Masterclass Cartel Investigations

Transcription

1 Masterclass Cartel Investigations 11 June

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3 Set-up 6 topics 30 minutes per topic Frank Wijckmans introduces the topic and chairs debate 1 or 2 panelists provide their do s and don ts in respect of the topics Other panelists to comment / Q&A 3

4 Panelists PUBLIC ENFORCERS Felix Agerbeek (European Commission) Xavier Lewis (European Commission) 4

5 Panelists PRIVATE PRACTITIONERS James Venit (Skadden Arps) Angel Valdes Burgui (Lupicinio) Ros Kellaway (Eversheds) Konstantin Jörgens (Garrigues) Hans Gilliams (Eubelius) Filip Tuytschaever (contrast) 5

6 Program PART I ( am) I. Detection of cartels / leniency II. Cartel investigation / dawn raids & RFI s III. Procedure before the European Commission / settlement BREAK (11.00 am am) 6

7 Program PART II (11.30 am pm ) I. European Commission is heading towards a fining decision / what to do II. Procedures before the Court III. Private damages PRESENTATION OF LEEN HOEBRECHTS CHARITY (01.00 pm pm) 7

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9 Overview Detection of cartels (Leniency) Cartel investigations (Dawn Raids & RFIs) Procedure before Commission (Settlements) The Commission is heading towards a fining decision Procedure before European Courts Damages actions 9

10 1. Detection of cartels (Leniency) Legislation Commission Leniency Notice Commission Notice on Immunity from fines and reduction of fines in cartel cases [2006] OJ C298/17 Key points General condition: genuine cooperation Full immunity: first in Reduction of fines: evidence with significant added value First (after immunity applicant): 30-50% Second: 20-30% Subsequent: up to 20% Partial immunity: first in with evidence increasing gravity or duration 10

11 1. Detection of cartels (Leniency) Legislation Commission Leniency Notice Commission Notice on Immunity from fines and reduction of fines in cartel cases [2006] OJ C298/17 Key points General condition: genuine cooperation Full immunity: first in Reduction of fines: evidence with significant added value First (after immunity applicant): 30-50% Second: 20-30% Subsequent: up to 20% Partial immunity: first in with evidence increasing gravity or duration 11

12 1. Detection of cartels (Leniency) 12

13 MASTERCLASS CARTEL INVESTIGATIONS. 11th June 2015 Panel: Detection of cartels (leniency) What to do once you are a leniency applicant by Ángel Valdés (Lupicinio International Law Firm) High level of coordination of the legal team. Internal Response Team. On-going internal research. HR management. Qualification of the conduct as a cartel. Communication plan. Remaining in the cartel. Collecting evidence about damages.

14 Overview Detection of cartels (Leniency) Cartel investigations (Dawn Raids & RFIs) Procedure before Commission (Settlements) The Commission is heading towards a fining decision Procedure before European Courts Damages actions 14

15 2. Cartel investigations (Dawn Raids) Legislation Council Regulation 1/2003 Article 20 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2002] OJ L1/1 Explanatory note Explanatory note to an authorization to conduct an inspection in execution of a Commission decision under Article 20(4) of Council Regulation No 1/2003 [2013] Key points Without notice to the undertaking Inspection mandate Entering premises and land, examining books, Sealing of premises (risk of fine) Private houses Access to all electronically stored data Full cooperation IT staff (e.g. blocking accounts) Assistance external lawyers (e.g. shadowing) 15

16 2. Cartel investigations (Dawn Raids) Legislation Council Regulation 1/2003 Article 20 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2002] OJ L1/1 Explanatory note Explanatory note to an authorization to conduct an inspection in execution of a Commission decision under Article 20(4) of Council Regulation No 1/2003 [2013] Key points Without notice to the undertaking Inspection mandate Entering premises and land, examining books, Sealing of premises (risk of fine) Private houses Access to all electronically stored data Full cooperation IT staff (e.g. blocking accounts) Assistance external lawyers (e.g. shadowing) 16

17 2. Cartel investigations (Dawn Raids) 17

18 2. Cartel investigations (RFIs) Legislation Council Regulation 1/2003 Article 18 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2002] OJ L1/1 Key points Statement of legal basis and purpose of request Request for information (questions and documents): Voluntarily RFI RFI by decision RFI under Leniency Notice Risk of fine (1% worldwide turnover) 18

19 2. Cartel investigations (RFIs) Legislation Council Regulation 1/2003 Article 18 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2002] OJ L1/1 Key points Statement of legal basis and purpose of request Request for information (questions and documents): Voluntarily RFI RFI by decision RFI under Leniency Notice Risk of fine (1% worldwide turnover) 19

20 2. Cartel investigations (RFIs) 20

21 Overview Detection of cartels (Leniency) Cartel investigations (Dawn Raids & RFIs) Procedure before Commission (Settlements) The Commission is heading towards a fining decision Procedure before European Courts Damages actions 21

22 3. Procedure before EC (settlement) Legislation Commission Regulation 622/2008 Commission Regulation (EC) No 622/2008 of 30 June 2008 amending Regulation (EC) No 773/2004, as regards the conduct of settlement procedures in cartel cases [2008] OJ L171/3 Commission Notice on settlement Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No 1/2003 in cartel cases [2008] OJ C167/1 Key points Only cartel cases Aim: simplification of the administrative proceedings Three formal bilateral meetings No negotiating/bargaining (but information and hearing) Acknowledgement of liability 10% fine reduction Less detailed decision (private damages) 22

23 3. Procedure before EC (settlement) Legislation Commission Regulation 622/2008 Commission Regulation (EC) No 622/2008 of 30 June 2008 amending Regulation (EC) No 773/2004, as regards the conduct of settlement procedures in cartel cases [2008] OJ L171/3 Commission Notice on settlement Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No 1/2003 in cartel cases [2008] OJ C167/1 Key points Only cartel cases Aim: simplification of the administrative proceedings Three formal bilateral meetings No negotiating/bargaining (but information and hearing) Acknowledgement of liability 10% fine reduction Less detailed decision (private damages) 23

24 MASTERCLASS CARTEL INVESTIGATIONS Contrast, Brussels, 11 June 2015 Screening of the perfect settlement case: - Do not rush, but make clear that you are serious about settling - While there are no formal negotiations taking place, consider carefully the arguments raised in the bilateral discussions with the Commission because these may be of relevance if the company opts out - Assess the adverse consequences of dropping out: If the Commission wants to settle, it may be more receptive to defense arguments than in standard proceeding, thereby lowering the fine. Conversely, the fine may increase as a consequence of additional information acquired - Use the possibility of holding informal technical discussions (non-papers) to clarify issues outside the three rounds of bilateral discussions (in an effort to alter the Commission s initial position on key issues)

25 MASTERCLASS CARTEL INVESTIGATIONS Contrast, Brussels, 11 June 2015 Hybrid Settlements: - Assess whether pursuing the standard procedure is worthwhile - The effect on private claims - Rights of defense may be compromised when a settlement decision against other defendants is adopted prior to their receipt of an SO

26 3. Procedure before EC (settlement) Make sure that your client is committed to settling Exercise your client s rights, but do not mistake the settlement procedure for a bargaining process Bear in mind that without prejudice works both ways

27 Break 11.00u 11.30u

28 Overview Detection of cartels (Leniency) Cartel investigations (Dawn Raids & RFIs) Procedure before Commission (Settlements) The Commission is heading towards a fining decision Procedure before European Courts Damages actions 28

29 4. The Commission is heading towards a fining decision Legislation Fining Guidelines Point 37 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 [2006] OJ C210/2 Key points Departing from general methodology of setting fines Reduced or increased fine Particularities of a given case 29

30 4. The Commission is heading towards a fining decision Legislation Fining Guidelines Point 37 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 [2006] OJ C210/2 Key points Departing from general methodology of setting fines Reduced or increased fine Particularities of a given case 30

31 Calculation of fine Not profit Presumption that all sales on market affected by cartel Up to 30% Numerous relevant factors but not exhaustive and no relative weighing Conduct, role played, profit obtained, size, market share, threat of infringement, content of conduct, intensity, market affected, damage done Non tax deductible Payable regardless of appeal

32 What if we are unable to pay the fine? No requirement for SO to mention fine (range) that will be imposed GC traditionally limits itself to light judicial review Inability to pay application? Commission discretion Only where fine would irretrievably eliminate undertaking specific economic and social context request during admin procedure Commission can deny request where made after fine decision Discuss ITP/ATP with case team after SO and before fine decision? Disclosure/confirmation of fine range? Which gravity percentage? Further clarity on criteria used by DG COMP for evaluating inability to pay a given amount?

33 Relevant provisions (1) In exceptional cases, the Commission may, upon request, take account of the undertaking's inability to pay in a specific social and economic context (EU Commission, Fining Guidelines, September 2006, point 35) the reduction of a fine pursuant to point 35 of the 2006 Guidelines [ ] is subject to [ ] the submission of a request during the administrative procedure (GC, Team Relocations, 16 June 2011, T-204/08, para 171); The requirement is not impossible to satisfy, including at the stage of the administrative procedure, since, in the light of the information which must appear in the SO and what is stated concerning the method of calculating the fines contained in the 2006 Guidelines, the undertaking in question will be able to assess, before the adoption of the [fine] decision [ ], whether it is reasonably possible to foresee that the fine which could be imposed on it risks [ ] irretrievably jeopardising its economic viability [ ] (ECJ, Team Relocations, 11 July 2013, C-444/11P, para 185)

34 Relevant provisions (2) [The SO] will indicate the essential facts and matters of law which may result in the imposition of a fine, such as the duration and gravity of the infringement [ ] Although under no legal obligation [ ], the Commission will endeavour to include in the [SO] matters relevant to any subsequent calculation of fines, including the relevant sales figures [ ] and the year(s) that will be considered for the value of such sales. [The SO] will also inform parties that in exceptional cases, [the Commission] may, upon request, take account of the undertaking's inability to pay [ ]. The undertakings making such a request should be prepared to provide, detailed and up-to-date financial information [ ]. Usually, [DG Comp] will be in contact with the parties in order to collect additional information [ ] which will allow the parties to bring further relevant information to the attention of the Commission. [ ] The assessment of the financial situation is carried out for all undertakings that have made an inability to pay request close to the adoption of the decision [ ], irrespective of when the request was submitted (DG COMP, Art 101 Best Practices, OJ 20 October 2011, 2011, point 87-88)

35 Overview Detection of cartels (Leniency) Cartel investigations (Dawn Raids & RFIs) Procedure before Commission (Settlements) The Commission is heading towards a fining decision Procedure before European Courts Damages actions 35

36 5. Procedure before Courts Legislation TFEU Articles 256, 261 and 263 Treaty on the Functioning of the European Union [2010] OJ C83 Regulation 1/2003 Article 31 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2002] OJ L1/1 Key points General Court Within 2 months First instance Full jurisdiction (but only marginal review in cases of complex economic assessments) Court of Justice Within 2 months Points of law Refers back to General Court Statute of the Court of Justice Articles Statute of the Court of Justice [2010] OJ C83 36

37 5. Procedure before Courts Legislation TFEU Articles 256, 261 and 263 Treaty on the Functioning of the European Union [2010] OJ C83 Regulation 1/2003 Article 31 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2002] OJ L1/1 Key points General Court Within 2 months First instance Full jurisdiction (but only marginal review in cases of complex economic assessments) Court of Justice Within 2 months Points of law Refers back to General Court Statute of the Court of Justice Articles Statute of the Court of Justice [2010] OJ C83 37

38 5. Procedure before Courts 38

39 Overview Detection of cartels (Leniency) Cartel investigations (Dawn Raids & RFIs) Procedure before Commission (Settlements) The Commission is heading towards a fining decision Procedure before European Courts Damages actions 39

40 6. Damages actions Legislation Private Damages Directive Directive 2014/104/EU of the European Parliament and the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union [2014] OJ L349 Key points National Courts Cartel decision = (prima facie) evidence of infringement Need to prove damage + causal link Disclosure of relevant evidence (black vs grey category) Every participant responsible to compensate for the harm in full (joint and several liability) Recourse action Passing on defense 40

41 6. Damages actions Legislation Private Damages Directive Directive 2014/104/EU of the European Parliament and the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union [2014] OJ L349 Key points National Courts Cartel decision = (prima facie) evidence of infringement Need to prove damage + causal link Disclosure of relevant evidence (black vs grey category) Every participant responsible to compensate for the harm in full (joint and several liability) Recourse action Passing on defense 41

42 6. Damages actions COMP/ Elevators and escalators, paragraph 660 In this case, the Commission did not attempt to demonstrate the precise effects of the infringement since it is impossible to determine with sufficient certainty the relevant competitive parameters (price, commercial terms, quality, innovation, and others) in the absence of the infringements. However it is obvious that the infringements did have an actual impact. The fact that the various anticompetitive arrangements were implemented by the cartel participants in itself suggests an impact on the market, even if the actual effect is difficult to measure, because it is, in particular, not known if and how many other projects were subject to bid-rigging, nor how many projects may have been subject to allocation between cartel members without there being a need for contacts between them.

43 6. Damages actions Private action damages directive: What does it mean for victims? Right to full compensation Proof of infringement Irrefutable and prima facie evidence Access to documents Presumption of harm Joint and several liability Prescription Quantification? Empowerment of national courts / claim acquisition vehicles / ADR

44 6. Damages actions Private action damages directive: What does it mean for infringers? Full compensation, not multiple damages Leniency applicants/settling infringers preferred over non-cooperating infringers Protection from disclosure Limited liability only for immunity recipient Passing-on defense Prescription

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46 Charity Leen Hoebrechts CAW

47 Remainder of 2015 program Masterclass Cartel Investigations (EN) (18 June 2015) Help, I am a shareholder (NL) (10 September 2015) Ins & outs of distribution agreements (NL) (22 October 2015) 47

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49 Minervastraat ZAVENTEM T +32 (0) F +32 (0)