SEVEN YEARS OF SETTLEMENT SEVEN YEARS OF SETTLEMENT DECISIONS: AN APPRAISAL AFTER THE DECISIONS: AN APPRAISAL AFTER THE TIMAB JUDGMENTTIMAB JUDGMENT

76TH LUNCH TALK OF THE GCLC76TH LUNCH TALK OF THE GCLC, 29 June 2015, 29 June 2015

Flavio LainaFlavio Laina Head of Unit - Cartel SettlementsHead of Unit - Cartel Settlements

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Overview• What is the cartels settlement What is the cartels settlement procedure procedure and why was it introduced?and why was it introduced?

• An short overview of the settlement An short overview of the settlement practise since 2008.practise since 2008.

• Lessons learned.Lessons learned.• The Timab judgement.The Timab judgement.

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A little bit of history

• Instrument created in 2008Instrument created in 2008•First decision in 2010: DRAMsFirst decision in 2010: DRAMs• 18 decisions in successful settlements18 decisions in successful settlements and 1 discontinued settlementand 1 discontinued settlement

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DRAMS DRAMS 19 May 201019 May 2010 331 million €331 million €

Animal feed phosphatesAnimal feed phosphates 20 July 201020 July 2010 175 million €175 million €

Consumer detergentsConsumer detergents 13 April 201113 April 2011 315 million €315 million €

CRT glassCRT glass 19 October 201119 October 2011 128 million €128 million €

Refrigeration compressorsRefrigeration compressors 7 December 20117 December 2011 161 million €161 million €

Water management productsWater management products 27 June201227 June2012 13 million €13 million €

Automotive wire harnessesAutomotive wire harnesses 10 July201310 July2013 141 million €141 million €

Euro Interest rates derivativesEuro Interest rates derivatives 4 December 20134 December 2013 1,04 billion €1,04 billion €

Yen interest rates derivativesYen interest rates derivatives 4 December 20134 December 2013 669 million €669 million €

Polyurethane foamPolyurethane foam 29 January 201429 January 2014 114 million €114 million €

Power exchangesPower exchanges 5 March 20145 March 2014 5,9 million €5,9 million €

BearingsBearings 19 March 201419 March 2014 953 million €953 million €

Steel abrasivesSteel abrasives 2 April 20142 April 2014 30.7 million €30.7 million €

MushroomsMushrooms 25 June 201425 June 2014 32 million €32 million €

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CHIRD-RatesCHIRD-Rates 21 October 201421 October 2014 61,6 million €61,6 million €

CHF-SpreadsCHF-Spreads 21 October 201421 October 2014 32,3 million €32,3 million €

EnvelopesEnvelopes 11 December 201411 December 2014 19,5 million €19,5 million €

Parking heatersParking heaters 17 June 201517 June 2015 68 million €68 million €

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Does it work?• 2013: 3 settlement decisions and 1 normal2013: 3 settlement decisions and 1 normal• 2014: 8 settlement decisions and 2 normal2014: 8 settlement decisions and 2 normal• 2015: 1 settlement decision and 2 normal2015: 1 settlement decision and 2 normal• Average duration of cases reduced by 2 yearsAverage duration of cases reduced by 2 years• Fines in settlement cases are about 50% of total Fines in settlement cases are about 50% of total

fines since 2010fines since 2010• Very different types of casesVery different types of cases 6

Identifying procedural efficiencies• one procedural language;one procedural language;• access to the evidence;access to the evidence;• a reduced written procedure;a reduced written procedure;• low probability of appeals low probability of appeals

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Screening• Likelihood of reaching a settlement with all the partiesLikelihood of reaching a settlement with all the parties• Procedural efficiencies; lack of appealsProcedural efficiencies; lack of appeals• Number of parties concernedNumber of parties concerned• Parties’ spontaneous interest to settleParties’ spontaneous interest to settle• Number of successful leniency applicants Number of successful leniency applicants • Expected degree of contestationExpected degree of contestation• Impact of aggravating circumstancesImpact of aggravating circumstances• Parties’ foreseeable conflicting positions on liabilityParties’ foreseeable conflicting positions on liability• EU/EEA cases or cases already decided/pending in other EU/EEA cases or cases already decided/pending in other

jurisdictionsjurisdictions• Novel legal issues Novel legal issues

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How does it work in practice

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Bilateral talks• Participating does not imply an admission of guilt or duty to Participating does not imply an admission of guilt or duty to

settle;settle;• Disclosure and exchange of arguments on potential objections, Disclosure and exchange of arguments on potential objections,

liability, fines;liability, fines;• Disclosure of evidence supporting potential objections, Disclosure of evidence supporting potential objections,

liability, fines;liability, fines;• Disclosure of other evidence upon reasoned request;Disclosure of other evidence upon reasoned request;• Commission retains discretion as to the opportunity, order and Commission retains discretion as to the opportunity, order and

pace of disclosure and discussions;pace of disclosure and discussions;• Discussions are bilateral, frank and non-usable as evidence.Discussions are bilateral, frank and non-usable as evidence.

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For the CommissionFor the Commission• Efficiency gains in Efficiency gains in

terms of faster terms of faster procedure.procedure.

• More streamlined More streamlined procedural procedural organisation.organisation.

• Subsequent Subsequent litigation unlikelylitigation unlikely

For the partiesFor the parties• Lower fines (10 % Lower fines (10 %

reduction)reduction)• Efficiency gains in Efficiency gains in

terms of faster terms of faster procedure.procedure.

• Transparent and Transparent and immediate dialogue immediate dialogue on key points of the on key points of the case.case.

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Advantages of Settlement

Lessons learned (1): rights of defence • Balance between procedural efficiencies and Balance between procedural efficiencies and

rights of defencerights of defence• Parties are guided through the evidence and the Parties are guided through the evidence and the

conclusions the Commission draws from evidenceconclusions the Commission draws from evidence• Requests for additional access, if any, are minorRequests for additional access, if any, are minor• HO always available to the partiesHO always available to the parties• Requests to proceed even fasterRequests to proceed even faster

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Lessons learned (2): hybrid cases and others• Hybrid from the start. Hybrid from the start. • Hybrid at a later stage.Hybrid at a later stage.• Smart cards chips case: settlement Smart cards chips case: settlement

discussions discontinued for lack of discussions discontinued for lack of progress and procedure reverted to the progress and procedure reverted to the standard one.standard one. 13

Timab's appeal• Timab dropped out from settlement after communication of the Timab dropped out from settlement after communication of the

fines range;fines range;• The Commission resorted to the standard procedure (1st hybrid):The Commission resorted to the standard procedure (1st hybrid):

(para. 117).(para. 117).• Timab brought action before the General Court for (i) annulment Timab brought action before the General Court for (i) annulment

and (ii) reduction of fine.and (ii) reduction of fine.– Main grounds: Commission said to have applied a fine higher Main grounds: Commission said to have applied a fine higher

than the maximum figure of the range envisaged during than the maximum figure of the range envisaged during settlement discussions settlement discussions

Action Action dismissed on 20 May 2015 (Case T 456/10)dismissed on 20 May 2015 (Case T 456/10)14

Endorsement of the settlement procedureEndorsement of:Endorsement of:•the settlement procedure (para. 73) ;the settlement procedure (para. 73) ;•the "hybrid" procedure (para. 72);the "hybrid" procedure (para. 72);•voluntary procedure, parties may drop out (para. 76);voluntary procedure, parties may drop out (para. 76);According to the Court:According to the Court:•The Commission is not bound by the range indicated as part of the settlement The Commission is not bound by the range indicated as part of the settlement procedure as it is an instrument related only to the settlement procedureprocedure as it is an instrument related only to the settlement procedure•During the standard procedure, the Commission must also establish the liabilities During the standard procedure, the Commission must also establish the liabilities of the undertakings concerned, and take into account new arguments or evidence of the undertakings concerned, and take into account new arguments or evidence brought to its attentionbrought to its attention

It would be illogical to apply a range of fines falling within the scope of It would be illogical to apply a range of fines falling within the scope of another procedure now abandoned.another procedure now abandoned.

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Reasoning of the General Court• The amount of the fine: same method for calculating the fine applied (i) The amount of the fine: same method for calculating the fine applied (i)

during the settlement procedure and (ii) during the standard procedure during the settlement procedure and (ii) during the standard procedure against Timab.against Timab.

• Where does the difference of some EUR 20 million come from? Where does the difference of some EUR 20 million come from? – GC: "GC: "It is true that, at first glance, such an increase in the amount of It is true that, at first glance, such an increase in the amount of

the fine, when the duration of the infringement has been reduced by the fine, when the duration of the infringement has been reduced by nearly 15 years, may seem paradoxical" (para. 81).nearly 15 years, may seem paradoxical" (para. 81).

– In the standard procedure against Timab, the Commission did not In the standard procedure against Timab, the Commission did not apply reductions initially applied during the settlement phaseapply reductions initially applied during the settlement phase

– Commission Commission took into account took into account new information (para. 107): new information (para. 107):

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Other (rejected) claims• The right not to The right not to incriminate oneselfincriminate oneself (para. 120).(para. 120).• Equality of arms (para 122).Equality of arms (para 122).• LegitimateLegitimate expectations expectations (para 124).(para 124).• Sound administration Sound administration (para 125).(para 125).• Misuse of powers – EC penalised Timab for not Misuse of powers – EC penalised Timab for not

settling (para 126).settling (para 126).

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Interplay with antitrust damages• Protection of settlement submissionsProtection of settlement submissions• StreamlinedStreamlined decision vs normal decisiondecision vs normal decision

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Possible improvements• Even faster proceedings? Where to find Even faster proceedings? Where to find

additional procedural savings?additional procedural savings?• Consolidating trust between the partiesConsolidating trust between the parties

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Thank you for your attention

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