Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003   (Text with EEA relevance)
Date: 2006-09-01
Institutions: European Commission
Subjects: competition law, fine, infringement of EU law, inter-company agreement, restriction on competition, restrictive trade practice

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Official Journal of the European Union

1.9.2006

Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation
No 1/2003

(2006/C 210/02)

(Text with EEA relevance)

INTRODUCTION

1. Pursuant to Article 23(2)(a) of Regulation No 1/2003 (1),
the Commission may, by decision, impose fines on under-
takings or associations of undertakings where, either inten-
tionally or negligently, they infringe Article 81 or 82 of
the Treaty.

2. In exercising its power to impose such fines, the Commis-
sion enjoys a wide margin of discretion (2) within the
limits set by Regulation No 1/2003. First, the Commission
must have regard both to the gravity and to the duration
of the infringement. Second, the fine imposed may not
exceed the limits specified in Article 23(2), second and
third subparagraphs, of Regulation No 1/2003.

3. In order to ensure the transparency and impartiality of its
decisions, the Commission published on 14 January 1998
guidelines on the method of setting fines (3). After more
than eight years of implementation, the Commission has
acquired sufficient experience to develop further and refine
its policy on fines.

4. The Commission's power to impose fines on undertakings
intentionally or
or associations of undertakings which,
negligently, infringe Article 81 or 82 of the Treaty is one
of the means conferred on it in order for it to carry out
the task of supervision entrusted to it by the Treaty. That
task not only includes the duty to investigate and sanction
individual infringements, but it also encompasses the duty
to pursue a general policy designed to apply, in competi-
tion matters, the principles laid down by the Treaty and to
steer the conduct of undertakings in the light of those
principles (4). For
the Commission must
ensure that its action has the necessary deterrent effect (5).
Accordingly, when the Commission discovers that Article
81 or 82 of the Treaty has been infringed, it may be neces-
sary to impose a fine on those who have acted in breach
of the law. Fines should have a sufficiently deterrent effect,
not only in order to sanction the undertakings concerned
(specific deterrence) but also in order to deter other under-
takings from engaging in, or continuing, behaviour that is
contrary to Articles 81 and 82 of the EC Treaty (general
deterrence).

this purpose,

(1) Council Regulation (EC) No 1 of 16 December 2002 on the imple-
mentation of the rules on competition laid down in Articles 81 and
82 of the Treaty (OJ L 1, 4.1.2003, p. 1).

(2) See, for example, Case C-189/02 P, C-202/02 P, C-205/02 P to C-
208/02 P and C-213/02 P, Dansk Rørindustri A/S and others v
Commission [2005] ECR I-5425, paragraph 172.

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

(4) See, for example, Dansk Rørindustri A/S and others v Commission,

cited above, paragraph 170.

(5) See Joined Cases 100/80 to 103/80 Musique Diffusion française and

others v Commission [1983] ECR 1825, paragraph 106.

5. In order to achieve these objectives, it is appropriate for
the Commission to refer to the value of the sales of goods
or services to which the infringement relates as a basis for
setting the fine. The duration of the infringement should
also play a significant role in the setting of the appropriate
amount of the fine. It necessarily has an impact on the
potential consequences of the infringement on the market.
It is therefore considered important that the fine should
also reflect the number of years during which an under-
taking participated in the infringement.

6. The combination of the value of sales to which the infrin-
gement relates and of the duration of the infringement is
regarded as providing an appropriate proxy to reflect the
economic importance of the infringement as well as the
relative weight of each undertaking in the infringement.
Reference to these factors provides a good indication of
the order of magnitude of the fine and should not be
regarded as the basis for an automatic and arithmetical
calculation method.

7. It is also considered appropriate to include in the fine a
specific amount irrespective of the duration of the infringe-
ment, in order to deter companies from even entering into
illegal practices.

8. The sections below set out the principles which will guide
the Commission when it sets fines imposed pursuant to
Article 23(2)(a) of Regulation No 1/2003.

METHOD FOR THE SETTING OF FINES

9. Without prejudice to point 37 below, the Commission will
use the following two-step methodology when setting the
fine to be imposed on undertakings or associations of
undertakings.

10. First, the Commission will determine a basic amount for
(see
each undertaking or association of undertakings
Section 1 below).

11. Second, it may adjust that basic amount upwards or down-

wards (see Section 2 below).

1. Basic amount of the fine

12. The basic amount will be set by reference to the value of

sales and applying the following methodology.

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A. Calculation of the value of sales

13. In determining the basic amount of

the fine to be
imposed, the Commission will take the value of the under-
taking's sales of goods or services to which the infringe-
ment directly or
in the relevant
geographic area within the EEA. It will normally take the
sales made by the undertaking during the last full business
year of
(hereafter
its participation in the infringement
‘value of sales’).

indirectly (1)

relates

14. Where the infringement by an association of undertakings
relates to the activities of its members, the value of sales
will generally correspond to the sum of the value of sales
by its members.

15. In determining the value of sales by an undertaking, the
take that undertaking's best available

Commission will
figures.

16. Where the figures made available by an undertaking are
incomplete or not reliable, the Commission may determine
the value of its sales on the basis of the partial figures it
has obtained and/or any other
information which it
regards as relevant and appropriate.

17. The value of sales will be determined before VAT and

other taxes directly related to the sales.

18. Where the geographic scope of an infringement extends
beyond the EEA (e.g. worldwide cartels), the relevant sales
of the undertakings within the EEA may not properly
reflect the weight of each undertaking in the infringement.
This may be the case in particular with worldwide market-
sharing arrangements.

In such circumstances, in order to reflect both the aggre-
gate size of the relevant sales within the EEA and the rela-
tive weight of each undertaking in the infringement, the
Commission may assess the total value of the sales of
goods or services to which the infringement relates in the
relevant geographic area (wider than the EEA), may deter-
mine the share of the sales of each undertaking party to
the infringement on that market and may apply this share
to the aggregate sales within the EEA of the undertakings
concerned. The result will be taken as the value of sales for
the purpose of setting the basic amount of the fine.

B. Determination of the basic amount of the fine

19. The basic amount of the fine will be related to a propor-
tion of the value of sales, depending on the degree of
gravity of the infringement, multiplied by the number of
years of infringement.

20. The assessment of gravity will be made on a case-by-case
basis for all types of infringement, taking account of all the
relevant circumstances of the case.

21. As a general rule, the proportion of the value of sales
taken into account will be set at a level of up to 30 % of
the value of sales.

22. In order to decide whether the proportion of the value of
sales to be considered in a given case should be at the
lower end or at the higher end of that scale, the Commis-
sion will have regard to a number of factors, such as the
nature of the infringement, the combined market share of
all the undertakings concerned, the geographic scope of
the infringement and whether or not the infringement has
been implemented.

23. Horizontal price-fixing, market-sharing and output-limita-
tion agreements (2), which are usually secret, are, by their
restrictions of
very nature, among the most harmful
competition. As a matter of policy, they will be heavily
fined. Therefore, the proportion of the value of sales taken
into account for such infringements will generally be set at
the higher end of the scale.

24. In order to take fully into account the duration of the
participation of each undertaking in the infringement, the
amount determined on the basis of the value of sales (see
points 20 to 23 above) will be multiplied by the number
of years of participation in the infringement. Periods of
less than six months will be counted as half a year; periods
longer than six months but shorter than one year will be
counted as a full year.

25. In addition,

irrespective of the duration of the underta-
king's participation in the infringement, the Commission
will include in the basic amount a sum of between 15 %
and 25 % of the value of sales as defined in Section A
above in order to deter undertakings from even entering
into horizontal price-fixing, market-sharing and output-
limitation agreements. The Commission may also apply
such an additional amount in the case of other infringe-
ments. For the purpose of deciding the proportion of the
value of sales to be considered in a given case,
the
Commission will have regard to a number of factors, in
particular those referred in point 22.

26. Where the value of sales by undertakings participating in
the infringement is similar but not identical, the Commis-
sion may set for each of them an identical basic amount.
Moreover, in determining the basic amount of the fine, the
Commission will use rounded figures.

2. Adjustments to the basic amount

27. In setting the fine, the Commission may take into account
circumstances that result in an increase or decrease in the
basic amount as determined in Section 1 above. It will do
so on the basis of an overall assessment which takes
account of all the relevant circumstances.

(1) Such will be the case for instance for horizontal price fixing
arrangements on a given product, where the price of that product
then serves as a basis for the price of lower or higher quality
products.

(2) This includes agreements, concerted practices and decisions by asso-
ciations of undertakings within the meaning of Article 81 of the
Treaty.

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A. Aggravating circumstances

C. Specific increase for deterrence

28. The basic amount may be increased where the Commis-
sion finds that there are aggravating circumstances, such
as:

— where an undertaking continues or repeats the same or
a similar infringement after
the Commission or a
national competition authority has made a finding that
the undertaking infringed Article 81 or 82: the basic
amount will be increased by up to 100 % for each such
infringement established;

— refusal

to cooperate with or obstruction of

the

Commission in carrying out its investigations;

— role of leader in, or instigator of, the infringement; the
Commission will also pay particular attention to any
steps taken to coerce other undertakings to participate
in the infringement and/or any retaliatory measures
taken against other undertakings with a view to enfor-
cing the practices constituting the infringement.

B. Mitigating circumstances

29. The basic amount may be reduced where the Commission

finds that mitigating circumstances exist, such as:

30. The Commission will pay particular attention to the need
to ensure that fines have a sufficiently deterrent effect; to
that end, it may increase the fine to be imposed on under-
takings which have a particularly large turnover beyond
the sales of goods or services to which the infringement
relates.

31. The Commission will also take into account the need to
increase the fine in order to exceed the amount of gains
improperly made as a result of the infringement where it is
possible to estimate that amount.

D. Legal maximum

32. The final amount of the fine shall not, in any event, exceed
10 % of the total turnover in the preceding business year
of the undertaking or association of undertakings partici-
pating in the infringement, as laid down in Article 23(2) of
Regulation No 1/2003.

33. Where an infringement by an association of undertakings
relates to the activities of its members, the fine shall not
exceed 10 % of the sum of the total turnover of each
member active on the market affected by that infringe-
ment.

— where the undertaking concerned provides evidence
terminated the infringement as soon as the
that
Commission intervened: this will not apply to secret
agreements or practices (in particular, cartels);

it

E. Leniency Notice

— where the undertaking provides evidence that

the
infringement has been committed as a result of negli-
gence;

— where the undertaking provides evidence that its invol-
vement in the infringement is substantially limited and
thus demonstrates that, during the period in which it
was party to the offending agreement,
it actually
avoided applying it by adopting competitive conduct in
the market: the mere fact that an undertaking partici-
pated in an infringement for a shorter duration than
others will not be regarded as a mitigating circum-
stance since this will already be reflected in the basic
amount;

— where the undertaking concerned has effectively coop-
erated with the Commission outside the scope of the
Leniency Notice and beyond its legal obligation to do
so;

— where the anti-competitive conduct of the undertaking
has been authorized or encouraged by public authori-
ties or by legislation. (1)

34. The Commission will apply the leniency rules in line with

the conditions set out in the applicable notice.

F. Ability to pay

35. In exceptional cases, the Commission may, upon request,
take account of the undertaking's inability to pay in a
specific social and economic context. It will not base any
reduction granted for this reason in the fine on the mere
finding of an adverse or loss-making financial situation. A
reduction could be granted solely on the basis of objective
evidence that imposition of the fine as provided for in
the
these Guidelines would
economic viability of the undertaking concerned and cause
its assets to lose all their value.

irretrievably

jeopardise

FINAL CONSIDERATIONS

(1) This is without prejudice to any action that may be taken against

the Member State concerned.

36. The Commission may, in certain cases, impose a symbolic
fine. The justification for imposing such a fine should be
given in its decision.

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37. Although these Guidelines present

the general metho-
dology for the setting of fines, the particularities of a given
case or the need to achieve deterrence in a particular case
may justify departing from such methodology or from the
limits specified in point 21.

38. These Guidelines will be applied in all cases where a state-
ment of objections is notified after their date of publication
in the Official Journal, regardless of whether the fine is
to Article 23(2) of Regulation No
imposed pursuant
1/2003 or Article 15(2) of Regulation 17/62 (1).

(1) Article 15(2) of Regulation 17/62 of 6 February 1962: First Regu-
lation implementing Articles 85 and 86 [now 81 and 82] of the
Treaty (OJ 13, 21.2.1962, p. 204).