Guidelines on the method of setting fines imposed pursuant to Article 23(2)(A) of Chapter II of Protocol 4 to the Surveillance and Court Agreement
Date: 2006-12-21
Institutions: EFTA Surveillance Authority
Subjects: EFTA, European Economic Area, administrative procedure, competition law, fine, supervisory body

C 314/84

EN

Official Journal of the European Union

21.12.2006

Guidelines on the method of setting fines imposed pursuant to Article 23(2)(A) of Chapter II of
Protocol 4 to the Surveillance and Court Agreement

(2006/C 314/12)

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

B.
The European Commission (hereafter the ‘Commission’) has issued a notice entitled ‘Guidelines on the
method of setting fines imposed pursuant to Article 23(2)(a) of Regulation 1/2003’ (1). That act sets out the
principles which the Commission follows in the setting of fines in respect of infringements of the EC
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
the Authority adopts the present notice under the power
throughout
conferred upon it by Article 5(2)(b) of the Surveillance and Court Agreement. It intends to follow the princi-
ples and rules laid down in this notice when applying the relevant EEA rules to a particular case.

the European Economic Area,

INTRODUCTION

Pursuant to Article 23(2)(a) of Chapter II of Protocol 4 to the Surveillance and Court Agreement (here-
1.
after ‘Chapter II’) (3), the EFTA Surveillance Authority may, by decision, impose fines on undertakings or
associations of undertakings where, either intentionally or negligently, they infringe Article 53 or 54 of the
EEA Agreement.

2.
In exercising its power to impose such fines, the EFTA Surveillance Authority enjoys a wide margin of
discretion (4) within the limits set by Chapter II. First, the Authority 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 Chapter II.

3.
In order to ensure the transparency and impartiality of its decisions, the EFTA Surveillance Authority
published on 16 January 2003 guidelines on the method of setting fines (5) corresponding to the Commis-
sion's guidelines on the method of setting fines from 1998 (6). In light of the implementation in practice of
the guidelines set out in these notices, the EFTA Surveillance Authority finds it appropriate to develop
further and refine its policy on fines.

4.
The EFTA Surveillance Authority's power to impose fines on undertakings or associations of undertak-
ings which, intentionally or negligently, infringe Article 53 or 54 of the EEA Agreement is one of the means
conferred on it in order for it to carry out the task of supervision entrusted to it by the EEA Agreement (7).
That task not only includes the duty to investigate and sanction individual infringements, but it also encom-
passes the duty to pursue a general policy designed to apply, in competition matters, the principles laid

(1) OJ C 210, 1.9.2006, p. 2.
(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 Commission according to the rules laid down in Article 56 of the EEA Agreement.
Only one of the surveillance authorities is competent to handle any given case.

(3) Following the Agreement amending Protocol 4 to the Agreement of the EFTA States on the establishment of a Surveillance
Authority and a Court of Justice of 24 September 2004, which entered into force on 20 May 2005, Chapter II of Protocol 4
to the Surveillance and Court Agreement reflects to a large extent in the EFTA pillar Council Regulation (EC) No 1 of 16
December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1,
4.1.2003, p. 1).

(4) See in this respect, 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.

(5) EFTA Surveillance Authority Guidelines on the method of setting fines OJ C 10, 16.1.2003, p. 16 and EEA Supplement to

the OJ 3, 16.1.2003, p. 6.

(6) ‘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).

(7) This task is shared with the Commission in accordance with Articles 55 of the EEA Agreement, as well as in accordance

with the rules of competence in Article 56 of the EEA Agreement, see footnote 2 above.

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down by the EEA Agreement and to steer the conduct of undertakings in the light of those principles (1).
For this purpose, the Authority must ensure that its action has the necessary deterrent effect (2). Accordingly,
when the Authority discovers that Article 53 or 54 of the EEA Agreement has been infringed, it may be
necessary 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 undertakings from engaging in, or continuing, behaviour that is contrary to Articles 53
and 54 of the EEA Agreement (general deterrence).

5.
In order to achieve these objectives, it is appropriate for the EFTA Surveillance Authority 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
undertaking participated in the infringement.

6.
The combination of the value of sales to which the infringement relates and of the duration of the
infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infrin-
gement 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.

It is also considered appropriate to include in the fine a specific amount irrespective of the duration of

7.
the infringement, in order to deter companies from even entering into illegal practices.

The sections below set out the principles which will guide the EFTA Surveillance Authority when it

8.
sets fines imposed pursuant to Article 23(2)(a) of Chapter II.

METHOD FOR THE SETTING OF FINES

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

First, the EFTA Surveillance Authority will determine a basic amount for each undertaking or associa-

2.
tion of undertakings (see Section 1 below).

3.

Second, it may adjust that basic amount upwards or downwards (see Section 2 below).

1. Basic amount of the fine

The basic amount will be set by reference to the value of sales and applying the following metho-

4.
dology.

A. Calculation of the value of sales

In determining the basic amount of the fine to be imposed, the EFTA Surveillance Authority will take
5.
the value of the undertaking's sales of goods or services to which the infringement directly or indirectly (3)
relates in the relevant geographic area within the EEA. It will normally take the sales made by the under-
taking during the last full business year of its participation in the infringement (hereafter ‘value of sales’).

6. 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.

In determining the value of sales by an undertaking, the EFTA Surveillance Authority will take that

7.
undertaking's best available figures.

(1) See in this respect, for example, Dansk Rørindustri A/S and others v Commission, cited above, paragraph 170.
(2) See in this respect Joined Cases 100/80 to 103/80 Musique Diffusion française and others v Commission [1983] ECR 1825,

paragraph 106.

(3) 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.

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8. Where the figures made available by an undertaking are incomplete or not reliable, the EFTA Surveil-
lance Authority 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.

9.

The value of sales will be determined before VAT and other taxes directly related to the sales.

10. 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 aggregate size of the relevant sales within the EEA and
the relative weight of each undertaking in the infringement, the EFTA Surveillance Authority 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 determine 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

The basic amount of the fine will be related to a proportion of the value of sales, depending on the

11.
degree of gravity of the infringement, multiplied by the number of years of infringement.

The assessment of gravity will be made on a case-by-case basis for all types of infringement, taking

12.
account of all the relevant circumstances of the case.

As a general rule, the proportion of the value of sales taken into account will be set at a level of up

13.
to 30 % of the value of sales.

In order to decide whether the proportion of the value of sales to be considered in a given case
14.
should be at the lower end or at the higher end of that scale, the EFTA Surveillance Authority 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.

Horizontal price-fixing, market-sharing and output-limitation agreements (1), which are usually secret,
15.
are, by their very nature, among the most harmful restrictions of competition. As a matter of policy, they
will be heavily fined. Therefore, the proportion of the value of sales taken into account for such infringe-
ments will generally be set at the higher end of the scale.

16.
In order to take fully into account the duration of the participation of each undertaking in the infrin-
gement, the amount determined on the basis of the value of sales (see points 20 to 23 above) will be multi-
plied 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.

17.
In addition, irrespective of the duration of the undertaking's participation in the infringement, the
EFTA Surveillance Authority 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 hori-
zontal price-fixing, market-sharing and output-limitation agreements. The Authority may also apply such an
additional amount in the case of other infringements. For the purpose of deciding the proportion of the
value of sales to be considered in a given case, the Authority will have regard to a number of factors, in par-
ticular those referred in point 22.

(1) This includes agreements, concerted practices and decisions by associations of undertakings within the meaning of Article

53 of the EEA Agreement.

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18. Where the value of sales by undertakings participating in the infringement is similar but not identical,
the EFTA Surveillance Authority may set for each of them an identical basic amount. Moreover, in deter-
mining the basic amount of the fine, the Authority will use rounded figures.

2. Adjustments to the basic amount

In setting the fine, the EFTA Surveillance Authority may take into account circumstances that result
19.
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.

A Aggravating circumstances

The basic amount may be increased where the EFTA Surveillance Authority finds that there are aggra-

20.
vating circumstances, such as:

— where an undertaking continues or repeats the same or a similar infringement after the Authority or a
national competition authority has made a finding that the undertaking infringed Article 53 or 54: the
basic amount will be increased by up to 100 % for each such infringement established;

— refusal to cooperate with or obstruction of the Authority in carrying out its investigations;

— role of leader in, or instigator of, the infringement; the Authority 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 enforcing the practices constituting the infrin-
gement.

B Mitigating circumstances

The basic amount may be reduced where the EFTA Surveillance Authority finds that mitigating

21.
circumstances exist, such as:

— where the undertaking concerned provides evidence that it terminated the infringement as soon as the

Authority intervened: this will not apply to secret agreements or practices (in particular, cartels);

— where the undertaking provides evidence that the infringement has been committed as a result of negli-

gence;

— where the undertaking provides evidence that its involvement in the infringement is substantially limited
and thus demonstrates that, during the period in which it was party to the offending agreement, it actu-
ally avoided applying it by adopting competitive conduct in the market: the mere fact that an under-
taking participated in an infringement for a shorter duration than others will not be regarded as a miti-
gating circumstance since this will already be reflected in the basic amount;

— where the undertaking concerned has effectively cooperated with the Authority 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

authorities or by legislation (1).

C Specific increase for deterrence

22.
The EFTA Surveillance Authority 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 undertakings which have
a particularly large turnover beyond the sales of goods or services to which the infringement relates.

(1) This is without prejudice to any action that may be taken against the EFTA State concerned.

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The EFTA Surveillance Authority will also take into account the need to increase the fine in order to
23.
exceed the amount of gains improperly made as a result of the infringement where it is possible to estimate
that amount.

D Legal maximum

The final amount of the fine shall not,

24.
in any event, exceed 10 % of the total turnover in the
preceding business year of the undertaking or association of undertakings participating in the infringement,
as laid down in Article 23(2) of Chapter II.

25. 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 infringement.

E Leniency Notice

The EFTA Surveillance Authority will apply the leniency rules in line with the conditions set out in

26.
the applicable notice.

F Ability to pay

In exceptional cases, the EFTA Surveillance Authority may, upon request, take account of the underta-
27.
king'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
these Guidelines would irretrievably jeopardise the economic viability of the undertaking concerned and
cause its assets to lose all their value.

FINAL CONSIDERATIONS

The EFTA Surveillance Authority may, in certain cases, impose a symbolic fine. The justification for

28.
imposing such a fine should be given in its decision.

29.
Although these Guidelines present the general methodology 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 metho-
dology or from the limits specified in point 21.

30.
These Guidelines will be applied in all cases where a statement of objections is notified after their
date of publication in the Official Journal and the EEA Supplement thereto, regardless of whether the fine is
imposed pursuant to Article 23(2) of Chapter II or Article 15(2) of the previous text of Chapter II of
Protocol 4 to the Surveillance and Court Agreement (1).

(1) The text of Chapter II of Protocol 4 of the Surveillance and Court Agreement (which corresponded to Regulation 17/62 of
6 February 1962: First Regulation implementing Articles 85 and 86 [now 81 and 82] of the Treaty (OJ 13, 21.2.1962, p.
204) was replaced on 20 May 2005, see footnote 3 above.