The number of patent settlements in the pharmaceutical sector that are potentially problematic under the European Union’s antitrust rules fell to 10% of total patent settlements in the sector in the period July 2008 to December 2009 compared with 22% in the period covered in last year’s inquiry into the pharmaceutical sector (January 2000-June 2008).

“Patent settlements are an effective means to end patent-related disputes and litigation. Nobody disputes this. However, some of them may be anticompetitive. Our report appears to show the sector’s increased awareness of the potential competition concerns, but the Commission will remain attentive to ensure that the sale of safe, affordable medicines is not delayed by unfair practices. This is all the more important in times of crisis and of serious budgetary constraints,” said Joaquín Almunia, Commission Vice President in charge of Competition Policy.

The Commission today has adopted a Report on the monitoring of patent settlements in the pharmaceutical sector. The monitoring exercise was launched in January 2010 and collected data on settlement agreements between originator companies and generic ones for the period from 1 July 2008 to 31 December 2009 (see IP/10/12). The report follows the Commission’s competition inquiry into the pharmaceutical sector concluded in July 2009 (see IP/09/1098 and MEMO/09/321).

The survey discovered that 93 patent settlement agreements were concluded between originator and generic companies during the 18 months covered by the survey. This compares with 207 agreements concluded during the 7.5 years covered by the sector inquiry (January 2000 to June 2008).

However, the number of settlements that may be problematic from a competition perspective decreased significantly in importance and number. In the 7.5-year period covered by the sector inquiry, such settlements accounted for 45 out of 207 or 22 % of the settlements reported. By contrast, in the period July 2008 to end 2009, only 10 % or 9 out of 93 of the settlements fell into the category that might attract scrutiny. The direct value transfers involved in the settlements also decreased.

The settlements that may prove problematic are those that limit generic entry and foresee a value transfer from originator to a generic company. The value transfer can take different forms such as direct payments, but can also consist of other commercial advantages. The Commission would also frown at agreements that contain restrictions beyond the exclusionary zone of the patent, i.e. which would grant protection against

generic entry outside the time, product or geographic scope of the patent.

Not all settlements falling into the potentially problematic category warrant an immediate in depth antitrust investigation by the Commission. Each case will be assessed on its merits. When considering action the size of the markets concerned, the value transferred from originator to generic companies and the restriction on independent generic entry will be considered. In cases with a purely national dimension, the Commission may also share certain information with national competition authorities. The Commission already has two open investigations with respect to patent settlements (see MEMO/09/322, Servier and IP/10/8, Lundbeck).

The monitoring exercise has also showed the sector’s concern that the Commissions’ heightened focus would result in an increase in court litigation was largely unfounded as the number of settlement agreements has actually increased.

The Commission will repeat the monitoring exercise, which proved to be of limited burden for the companies concerned, in 2011.

(Source: European Commission)

The European Commission has adopted new competition rules for agreements between vehicle manufacturers and their authorised dealers, repairers and spare parts distributors. The new rules will increase competition in the market for repair and maintenance by improving access to technical information needed for the repairs and by making it easier to use alternative spare parts.

They will allow the Commission to tackle manufacturers’ abuse of warranties when they request that cars are serviced only in authorised garages. The new rules will also reduce distribution costs for new cars by eliminating overly restrictive rules.

“I strongly believe the new framework will bring tangible benefits for consumers by bringing down the cost of repairs and maintenance that represent an excessive share of the total cost of a car over its lifetime. It will also reduce the cost of distribution by doing away with overly restrictive rules,” said Vice-President of the Commission and Competition Commissioner Joaquin Almunia.

Today the Commission has adopted a new block exemption Regulation and Guidelines on the application of competition rules to the car sector. The new rules introduce a 30% market share threshold above which agreements between car manufacturers and authorised repairers will no longer be block exempted, aligning the rules with the general framework (Vertical restraints block exemption Regulation 330/2010 adopted on 20 April, see IP/10/445 and MEMO/10/138). This will make it easier for the Commission to tackle possible abuses to the detriment of consumers, such as the refusal to grant independent repairers access to technical information. It will increase competition between authorised and independent repairers.

The new rules will strengthen repairers’ access to alternative spare parts which can represent a big share of the repair bills. Car manufacturers will no longer be able to make the warranty conditional on having the oil changed or other car services only in authorised garages. Of course, manufacturers may request repairs covered by the warranty - and paid for by the manufacturer - be carried out within the authorised network. All this is important for consumers because repair bills account for an estimated 40% of the total cost of owning a car and costs have been rising in recent years.

Regarding the distribution of cars, the Commission’s evaluation has shown that car sales markets are highly competitive. Margins for vehicle manufacturers and dealers are slim, and for several years production over-capacities and technological improvement have led to consumer benefits in terms of falling real car prices and increasing choice. The financial crisis has added to the downward pressure on prices. In this context, the existing rules are clearly overly complicated and restrictive and have had the indirect effect of driving up distribution costs, which make up on average 30% of the price of a new car.

The Commission therefore proposes to simplify these rules and treat the distribution of cars like any other market. The current distribution model will continue to be exempted in most cases, but certain sector-specific clauses which have proven ineffective or counter-productive will not be carried forward. The new regime will give carmakers more flexibility to organise diverse networks in which multi-brand dealers co-exist alongside dealers fully committed to promoting the brands of a single manufacturer.

The new rules will come into force on 1 June 2010 as concerns the repair and maintenance markets, and on 1 June 2013 with regard to the vehicle sales markets and will be valid until 31 May 2023. The Commission will monitor developments and take appropriate remedial action if it detects problematic behaviour or changed competitive conditions, as it has done in the past.

In the past few years, the Commission has brought four cases against DaimlerChrysler, Fiat, Toyota and GM to ensure that they allow independent garages adequate access to repair information (see IP/07/1332). However, other potential problems involve access to spare parts and the refusal to honour warranties if consumers have work done outside the authorised repair networks. The Guidelines and block exemption adopted today give detailed clarification for stakeholders on how the Commission intends to apply the rules in these areas.

The new Block Exemption Regulation can be found at:

http://ec.europa.eu/competition/sectors/motor_vehicles/legislation/legislation.html

The detailed Guidelines will be published at the same address after the finalisation of the different linguistic versions.

For further information see also MEMO/10/217.

(Source: European Commission)

Certain information exchange can be justified in order to allow insurers to accurately assess risks. Pooling is also important in order to ensure that all risks can be covered. These two types of agreements justify a block exemption. Other types of cooperation may also be legal but it will be for insurers to self-assess that they comply with the general competition rules.

“The block exemption continues to be justified for pools and certain types of information exchange necessary for the industry to be able to carry out its business. This is in the interest of consumers and of the economy as a whole. The Commission together with the national competition authorities will see to it that the industry does not use the exemption as a blanket protection and will enforce competition rules where and whenever necessary“, said Joaquín Almunia, Commission Vice-President in charge of Competition Policy.

After a detailed review of the functioning of the current BER adopted in 2003 and which expires at the end of March, the Commission has adopted new rules that continue to exempt two forms of cooperation specific to the insurance sector, namely agreements in relation to joint compilations, tables and studies and co(re)insurance pools. This new regulation will be valid until 31 March 2017.

Certain information exchange is important for the insurance sector because large amounts of data are required in order for companies to assess the costs of covering risks. Access to the data is also crucial to facilitate the entry of new or foreign market players. Key changes to the exemption for information exchange are:

- a new right of access to the results of the information exchange for customer and consumer organisations, except for public security reasons; and

- clarifications to the scope of the exchange of information covered by the BER.

The new BER also exempts, subject to certain strict conditions pools (common coverage of risks by insurance companies) which cover either “new” risks or fall below certain market share thresholds if they cover risks which are not “new”. This helps to ensure that all risks can be covered by insurance companies. The key changes to this exemption area

- a change to the approach to market share calculation in order to bring it into line with other general and sector-specific competition rules so that not only gross premium income earned within the pool by the participating undertakings, but also outside the pool will be taken into account;

- a broadening of the definition of “new risks” to cover risks the nature of which has changed so materially that it is not possible to know in advance what subscription capacity is necessary in order to cover such a risk.

The review of the previous BER showed that neither agreements on standard policy conditions nor agreements on security devices are specific to the insurance sector. They are therefore excluded from the new BER. The Commission, however, plans to address both of these types of agreements under the EU Guidelines on horizontal cooperation agreements, which are currently being reviewed.

The Commission will cooperate with national competition authorities, which have been closely involved in the BER review exercise, to ensure that insurance companies and in particular pools, assess correctly whether their agreements meet the exemption conditions and do not use the BER as a blanket protection.

Before the entry into force of Council Regulation 1/2003 on the application of the competition rules, companies had to notify agreements or concerted practices to the Commission to obtain clearance under the competition rules. As of 1 May 2004, Regulation 1/2003 abolished the notification system and introduced the principle that companies need to assess for themselves whether their agreements are compatible with the ban on restrictive business practices (Article 101 of the Treaty). This principle applies to all sectors, including the insurance sector. Sector specific rules are now rare and in order to determine whether the BER should be renewed, the Commission examined whether the insurance sector presents specificities that trigger an enhanced need for cooperation and if so, whether a specific legal instrument is necessary in order to protect or facilitate that cooperation.

(Source: European Commission)

The full text of the new Block Exemption Regulation as well as the explanatory accompanying Communication are available at:

http://ec.europa.eu/competition/sectors/financial_services/legislation.html

European Commissioner for Competition Neelie Kroes welcomes the strong cross-party support received in today’s resolution by the European Parliament on the Commission’s White Paper on damages: an initiative designed to improve the ways in which victims of competition breaches can claim compensation for the harm they suffered. Due to the ineffectiveness of the legal rules currently in place, victims of competition law infringements each year forego compensation payments of many billions of euros. In today’s vote, which affirms the Parliamentary committee report of 2 March, the Parliament provided valuable support and comments on this initiative. In April 2008, the Commission presented a set of specific measures to improve the legal rules and procedures governing damages actions (see IP/08/515 and MEMO/08/216). This followed a Green Paper published in 2005 (see IP/05/1634 and MEMO/05/489). The Commission is carefully considering the valuable constructive comments and suggestions received from Parliament, not only in the resolution adopted but also during numerous debates and discussions since 2005, and will take these into account when deciding on the appropriate measures to follow-up on the White Paper.

“Today’s vote follows years of discussions on the Green and White Papers, and I am delighted that the European Parliament shares the Commission’s view that something needs to be done to ensure that the victims of competition breaches finally get the compensation they are entitled to”, said European Competition Commissioner Neelie Kroes. “I am particularly pleased that today’s resolution is based on a wide consensus across most political groups”.

The European Parliament approved a Resolution on the Commission’s White Paper on damages actions for breach of the EC antitrust rules. The Resolution fully adopts the Parliamentary Committee’s report which was the result of constructive cooperation between the three large political groups and unanimously adopted on 2 March 2009 in the Parliament’s Committee on Economic and Monetary Affairs. The report follows several years of discussions within the European Parliament, going back to the 2005 Green Paper, in which the Commission first highlighted the ineffectiveness of compensation for competition breaches.

The European Parliament confirms the Commission’s findings that many victims harmed by EC competition law infringements are currently prevented from obtaining the compensation they are entitled to under the Treaty. The European Parliament stesses that collective redress – with appropriate safeguards – is necessary, and that proposals to help victims gain compensation must not be delayed.

Commissioner Kroes shares Parliament’s view that collective redress mechanisms are necessary to give consumers and small businesses a realistic and efficient possibility to obtain compensation in cases of scattered damage, and that these mechanisms must include appropriate safeguards against excessive or abusive litigation. Commissioner Kroes welcomes Parliament’s acknowledgement that the need for a consistent approach does not mean that all areas would have to be dealt with in one single horizontal instrument and that the call for consistency must not unduly delay the development of measures identified as necessary for the full enforcement of EC competition rules.

Commissioner Kroes also welcomes yesterday’s Opinion of the European Economic and Social Committee, which supports on the basis of a large consensus between the groups represented in the Committee the objectives and specific suggestions of the White Paper and calls on the Commission to propose the appropriate follow-up measures.

(Source: European Commission)

The European Commission has launched a public consultation on the functioning of the current regime for the assessment of horizontal cooperation agreements under EU antitrust rules, in particular the Specialisation and Research & Development Block Exemption Regulations and the Horizontal Guidelines. The purpose of the review is to evaluate how these rules have worked in practice. The Commission welcomes comments up to 30th January 2009.

In order to prepare the regime to be applied after the expiry of the current rules on 31^st December 2010, the Commission invites stakeholders to share their experiences in practice in applying the two block exemption Regulations and the accompanying guidelines. Receiving feedback from stakeholders is a key element of this review and will help to ensure that any future regime not only reflects market realities but also provides for the possibility of fair cooperation between competitors. The Commission welcomes comments from the business community and their representatives as well as other stakeholders, including industry associations and consumer interest associations who have had direct experience of the current regime for the assessment of horizontal cooperation agreements.

In preparing any future regime, the Commission will analyse stakeholders’ input and its own experience of applying the BERs and guidelines, as well as feedback from national competition authorities and other sources.

Comments can be addressed to the Commission up to 30th January 2009 at the following address:

European Commission

DG Competition

Antitrust Registry

B-1049 BRUSSELS

or by email to comp-greffe-antitrust@ec.europa.eu

specifying the reference “HT.1407 – stakeholder input”

The questionnaire is available at:
http://ec.europa.eu/competition/consultations/2009_horizontal_agreements/index.html

Background

Article 81(1) of the EC Treaty prohibits agreements between companies and other restrictive business practices that would result in distortions of competition in the Single Market. Article 81(3) allows the Commission to exempt under certain conditions agreements or practices that promote trade or innovation from the general prohibition.

In November 2000, the Commission adopted Regulation (EC) No 2658/2000 on the application of Article 81(3) of the Treaty to categories of specialisation agreements (Specialisation BER), Regulation (EC) No 2659/2000 on the application of Article 81(3) of the Treaty to categories of research and development agreements (R&D BER), and, shortly thereafter, guidelines on the applicability of Article 81 of the Treaty to horizontal cooperation agreements (Horizontal Guidelines). The Specialisation and R&D BERs will expire at the end of 2010.

Horizontal agreements are agreements between companies operating at the same level in the market. They can lead to serious competition problems when the parties agree to fix prices, share markets, or limit output, as may occur in certain cooperation agreements such as joint commercialisation or information exchanges. However, horizontal agreements can be pro-competitive in areas such as joint research and development, joint production and joint purchasing, which can lead to substantial economic benefits. They allow companies to respond to increasing competitive pressures in a changing market place driven by globalisation. The speed of technological progress and the generally more dynamic nature of markets mean that there is an even greater need to share risks, save costs, pool know-how and launch innovation faster. Cooperation can be particularly important for small and medium sized enterprises.

(Source: European Commission)

The European Commission has published guidance on its enforcement priorities in applying EC Treaty rules on abuse of a dominant market position (Article 82) to abusive exclusionary conduct by dominant undertakings. Such conduct aims to exclude actual competitors from expanding or would-be competitors from entering a market, thereby potentially depriving customers of more choice, more innovative goods or services and/or lower prices. The guidance sets out the Commission’s determination to prioritise those cases where the exclusionary conduct of a dominant undertaking is liable to have harmful effects on consumers.

Competition Commissioner Neelie Kroes said: “The paper provides guidance by setting out an approach to deal with abuses of a dominant position by companies. This is in line with our approach to restrictive business practices and merger control, and to recent individual cases of abuses of dominant position. It will ensure that the Commission’s intervention is effective, and should leave dominant undertakings in no doubt that they will find the Commission in their way wherever their conduct risks increasing prices, limiting consumer choice or dissuading innovation. Clear rules protecting consumers and promoting innovation are all the more important in times of economic difficulty such as these.”

The guidance paper sets out an economic and effects-based approach to exclusionary conduct under EC antitrust law. Such an approach has already been used in recent Article 82 cases, including Wanadoo (see IP/03/1025), Microsoft (see IP/04/382 and MEMO/04/70) and Télefonica (see IP/07/1011 and MEMO/07/274). This document provides for the first time comprehensive guidance to stakeholders, in particular the business community and competition law enforcers at national level, as to how the Commission uses an effects-based approach to establish its enforcement priorities under Article 82 in relation to exclusionary conduct.

The guidance paper outlines the analytical framework that the Commission employs when assessing the most commonly encountered forms of exclusionary conduct, such as exclusive dealing, rebates, tying and bundling, predatory practices, refusal to supply and margin squeeze.

The main principles of the effects-based approach to Article 82 are the following:

a)     fair and undistorted competition is the best way to make markets work better for the benefit of EU business and consumers. Healthy competition, including by dominant undertakings, should be encouraged

b)     the focus of the Commission’s enforcement policy should be on protecting consumers, on protecting the process of competition and not on protecting individual competitors

c)     the Commission does not need to establish that the dominant undertaking’s conduct actually harmed competition, only that there is convincing evidence that harm is likely

d)     since the focus of the Commission’s enforcement policy is on conduct that harms the competitive process rather than individual competitors, for pricing conduct the Commission examines whether the conduct is likely to prevent competitors that are as efficient as the dominant undertaking from expanding on or entering the market and that can be expected to be most relevant to consumer welfare.

e)     since the focus of the Commission’s enforcement policy is on the likely effects of a dominant undertaking’s conduct on consumers, the Commission will examine claims put forward by dominant undertakings that their conduct is justified on efficiency grounds – as is already the case under Article 81 and for merger control.

The Commission will fully apply the approach set out above to future cases. The guidance paper (still a draft text) is available at http://ec.europa.eu/competition/antitrust/art82/index.html.

(Source: European Commission)

The European Commission has published its preliminary report on the competition inquiry into the pharmaceutical sector, which finds that competition in this industry does not work as well as it should. According to the preliminary findings there is evidence that originator companies have engaged in practices with the objective of delaying or blocking market entry of competing medicines.

Competition Commissioner Neelie Kroes said: “Competition in the pharmaceuticals market is vital for people to get affordable and innovative medicines, and to make sure that taxpayers get the best value for money out of their healthcare system. These preliminary results show that market entry of generic companies and the development of new and more affordable medicines is sometimes blocked or delayed, at significant cost to healthcare systems, consumers and taxpayers. We now have a solid view of what is happening and why: the next step is to discuss our findings with the stakeholders and to draw the necessary conclusions. It is still early days, but the Commission will not hesitate to open antitrust cases against companies where there are indications that the antitrust rules may have been breached.”

Delays or blocks to market entry

The preliminary report shows that originator companies (that develop and sell new medicines) used a variety of methods with the objective of delaying or blocking market entry of generic companies (that sell medicines equivalent to original medicines once patents have expired) and other originator companies, and therefore maintain high income streams for the originator companies.

The preliminary report also found evidence that originator companies also practice defensive patenting strategies to fence off competition from other originator companies. This may obstruct innovation, lead to higher costs for competing pharmaceutical companies and delay consumers’ access to innovative medicines.

Stakeholders also made a significant number of comments on the regulatory framework. In particular, both generic companies and originator companies called for a single Community Patent and the creation of a unified and specialised patent judiciary in Europe. These calls are supported by the preliminary findings of the sector inquiry, that discovered 11% of contradictory final judgments in litigation cases and total direct costs associated with the patent litigation of €420 million. Such contradictions and the costs related to the litigation could be avoided, or as a strict minimum reduced, with a Community Patent and an unified specialised patent judiciary.

Background

The sector inquiry began in January 2008 (see IP/08/49 and MEMO/08/20) to examine the reasons why fewer new medicines were brought to market and why generic entry seemed to be delayed in some cases.

A sector inquiry is an information gathering exercise that provides the Commission with in-depth knowledge about markets, with a view to better identifying obstacles to competition. Essentially, the Commission opens a sector inquiry when it has concerns that competition may not be working as it should, but the reason for that is not clear.

For further information, see also MEMO/08/746.

The preliminary report and more information on the pharmaceutical sector inquiry will be available at:

http://ec.europa.eu/comm/competition/sectors/pharmaceuticals/inquiry/index.html

(Source: European Commission)

The European Commission has launched a public consultation on the functioning of the Council Regulation (1/2003) that sets out the rules for the Commission’s enforcement of EC Treaty antitrust rules.

The Commission is looking for views on all aspects of its implementation in practice. Regulation 1/2003 was the result of the most comprehensive reform of antitrust procedures since 1962. Its key objectives are more effective enforcement of EC antitrust rules in the interests of consumers and businesses, while bringing about a more level playing field and reducing red tape for companies operating in Europe. The Commission will use the results of the consultation to prepare the report on the functioning of Regulation 1/2003, which should be presented to the European Parliament and the Council by 1 May 2009. Interested parties are invited to submit their comments by 30 September 2008.

The questionnaire for stakeholders is published on the Commission’s website at: http://ec.europa.eu/comm/competition/consultations/open.html.

The Commission will analyse the outcome of this consultation as part of the factual basis for the preparation of the Report, alongside its own experience of applying Regulation 1/2003, feedback from national competition authorities and any other relevant sources. Replies should be sent no later than 30 September 2008. 

(Source: European Commission)

The European Commission has adopted Guidelines on the application to maritime transport services of EC Treaty rules on restrictive business practices (Article 81). As from October 2008, liner companies will have to assess themselves whether their business practices comply with the competition rules. The Guidelines will help maritime operators understand the implications of this change, and provide details on market definition, information exchange in liner shipping and on operational co-operation agreements between tramp operators (i.e. unscheduled maritime transport of non-containerised bulk cargo), so-called pool agreements. The Guidelines will be published in the EU Official Journal.

Council Regulation 4056/86 allowed liner shipping operators an exemption from EU competition rules to organise themselves into so-called “conferences” with the aim of fixing prices and coordinating capacity for the transport of containerised cargo. In September 2006, the Council decided to abolish that exemption from EU competition rules, with effect from 18 October 2008. The Council also decided to extend the scope of the procedural antitrust rules (EC Regulation No 1/2003 – which lays down the rules for implementing the antitrust rules laid down in Articles 81 and 82 of the ECTreaty) to cabotage (i.e. the transport of goods between two points in the same country) and tramp shipping services (unscheduled maritime transport of non-containerised bulk cargo). This means that the Commission now enjoys the same investigation and enforcement powers as regards cabotage and tramp services as in all other economic sectors.

These changes mark the start of a new competitive regime in the maritime sector. To ensure that the new regime fosters competitive markets, the Commission agreed to provide guidance on the application of Article 81 of the EC Treaty to the maritime sector. The Guidelines have been adopted following a consultations on a draft published at the end of 2007. The Guidelines clarify the rules on information exchanges and trade associations in the liner sector and provide more guidance on the legal treatment of tramp pools. In particular, the final text explains in more detail the circumstances in which a pool agreement which initially looks anti-competitive may be redeemed by its pro-competitive effects, such as better quality services or lower prices for customers.

The section dealing with the liner sector will apply for a period of five years starting from 18th October 2008 which is the effective date of repeal of the liner conference block exemption.

The reform of competition rules applying to maritime transport services will be completed in the coming months by a public consultation on a preliminary draft regulation on the renewal of the block exemption Regulation for liner shipping consortia (Commission Regulation (EC) No 823/2000 of 19 April 2000, as amended). That regulation allows shipping lines to enter into extensive cooperation for the purpose of providing a joint service (so-called “consortia”). The Maritime Guidelines adopted today are an integral part of the Commission’s Action Plan to implement the Integrated Maritime Policy.

(Source: European Commission)

The European Commission has introduced a settlement procedure for cartels which will allow the Commission to settle cartel cases through a simplified procedure. Under this procedure, parties, having seen the evidence in the Commission file, choose to acknowledge their involvement in the cartel and their liability for it. In return for this acknowledgement, the Commission can reduce the fine imposed on the parties by 10%. Settlements aim to simplify the administrative proceedings and could reduce litigation before the European Courts in cartel cases. This will in turn free Commission resources to pursue other cases.

The legislative package consists of a Commission Regulation together with a Commission Notice (the “settlement notice”) explaining the new system in detail. The settlements package will enter into force on the day of its publication in the EU Official Journal.  Parties have neither the right nor the duty to settle, but in cases where companies are convinced that the Commission could prove their involvement in a cartel, a settlement can be reached with the Commission on the scope and duration of the cartel, and the individual liability of the companies involved. To this end, parties will be informed about the envisaged objections and the evidence supporting them, and will be given the occasion to state their views, before formal objections are sent. If the parties chose to introduce a settlement submission, acknowledging the objections, the Commission’s statement of objections (SO) would endorse the contents of the parties’ submission and so could be much shorter than an SO issued without prior cooperation. Since parties will have been heard in anticipation of the “settlement” SO, other procedural steps can be simplified so that, following confirmation by the parties, the Commission can proceed swiftly to adopt a final decision after consulting Member States in the framework of the Advisory Committee, comprised of representatives of all Member States’ competition authorities.

Companies which are convinced that the Commission can prove their involvement in a cartel, will also benefit from quicker decisions and a fine reduction.” The Commission’s ability to fight cartels hinges on the evidence gathered during its investigations. Parties found guilty of a cartel often do not go to court to contest the existence of a cartel or their involvement in it, but rather to reduce or avoid fines. This is particularly so in cases driven by leniency applications. Where both the settlement reduction and the leniency reduction are applicable, they are applied cumulatively. A decision finding an infringement of the antitrust rules and imposing fines pursuant to Regulation (EC) Nº 1/2003 is adopted, irrespective of whether the standard or the settlement procedure applies.

Under the new settlement procedure, the Commission neither negotiates nor bargains the use of evidence or the appropriate sanction, but can reward the parties’ cooperation to attain procedural economies. Such cooperation is different from the voluntary production of evidence to trigger or advance the Commission’s investigation, which is already covered by the Leniency Notice. The Commission retains the possibility, until the final decision, to revert to the standard procedure. In addition, if no settlement was explored or reached, the standard procedure would apply by default.

(Source: European Commission)