RESTRICITVE PRACTICES AND LENIENCY Zuzana Šimeková European Union – Opportunities and Challenges June 2009, Dubrovnik

Agenda  Relationship between EC and national competition rules  Which law to apply?  National Competition Authority (NCA) or European Commission (Commission)?  Restrictive practices  Anti-competitive agreements  Concerted practices  Leniency  Leniency application tests  Procedure and Results

EC and National Laws for Restrictive Practices NEED TO CONSIDER BOTH Two sets of rules Art. 81 EC TreatyNational competition law

Jurisdiction – Commission or NCA  Commission:  effect on trade between Member States  EC law applies  NCA:  if effect on trade within the state, national law applies  can also apply EC law, if the infringement has an effect on trade between Member States and the NCA is the best-placed authority to deal with the infringement  Use of EC law as an example or guidance

Anti-competitive Agreements  Article 81 EC Treaty prohibits anti-competitive agreements which have the object or effect of preventing, restricting or distorting competition  Applies to oral as well as written agreements  Even if not legally binding  Even if fail to work in practice  Even if inferred from conduct (especially contact with competitors)

Concerted Practices  Article 81 EC Treaty prohibits concerted practices which have the object or effect of preventing, restricting or distorting competition  Concerted practices:  Fall short of agreement  Involve direct or indirect contact between economic operators  Are most likely in contact between competitors, but can also apply to vertical relationships  No need to specify whether a conduct amounts to an agreement or practice.

Restrictive Practices - Examples  No exhaustive list of restrictive practices  Agreements between competitors and vertical agreements  Examples of agreements that infringe Art. 81:  horizontal price fixing between competitors (also covers agreed discounting, limiting output)  market sharing (i.e. dividing up customers or markets between competitors)  resale price maintenance (e.g. telling dealers not to sell [Product Y] below €X)  bid rigging  sharing confidential / competitively sensitive information with competitors

Exemptions from Prohibition  In limited situations, there are exemptions from the prohibition:  If can show agreement satisfies a number of conditions (e.g. efficiencies which result in benefits to consumers) but burden of proof is high  Certain agreements will automatically satisfy these conditions if they fall within the scope of a Block Exemption Regulation  “Hard core” infringements such as price fixing are very unlikely to benefit from an exemption

Importance of Leniency "Secret cartels undermine healthy economic activity. To root out cartels we need heavy sanctions to deter cartels and an efficient leniency policy providing incentives to report them." Kroes, press release IP/06/1705, Brussels, 7th December  Purpose: to reward companies for the value they bring to the Commission’s case  100% immunity from fines  Fixed range of percentage reductions in fines  Covers cartel agreements

Leniency Application Tests Full immunity:  Submission of sufficient information to carry out a targeted investigation or come to an infringement decision  Co-operation obligation Reductions in fines:  Evidence with significant added value  Co-operation obligation

Different Authorities, Different Rules  Absence of a “One Stop Shop” for leniency applicants  Applications to the Commission: covers EC infringements but not necessarily national infringements  Applications to the national competition authorities may also be necessary  Applications generally include information on the applicant and alleged cartel arrangement, incl. its aims, activities, functioning, duration, geographical scope, etc.

Leniency – Reduction in Fines CasePartiesOriginal Fine/ € Leniency Professional videotape cartel (2007) Sony: Fuji: Maxel: 47,19,000 3,20,000 14,400,000 40% reduction 20% reduction Flat Glass cartel (2008) Asahi: Guardian: Pilkington: Saint-Gobain: 65,000, ,000, ,000, ,900,000 50% reduction Rubber cartel (2008) Bayer: Zeon: 28,870,000 5,600,000 30% reduction 20% reduction

Questions?