This document provides statistics on the ten highest cartel fines imposed by the European Commission since 1969. It lists the largest fines per case and per company. The document then provides an overview of Article 101 of the TFEU, which prohibits anticompetitive agreements between undertakings. It discusses what constitutes an agreement under EU competition law and outlines the key elements analyzed in assessing potential violations of Article 101, including the concepts of object and effect. The document also touches on how economic principles like the prisoner's dilemma can help assess whether collusion between competitors is likely.

1. Prohibited
agreements. Part 1
Julija Jerneva

2. Some statistics

3. Ten Highest Cartel Fines Per Case Since
1969
Year Case name Amount in €
2008 Car Glass 1 383 896 000
2009 Gas 1 106 000 000
2007 Elevators and Escalators 992 312 200
2010 Airfreight 799 445 000
2001 Vitamins 790 515 000
2007 Gas Insulated Switchgear 750 712 500
2008 Candle Waxes 676 011 400
2010 LCD 648 925 000
2010 Bathroom fittings 622 250 782
2006 Butadiene Rubber/Emulsion Styrene Butadiene
Rubber
519 050 000

4. Ten Highest Cartel Fines Per Company
Since 1969
Year Case name Amount in €
2008 Saint Gobain (Car glass) 896.000.000
2009 E.ON (Gas) 553.000.000
2009 GDF Suez (Gas) 553.000.000
2001 F. Hoffmann-La Roche AG (Vitamins) 462.000.000
2007 Siemens AG (Gas insulated switchgear) 396.562.500
2008 Pilkington (Car glass) 370.000.000
2010 Ideal Standard (Bathroom fittings) 326.091.196
2007 ThyssenKrupp (Elevators and escalators) 319.779.900
2008 Sasol Ltd (Candle waxes) 318.200.000
2010 Air France / KLM (Airfreight) 310.080.000

5. Overview of Article 101 TFEU

6. §1 – The Prohibition
Rule (+ examples)
Are prohibited as incompatible with the internal market:
“all agreements between undertakings, decisions by
associations of undertakings and concerted practices which
may affect trade between Member States and which have as
their object or effect the prevention, restriction or distortion of
competition within the internal market (…)”
§2 – The Rule of
Nullity
“Any agreements or decisions prohibited pursuant to this
Article shall be automatically null and void”
§3 – The Exception
Rule
§1 may be declared inapplicable to agreements which:
1. “contribute to improving the production or distribution of
goods or to promoting technical or economic progress,
2. allow consumers a fair share of the resulting benefit,
and which do not:
1. impose on the undertakings concerned restrictions which
are not indispensable;
2. afford such undertakings the possibility of eliminating
competition”

7. Basic structure of analysis of Art.101
• Agreements violating Article 101(1)
• and not capable of being exempted under Article 101(3)
• are null and void (Article 101(2))

8. Agreement:
horizontal or vertical
Step one
• Agreement?
• Between undertakings?
• Appreciable effect on trade?
• Object or effect?
Step two
• Derogations (Article 101 (3) TFEU)
• Rule of reason (incl. block
exemptions)

9. Elements (step one)
1. “Agreements”
2. Between “undertakings”
3. Which have appreciable effect on intra-state trade
4. Which have as their object or effect the prevention,
restriction or distortion of competition

10. Unilateral practices/behaviour
• Unilateral action NOT prohibited under Article 101
• Unilateral action is subject to rules of competition law only
under Article 102 (abuse of dominance)

11. Mergers
• Are “worse” than agreements”
• Joint ventures between the companies (depending on the level of
integration):
• Analysed under the merger rules; or
• Analysed under the Article 101 rules
Mergers Agreements
Eliminate competition Reduce competition (preserve at
least some level of competition)
Leave permanent effect on the
market
Leave temporary effects on the
market

12. Agreements

13. The concept of an “agreement”
• ”Agreement”  widely construed
– It is sufficient if the undertakings in question should have expressed
their joint intention to conduct themselves on the market in a specific
way
» Alignment of the competition parameters available to them
• “joint intention”  a legally binding agreement not necessary
– The form of no importance (oral, signed, unsigned)
– “gentlemen’s agreements”
– The agreement does not have to be exhaustive
» It is enough just to set the broad framework for the undertakings market conduct

14. • The engagement of the parties in the agreement
– It is enough to be partly engaged in the collaboration
» Breach of contract regarding parts of the agreement
– Passive “members”
– An excuse if an undertaking has been “forced” into a cartel?
• Collaboration through the establishment of a company (joint
ventures)

15. “Decisions of undertakings”
• Collusion can take place through the medium of an
association: Directly covered by art 101(1)
– Makes it possible to hold associations directly liable
• Association
 widely defined
• Decision
 every statement made with the object or effect of influencing the
commercial behaviour of the association’s members
– Does not have to be binding (e g recommendations)

16. “Concerted practices”
• A form of co-ordination where undertakings, without
concluding any sort of agreement or establishing a plan of
action, knowingly substitute practical co-operation between
them for the risks of competition
– This criteria avoids that situations where companies collaborate without
any kind of agreement but only on the basis of a common understand
falls outside article 101(1)
• It is contrary to the rules on competition for a producer to
co-operate with his competitors, in any way whatsoever, in
order to determine a co-operated way of action or to ensure
its success by prior elimination of all uncertainty as to each
others conduct regarding the essential elements of that
action
– ECJ, case 48/69, ICI v Commission

17. Proving concerted practices
• Direct or indirect contact
• Meeting of minds or some kind of consensus
– Exchange of information
– Unilateral disclosure
– Public announcements
• Subsequent behaviour in the market
• Indirect evidence of intention?

18. Can a concerted practice be inferred from
circumstantial evidence alone?
• A question of the use of economic evidence in
competition cases
• Parallel market behaviour alone in itself not a
concerted practice
• BUT: It may however amount to strong evidence of
such a practice if it leads to conditions of competition
which do not correspond to the normal conditions of
the market having regard to the nature of the products,
the size and numbers of undertakings, and the volume
of the said market power
– ECJ, case 48/69, ICI v Commission
• Oligopoly markets and economic evidence
– Joint dominance

19. The distinction between “agreement” and
“concerted practices”
• Overlapping concepts
• No precise distinction
– And no use for a precise distinction
• “Concerted practice” important mainly where the
Commission or the Courts is forced to rely upon
circumstantial evidence alone

20. Undertakings (market participants)

21. Competition law and math

22. Single economic unit doctrine
• Two or more separate legal undertakings can be treated as on
undertaking
– if the undertakings “form an economic unit within which the subsidiary
has no real freedom to determine its course of action on the market,
and if the agreements or practices are concerned merely with the
internal allocation of tasks as between the undertakings”
» Case 30/87, Corinne Bodson
• Agreements between two undertakings within a single
economic unit not regarded as an agreement “between”
undertakings
– Escapes the prohibition in article 101(1)

23. • The rationale:
– No freedom to take decisions regarding the market
conduct
» Regarded as unilateral conduct
» May be caught by article 102 if the undertaking has a dominant
market position
– Internal allocation of functions
• The other side of the coin:
– If a subsidiary engages in anti competitive agreements
the mother company will also be regarded as part of the
agreement

24. • The test of control
– If a parent company owns more than 50% of the shares
in a subsidiary interdependency is presumed
– Minority share holdings may also give control if combined
with specific rights attached to them
– One large shareholder and many small
– Joint control (50/50)
» Jointly controlled companies must belong to a single group of
companies to be regarded as part of one economic unit

25. The parent company’s responsibility for
infringements committed by subsidiary
• Case C-97/08 Akzo Nobel NV vs. Commission
”[W]here a parent company has a 100% shareholding in a subsidiary
which has infringed the Community competition rules (…) there is a
rebuttable presumption that the parent company does in fact exercise a
decisive influence over the conduct of its subsidiary (…) The Commission
will be able to regard the parent company as jointly and severally liable for
the payment of the fine imposed on its subsidiary”
100% (or close to) of shares in subsidiary gives rise to presumption
Parent company must show that the subsidiary acted independently on
market – difficult (impossible?)!
Maximum fine increases – 10% of group turnover
If parent company has been involved in prior cartel – increase in fine
Increased risk of being subject to specific increase for deterrence

26. Cross-border trade effect

27. Cross-border trade effect
• EU competition rules apply to practices which affect trade
between Member States
• Impact «within the internal market» («effects» doctrine)
• EU-based firms reach an anticompetitive agreement over
price/quantities on US markets – EU competition law is not applicable
• Non-EU based firms reach an anticompetitive agreement over
price/quantities on EU markets – EU competition law is applicable

28. Cross-border trade effect
1. Must be appreciable
2. Means decrease, increase or simply diversion of trade

29. Appreciable effect
• The stronger the market position of the undertakings concerned,
the more likely it is that an agreement or practice capable of
affecting trade between Member States can be held to do so
appreciably
• BPB Industries and British Gypsum, Case T-65/89
• BUT: appreciability requirement was also fulfilled when the sales of
the undertakings concerned accounted for about 5 % of the market
• Miller, Case 19/77

30. “Object” or “Effect”

31. • “The distinction between „infringements by object‟ and
„infringements by effect‟ arises from the fact that certain forms
of collusion between undertakings can be regarded, by their
very nature, as being injurious to the proper functioning of
normal competition”
• Competition Authority v BIDS and Barry Brothers, Case C-209/07

32. Object cases
• The object-category consist of “obvious restrictions of
competition”
• European Night Services v Commission, Joined cases T-374-375/94,
384/94
• The “object” rule can be described as a presumption rule:
• if object is found, harmful effects on competition are presumed
• certain types of agreements under normal market conditions always, or
almost always, restrict competition

33. Object cases
• Horizontal agreements:
• fixing prices
• sharing markets
• limiting outputs
• Vertical agreements
• Fixed and minimum resale price maintenance
• Absolute territorial protection
• Restrictions on passive sales
• Other cases, listed in the “block exemptions”

34. Effects cases
• All cases, not falling within the “object box”
• Negative effects on competition within the relevant market are
likely to occur when:
• the parties individually or jointly have or obtain some degree of market
power and
• the agreement contributes to the creation, maintenance or
strengthening of that market power or allows the parties to exploit such
market power.

35. Economics and competition

36. Economic theory usage
• How can the agreement hinder competition?
• Is collusion likely to occur on a given market?
• Is cooperation between competitors likely to succeed or fail?
Will it be easy or difficult?

37. The prisoners’ dilemma
Prisoner A
Prisoner B
Remain silent Confess
Remain silent 0, 0 25, 15
Confess 15, 25 20, 20
Firm A
Firm B
Collude Cheat
Collude 20, 20 15, 22
Cheat 22, 15 17, 17

38. The prisoners’ dilemma
• Prerequisites for a successful cartel and what complicates the
cartel?
• The problem of cheating?
• Efficiency, savings from the horizontal cooperation

39. What complicates collusion?
• Demand side
• Elastic demand (can the cartel set higher prices?)
• Balancing buyer power?
• Differentiated (vs homogenous products)
• Demand booms as a characteristics of the market)
• Non-stable demand

40. What complicates collusion?
• Supply side
• Low seller concentration
• Existence of competitors with elastic supply
• Ease of entry
• Cost assymmetries between cartel members
• Prior collusion history on the market (more attention from competition
authorities)

41. Need for the possibility of high gains
• Elastic and constant demand
• Potential fines? (active/inactive competition authorities)
• Members want and can cheat without being detected

42. Organisation
• Need to meet, agree
• Need to communicate regularly
• Many competitors vs “few” competitors
• Reinhard Selton, the Nobel prize winner in “Four are few and six are
many”:
• Profitable to collude if less than 5 cartel members
• More attractive to cheat if more than 5 cartel members

43. Thank you!
• Julija Jerneva
• Mobile: +371 29131597