Fines are integral to EU cartel enforcement and subject to careful methodology and review. The European Commission (“EC”) determines cartel fines in accordance with the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (the “Fining Guidelines”). The Fining Guidelines set the value of sales of goods or services to which the infringement relates as the proxy that forms the basis of the fine calculation. The value of sales, together with the duration of the infringement, is considered “an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement”.

The proportion of the sales value taken into account will depend on the degree of gravity of the infringement, multiplied by the number of years of the infringement, and will be set at a level of up to 30%. However, point 37 of the Fining Guidelines enables the EC to depart from the usual methodology where the peculiarities of the case, or the need to achieve a deterrent effect so require.

Implemented in 2006, the Fining Guidelines have since come of age and in recent cases – mostly in the financial services industry – the EC has started to apply point 37 to accommodate increasingly complex infringements and sectors, rather than as an instrument to wriggle it out of the occasional fining impasse. Does this mean the Fining Guidelines are ripe for an overhaul? Or can the use of point 37 cater for all situations in which the standard methodology falls short?
Continue Reading The EU Commission’s cartel fining challenges: a need to “re-fine” the method?

On July 11, 2019, Assistant Attorney General Makan Delrahim announced fundamental and sweeping changes to the Division’s approach to corporate compliance policies that will bring it into line with other Department of Justice branches.  In every case, the Division will now consider compliance programs in deciding whether to file criminal charges and in calculating fines.

On 16 January 2019, the European Court of Justice (“ECJ”) rejected the European Commission’s (“Commission”) appeal in Commission v. UPS. The judgment followed Advocate General Kokott’s Opinion of July 2018, and upholds the 2017 judgment of the General Court (“GC”) annulling on procedural grounds the Commission’s decision prohibiting the acquisition of TNT by UPS.

Continue Reading EU Court Confirms the Annulment of the European Commission’s Decision Prohibiting the UPS/TNT Transaction

On 21 January 2019, the UK government published its draft statutory instrument on State aid, outlining the changes to the UK State aid regime in the event of a no deal Brexit. Its publication comes at critical moment for the UK as it considers the potential options for leaving the European Union: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving.

The State Aid (EU Exit) Regulations 2019 (“State Aid No Deal Regulation”), which still requires the approval of the UK Parliament, does not make material changes to the substance of the EU State aid framework, but rather transposes the regime into UK domestic law, establishing the UK Competition and Markets Authority (“CMA”) as the UK State aid enforcement authority, thereby replacing DG Comp.


Continue Reading “No Deal” Brexit and the UK State Aid Regime (Part 2)

Potentially significant changes are just around the corner for the UK competition system, as the country prepares to take the final step of exiting the European Union. In this regard, the UK has three potential options: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving. Should the UK leave the EU with a deal, then its departure shall be governed by the Withdrawal Act ( “WA”), which simply confirms much of the competition framework will remain until December 2020 (the “Transition Period”). At the time of writing, the WA still awaits Parliamentary approval. In the case that the UK leaves without a deal in place, then from 29 March 2019 competition law will be governed by the statutory instrument titled The Competition (Amendment etc.) (EU Exit) Regulations 2019 (“No Deal Regulation”).

A very brief summary of the key differences between the WA and the No Deal Regulation in terms of the effect on the UK competition framework is as follows:


Continue Reading Deal or No Deal Brexit? The Lowdown for Competition Law (Part 1)

With a musical ABBA twist, Johan Ysewyn presented the evolution of the cartel concept in the EU at the Chillin’ Competition Conference on 20 November 2018 in Brussels.

Click here to watch the full presentation by Johan.
Continue Reading The (Developing) History of Cartels – A Conceptual Waterloo

Last month in In the Matter of 1-800 Contacts, Inc., the Federal Trade Commission (“FTC”) provided insight into the circumstances under which retail price competition may take place in the 21st century internet economy. In the Opinion authored by Chairman Joseph J. Simons (“Commission’s Opinion”) the Commission decided that 1-800 Contacts, the country’s largest online retailer of contact lenses, unlawfully entered into anticompetitive agreements with 14 rival online sellers (“Agreements”). The Agreements, which, in most cases were trademark litigation settlements, required the parties, when bidding as part of search engine advertising auctions, to take measures ensuring their advertisements do not appear in response to searches for the other party’s trademark terms. According to the Commission’s Opinion, approved 3-1-1, the “decision will affect not only the price that consumers pay for some contact lenses but also the very manner in which substantial parts of price competition will occur throughout consumer markets today and tomorrow.” This week, 1-800 Contacts filed an application with the FTC for a partial stay pending review by the U.S. Court of Appeals.

Continue Reading Sights on Online Search Advertising: FTC Finds Practices by 1-800 Contacts to Unlawfully Harm Competition and Restrict the Availability of Truthful Advertising to Consumers

In its 13 November 2018 judgment in Merricks v MasterCard, the English Court of Appeal (the CA) determined that a refusal by the Competition Appeal Tribunal (CAT) to grant a Collective Proceedings Order (CPO) can be appealed to the Court of Appeal.

A CPO is the order by which the CAT authorises a class representative to act as such in the collective proceedings action and sets out certain basic details, such as the parties’ names, the definition of the class (and any sub-class), the common issues to be determined and the remedy sought. Without a CPO the collective action cannot proceed.

The CA concluded that the refusal of a CPO is likely to prevent individual members of the represented class who have suffered loss from obtaining any compensation. Consequently, it concluded that in substance, a refusal of a CPO is a decision as to the award of damages within the meaning of the Competition Act 1998 (CA98), which can, consequently, be appealed to the Court of Appeal.


Continue Reading A refusal to make a ‘Collective Proceedings Order’ in England can be appealed

In October, the UK’s Competition and Markets Authority (CMA) imposed a fine of 1.6 million GBP for a land agreement which it found to infringe competition law. This is the first time that the CMA has taken enforcement action and issued a fine in relation to a land agreement, despite such agreements having been covered by the Chapter 1 prohibition (the UK equivalent of Article 101 TFEU) since 2011. The imposition of the fine, together with increased activity by the CMA in this sector, suggests that undertakings with land agreements should carefully check their compliance with competition law. Whatever “grace to adapt” has been afforded to businesses by the CMA since the change in the law has clearly come to an end.

Continue Reading Land agreements rise up the CMA’s agenda

On 8 October 2018, the UK Competition and Markets Authority (“CMA”) published a Working Paper on the ‘use of pricing algorithms to facilitate collusion and personalized pricing’ (the “Paper”). It follows a number of other initiatives from competition authorities regarding algorithms, including the recent German Monopolies Commission’s proposals regarding pricing algorithms, which was the subject of a Covington Competition Blog post. The CMA’s analysis reflects input from algorithm providers, other competition authorities, and the results of the CMA’s findings from pilot tests. The Paper is economic rather than legal in focus, and assesses the extent to which various algorithm models have the potential to affect competition.

Continue Reading The CMA’s Paper on Pricing Algorithms, Collusion and Personalised Pricing