Settlement [EU]

Notice on the conduct of settlement procedures

It sets out the procedures and criteria for rewarding companies — through lower penalties — which admit to the European Commission that they have participated in an illegal cartel.

It provides guidance for the legal and business communities.
The anti-competitive behaviour prevents the single market from operating smoothly and is illegal under Article 101 of the Treaty on the Functioning of the European Union (formerly Article 81 of the Treaty on European Union).

The notice explains how the Commission applies the contents of the following 2 regulations in competition cases.

Regulation (EC) No 1/2003 (see summary), especially Articles 7 and 23,
Regulation (EC) No 773/2004 (see summary).
The Commission, in the settlement process:

does not negotiate whether EU law has been infringed; nor does it negotiate the appropriate sanction;
decides whether to explore a possible settlement or not, depending on the chances of a successful outcome, and may stop the procedure in certain circumstances;
may not impose a settlement procedure on the companies involved;
respects fully the parties’ right of defence to respond to the truth and relevance of the facts, objections and circumstances it puts forward — a principle underlined in Hoffmann-La Roche & Co AG v Commission of the European Communities (Case 85/76).
Procedure

Opening proceedings and exploratory steps

The Commission:

• identifies the legal persons facing a possible penalty;
• gives the parties concerned two weeks to reply in writing stating whether they envisage participating in settlement discussions;
• acknowledges that an affirmative reply does not mean the parties admit they have broken EU law;
  writes to all parties concerned, and EU countries, informing them of the start of the settlement process and asking them to express their interest.

Settlement discussions

The Commission:

• may decide to have bilateral contact with those concerned;
• determines the suitability and pace of the bilateral discussions;
• must disclose information in a timely manner so the parties involved are aware of the alleged facts, their gravity and range of likely fines to enable them to make an informed decision on whether or not to settle;
• grants a company a final time limit of 15 working days to table its definitive settlement submission, if it believes sufficient progress has been made in their discussions.

Settlement submissions

The companies involved formally request to settle by presenting a settlement submission, which they may not unilaterally withdraw later. It contains:

• clear and unequivocal acknowledgment of their liability for the illegal behaviour;
• an indication of the maximum fines they envisage the Commission imposing and which they would accept within the settlement procedure;
• confirmation they have been sufficiently informed of the Commission’s case against them and have had adequate opportunity to reply;
• agreement that they do not envisage having access to the case file or an oral hearing, unless they consider the Commission, in the next phase, does not accurately reflect their submission;
• agreement to receive the Commission’s reply (known as the statement of objections) to their submissions.

Statement of objections

The Commission:

• takes into account the arguments of fact and law that the companies presented in their submissions;
• accepts or rejects those arguments and may amend its preliminary analysis where appropriate;
• gives the companies concerned at least 2 weeks to confirm they remain committed to following the settlement procedure, when it accepts the contents of their submissions;
• grants a new time limit to a company whose submission was not addressed in order to allow that company, if it wishes, to present a new defence; the company may also possibly be granted access to the file and a request for an oral hearing;
• may decide to adopt a statement that departs from a company’s submission, and so the case reverts to the ordinary procedure.

Commission decision and settlement reward

The Commission:

• consults national officials on the Advisory Committee on Restrictive Practices and Dominant Positions;
• reduces by 10% the fine levied on a company which cooperates throughout the settlement process.
• may decide to adopt a final decision that differs from the statement of objections endorsed by the parties, where this happens the case reverts to the ordinary procedure. In such circumstances, it issues another statement of objections, allowing the company concerned to have access to the file, request an oral hearing and reply to the new statement.

In parallel, the Commission has issued a notice on immunity from fines and reduction of fines in cartel cases (the Leniency Notice).

It has applied since 2 July 2008.

Background

The settlement procedure speeds up the Commission’s investigations into cartels by simplifying the various procedures when companies admit their guilt.
This allows the Commission to handle more cases with the same resources, deliver effective and timely punishment and strengthen overall deterrence.
For more information, see: