The European Commission has imposed total fines of €388 million on seven manufacturers of bleaching chemicals for participation in a cartel.
Between 1994 and 2000 nine companies exchanged commercially confidential information, limited production, allocated market shares and customers and fixed and monitored prices in the hydrogen peroxide and perborate markets throughout the European Economic Area. Hydrogen peroxide is used in a range of industries including pulp and paper manufacturing, sewage treatment, and the production of persalts (including perborate). Perborate is used mainly to manufacture synthetic detergents and washing powders.
Total fines imposed on the cartel members exceeded €388 million. The high fines take into account the fact that three of the parties had been involved in previous cartels relating to the production of hydrogen peroxide and perborate, which were prohibited by the European Commission in 1984. Fines imposed on these repeat offenders were increased by 50%.
The Commission may grant full or partial immunity from fines to parties who either "whistleblow" on the existence of a cartel, or provide significant information about the cartel after the Commission has become aware of its existence. Failure to make an early application for leniency can result in the loss of full or even partial immunity from fines since it becomes more difficult to provide information with the level of "added value" required to secure leniency from the Commission. In this case, Degussa applied for leniency from the Commission and, as a result of its co-operation, received full immunity from a fine, which would otherwise have reached some €130 million. Other parties provided additional information on the cartel, which led to reductions in their fines of between 10% and 40%. The Commission notes that various applications for leniency were made within a matter of days or even hours from each other, highlighting the need for rapid action once a decision either to whistleblow or to seek leniency has been taken.
The Commission has recently made clear that it is firmly committed to promoting third party damages claims for breaches of European competition law. In December 2005, it published a Green Paper on damages actions, which sets out a number of options, intended to encourage greater private enforcement of the competition rules. In its press release, the Commission makes a point of inviting firms affected by the cartel to consider seeking damages before national courts. The Commission points out that its infringement decision can be used in court to prove that an illegal cartel existed. The Commission also emphasises that the fines it has imposed do not reduce the damages to which a successful claimant is entitled.
For further details on recent legal developments in this area please see below:
Full Article
Damages actions for breach of competition rules encouraged
Originally published December 2005
The European Commission has just published for consultation a Green Paper and Staff Working Paper with a number of proposals intended to encourage claimants to enforce their rights and bring claims for damages for breach of European competition law.
It is clear from the consultation that the Commission is firmly committed to creating effective conditions in Europe for the private enforcement of the competition rules. Parties engaged in anti-competitive behaviour should acknowledge the increasing risk of private action. Those who suffer loss as a result of that behaviour can expect a more favourable landscape for enforcing their rights. Both sets of parties have the chance to put their views across. The Commission invites those views by 21 April 2006.
Since its modernisation programme was introduced on 1 May 2004, the European Commission has been looking to encourage greater private enforcement of the competition rules through the national courts. The Commission sees private enforcement as a vital complement to public enforcement of European competition law, itself central to the "Lisbon strategy" aimed at improving Europe’s economy.
Whilst modernisation lifted some of the barriers to litigating competition, a study commissioned by the Commission found there to be "total underdevelopment" and "astonishing diversity" in the conditions for claiming damages for breach of European competition law across Europe. The UK Court of Appeal’s judgment in Crehan v Inntrepreneur is a rare example of a successful competition law damages claim in an otherwise hostile landscape. EU Commissioner for Competition, Neelie Kroes, recently acknowledged that the right to claim damages for competition law breach "is all too often theoretical because of obstacles to exercising this right in practice".
The consultation tries to address those obstacles and focuses on a number of areas for improvement, of which the following are key:
What measures could be taken to alleviate the burden and standard of proof for those seeking to claim damages for breach of the competition rules?
The Commission acknowledges that not only is the evidential burden on the claimant particularly high, but the information needed to bring a claim is also unevenly distributed. Often the party that breaches the law possesses much of the information relating to that breach, whereas the party seeking to claim damages has little of the information needed to bring the claim. To address this, the Commission seeks views on a variety of proposals, such as:
- the introduction in some cases and the improvement in others of the rules on disclosure
- a bespoke right of access to documents in the Commission’s possession, with some limited protection for leniency applicants (preventing access to documentation admitting the infringement, but allowing access to other documents related to the application) and with the continued protection of business secrets
- a reversal of the burden of proof where the claimant can show a prima facie case of infringement
- a relaxation of the standard for proving quantum of damages where information is scarce/unavailable
- decisions of national competition authorities (NCAs) to be made binding on all other NCAs.
Should steps be taken to increase the amount of damages and interest that are recoverable?
The Commission seeks views on whether double damages for horizontal cartel behaviour would be welcomed and if so, whether they should be awarded automatically, conditionally or at the court’s discretion. The consultation also considers whether interest should be calculated from the date of infringement or injury, rather than the date of judgment.
What method for assessing quantum of damages is to be preferred?
The Commission recognises the complexity of proving loss in the competition field and asks whether an equitable approach to claiming damages in place of economic modelling might be justified. The Commission also wants to explore the practical merits of different economic techniques and asks whether it would be useful for it to publish guidelines on the subject.
Should the pass-on defence (where the defendant tries to reduce or eliminate its liability to pay damages by showing that the claimant passed on all or some of its loss to its customers) be allowed and should indirect purchasers be entitled to claim damages?
The consultation explores the practical complexities associated with the pass-on defence and asks whether it should be allowed or barred and whether only direct purchasers should be entitled to claim damages or whether indirect purchasers should be entitled also.
Should there be a special rule on jurisdiction for competition law damages claims?
The Commission seeks views in particular on a special rule for claimants to forum shop between countries where they suffered the effects of the anti-competitive conduct on which their claim is based.
What could be done to increase access to justice in competition cases?
The Commission is looking to facilitate the enforcement of consumers’ rights under the competition rules by introducing additional means of representative action by consumer associations or other qualified bodies (this possibility is already part of the UK regime) and of collective/group action.
To view the Commission’s press release, please click here to view in a new window.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 05/05/2006.
