Summary
Summary Public Enforcement - Fines
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An in-depth discussion of public enforcement in particular fines. How do fines operate? The relevant legislation and case law is provided.
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By: shadalemiller97 • 4 year ago
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Public Enforcement – Class 2Fines:
Article 23 Regulation 1/2003 allows Commission to impose fnes of
up to 10% of an undertaking’s total turnover in preceding year.
Article 23(2) Reg 1/2003 impose fines where undertakings
intentionally or negligently infringe Article 101 + 102 TFEU or
contravene interim measures or fail to comply with a
commitment.
Periodic penalty payments can also be imposed under Article 24 for
continued infringements.
Largest fines imposed tend to be for price-fiiing agreements + agreement
that divide up internal market of EU.
Commission enjoys wide discretion in imposing fines + takes into
account such factors such as gravity of behaviour, in duration, size of
market in question + likely deterrent efect of fine.
To improve transparency, Commission published its frst otice on
the setting of fnes in 1998.
Notice the basic amount of the fne was set according to gravity +
duration of infringement, with infringements categorised into several
levels of gravity.
Minor infringements usually vertical in nature received fnes of up
to €1m.
Serious infringements usually horizontal or vertical infringements or
abuses with more efect over a larger area, received fines of up to €20m.
Very serious infringements, usually horizontal price fiiing or market
sharing could be fined in eicess of €20m.
Duration is importanct with infringements of medium duration, of more
than 1 year, receiving a 50% uplift on the fne.
Long duration of more than 5 years, an uplift of 10% would be
applied for each year the infringement continued.
On top of this ‘basic’ amount there are certain aggravating factors
which if present could result in fine being increased i.e. refusal to co-
operate or being the leader of infringement.
There could be attenuating circumstances resulting in reduction of
basic fine.
1998 Notice was revised in 2006 in three principal ways to enhance
deterrence.
Firstly, the fne will be based on a percentage of up to 30% of the
yearly sales in relevant sector for each company participating in the
infringement, multiplied by years of participation.
Secondly, Commission may impose an additional ‘entry fee’ of 15% to
25% of yearly relevant sales for seriously illegal conduct.
Thirdly, guidance on aggravating factors was amended to deal with
‘recidivists’ they face increases in fne of up to 100% for each prior
infringement.
Leniency programme exists for whistle-blowers can secure either
partial or total immunity from fines by disclosing the eiistence of the
cartel to Commission.
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