Competition and trade law: Guidelines for competition fines

Guidelines for competition fines

The Commission has published guidelines about how it will calculate fines for breaches of Article 85 and Article 86 of the EC Treaty. The idea is to improve the transparency of the fining system and ensure that fines act as a more effective deterrent.

Article 85 regulates business agreements and arrangements which may be anti-competitive and affect trade at EU level; Article 86 prohibits abuses of a dominant position in a market by one or more undertakings.

When EC competition rules are breached a basic amount for the fine will be calculated based on the gravity and duration of the breach, calculated without reference to the turnover of the company involved. This is a marked change from the old system of fining up to 10% of world-wide group turnover.

The base sum can be raised or reduced when aggravating or extenuating circumstances exist. Other refinements may be made to the resulting amount to take account of the particular facts of the case.

The gravity of the infringement will be assessed by its nature, its actual impact on the market (where this can be assessed) and the size of the relevant geographic market. Infringements will be divided into minor, serious and very serious infringements. Minor infringements are likely to be fined a sum of between ECU 1,000 to 1 million (£670-670,000), serious infringements between ECU 1m to 20m (£670,000 - £13,400,000) and very serious infringements above ECU 20m. The effective economic capacity of offenders to cause significant damage to other operators will be taken into account and the fine will be set at a level which is adequately deterrent. Similar distinctions are made between short, medium and long-lasting infringements.

Aggravating circumstances include repeated infringement of the same type by the same undertaking, a refusal to co-operate and attempts to obstruct the Commission in carrying out its investigations. Attenuating circumstances might include having a passive role in the infringement and non-application of the prohibited agreement or practices which constitute the infringement.