On 1 September 2006, the European Commission’s new guidelines for setting fines for breaching competition law were published in the Official Journal of the European Communities. The guidelines will now be applied in all cases where a statement of objections has been issued after 1 September.
The new guidelines replace the guidelines first adopted in 1998 and there are three key changes:
- Basic amount of fine – the basic amount of fine (which can then be increased or decreased depending on aggravating or mitigating factors) may now be based on up to 30% of the company’s annual sales to which the infringement relates. It is then multiplied by the number of years of the participation in the infringement. Under the previous guidelines the starting point of the fine was based on a lump sum depending on the gravity of the infringement and a 10% increase was then added per year of infringement.
- Entry fee – the new guidelines introduce an 'entry fee' concept which means that simply entering into a cartel will cost the company 15% to 25% of its annual sales in the relevant sector. This is intended to deter companies from taking any first steps towards cartel participation. A similar entry fee may, however, be applied to other types of infringements.
- Repeat offenders – as a result of the new guidelines, there will be a significant increase in the level of fine which may be imposed on repeat offenders. The previous guidelines allowed the fine to be increased by 50% for repeat offenders. The new guidelines allow for an increase of up to 100% for each prior infringement. The guidelines also allow the European Commission to take into account decisions of national competition law authorities for breaching Articles 81 and 82 of the EC Treaty when deciding whether a company has offended before.
The guidelines also set out amended aggravating and mitigating factors to be taken into account when deciding on the overall level of fine to be imposed. The amended aggravating factors listed in the new guidelines include coercing other companies to participate in the infringement and taking retaliatory measures to enforce the infringement. Mitigating factors include the infringement being authorised or encouraged by public authorities or legislation and negligent, as opposed to intentional, infringement.
The new guidelines represent a refinement of the European Commission’s fining policy and seek to reflect the overall economic significance of the infringement. As Competition Commissioner Neelie Kroes commented when the guidelines were adopted in June 2006, the guidelines should send three clear signals to companies: “Don’t break the anti-trust rules; if you do, stop it as quickly as possible, and once you’ve stopped, don’t do it again.”