of reasonable doubt on the part of the undertaking as to whether the restrictive conduct does indeed constitute an infringement,

- infringements committed as a result of negligence or unintentionally,

- effective cooperation by the undertaking in the proceedings, outside the scope of the Authority's new notice on the non-imposition or reduction of fines in cartel cases,

- other.

5. Application of the EFTA Surveillance Authority's notice of 12 June 2002 on the non-imposition or reduction of fines in cartel cases

6. General comments

(a) It goes without saying that the final amount calculated according to this method (basic amount increased or reduced on a percentage basis) may not in any case exceed 10 % of the worldwide turnover of the undertakings, as laid down by Article 15(2) of Chapter II of Protocol 4 to the Surveillance and Court Agreement.

The accounting year on the basis of which the worldwide turnover is determined must, as far as possible, be the one preceding the year in which the decision is taken or, if figures are not available for that accounting year, the one immediately preceding it.

(b) Depending on the circumstances, account should be taken, once the above calculations have been made, of certain objective factors such as a specific economic context, any economic or financial benefit derived by the offenders, the specific characteristics of the undertakings in question and their real ability to pay in a specific social context, and the fines should be adjusted accordingly.

(c) In cases involving associations of undertakings, decisions should as far as possible be addressed to and fines imposed on the individual undertakings belonging to the association. If this is not possible (e.g. where there are several thousands of affiliated undertakings), and an overall fine should be imposed on the association, calculated according to the principles outlined above but equivalent to the total of individual fines which might have been imposed on each of the members of the association.

(d) The EFTA Surveillance Authority will also reserve the right, in certain cases, to impose a "symbolic" fine of EUR 1000, which would not involve any calculation based on the duration of the infringement or any aggravating or attenuating circumstances. The justification for imposing such a fine should be given in the text of the decision.

(1) OJ C 9, 14.1.1998, p. 3.

(2) The competence to handle individual cases falling under Articles 53 and 54 of the EEA Agreement is divided between the EFTA Surveillance Authority and the European Commission according to the rules laid down in Article 56 of the EEA Agreement. Only one authority is competent to handle any given case.

(3) Notice as adopted on 12 June 2002 (not yet published).