It is an illegal secret agreement concluded between competitors to fix prices, restrict supply and/or divide up markets. The agreement may take a wide variety of forms but often relates to sales prices or increases in such prices, restrictions on sales or production capacities, sharing out of product or geographic markets or customers, and collusion on the other commercial conditions for the sale of products or services.
Why are cartels harmful to consumers, businesses and to the economy in general?
Cartels shield participants from competition allowing them to charge higher prices and removing the pressure on them to improve the products they sell or find more efficient ways in which to produce them. It is the customers (companies and consumers) who foot the bill in terms of paying higher prices for lower quality and narrower choice. This not only makes consumers and businesses suffer but also adversely affects the competitiveness of the economy as a whole.
What legal basis underpins the Commissions action to combat cartels?
Article 81 of the Treaty establishing the European Community prohibits agreements and concerted practices between firms that distort competition within the Single Market. Fines of up to 10% of their worldwide turnover may be imposed on the guilty parties.
What happens to the proceeds from fines?
The amount of the fines is paid into the Community budget. The fines therefore help to finance the European Union and reduce the tax burden on individuals.
Does the Commission have the last word?
All cartel decisions by the Commission may be appealed against before the Court of First Instance (CFI) and then before the Court of Justice of the European Communities in Luxembourg. They can, therefore, be closely scrutinised by these two courts, which are empowered to annul decisions in whole or in part and to reduce or increase fines, where this is deemed appropriate.
What is the European Commissions leniency programme?
It encourages firms to provide the Commission with insider information on cartels. The first firm to do so is granted total immunity from fines. Other firms that follow suit may be granted a reduction in the amount of the fine. This policy is very effective in uncovering cartels but does not prevent the Commission from conducting investigations on its own initiative. For further information, see IP/06/1705, MEMO/06/469 and MEMO/06/470. Companies wishing to approach the Commission in order to benefit from the Commission notice on immunity from fines and reduction of fines in cartel cases should consult:
http://ec.europa.eu/comm/competition/cartels/leniency/leniency.html
What practical steps has the Commission taken to step up action against cartels?
Since June 2005 an entire Directorate composed of four units (Directorate F, with a staff of around 60) in the Competition Directorate General has been involved exclusively in helping the Commission to detect and punish cartels.
What action is open to consumers and companies who feel that they have been victims of such illegal agreements?
Any firm or individual adversely affected by practices censured by the Commission, such as those set out in today’s decision, may bring the matter before a court in a Member State of the European Union with a view to seeking compensation for damage suffered as a result of such practices. Fines imposed by the Commission are different from the damages awarded by national courts. While action for damages before a court can also have a certain deterrent effect, its main purpose is to compensate victims of anti-competitive behaviour or to secure compensation for damage suffered. A Commission Green Paper on facilitating action for damages before courts in the Member States was published in December 2005.
What are the ten largest fines imposed by the Commission in cartel cases?
By company:
Firm | Fine (euros) | Year |
479 669 850 | 2007 | |
Hoffmann-La Roche AG (IP/01/1625) | 462 000 000 | 2001 |
Siemens AG (IP/07/80) | 396 562 500 | 2007 |
ENI SpA1 (IP/06/1647) | 272 250 000 | 2006 |
Lafarge SA1 (IP/02/1744) | 249 600 000 | 2002 |
BASF AG2 (IP/01/1625) | 236 845 000 | 2001 |
Arkema1 (IP/06/698) | 219 131 250 | 2006 |
Arjo Wiggins Appleton PLC1 (IP/01/1892) | 184 270 000 | 2001 |
Solvay1 (IP/06/560) | 167 062 000 | 2006 |
Shell1 (IP/06/1647) | 160 875 000 | 2006 |
By sector:
Sector | Year | Total (euros) |
Elevators and escalators | 2007 | 992 312 200 |
Vitamins2 | 2001 | 790 505 000 |
Gas insulated switchgear | 2007 | 750 512 500 |
Synthetic rubber (BR/ESBR) | 2006 | 519 050 000 |
Plasterboards | 2002 | 478 320 000 |
Hydrogen peroxide | 2006 | 388 128 000 |
Acrylic glass | 2006 | 344 562 500 |
Copper fittings | 2006 | 314 760 000 |
Carbonless paper | 2001 | 313 690 000 |
Industrial bags | 2005 | 290 710 000 |
Fines imposed on cartels by the Commission in the last four years:
Year | Sector covered by cartel | Number of undertakings subject to decision | Total fine (euros) |
2007 | Elevators and escalators (IP/07/209) | 18 | 992 312 200 |
2007 | Gas insulated switchgear (IP/07/80) | 11 | 750 512 500 |
2006 | Alloy surcharge (re-adoption) (IP/06/1851) | 1 | 3 168 000 |
2006 | Synthetic rubber (BR/ESBR) (IP/06/1647) | 6 | 519 050 000 |
2006 | Steel beams (re-adoption) (IP/06/1527) | 1 | 10 000 000 |
2006 | Copper fittings (IP/06/1222) | 11 | 314 760 000 |
2006 | Bitumen Netherlands (IP/06/1179) | 14 | 266 717 000 |
2006 | Acrylic Glass (IP/06/698) | 5 | 344 562 500 |
2006 | Hydrogen Peroxide (IP/06/560) | 9 | 388 128 000 |
2005 | Rubber chemicals (IP/05/1656) | 4 | 75 860 000 |
2005 | Industrial bags (IP/05/1508) | 16 | 290 710 000 |
2005 | Italian tobacco (IP/05/1315) | 6 | 56 052 000 |
2005 | Industrial thread (IP/05/1140) | 11 | 43 497 000 |
2005 | Monochloroacetic acid (IP/05/61) | 5 | 216 910 000 |
2004 | Choline chloride (IP/04/1454) | 6 | 66 340 000 |
2004 | Haberdashery products (IP/04/1313) | 3 | 60 000 000 |
2004 | Spanish tobacco (IP/04/1256) | 9 | 20 038 000 |
2004 | French beer (IP/04/1153) | 2 | 2 500 000 |
2004 | Sodium gluconate (IP/01/1355) | 1 | 19 040 000 |
2004 | Copper plumbing tubes (IP/04/1065) | 9 | 222 291 100 |
2003 | Industrial pipes (IP/03/1746) | 5 | 78 730 000 |
2003 | Organic peroxides (IP/03/1700) | 6 | 69 531 000 |
2003 | Carbon and graphite products (IP/03/1651) | 6 | 101 440 000 |
2003 | Sorbates (IP/03/1330) | 5 | 138 400 000 |
2003 | Beef2 (IP/03/479) | 6 | 12 690 000 |
1 Appeal lodged before the CFI.
2Following judgment by the CFI.
3 ThyssenKrupp Liften Ascenseurs N.V./S.A. (Belgium), ThyssenKrupp Aufzüge GmbH and ThyssenKrupp Fahrtreppen GmbH (Germany), ThyssenKrupp Ascenseurs Luxembourg S.à.r.l. (Luxembourg) and ThyssenKrupp Liften B.V. (the Netherlands)
