PROSECUTION OF CARTELS
WITHOUT DIRECT EVIDENCE
SLOVENIAN EXPERIENCE
–
DAVID VOGRINEC
Department for Legal Affairs and Investigations
Slovenian Competition Protection Agency
The following presentation does not reflect views and opinions of Slovenian CPA
REGULATORY FRAMEWORK
Prevention of the Restriction of Competition Act
(ZPOmK-1)
• Article 6:
Agreements between undertakings, decisions
by associations of undertakings and
concerted
practices of undertakings, which have
as their
object or effect the prevention,
restriction or
distortion of competition on the
territory of the
Republic of Slovenia shall be
prohibited and
shall be null and void.
• Same context as in the article 101 TFEU
•
TOOLS FOR COLLECTING EVIDENCE
Currently the CPA conducts 2 separate procedures:
– administrative (the CPA establishes the
infringement)
– misdemeanour (usually conducted as a followon procedure, the CPA imposes fines on
undertakings and individuals – responsible
persons)
• ZPOmK-1 provides the CPA with large variety of
investigation tools, including inspections
• Inspections (administrative procedure) conducted
with an order, issued by the director of the CPA,
no judicial review
DIRECT EVIDENCE
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proves the existence of an agreement between
undertakings
usually tries to identify contact, established
between parties of an agreement
almost impossible to obtain without conducting
an investigation or leniency application
Usually exists in a written form, official/unofficial
document, e-mail, notice etc
CIRCUMSTANCIAL / INDIRECT EVIDENCE
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when there is no evidence of a contact between
the parties of an agreement
it must be carried out on case by case basis,
depending on the burden of proof
can be used as a sole proof to determine the effect
of an cartel on the market, linking it to behavior
of the parties included in an agreement and
subsequently proving the existence of a cartel
can be used as a supporting method to the
document and other proof to achieve greater
effect
TYPES OF CIRCUMSTANTIAL EVIDENCE
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proof of sole contact between parties of an
agreement, no proof of actual price fixing etc
Slovenian ski lift operators cartel:
association of ski lift operators – discussions
about price fixing of ski cards
CPA obtained evidence for some of the years via
inspection
for the missing years it concluded there was a
cartel based on the effect on the market (paralell
price increase etc) and the fact, the parties met
regularly at the sessions of the association
SLOVENIAN SKI LIFT OPERATORS
CARTEL
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for the missing seasons CPA took into account
relevant factor, that the price increase in every
season was almost synchronized
in addition to that, CPA analyzed the margin
range of an individual ski lift operator
there was no objective reasoning for the similar
increase
CPA used a well established assumption that the
cartel members continue to meet at the meetings
of the association, with no public distancing
themselves from a cartel
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Slovenian Supreme Court concluded it was not
sufficient evidence for the missing seasons that the
parties engaged in contact within the association
mere presence at the meetings with no direct proof of
an actual price fixing agreement was not sufficient to
prove a cartel agreement for an individual ski season
ordered the CPA to conduct economic analysis of the
relevant factors for the price of a ski card in the
absence of direct proof
paralell price increase could origin from objective
factors such as higher ground costs (electricity etc),
level of investments into necessary infrastructure etc,
so the CPA must provide an analysis or proof that the
paralell prices are a consequence of an agreement and
cannot be justifyed with other objecitve factors
CIRCUMSTANCIAL EVIDENCE
EVIDENCE
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– „ECONOMIC“
almost every conduct or state on the markt can
be used as circumstancial evidence
most common circumstancial evidence are price
paralelism, concerted rise of prices, unusually
high profits or margins, stable market shares,
high barierrs to entry, oligopolic market with low
concentration etc
slovenian case of a cartel in the wholesale
pharmaceuticals sectors
inspection + indirect evidence
PHARMACEUTICALS CARTEL CASE
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The CPA found that the four undertakings rigged their
bids in public procurement proceedings conducted by public
pharmacies, as they submitted mostly identical offers in
terms of prices and rebates
outcome of each procurement was division of the requested
quantities between the parties of an agreement in
accordance with their previous market shares
Although wholesale prices of medicines for human use are
set as legally binding maximum prices, this does not
prevent suppliers from offering lower prices or discounts
CPA looked into the bids submitted by an individual
undertaking in the public procurement and concluded, that
identical bids submitted in the public procurement
procedure were a consequence of an agreement, enabling
parties to retain fixed market shares in the procurements
for public pharmacies
PHARMACEUTICALS CARTEL CASE
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II.
lack of rebates and lower prices in the bids
cannot be explained otherwise than as a
consequence of an agreement, as lower bids and
rebates by individual undertaking would lead to
obtaining whole procurement and all of the
quantities, which is the goal of every undertaking
active on the market
CPA obtained only one direct evidence indicating
that the rebate policy of two of the parties of an
agreement were synchronised with each other
CPA investigated capability of an each individual
undertaking to provide all of the quantities of the
whole asortiment of medicines, required by
pharmacies in each individual procurement
PHARMACEUTICALS CARTEL CASE
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III.
the fact that the undertakings involved offered
rebates in the latter phase of the procurement,
after the division of the procurement between the
parties of the agreement, showed, that it was
possible for the parties involved to offer rebates
and lower price in the phase of submitting the
bids
parties claimed the later offer of rebates occured
due to the fact that the quantites awarded to
each party were known only afterrwards,
enabling them to offer rebates according to the
awarded share
PHARMACEUTICALS CARTEL CASE
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IV.
CPA refused such argument due to the fact that
the main goal should have been obtaining all the
quantities required in the procurement, enabling
the parties to offer rebate already in the bid
concerning the whole procurement
nevertheless, CPA concluded that parties offered
rebates in the stage of procedure where not all
the awarded quantities were known to the
parties
also, the parties regulary met at the meetings of
the section of pharmaceuticals wholesalers
indicating that they were constantly in contact
with each other
PHARMACEUTICALS CARTEL CASE
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V.
additionally, the CPA took into account
circumstantial evidence that all the parties
founded a joint venture together, which led to a
presumption on their medium for information
exchange
after consideration of all the direct and
circumstantial evidence CPA concluded that the
infringement was proven to the parties with the
explanation the conduct of the parties was a
consequence of an agreement between them
Thank you very much for your
attention!