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James Killick, Nov 02, 2006
On June 28, 2006, the European Commission announced that it had adopted new fining guidelines for companies found guilty of infringing Articles 81 or 82 of the EC Treaty. The Guidelines will apply prospectively to any antitrust infringement to which the Commission had not already issued a statement of objections as of September 1, 2006, the date that the Guidelines were published in the Official Journal. Under the new Guidelines, fines will be now established based on a two-step process, first establishing a basic amount for each undertaking, then adjusting it depending on the circumstances of the individual case. The key factor is the value of sales of the product or service to which the infringement relates.
This contrasts with the previous 1998 Guidelines, which had a four-step process and where the starting point for calculating the fine was supposed to be determined by the nature of the infringement without reference to the infringer’s turnover in the market concerned. The new fining policy clearly has the potential to be severe. Under the new Guidelines, a participant in a five-year, price-fixing cartel could be fined around 150 percent of the annual value of its sales of the product concerned – and a repeat offender could be fined 300 percent of its sales. Yet, it is interesting to note that the Guidelines will not be more severe than the 1998 Guidelines in all cases. There are some categories for which the new rules will actually produce a less severe outcome: where the market size is relatively small and the infringement of relatively short duration – and particularly if an increase for deterrence might have been imposed under the 1998 Guidelines.
