#13672 - Enforcement - International Competition and Anti-Trust

Outcomes:

Appreciate the extent of the competition authorities’ powers of investigation
Identify the main steps in the investigatory and prosecution process
Explain and advise on the main elements of leniency programmes and how they impact on the enforcement process
Explain the penalties that can be imposed
Appreciate the private actions that can be taken by third parties
Develop memo writing skills

Outcome 1 - competition authorities’ powers of investigation & Outcome 2 – main steps in the investigatory and prosecution process & Outcome 4 - penalties that can be imposed

How authorities become aware of possible infringements:

Whistleblowing
- Leniency can be given to those involved for bringing infringement to the notice of the authorities
- Partial or total leniency
Information from other authorities
- Increasing cooperation between global authorities
Third party complaint
- Victims of anti-competitive behaviour
- Generally from customers, suppliers and consumers of the product or service which is subject of the anti-competitive behaviour
Other investigations
- Other investigations based on illegal activity can sometimes find evidence of other infringements

Powers of the Commission – investigation and prosecution
Investigation	Articles 4 & 7 of the Modernisation Regulation gives the Commission power to make infringement decisions relating to breach of Art 101 or 102 TFEU Commission will require evidence to base conclusions. Evidence obtained by: RFI Has the power under Article 18 Modernisation Reg to request businesses provide all necessary information Commission must state legal basis for request and provide time limit for response Art 18(2) & (3) – allows fines to be given for misleading information Art 19 – can interview any person who may have information and record statements Inspection ‘dawn raids’ On the spot investigation within EU territory (Art 20 & 21) Power to examine and take copies of books and records relating to business Art 21 – gives power to inspect other premises where information may be held Seal any information or premises for duration of inspection Ask any representative for information and record answer Company can refuse inspection for particular information (Commission may then serve a decision ordering documents to be produced and fines if delay in doing so)
Criminal sanctions	Where the EU Commission brings proceedings against a company for anti-competitive behaviour In these circumstances, the EU has no powers to bring criminal proceedings against the company's directors and employees. However, the CMA does. So individuals cannot assume, just because the proceedings are being brought against their company by the Commission, that there will be no criminal consequences for them. Where the EU Commission grants immunity to a company, as part of its leniency programme In these circumstances, because the Commission has no powers to bring criminal proceedings, it cannot grant individuals immunity from any criminal sanctions that the CMA could bring. So to ensure that individuals are also protected against criminal proceedings brought by the CMA, either the company must apply to the CMA for Type A blanket immunity at the same time as applying to the Commission for leniency, or if it does not do so, individuals must make their own applications.
Interim Measures	In specific situations the Commission does not need evidence to make an order, in such situations they will make an interim measures order (Art 8). Interim measures allows Commission to take action where delay that would be caused by full investigation would cause irreparable damage to competition
Post Investigation options	Once the Commission has gathered enough evidence (or interim measure) the following options are available to the Commission: Infringement decisions Last stage of prosecution process governed by the Commission Regulation 773/2004 (Conduct of Proceedings Reg) Parties must be aware of the case against them and have opportunity to answer the case – therefore Commission should provide them with a statement of objections (Art 10) Parties have right to make written response submissions and oral and written submissions at an oral hearing (Art 10-12) Infringement decision can be given under Art 7 of Modernisation Reg Fines can also be given under Art 23 Commitments Commission may accept binding commitments from the parties subject to an investigation (Art 9 Modernisation Reg) For the party involved this can remove the possibility of sanctions Settlements in cartel cases Commission can enter into agreement with parties involved in cartels Parties under investigation have an opportunity to review Commissioner’s evidence and if they believe they cannot defend it may opt to enter into settlement with the Commission In return for settling the case the parties will receive a 10% reduction in any fine imposed
Penalties	Fines Article 23(2) of Modernisation reg, the Commission can impose fines not exceeding 10% of the worldwide turnover of the undertaking Art 24 of Modernisation Reg – can impose penalties for non-compliance with infringement decisions Level of the fine: is contained in Guidelines which first determines the basic amount of the fine (based on proportion of party’s value of sales (+15-25% as deterrent) in relevant market sector, depending on the gravity of the infringement and capped at 30%), multiplied by number of years of infringement Fines assessed by gravity and takes into consideration: Nature of infringement Combined market share of undertakings Geographic scope of infringement Whether infringement has been implemented Figure will be adjusted depending on aggravating or mitigating factors (e.g. repeat offending, refusal to co-operate, being instigator in infringement) Final adjustment made to ensure fine is not <10% worldwide turnover Cease and desist Art 7 of Modernisation Reg – allows order that the infringement is stopped immediately Especially relevant where the undertaking seeks leniency from the imposition of fines where the termination of illegal activity is a condition of any leniency award Void Agreements that are found to be void under Art 101(1) are automatically void under Art 101(2)
Relationship between Commission and national competition authorities
Commission and national competition authorities	Commission investigations under the Modernisation Regulation: NCAs may be called on to assist the Commission inspectors or conduct investigations on their behalf (Art 18-22 Modernisation Reg) National authority enabled under Art 5 to apply Art 101 and 102 TFEU in individual cases and given the full range of powers to enforce finding of infringement In general under Modernisation Regulation: NCAs able to apply Art 101 and 102 TFEU directly Where there is an ‘effect on trade between MS’ NCAs must apply EU competition law (Art 3 Modernisation Reg) Commission should only concentrate on most severe of cases ECN = forum for national authorities and Commission to allocate cases National courts: Art 101 & 102 TFEU have direct effect and therefore can be enforced by individuals in their national courts (Art 6 of Modernisation Reg gives Nat courts the power to apply TFEU) Importance of uniform of application of EU competition law – Art 16 Modernisation Reg Infringement decision made by Commission may be used by a private claimant in the course of national litigation – Claimant is only generally required to prove it was affected by the infringement and then establish damage (proof of infringement is removed from claimant)
Powers of UK Courts – investigation and prosecution
Investigations – CA 1998	CMA can conduct investigation if there are reasonable grounds for suspecting that either of the prohibitions have been breached (s25) CMA may launch infringement proceedings either as a result of a leniency application, info received from other competition authorities, complaints received from 3^rd party, or as result of own investigation CMA can pay up to 100,000 for information leading to identification and ability to take action against illegal cartels Gathers information in same way as Commission Investigatory powers of OFT are now vested in CMA which has been extended by Enterprise and Regulatory Reform Act 2013 Evidence obtained also by: The written procedure S26 CA allows the CMA to request in writing that a business produce specific documents Inspection – ‘dawn raids’ In conjunction with or instead of written procedure S27 – officers can enter premises in conjunction without a warrant or with (s28) Additional powers Can use powers under the Regulation of Investigatory Powers Act (RIPA) 2000 which allows: Direct surveillance e.g. watching someone’s office (s28 RIPA) Covert human intelligent sources e.g. informants (s29 RIPA)
Investigations – Enterprise Act 2002	Introduced criminal cartel offence Many rules relating to CA 1998 will also apply to EA 2002 CMA can launch an investigation under the EA where it has reasonable grounds for suspecting that a criminal infringement has taken place (s192(1)EA2002) Evidence obtained by only under EA: Intrusive surveillance Allows CMA to undertake covert surveillance in residential premises (includes hotels) Can be done by person on site or by surveillance devices Property interference Allows CMA to enter properties in order to install surveillance Access to communications data Allows CMA to obtain information about people,...

#13672 - Enforcement - International Competition and Anti-Trust

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