SEVEN YEARS OF SETTLEMENT DECISIONS: AN APPRAISAL AFTER THE TIMAB JUDGMENT 76TH LUNCH TALK OF THE GCLC, 29 June 2015 Flavio Laina Head of Unit - Cartel Settlements 1

Overview What is the cartels settlement procedure and why was it introduced? What is the cartels settlement procedure and why was it introduced? An short overview of the settlement practise since An short overview of the settlement practise since Lessons learned. Lessons learned. The Timab judgement. The Timab judgement. 2

A little bit of history Instrument created in 2008 Instrument created in 2008 First decision in 2010: DRAMs First decision in 2010: DRAMs 18 decisions in successful settlements 18 decisions in successful settlements and 1 discontinued settlement and 1 discontinued settlement 3

DRAMS 19 May million € Animal feed phosphates20 July million € Consumer detergents13 April million € CRT glass19 October million € Refrigeration compressors7 December million € Water management products27 June million € Automotive wire harnesses10 July million € Euro Interest rates derivatives4 December 20131,04 billion € Yen interest rates derivatives4 December million € Polyurethane foam29 January million € Power exchanges5 March 20145,9 million € Bearings19 March million € Steel abrasives2 April million € Mushrooms25 June million € 4

CHIRD-Rates21 October ,6 million € CHF-Spreads21 October ,3 million € Envelopes11 December ,5 million € Parking heaters17 June million € 5

Does it work? 2013: 3 settlement decisions and 1 normal 2013: 3 settlement decisions and 1 normal 2014: 8 settlement decisions and 2 normal 2014: 8 settlement decisions and 2 normal 2015: 1 settlement decision and 2 normal 2015: 1 settlement decision and 2 normal Average duration of cases reduced by 2 years Average duration of cases reduced by 2 years Fines in settlement cases are about 50% of total fines since 2010 Fines in settlement cases are about 50% of total fines since 2010 Very different types of cases Very different types of cases 6

Identifying procedural efficiencies one procedural language; one procedural language; access to the evidence; access to the evidence; a reduced written procedure; a reduced written procedure; low probability of appeals low probability of appeals 7

Screening Likelihood of reaching a settlement with all the parties Likelihood of reaching a settlement with all the parties Procedural efficiencies; lack of appeals Procedural efficiencies; lack of appeals Number of parties concerned Number of parties concerned Parties’ spontaneous interest to settle Parties’ spontaneous interest to settle Number of successful leniency applicants Number of successful leniency applicants Expected degree of contestation Expected degree of contestation Impact of aggravating circumstances Impact of aggravating circumstances Parties’ foreseeable conflicting positions on liability Parties’ foreseeable conflicting positions on liability EU/EEA cases or cases already decided/pending in other jurisdictions EU/EEA cases or cases already decided/pending in other jurisdictions Novel legal issues Novel legal issues 8

How does it work in practice 9 Presentation of the case Agreement on the case Disclosure of potential fine Settlement submission Written process, SO and final decision

Bilateral talks Participating does not imply an admission of guilt or duty to settle;Participating does not imply an admission of guilt or duty to settle; Disclosure and exchange of arguments on potential objections, liability, fines;Disclosure and exchange of arguments on potential objections, liability, fines; Disclosure of evidence supporting potential objections, liability, fines;Disclosure of evidence supporting potential objections, liability, fines; Disclosure of other evidence upon reasoned request;Disclosure of other evidence upon reasoned request; Commission retains discretion as to the opportunity, order and pace of disclosure and discussions;Commission retains discretion as to the opportunity, order and pace of disclosure and discussions; Discussions are bilateral, frank and non-usable as evidence.Discussions are bilateral, frank and non-usable as evidence. 10

For the Commission Efficiency gains in terms of faster procedure. Efficiency gains in terms of faster procedure. More streamlined procedural organisation. More streamlined procedural organisation. Subsequent litigation unlikely Subsequent litigation unlikely For the parties Lower fines (10 % reduction)Lower fines (10 % reduction) Efficiency gains in terms of faster procedure.Efficiency gains in terms of faster procedure. Transparent and immediate dialogue on key points of the case.Transparent and immediate dialogue on key points of the case. 11 Advantages of Settlement

Lessons learned (1): rights of defence Balance between procedural efficiencies and rights of defenceBalance between procedural efficiencies and rights of defence Parties are guided through the evidence and the conclusions the Commission draws from evidenceParties are guided through the evidence and the conclusions the Commission draws from evidence Requests for additional access, if any, are minorRequests for additional access, if any, are minor HO always available to the partiesHO always available to the parties Requests to proceed even fasterRequests to proceed even faster 12

Lessons learned (2): hybrid cases and others Hybrid from the start. Hybrid from the start. Hybrid at a later stage. Hybrid at a later stage. Smart cards chips case: settlement discussions discontinued for lack of progress and procedure reverted to the standard one. Smart cards chips case: settlement discussions discontinued for lack of progress and procedure reverted to the standard one. 13

Timab's appeal Timab dropped out from settlement after communication of the fines range; Timab dropped out from settlement after communication of the fines range; The Commission resorted to the standard procedure (1st hybrid): (para. 117). The Commission resorted to the standard procedure (1st hybrid): (para. 117). Timab brought action before the General Court for (i) annulment and (ii) reduction of fine. Timab brought action before the General Court for (i) annulment and (ii) reduction of fine. – Main grounds: Commission said to have applied a fine higher than the maximum figure of the range envisaged during settlement discussions  Action dismissed on 20 May 2015 (Case T 456/10) 14

Endorsement of the settlement procedure Endorsement of: the settlement procedure (para. 73) ; the settlement procedure (para. 73) ; the "hybrid" procedure (para. 72); the "hybrid" procedure (para. 72); voluntary procedure, parties may drop out (para. 76); voluntary procedure, parties may drop out (para. 76); According to the Court: The Commission is not bound by the range indicated as part of the settlement procedure as it is an instrument related only to the settlement procedure The Commission is not bound by the range indicated as part of the settlement procedure as it is an instrument related only to the settlement procedure During the standard procedure, the Commission must also establish the liabilities of the undertakings concerned, and take into account new arguments or evidence brought to its attention During the standard procedure, the Commission must also establish the liabilities of the undertakings concerned, and take into account new arguments or evidence brought to its attention  It would be illogical to apply a range of fines falling within the scope of another procedure now abandoned. 15

Reasoning of the General Court The amount of the fine: same method for calculating the fine applied (i) during the settlement procedure and (ii) during the standard procedure against Timab. The amount of the fine: same method for calculating the fine applied (i) during the settlement procedure and (ii) during the standard procedure against Timab. Where does the difference of some EUR 20 million come from? Where does the difference of some EUR 20 million come from? – GC: "It is true that, at first glance, such an increase in the amount of the fine, when the duration of the infringement has been reduced by nearly 15 years, may seem paradoxical" (para. 81). – In the standard procedure against Timab, the Commission did not apply reductions initially applied during the settlement phase – Commission took into account new information (para. 107): 16

Other (rejected) claims The right not to incriminate oneself (para. 120). The right not to incriminate oneself (para. 120). Equality of arms (para 122). Equality of arms (para 122). Legitimate expectations (para 124). Legitimate expectations (para 124). Sound administration (para 125). Sound administration (para 125). Misuse of powers – EC penalised Timab for not settling (para 126). Misuse of powers – EC penalised Timab for not settling (para 126). 17

Interplay with antitrust damages Protection of settlement submissions Protection of settlement submissions Streamlineddecision vs normal decision Streamlined decision vs normal decision 18

Possible improvements Even faster proceedings? Where to find additional procedural savings? Even faster proceedings? Where to find additional procedural savings? Consolidating trust between the parties Consolidating trust between the parties 19

Thank you for your attention 20