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The EU Response

International Cartels Law Seminars International Conference Washington, DC, 7-8 September 2006. The EU Response. Developments in EU Cartel Enforcement. Howard T. Rosenblatt Howrey LLP Brussels. The EU Backdrop. Between 2002 and 2005: 165 applications (80 cartels). But few decisions.

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The EU Response

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  1. International Cartels Law Seminars International Conference Washington, DC, 7-8 September 2006 The EU Response Developments in EU Cartel Enforcement Howard T. Rosenblatt Howrey LLPBrussels

  2. The EU Backdrop • Between 2002 and 2005: 165 applications (80 cartels). But few decisions. • Dedicated cartel directorate established, three units with 40 case handlers. • Plea bargaining? Wait and see approach.

  3. Massive Fines2001 - 2006 Hoffman-La Roche €462 million Lafarge SABASF AG €249 million BASF AG €237 million Total €219 million Arjo Wiggins Appleton €184 million Solvay €167 million BPB PLC €138 million Hoechst € 99 million

  4. New Fining Guidelines • Published in the O.J. on 1 September 2006 • Likely effect: Substantial increase in most cases, especially for large companies in long cartels. • Neely Kroes: “Don’t break the antitrust rules; if you do, stop it as quickly as possible, and once you’ve stopped, don’t do it again....If companies do not pay attention to these signals they will pay a very high price.”

  5. 1998 Guidelines Silent on methodology for calculating start point. Start point is increased by 10% for each year of infringement. No “entry fee”. Recidivism typically increases basic amount by a total of 50%. 2006 Guidelines Percentage sales of relevant product (<30%). Start point is multiplied by number of years of infringement. New “entry fee”. Recidivism increases basic amount by 100% for each prior act. New Fining Guidelines

  6. Hypothetical: Le Prix, SA • Five-year cartel • EEA Sales of €100 million • Second offense

  7. 1998 Guidelines Start Point: 30% x €100 million = €30 million. Duration: €30 million x 1.5 = €45 million. Recidivism: €45 million x 1.5 €67.5 million 2006 Guidelines Start Point: 30% x €100 million = €30 million. Duration: €30 million x 5 = €150 million. “Entry fee”: €150 million + €25 million = €175 million. Recidivism: €175 million x 2 €350.0 million Le Prix, SA

  8. New Fining Guidelines • Premium on keeping a clean record. • Premium on discovering and ending ongoing cartels. • Leniency calculus even more critical. • Prelude to plea bargaining?

  9. Hot Topics • Sufficient evidence to prove a cartel • Relying on (increasingly oral) “corporate statements” in leniency applications as proof against all. • This issue is currently on appeal to the CFI in at least two cases. • Commission already imposing tougher standards to obtain immunity or leniency.

  10. Hot Topics • Parental liability • Extreme willingness to disregard corporate structures • Even more relevant after the new fine guidelines: disregarding the corporate structure raises the 10%-of-turnover ceiling.

  11. Hot Topics • Discoverability of leniency materials • Amended 2002 Leniency Notice formalizes use of oral applications: • No need to sign transcript • Other parties can read, but not copy • Implications

  12. International Cartels Law Seminars International Conference Washington, DC, 7-8 September 2006 The EU Response Developments in EU Cartel Enforcement Howard T. Rosenblatt Howrey LLPBrussels

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