A more recent version of these Chapter 4 Consequences Of Infringement Article 101 notes – written by University Of Cambridge students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Competition Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
LLM Chapter 4
Chapter 4 Consequences of infringement - Article 101 Notes
The legal risks of an agreement or practice infringing Article 101 are as follows:
parties may be ordered to cease operating the agreement.
parties may be fined up to 10% of turnover.
The restrictions (and sometimes the agreement itself) may be unenforceable.
3rd parties may bring an action for damages or, an injunction in the national courts of a member state.
In the UK, the Competition and Markets Authority (CMA) can apply to court to have a director of a company who has infringed Art 101 to be disqualified from acting as a director of a company for up to 15 years in situations where his conduct is considered him unfit to act as a director. Individuals involved in cartels may also risk criminal prosecution in the UK under the cartel offence in the Enterprise Act 2002. In practice, non-legal risks may be of equal concern.
2. Type of Remedies
Order to ceaseIf an agreement infringes Art 101(1), the parties are required cease the anti-competitive behaviour. How? The parties can either: (1) terminate it; (2) in alter the provisions.Under Regulation 1/2003, Commission can impose behavioural/ structural remedies on infringing parties (Art 7(1)). Commission has power to accept commitments by companies to modify their behaviour in a defined way as a means of allowing it to close the file without adopting an infringement decision (Art 9).Commission also has the power to impose fines for failure to comply with commitments given under Art 9: 2013 - it fined Microsoft for non-compliance with its commitment to offer users of Microsoft Windows operating systems a choice screen enabling them to choose an alternative web browser.Commission has also closed cases on the basis of informal commitments to end potentially infringing activity:
LLM Chapter 4 2017 - Commission and German Federal Cartel Office (FCO) welcomed an agreement by Amazon / Audible and Apple to remove two-way exclusivity provisions. These restrictions prevented Audible from supplying audiobooks to 3rd parties, and Apple from sourcing audiobooks from other suppliers. The restrictions had been in place since at least 2008 and were subject to Commission and FCO investigation after market complaint. The agreement to remove the restrictions closed the investigations without formal commitment. FinesFine amount-> turnover (in the last financial year) on each of the companies in breach.No knowledge of the relevant law? Not a defence.Commission has no power to fine employees or directors of a business. But parent co can be held liable if they have "decisive influence".Cases such as price-fixing, market-sharing, restricting output, or partitioning the EU, eg by imposing export bans have the risk of substantial fines.Commission has published 2 advisory Notices on fines and has adopted a procedure for settling cartel cases: (i)
The amount of fines. 2006 Guidelines introduced a number of important changes. General rule- > the basic amount of a fine will be set at a level of up to 30% of the value of sales to which the infringement relates. The % applied will depend on the Commission's assessment of the gravity of the infringement and its duration. Fines for horizontal pricefixing, market-sharing and output limitation agreements will generally be set at the higher end of this scale.
(ii) This amount may then be increased by an amount to act as a deterrent. This "deterrent entry fee" will be between 15%
- 25% of an undertaking's value of sales and will be added to the basic amount regardless of the duration of the infringement. (iii) Example 1: Commission fined Sony, Fuji & Maxell for price fixing in the market for professional video tape. Commission announced the decision stated that the fines imposed reflected the overall significance of the infringement
& the shares of the parties involved. The fines imposed on Fuji & Maxell were reduced due to Commission's leniency notice. Sony's fine was increased by 30%- it had obstructed the investigation the Commission conducted on its premises. One employee had refused to answer Commission's questions, and one had shredded documents while the investigation was taking place (iv) Example 2: Commission increased the fine it imposed on ENI for its part in the chloroprene rubber cartel by 60% in Dec 2007. Why? Due to the undertaking's previous involvement in a similar infringement. Under previous guidelines, the Commission increased fines by 50% to take account of an undertaking's recidivism. The 2006 Guidelines allow for an increase of up to 100% per each prior infringement. (v) Example 3: In a cartel in the market for sodium chlorate paper bleach, Commission increased the fine imposed on Arkema France by 90% considering the fact that it had been fined 3 times previously in relation to cartels in the plastics sector. Undertakings that have been involved in a prior infringement can expect a large increase in fine. Arkema appealed but General Court upheld the Commission's decision considering the increase is proportionate.
Leniency. 2006 Commission Notice sets out the basis on which participants in an unlawful cartel may obtain immunity from
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