Americanization rather than, or as well as
Europeanization: Tracing the Evolution and
Trajectory of European Antitrust Policy
Lee McGowan (Queen’s University Belfast) and Eleanor Morgan (Bath University)
Paper presented at IPSA, panel on Revitalising the Europeanization Agenda, Luxembourg, 19-21
March 2010.
Very much work in progress
All comments welcome at [email protected]
Abstract
European competition policy has emerged as one of the most entrenched aspects of a European
Union (EU) regulatory order. It finds it origins in the objectives laid down in both the ECSC and
EEC treaties which were given reality by the Council under Regulation 17. The European
Commission was handed responsibility for administering the EU’s first supranational policy. Much
has already been written about the evolution and institutional developments and charted this
regulatory agency’s development as it gained expertise, grew in confidence and found support from
changing economic philosophies towards the competition principle and from case law. This
formidable institutional regime has been adept at making change and constantly displayed
innovation as it has pursued cartels and abusive monopolies, sought to combat state subsidies,
monitored the impact of economic concentration and pushed a liberalization strategy in the airline,
energy and telecommunications sectors. It is not the intention of this article to try and assess policy
developments over the course of the last 50 years but rather to pose a more fundamental question
about the nature of the evolution of policy and specifically the extent to which European (Union)
cartel policy has been following an American trajectory. This paper focuses its attention on Article
101 (TFEU) on restrictive practices and specifically hard core cartels and considers how the
modernization and ongoing evolution of practices within the EU cartel regime can best be
explained. Alongside a Europeanization discourse this paper makes the case for an Americanisation
discourse where the EU is learning from, and mirroring, US experiences and traditions. What are
the drivers of policy change and such Americanization? Indeed, when did this process begin and
does such a trajectory suggest that the EU regime is actually moving ever closer towards the
criminalisation of such anti-competitive offences and penal sanctions and what do these mean for
the ongoing process of European integration.
1
INTRODUCTION
Never has interest in competition policy arguably excited so much controversy in the world of
contemporary politics. From Nicholas Sarkozy’s questioning of what competition has ever done
for Europe in 2007 to the implications of the credit crunch on the merits of competitive markets,
competition issues have gone much more mainstream at the same time as the European
Commission has sought to inform the wider public of the successes ad achievements of
competition regulation for the consumer. The significance of competition policy has long been
recognized as a crucial aspect of government and supranational governance although it technical
nature still often deters coverage in many collections (Rosamond 2008). Yet, the history of
competition policy and European integration have been inexorably intertwined and linked from
the outset. Competition represents the oldest specific policy area that dates back to the ECSC
Treaty (Cini and McGowan, 2009) and has long embodied one of the European Union’s most
developed, credible and even successful policy arenas and led to the European Commission
increasingly being recognized as the world’s pre-eminent antitrust authority.
The competition policy theme has been analysed and explored by economists (Bishop,
1993; Estrin and Holmes, 1998; Morgan and 2006 and Motta, 2004, (legal scholars Goyder,
2003; Goyder and Albors-Llorens, 2009; Sufrin and Jones, 2008 and Whish, 2009). The style,
substance and enforcement of competition rules matters to political science and its study
illustrates the benefits and possibilities of supranational regulation. Competition policy has not
only constituted an integral feature of European Union governance but has been explicitly
identified as one of only five exclusive EU competences by the Treaty on the Functioning of the
European Union (TFEU) or the Lisbon Treaty. Initial research on antitrust by political science
(Doern and Wilks, 1996; McGowan and Wilks, 1995 and Wilks, 1999) has been followed by a
new generation of political science researchers and historians (Büthe and Swank, 2007; Cini and
McGowan, 2009; Damro; 2003; Doleys, 2007; Lehmkuhl, 2008; Leucht; 2008, Seidel, 2007;
Warzoulet, 2007, Wigger, 2008) shed greater and welcome light into the origins, institutions,
workings and even desirability and benefits of EU competition policy and its role in economic
policy and modern capitalism since the 1950s.
The EU competition regime makes for a fascinating study of this European mode of
integration in its own right but it also represents one of the best examples of policy export as the
EU own brand of antitrust is being, for example, replicated in countries such as China and
Russia. The international dimension of European competition policy (Damro, 2006; Uydin,
2009) has emerged as a new and prominent theme and often explored the political sensitivities of
the extraterritorial application of anti-trust rules and the pursuit of a transnational agreement on
competition rules through the auspices of the WTO. It raises highly intriguing questions about
policy fit, convergence and divergence that have long been an aspect of wider EU/US
commercial and trade relations (Dewatripont and Legros, 2009).
The failure to make any headway in this direction as epitomised by the collapse of the
talks in Cancun in 2004 seem to indicate a degree of ongoing divergence in distinct domestic
approaches to the competition regulation. Indeed, it often seems that the two most developed
antitrust systems, as developed in the EU and in the United States, are incompatible as so often
seen over issues of state aid. Often tensions between the regimes simmered with the realization
2
that EC antitrust enforcement was not just merely restricted to European companies and vice
versa but could be applied to non-EU based firms who were doing business in EU space. The
Commission’s landmark 1988 Woodpulp decision embodied the Commission’s determination
and ability to punish non-EU firms. The extra-territorial application (Damro, 2001) of EC
competition law has proved problematic.
High profile clashes and especially over mergers (e.g. Boeing McDonnell/Douglas in
1997 and GE/Honeywell in 2001 (Djelic, 2002), disagreements of analyses in very sensitive
cases such as Microsoft and the unwillingness to share information in cartel cases, the EU’s role
in state aids (Airbus) and the tensions it stokes over Boeing in the US and the apparent inability
to reach any international consensual agreement of anti-trust seem to support this. As such
collision and conflict might appear to constitute the hallmarks of EU/US relations vis à vis
antitrust and simply arise from the distinct political and economic structures which are the
product of norms, values and decades of learning and have produced distinct forms of regulatory
governance and priorities. These differences have propelled greater international co-operation
and treaties.1
Yet, are the differences really so stark? Do the EU and US antitrust regimes have much
more in common in terms of approach, language and discourse and similar rules of the game?
How much divergence exists and is it getting stronger or conversely is convergence occurring? If
convergence and co-operation are the hallmarks of EU/US antitrust, who is pushing them and
why? Both regimes are in reality closer and this growing ’partnership’ is evident over the last
decade in a number of bilateral agreements and other efforts such as the creation of the
International Competition Network in 2001. These certainly facilitate the sharing of competition
culture and values and seen the setting up, for example of the Unilateral Conduct Working
Group. The pressures for enhanced cooperation between antitrust regulators in the enforcement
of competition policy reflect the realities of globalization which have partly responsible for
propelling the ever greater co-operation and agreements between businesses worldwide.
This paper focuses specifically on EU cartel policy. On closer inspection of the recent
modernization of the EU cartel regime (McGowan 2009) there is striking evidence in the use of
leniency (whistle blower) programmes, private action proceedings and the inevitable drift to
criminal sanctions - that the EU competition regime is actually adopting many of the traits,
characteristics and policy initiatives of the US regime. Let’s be clear on one crucial point at the
outset. We are not saying that the EU is directly copying but we are saying that the EU is
learning from US experience and adapting and implementing its own brand of American rules. If
we take a closer inspection of the composition of DG Competition it is increasingly clear that the
growing number of economics graduates from the early 1990s reflects the growing recognition
of economic analyses in competition cases which has long been one of the strongest hallmarks of
the US antitrust model. Indeed, the creation of the post of Chief Economist in 2003 was most
apparent recognition of this reality.
1
The Court concluded that the EU does have the power under the competition rules contained within the EEC
Treaty and measures implementing these rules to conclude international agreements (See Devuyst 2002: 125).
However, it was initially unclear as to whether any such Commission led agreements required Council approval and
the answer was provided that the Commission did when the ECJ ruled that the Commission lacked the authority to
conclude an international agreement (in this case between the EU and the US in 1991) on its own. The case arose
from a challenge by the French government although interestingly the same agreement was then concluded by the
Council and adopted in 1995. For details see A.D. Ham, 1993, ‘International Co-operation in the Anti-trust Field
and in particular the Agreement between the united States of America and the Commission of the European
Communities’, Common Market Law Review, 30, 571.
3
This paper raises the controversial issue of whether the recent reforms of the EU cartel
rules can be labeled as simply Americanization for slow learners or whether more positively, it is
more of a case of viewing the Europeans as smarter, more imaginative and adept learners and
policy regulators. It fits into wider and ongoing discussions about the spread of the American
legal style (Keleman and Sibbitt; 2004). This paper is divided into four parts. The first defines
Americanization, the second presents a brief synopsis of the traits of both the EU and US
antitrust regimes before going on to isolate in sections three and four the two leading examples
of Americanization, in the form of leniency and criminalization, within EU cartel policy before
presenting conclusions.
Table: 1 EU and US Approaches to Antitrust: Identifying Similar Objectives
Object
Cartels
Monopolies
Mergers
State Aids
Public Utilities
Institutions of Enforcement
US
Sherman S1
Sherman S2, Clayton and FTC
Sherman, Clayton and FTC
FTC, DOJ And Courts
EU
Art. 101 TFEU. Reg1/2003,
Art. 102 TFEU. Reg 1/2003
Reg. 139/2004
Articles 107-99 TFEU
Art. 110 TFEU
Commission, Courts and
NCAs
EUROPEANIZATION OR AMERICANIZATION OR BOTH?
The ongoing transformation of EU antitrust over the last decade have been explained and labeled
as processes of Europeanization (for this angle see McGowan, 2005), modernization and even
decentralization (Cini and McGowan, 2009). Each has their own merits and it is not the intention
to revisit them here except to say that much of burgeoning literature on `Europeanization’
(Borzel, Featherstone and Radaelli, 2003; Harmsen and Wilson, 2000; Olsen, 2002; Radaelli,
2000; Risse, 2001) focused is attention on policy isomorphism and the degree to which EU rules
came to impact on the changes and adaptation of the domestic antitrust regimes in Europe to the
EU model. This took both the forms (Cini, 2007; Green and Robertson, 2005; McGowan, 2005)
of both voluntary adaptation (Member state convergence) and coercive adaptation (in the form of
conditionality and the adoption of competition provisions and institutions through Europe the
Agreements (Lavanex). This process of policy convergence was certainly significant and
reflected the changing approaches and norms to the handling of competition policy. The
modernization and decentralization strands within competition policy research echoed this
pattern of mutual learning and a common value formation. The EU regime was modernized in an
attempt to make its management more efficient and it was decentralised in so far as the National
Competition Authorities (NCAs) were brought into a new institutional framework that
transformed them into regional agencies (fully conversant and applying only the EU rules). The
centrality of the EU rules were integral aspects of the modernization Regulation (1/2003) which
federalized the jurisdictional parameters of European antitrust (through either the Commission or
the national competition authorities) and facilitated their co-operation and learning through the
ECN (a new form of regulatory agency). It is interesting to speculate how far another variables
were at work and help explain the transformation of the EU model with it must be emphasized
4
specific reference to how cartels are combated. In other words is it possible to identify variable at
play within the European context in the handling of cartels and one which seemed glaringly
evident in the reforms post 2000 to the UK regime which clearly imported US practices and led
to notions of Americanization? In his analysis of the development of cartel policy McGowan
(McGowan, 2009) identified critical moments when the EU regime (see figure 1) appeared to
learn from US antitrust practices by incorporating aspects of American anti-cartel policy. Was
this just co-incidence or is this clear evidence of Americanization?
What is Americanization? Americanization can be defined broadly as making American
in form, style or character; to absorb, assimilate into American culture and to bring under
American influence of control. If the key driver of Europeanization has been the EU then in very
much the same fashion we identify the key driver of Americanization as the United States. In the
cartel policy case by Americanization we understand the influence of the US antitrust rules on
the regimes of other states. This influence in benign in so far as it is not being directed in the
manner or way that NATO operations and decisions are shaped. This is important because so
often the term Americanization can be held to hold negative connotations as the explicit
imposition of rules and norms. In the antitrust area we are not in any way suggesting that this
Americanization brings the EU regime under US control and it is not about making an identikit
American model. On the contrary it is about assimilating aspects of the American antitrust rules
and the influence these are having on the developing EU regime. Americanization can also have
positive connotations that focus more on modernity and progress (Berghahn, 1986). It is
important to stress that the move towards Americanization is entirely European orchestrated
which in turn raises the questions about why the policy is seeking to gin inspiration from across
the Atlantic and who is driving such a policy trajectory? Before addressing both questions it is
necessary to provide brief overviews of the EU and US competition regimes but also to set cartel
policy in context.
THE ‘INTERNATIONAL’ WAR ON CARTELS
Cartels have long represented an established aspect of commercial activity (Smith, 1776).2 They
were particularly pronounced as an essential, accepted and even government orchestrated feature
of business activity in German speaking Europe throughout the first half of the twentieth century
(Gerber, 1998) and arguably extend as far back as Ancient Egypt (Herlitzka, 1963: 121). Any
comparative and historical examination reveals that perceptions (ranging from toleration,
agnosticism to outright hostility) have differed from state to state over time. The propensity
towards cartels today may often be driven as much by cultural norms and historical tradition as
much as by economic benefits. Yet, perceptions changed in the period after 1945 (slowly,
however) when cartels came to be perceived as undesirable (Hoselitz, 1947) but most European
regulators doled out much more than a slap on the wrist for engaging in such conspiracies. For
too long it often seemed that the US stood alone in its efforts to tackle cartels.
No sector is immune from cartel activity. However, what has become apparent is that the
‘traditional’ approach to the enforcement of antitrust law which was very much targeted at
national markets and national welfare is no longer appropriate. The spectre of international
cartels raises questions of exactly whose jurisdiction do they fall into. This opened up
discussions of extraterritorial application (Friedberg, 1992) which has long constituted a
2
According to Smith ‘People of the same trade seldom meet together, even for merriment and diversion, but the
conservation ends in conspiracy against the public, or in some contrivance to raise prices’.
5
hallmark of the US regime and one the EU has follow more recently. Indeed, whereas the US has
placed much emphasis on antitrust the European competition regulators (both national and
supranational) have only finally opted in the course of the last two decades to seriously confront
the cartel issue (Harding and Joshua, 2004). The study of cartel activity (Levenstein, 1996;
Levenstein and Salant, 2007) and the initiatives by the regulators to unearth them provide for a
fascinating story of detective work (Connor; 2001between the regulated and the regulator and
one that involves the use of encrypted emails, code names, pre-paid mobile phone so calls cannot
be traced, secret meetings and a range of other forms of deception by the ongoing presence of
cartel members.
The origins of EU has to be understood in the context of three factors; the imperative of
the drive for the realisation of a single market and the neo-liberal paradigm shift (Wigger and
Buch-Hansen, 2010) , the historical context that shaped policy after 1945 and the influence and
leading role of the US experience on the European regimes (Leucht, 2008; Schulze and Hoeren,
2000). Cartels were identified as an immediate target from the outset when the original Article
85 of the Treaty establishing the European Economic Community (EEC) specifically prohibited
all agreements `which may affect trade between member states and which have as their object,
the prevention, restriction or distortion of competition within the common market’.3 In
retrospect, the decision by the six founding EEC member states to commit themselves to
competition discipline and simultaneously recognise the logic of a supranational dimension is
significant given the unfamiliarity for the majority with anti-trust.4
Although cartels were identified as the first target of the EU’s competition policy order
(now post Lisbon Articles 101-110 under the Functioning of the European Union (TFEU) Treaty,
the EU cartel regime took time to form and its enforcement until the 1980s has been described as
hesitant, patchy and largely ineffectual and DG Competition (formerly DGIV) was an
administrative backwater. McGowan (McGowan, 2009) suggests four periods of policy
development. In each the position of DG COMP and cartel policy developments can be
examined with reference to both the substantive and the procedural regimes. Accounting for
internal changes is one aspect of competition policy that is generally well covered (Wilks and
McGowan, 1996), whereas there has been considerably less attention paid to the external
variables. Any examination into the evolution of EU cartel policy cannot be completely
separated from developments at Member State level. This allows recognition of the varieties of
capitalism literature (Albert, 1993) which emphasises the spectrum of capitalist models across
Europe and the variable impact of competition policy (see Wigger, 2008) on liberal, coordinated, state and transitional economies. Policy development must be considered against
changes and events in the wider economic and societal spheres. The adoption of a critical
economy perspective to the development of EU competition policy in which the impact of Ordoliberalism, embedded liberalism and neo-liberalism on the evolution of the competition regime
and especially on Commission thinking (Wigger and Nölke, 2007) are considered. Readers are
strongly urged to consult such emerging literature.
3
It should be noted that some types of agreement (and this to some extent reflects earlier more sympathetic
perceptions) were entitled to exemptions from the EU competition rules where agreements contribute to improving
the production or distribution of goods, promote technical and economic progress or ensure that consumers reaped
considerable benefits. Prior to 1 May 2004 such exemptions under 81(3) were solely at the Commission’s discretion to
bestow if an agreement’s beneficial effects were judged to outweigh any detrimental impact on competition.
4
It is also worth recalling that Member State positions on the competition policy rules certainly varied and there was
a tussle between France, the Netherlands and West Germany over both the meaning of competition policy and also
differing approaches on policy management.
6
Secret horizontal agreements that divide markets, fix prices and prevent newcomers from
entering the market embody the classic shape of a collusive agreement.5 They arise when
companies participate in `deliberate, highly organised and covert collaborative’ (Harding and
Joshua, 2003:1) practices that have been agreed by a number of independent firms from the same
of similar sphere of economic activity. Cartels in the contemporary world are generally
recognised as problematic because they have been primarily designed to serve and work in the
interests of their members and not the consumer or the overall health of the economy. Kroes
(Kroes 2006a) summed this up neatly, `cartels strike a killer blow at the heart of economic
activity. This makes it harder for us to deliver the Lisbon goals of high growth, job creation and
innovation’. They work to the detriment of the consumer through the imposition of higher
prices.6 It is therefore not surprising that cartels are generally held today to represent the most
`most aggressive violation of competition law’ (OECD, 1998) and have even been likened `to
cancers in the market place’ (Monti, 2000) and even theft.7 As such cartels are effectively safe
havens to escape and prevent competition. For the most part cartel policy amounts to a
combative struggle between large corporate interests to conceal their price fixing and market
sharing activities and the regulator.
In the short term recourse to cartelization may indeed prove beneficial but in the longer
term and in today's environment such hard core cartel arrangements are certain to have
detrimental repercussions. In the medium to long run cartels will always enjoy higher (illegal
profits) than otherwise would be the case in the face of open competition.8 As a means to extract
higher rents from their customers such covert operations prevent competition and innovation.
The profit maximisation incentive ensures that cartels remain very much an endemic reality in
the modern world. Indeed, the eighteen highest fines in EU cartel history occur after 2001 (table
2). The world of cartels is inherently unstable. The formation of cartels proves immensely
intricate, incites many jealousies among the parties and ultimately the strain leads many to
collapse. Still, cartels thrive in the modern world and cartelisation continues to remain as a
strategic option for many companies on a short term and for some on a much longer term basis
Condemnation of cartel agreements has become very much the norm as any exploration
of official agency press releases and objectives makes all too clear. In the last decade
competition regulators in the EU, Germany and the US have intensified their determination to
hunt and break-up as many cartel agreements that can be unearthed as possible. The difficulties
of such a task should not be underestimated and the regulators are constantly engaged in battling
a seeming propensity on the part of the business world for cartelization (Neven, Papadopolous
and Seabright, 1998). The existence of international cartels is a reality. Cartels are not only just
more prevalent today but have become much more sophisticated in their design and ways of
concealment. Arguments in favour are usually predicated on notions that cartels can protect
employment and can assist sectors of the economy that are under threat are highly suspect as
cartels are designed and always work in the interests of its members. Yet, no matter how
5
US antitrust has always displayed an aversion towards the concentration of economic power and questioned its
actual impact on notions and concepts of democracy if economic power is in the hands of a few powerful players.
6
In its 2005 report on hard core cartels the OECD noted that collusion resulted in significant percentage increase in
prices. In Japan it was estimated that cartels raised prices by on average 16.5 percent, in Sweden and Finland by
around 20 per cent and in the United States there were examples of price increases of the magnitude of some 60-70
percent.
7
Monti described cartels as a `cancer’ on the European economy in the XXXI Report on Competition Policy 2001,
European Commission, 2002, p.4
8
The economic gains are difficult to quantify and vary from case to case.
7
laudable the goal of eradicating cartels may be it remains an onerous task that continually
challenges the energies and resources of all anti-trust regulators. It is a global issue. How the
regulators respond and pursue cartelisation ultimately determines the scale, intensity and number of
such anti-competitive practices at least in theory. Can they create sufficient deterrents to ever
overcome the attraction of cartelisation?9 This paper now turns to the situations in the US and the
EU.
THE US REGIME
The US often taken to be the driver of antitrust but it is worth recalling that the antitrust
credentials emerged more than a century after the declaration and after over 100 years of
mercantilist approach (Gourevitich, 1996). The US possesses one of the first and strongest legal
bases in terms of antitrust and is built on the 1890 Sherman Act and both the later Clayton and
the Federal Trade Commission Acts from 1914.10 Together these acts represent the bible of US
anti-trust policy. The American antitrust (or competition) tradition, embodied in these laws grew
from a populist movement in the late nineteenth century (McChesney and Shughart, 1995) that
centred on a suspicion of unchecked economic power and the development and expansion of
large trusts brought increasing concerns about notions of democracy and accountability. And
contrasted with first 100 years when the US approach to the economy very much reflected
European notions of corporatist and mercantilist approaches. It is important to locate the arrival
of anti-trust within the expansion of American economic power art home. The United States had
also undergone a rapid wave of industrialisation that mirrored the country’s rapid expansion
westwards to the Pacific Ocean from the 1830s onwards. The drive west was followed by the
railroads and enhanced trade and economic growth. In the second half of the nineteenth century
the first cartels emerged in such sectors as tobacco, oil, steel, and the railways (Beaud, 2000:
176) as a response.
9
In exploring EU cartel policy the academic researcher relies very much for primary material on a number of official
publications (such as the Commission’s annual competition policy report, DG Competition’s Competition Policy
Newsletter and information rich web-site as well and Court rulings) and on interviews with officials from DG
Competition. Commission information provides statistics on the formal decisions, the number of firms involved in
each case, the level of the fines and information on where and to whom leniency notices have been issued. The
researcher also needs to be able to digest the existing range of secondary sources that extend across the disciplines of
economics, history, law and politics. Judging just how successful an enforcement agency the Commission is, depends on
a number of factors that include how many cartels it unearths, how many fines it imposes and how many potential
arrangements it deters. Although statistics are available for the first two we will never be in a position to provide an
answer on the EU rules as a deterrent. It is practically impossible to speak with the firms concerned and thus all reference
points relate to cartels that have been unearthed. As onlookers we will simply never be in a position to know enough
information about the scale and scope of cartelization or the strategies of the firms involved but we can make general
assumptions about the nature and degree of such anti-competitive activities from cartels that have already been detected.
That said researchers should also avoid the danger of relying on the Commission’s hype in its own assessment of its
strategies.
10
The creation of Canadian competition policy narrowly predates the onset of the American legislation by one year but the
former was rather symbolic and was quickly surpassed in terms of activity and depth by the US model. For further information on
the Canadian model see Bruce G. Doern, `Canadian Competition Policy: Institutions and Decision Processes’ in Doern and Wilks
(eds) Comparative Competition Policy, Clarendon Press, 1996.
8
By the late 1880s huge enterprises, especially the railroad companies, were swallowing up
small firms at a frightening rate. These large businesses raised concerns about potentially abusive
monopolies. Pressure for antitrust legislation was driven initially by the social, moral and
political effects of big business rather than being driven by economic theory. In short, US
antitrust began as an attempt to defend the individual entrepreneur against large companies (or
trusts). There were numerous protests about the dangers posed by cartelisation from both other
business undertakings who were affected by such illicit agreements and also from the wider
public. Fears were expressed about the power of many capitalists and the number of large
companies and the near monopolies in such economic sectors such as sugar, petroleum and
steel.11 It was this discontent that fuelled the emergence of the first anti-cartel legislation at state
level in 1887 (Hovenkamp, 1994) and preceded US Congress’s passing of the Sherman Act in
1890
11
See R,C. McGrath, American Populism: A social History, 1877-1898, New York, Hill and Wang, 1993.
kings,
- any concerted practice or category of concerted practices,
which contributes to improving the production or distribution of goods or to promoting technical
or economic progress, while allowing consumers a fair share of the resulting benefit, and which
does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to the
attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial
part of the products in question.
9
The US antitrust Acts are therefore not simply legislative texts but also embodied the values
on which America was built: individualism, fairness and free enterprise (Whish, 1988:16). As
free and fair competition was viewed as the economic embodiment of political freedom and
democracy, surrender to the unaccountable economic power of the monopolist would have
undermined the ideological foundations of the American state (Neale and Goyder, 1980, p. 16).
This does not mean that the American approach to concentration was unquestioningly hostile.
Rather, it tended to focus on the need for balance, and on the fostering of a positive procompetition ethos.
The Sherman Act omitted the word competition completely and placed its emphasis with
concepts and positions of economic power rather market structures. The Act contained a definite
prohibition against ‘monopolization of trade and commerce’ but also declared that ‘every
contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade and
commerce….to be illegal’. It was very much geared against `large industrial conglomerates
9Devuyst, 2001) and efforts at bid rigging. There were no provisions for exceptions and those
found guilty of such practices were to be subject to financial and penal penalties. The seemingly
clear objective and powers to prosecute every trust disguises the reality that this was not a
particularly ‘effective piece of legislation’ (Peters, 1996: 43) and was beset by a vagueness in
terms of both style and the use of language and consequently the job of the courts was made
more difficult when it came to assessing what actually constituted clear abuses of power. Little
distinction, for example, was made between those restraints of trade which could be deemed
beneficial and those that were problematic. This particular act was also powerless to prevent the
growing trend towards greater economic concentration. Interestingly the drive against cartels led
to a wave of merger activity a the start of the twentieth century.
Accordingly, the later and more significant, Clayton Act of 1914 should be recognised as an
attempt to tighten up the law and the growing concerns about the power of monopolies. It
attempted to specify the different types of activity that could be deemed illegal restraints on
trade. This Act, for example, included price discrimination and also sought to tackle trade
practices (including tying and exclusive dealing arrangements as well as mergers) that threatened
to undermine competition. It went one step further and cleverly forbade ‘all unfair methods of
competition’ and placed the newly created Federal Trade Commission as the primary institution
to undertake investigations of industry and to initiate proceedings against companies that were
engaged in unfair practices. These American anti-trust laws had set the scene and direction of the
US tradition and one that found degrees of reflection in Europe after 1945?
THE EU REGIME
The US model of anti-cartel policy (McGowan, 2010) had certainly differed in style, substance
and approach to almost anything that had existed in Europe until 1945. It is certainly tempting to
assume that US antitrust is the model upon which all later policies are based. While there are
varying degrees of truth in this assumption, it is important to remember that Europe did have
experience of antitrust prior to 1939 (Gerber, 1998). The evolution of competition policy after
1945 was shaped by domestic considerations (see Cini and McGowan, 1998) and historical
traditions and factors such as the role of the state, and cultural attitudes towards industry
impacted upon development as much and if not more than external policy borrowing.
That said, the US regime certainly served as a reference point, albeit with differing
degrees of strength, for the emerging European antitrust regimes. This was true in the West
German case (McGowan, 2010; Sturm,1996) but its presence was particularly felt in the crafting
of the ECSC’s competition rules when US officials helped to advise the Europeans about the
desirability of competition provisions. Many of these European had been trained as antitrust
lawyers in the US and their contacts and experiences facilitated the shaping of the ECSC’s
antitrust rule (Buch-Hansen, 2009; Seidel, 2008 – Leucht, 2009). Agreement on the later EEC
10
antitrust provisions provided for lengthier discussion and deliberations between the EEC6 (and
especially France and West Germany) given the much broader scope of the economic sectors
(with the notable exception of agriculture) covered within the Treaty of Rome’s before
agreement on the rules and enforcement procedures was finally reached (McGowan, 2010).
Regulation 17(62) contained the operating rules for combating cartels and abusive monopolies
and served as procedural template for the next fifty years. Experience of European antitrust from
the ECSC to the EEC and beyond has been covered elsewhere (see Cini and McGowan, 2009)
and it is not the intention to recap here. Nevertheless, certain points should be made.
Table 1
Europeanization and Americanization Drivers: The Four Incremental Phases of the Commission’s
Anti-Cartel Engagement:
Pre-Phase – Strong US influence in ECSC competition provisions
Period 1: 1962-72, Surveying the Terrain and the `Phoney War’
(Reg17/62, move to own initiative investigations, first fines)
Commission style: Hesitant, patchy response but growing signs of activity
Period 2: 1973-84, Forays and Stalemate
First use of dawn raids, further cartels discovered, crisis cartels
Commission style: still hesitant and some retrenchment
Period 3: 1985-98, Seizing the Initiative
Fines increasing, Leniency Programme
Commission style: Leadership, comes of age, increasingly active
Period 4: 1999-present, Modernisation and Combat (Decussis Mirabilis)
Reg1/2003, Decentralisation, Modernisation, revised Guidelines for Setting Fines, New Settlement
Procedure, Green and White Papers on Private Actions, Internal reorganization, Criminalisation
Commission style: Pro-active and increasingly innovative
The objectives and aims of both EU and US regimes may look pretty similar in so far as what
they target but the manner in which both have pursued the maintenance of competition has
11
differed. The EU system was constructed as an administrative based system that centred on the
Commission which operates as a quasi-autonomous institution that determined day to day
decision making in cartel cases without any direct interference from either the Council or the
European Parliament. The EU regime has not contained any separation of powers as the
Commission has operated as investigator, judge, jury and executioner. It has also been open to more
discretion and politicisation and the use of non-competition criteria in cases.
The narrative of EU anti-cartel policy has been one of incremental growth as the
Commission gained experience and confidence and backed by an accumulating case-law, highly
competent Commissioner and an in-tune neoliberal mood gradually emerged from the mid 1980s
and came to be recognized as one of the world’s leading and formidable regulators (Add ref).
DG Competition’s reputation intensified further when the machinery of EU cartel policy was
overhauled by Regulation 1/2003 from May 2004. This new regulation replaced Regulation17/62
and both modernised the antitrust rules and decentralized enforcement of both Articles 81 and 82
to the NCAs. It also facilitated greater co-ordination between the European competition agencies
through the creation of the ECN. In short, it ensured closer co-operation and exchanges between
the Commission and the NCAs who effectively became agencies of the former, but could such
developments find replication at the international level in discussions of competition policy
development?
ANTITRUST ENTANGLEMENT?
Cartel policy forms one aspect of a much larger picture of EU/US transatlantic relations and one
in which the US has been actively encouraged developments in Western Europe from the
Marshall Plan, to the creation of NATO and the process of European integration. American
influence was particularly evident in the framing and writing of the competition policy
provisions of the ECSC (McGowan, 2010) both indirectly as American officials provided the
guidelines and template, encouragement and advice and directly as a number of US trained
antitrust Europeans used their experience of the US tradition to broadly shape the structure of the
ECSC rules. To this extent we can positively identify the Americanisation of European anti-trust
from the outset.
Let’s state quite clearly that there is divergence between the regimes. It is not difficult to
locate such areas in terms of objectives, administrative procedures and economic analysis. The
differences are clearly articulated in the objectives of the US and EU competition regimes. Whereas
the former is primarily been concerned with securing efficient markets and is based on a more
laissez faire approach the two primary goals of the EU system have been market (EU) integration
and European integration. To this end the latter has enabled the possible consideration of noncompetition criteria in case decisions. The EU regime has been subject to degrees of political
interference from some member states and the reality of a more active member involvement of trade
unions. The use of criminal sanctions in the US and not EU and the former’s ability to pursue
private actions against companies only seem to signify major differences.
Table 2.
The Eighteen largest Fines imposed by the Commission on Individual Companies for Cartel
Membership
12
Case Name and
Economic Sector
Year fine
imposed
Number of
Cartel
Members
Amount of Fine (million euro)
Car Glass
Gas
Lift and Escalators
Vitamins
Gas Insulated
Switchgear
Candle Waxes
Synthetic Rubber
Flat Glass
Plasterboard
Hydrogen peroxide
Methacrylates
(Acrylic Glass)
Haperdashery/Zip
Fasteners
Copper Fittings
Producers
Carbonless Paper
Plastic Industrial
Bags i
Dutch Brewers ‘
Bitumen Netherlands
Chloroprene Rubber
2008
2009
2007
2001
2007
4
4
5
4
11
1,383.8
1.106
992.3
855
750.7
2008
2006
2007
2002
2006
2006
10
6
4
9
5
676.0
519
486.9
458.5
388.1
344.5
2007
7
328.6
2006
11
314.7
2001
2005
6
16
313.6
290.7
2007
2006
2007
4
14
6
273.7
266.6
247.6
Source: European Commission website at at
http://ec.europa.eu/competition/cartels/overview/faqs_en.html on 12. February 2010
On administrative procedures it is often assumed that the EU system is much more
bureaucratic and less transparent than its American counterpart and there has been criticism over the
powers and roles of the European Commission and its multiple roles as judge, jury and executioner.
The way cases both regimes have handled the economic analysis of individual cases has also
facilitated notions of divergence and especially until the late 1990s the much lower numbers of
trained economists in DG Competition (with the exception of the merger unit). DG Competition
was largely the domain lawyers and consequently the Commission judgements were more often
than not based on legal argument than economic analysis. Some high profile cases and clashes on
both sides of the Atlantic over the legality of EU state aid for Airbus and impact of mergers have
often illustrated the differing perceptions but also overplayed the differences.
In short, it is easily possible to identify issues of conflict, distinctiveness and divergence
between the two regimes on both sides of the Atlantic. Yet, are these aspects just as stark as they
initially appear and indeed the best way of understanding developments is to change the language of
seeming extremes and refer instead to entanglement. This concept it is argued makes greater sense
13
and gives a clearer picture of realities of the ways in which the EU and US regimes interact with one
another.
Such entanglement is evident in the realisation of enhanced interactions in the form of the
series of EU/US agreements of 1991, 1998 and 2002 and the formal creation of the international
Competition Network (ICN) in 2001 as a vehicle or maintaining regular contacts and addressing
practical competition concerns as well as exchanging norms and values. The formal bilateral
agreements are arguably the first steps at facilitating greater co-operation and hoping for the sharing
of information. It is important not to overstate the degrees and limits of such operations and there
certainly have been difficulties over specific cases. Nevertheless, the overall experience has been
positive and progress has certainly been made on the merger front even if cartels are still proving to
be a little more problematic when it comes to sharing information. Ultimately, the pursuit,
condemnation and punishment of cartels (as recognized by a series of OECD reports) ensures cooperation and this involves learning. In order to explore the impact of Americanization on cartel
policy this paper now turns to address two key areas; namely the EU’s adoption of its own leniency
programme and its ‘drift’ towards criminalization.
LOCATING THE DYNAMICS OF AMERICANIZATION IN EU CARTEL POLICY IN
TWO CASE STUDIES: LENIENCY AND CRIMINALISATION
Leniency
The adoption of the EU’s first Leniency Notice in 1996 illustrates how the Commission is
attempting to hunt cartels. Although novel as far as European competition experience is
concerned the leniency initiative reflected practice that had been established by the Antitrust
division of the Department of Justice in the United States in 1979. Both programmes were
specifically designed to destabilise cartels which is predicated on inducements and sweeteners in
the form of substantially reduced fines and even total immunity from fines if cartel members
break cover and inform on their colleagues. The world of the cartel has always been one of
inherent instability and cartel members persistently keep a check on their partners and their pricing
arrangements through regular meetings in order to ensure that no-one is breaking their terms. Often
one member acts as the lead cartel and is charged with moniroing the others. It is scarcely surprising
that few cartels survive for any more tan five years given the strains and tensions. Complete
immunity under the leniency programme is only available for the first informant who provides
sufficient information for the Commission to launch an inspection of premises and if they
continue to co-operate throughout the investigation. For example, in 2003 a Japanese firm
(Chrisso Corporation) was granted complete immunity when it brought to the Commission’s
attention a price-fixing and market allocating cartel in Sorbates (a chemical preservative that is
used to prevent the emergence of mould and other bacteria in foods and beverages) market.12
12
This infringement had been operation between 1978 and 1996 and the Commission fined four companies the sum
of €134.4 million. The German giant Hoechst was handed the bulk of this fine (some €99 million). Another
Japanese company (Takeda Chemical Industries Japan) was also granted total immunity from a 2002 decision when
it alerted DG COMP to the existence (from 1998-1998) of a cartel in the Nucleotides (used to flavour foodstuffs)
market.
14
Any applications for immunity which do not provide enough information are denied and
there were five such cases in 2005. The reality of immunity for only one company often
intensifies the incentive to provide evidence before one of the other cartel members does and
enhances further cartel instability. Companies which do not meet the criteria for complete
immunity can also hope to benefit from a reduction in the overall fine if they can contribute to
the DG COMP’s investigation. Whereas experience of the first programme displayed
considerable reluctance towards this Commission initiative (Reynolds and Anderson, 2006) the
policy is now proving very effective and most cartels that are now being discovered and
unravelled by the Commission following the receipt of insider evidence. Indeed, whereas the
Commission received 80 applications (both for total immunity and a reduction in fines) in the
period from 1996 to 2002 it is interesting to note post the 2002 Notice the rise in such requests to
165 between 2002 and 2005. 51 immunities were granted in the period from 2002 to December
2005. This rise was greeted by DG COMP as a sign of the policy’s effectiveness.
The publication of the most recent Leniency Notice in December 2006 (OJ C 298) has
reinforced the fundamental shift in business’ approaches to, and growing acceptance of the
leniency initiative. This revised Notice represents another significant step to both detect and
terminate hard core cartel activity. Hard core infringements (that divide markets, fix prices
and/or apply conditions of sale) are deemed under Article 81 to constitute infringements even
where in theory they might be able, but in practice cannot make a case for efficiency benefits.
Interestingly, in agreements where there are no specific hardcore clauses can still fall foul of the
EU rules if they have the effect of restricting actual competition.
The 2006 Notice clarifies for companies the information the Commission requires for an
undertaking to benefit from immunity as well as providing greater guidance on how to obtain a
reduction in fines. According to the Commission the leniency programme continues to play a
crucial role in DG COMP’s detection efforts and continues to entice more `whistle blowers’ to
come forward. However, it has been suggested that most of the cartels detected through the
leniency programmes would probably have broken up within a couple of years in any case
(Lowe, 2007). Such often economic assessments should not be allowed to detract from serious
nature of cartels. The fortunes for the companies who have opted to co-operate have been mixed.
In the very first decision stemming from the 2002 Notice in Raw Tobacco Italy the original
whistleblower’s hope of conditional immunity was dashed when it was discovered that it
(Deltafina) had actually pre-alerted its competitors/cartel members of the pending Commission
investigation. Nevertheless, Deltafina was deemed to have provided sufficient information and
warranted a 50 per cent reduction. The Industrial Bags case began likewise with information
from a cartel member (British Polythene Industries) and in the final Commission judgement saw
an additional increase in the level of fine for one of the companies involved, Bischof and Klein,
for actually being caught trying to destroy a document during the investigation. In Bitumen
(2006) British Petroleum came forward as a whistle blower and was granted immunity from a
Commission fine for clear cartel activity among oil producers. In this case the highest individual
fine fell on Shell (€80 million) and provided further evidence of the Commission’s determination
to punish such habitual cartel offenders (given Shell’s earlier involvement in the PVS and
Polypropene cases) more severely. These developments owe much to the role and ambitions the
European regulator.
15
In general terms, a leniency policy is a set of rules which gives more lenient treatment, even total
immunity, from penalties in return for confessing wrongdoing to the relevant authority. It is now
widely used in cartel policy as an inducement to cartel members to break cover and inform the
antitrust/competition authorities about the existence of the cartel. The introduction of leniency
provisions into EU cartel policy in 1996 is a major example of the EU embracing a technique
that had already been extensively tested by the US antitrust authorities. It did not imitate the US
provisions; rather, it introduced its own brand of the policy, then adapted it over time learning
both from developments in the US, from its own experience and more widely (eg OECD).
There are now certain well recognised prerequisites for a leniency policy to successfully
destabilise cartels. These can be analysed in terms of the classic prisoners’ dilemma framework
(ref). There must be a big prize for coming forward – ideally complete immunity from a large
penalty. The offer must be much better than for informants who come forward later (if they are
rewarded at all) to encourage a race to be first. There must be certainty about the reward on offer
and transparency in terms of how to qualify (ref). Cartels can be destablised and deterred through
leniency policy as it promotes tension amongst (would- be) cartel members; the evidence
provided will also facilitate detection and successful prosecution. The relative weight given to
different aims of leniency policy – deterrence, detection and successful prosecution - will be
reflected in the way in which different provisions are balanced.
Leniency policy does not operate in isolation; its success will depend on the regime’s whole
package of measures affecting cartelists – including the types of penalties imposed by the
antitrust authorities, whether corporate or individual and their severity, the possible interactions
with other penalties such as private actions for damages (the ‘sticks’) and the scope for reducing
penalties outside leniency arrangements for example by plea bargaining (other ‘carrots’) as well
as effects on the likelihood of penalties being incurred in other regimes .
 Decentralised experimentation in US (Muris framework)
The application of leniency policy to cartels can be traced back to the initial example given by
the introduction of a so called Amnesty Programme by the US in 1979 – or 1978 (check). Under
this programme, firms that participated in illegal cartels and came forward with evidence were
eligible to receive immunity from criminal prosecution (‘amnesty’) as long as no investigation
had begun. This early discretionary policy had little impact but was widened in 1993 to make
immunity automatic for a firm reporting a cartel that was not being investigated at the time and
possible even if the cartel was already under review by the authorities. Individual immunity was
introduced for directors and employees coming forward to provide evidence with the cooperating
firm and a specific leniency policy was introduced in 1994 as a counterpart to personal sanctions
available under the US system.
The increased scope of the leniency programme and reduction of uncertainty about the grant of
immunity substantially increased the effectiveness of the policy. In 2000, Scott Hammond, the
Director of DoJ’s Criminal Enforcement Antitrust Division identified the policy as ‘
unquestionably, the single greatest investigative tool available to ant-cartel enforcers (Hammond,
2000). The tool was honed further in the light of experience, notably with the addition of further
inducements to participate in both 1999 and 2004. In 1999, an ‘amnesty plus’ provision was
introduced allowing a firm that is not first in coming forward in one market but provides
evidence of a cartel in a second to receive amnesty in the second plus more favourable treatment
in any plea bargain in the first. From 2004, successful leniency applicants also benefited from
16
single instead of treble damages and concessions as regards their liability in follow on private
damages actions.

Voluntary opting in (Muris framework)
Before 1996, the EU had rewarded cooperation in a few cartel cases by reducing fines or not
imposing them but the introduction of a formal leniency policy was a new departure in EU cartel
policy. While it was clearly influenced by the US example, there were significant differences
between the newly introduced EU system of leniency and the features of the revised US policy
which was so effective at the time. There were also important differences in other aspects of the
antitrust regime impinging on the introduction of leniency policy, notably the lower penalties and
lack of personal sanctions for cartel activity as well as absence of plea bargaining arrangements.
Under the EU system, rather than automatically rewarding the first and only the first firm to
apply for immunity with the possibility of immunity even when an investigation had started, as
in the successfully revised US policy, all rewards were discretionary and the highest (a reduction
in fines of 75-100%) was only possible if the investigation had not begun. Others could receive
rewards under the leniency provisions with different categories of reduction designed to reflect
the value of the material and timing of evidence supplied by the firm. The threshold for
cooperation was relatively low compared with the US system; a firm could benefit from a
reduction of 50-70% of the fine in the EU if it provided ‘…evidence which materially contribute
to establishing the existence of the infringement’ after the investigation had started. This reduced
the incentive to be first compared to the US system in operation at the time. The Commission
had discretion both over whether to give a reward to applicants and how much, and this
uncertainty about the scale and likelihood of the reward undermined the attractiveness of
confession.
The possibility of reductions in fine as well as complete immunity in the EU will in part have
been due to the absence of established plea bargaining arrangements in the US. These allowed
those who did not benefit from immunity to obtain a reduction in penalties outside the certainty
of the leniency programme. It is arguable that the design of the EU policy also reflected more
concern with obtaining the evidence needed for successful prosecution of cartels whereas the US
gave priority to destabilising them by focusing on incentives for the first to inform.
The evidence suggests (Stephens) that as in the US, the initial leniency notice was only of
limited success in inducing firms to reveal active cartels.
The adoption of a new Leniency Notice in 2002 brought the EU system closer to the US. It
increased the incentives for firms to apply and decreasing the uncertainty among potential
applicants. Immunity became automatic whether or not the investigation had begun as long as
the firm had not coerced other firms to join or stay in the cartel. This was somewhat more
generous than US provisions where and a lesser cooperation requirement was introduced – the
evidence had to be at least ‘sufficient’ to enable the Commission to launch an investigation
rather than ‘decisive’. Reductions in fine were also possible for evidence providing significant
‘added value’ to the investigation and were related more closely to the applicant’s position in the
leniency queue.
17
In 2006, leniency policy was again revised while retaining the possibility of full immunity for the
first firm to come forward and the previous scale of reductions in fines available to later
informants. One important change was the introduction of a ‘marker system’, reflecting some
features of the ‘proffer’ system which had been operating successfully in the US for some time.
It encourages an immunity applicant by allowing it to secure first position in the ‘queue’ without
providing all its evidence immediately. At the same time, the notice also aims to increase
transparency in various ways, including clarifying the term ‘genuine cooperation’, specifying the
type of information which is will be considered relevant and raising the threshold or evidence
required for both immunity and fine reductions.
The frequent revisions to leniency policy in both the US and EU reflect a process of
experimentation and learning. The EU policy operates in a very different environment, especially
in terms of the available cartel sanctions but was clearly inspired by the US example. Rather than
incorporate automatic immunity straight away, as in the successfully revised US policy in place
at the time, the EU also experimented initially with a discretionary (and relatively ineffective)
policy while building up confidence and support for automatic provision. In both regimes, the
revisions have primarily been to reduce uncertainty and increase transparency, with clear
evidence of the EU gradually emulating features of the US system.
Other influences – eg OECD
There are still differences however. One example is the absence of an amnesty plus provision in
EU policy and why. Others
Europeanisation – eg model leniency agreement
Criminalisation
At first glance it may seem that the issue According to Article 23(5) of Regulation 1/2003
European Commission decisions ‘shall not be of a criminal nature’ which at first glance seems to
suggest of the criminalization of EU antitrust law might be a non-starter.13 However, upon closer
inspection and appreciation of the EU regime it seems that there can be little doubt that the EU
competition regime is being pulled closer to identifying cartel behaviour as a criminal intent and
thus, we are seeing the `creep’ of criminalization (Davy, 2008) Essentially recourse to the
criminalization (or criminal enforcement) of antitrust adopts a moral tone that not only are such
acts wrong but that individuals can be targeted and can in turn be imprisoned for deliberately
engaging in anti-competitive practices. Evidence of the encroachment of criminalization of
antitrust into the domestic antirust arenas is already evident in various member states such as
Finland, Ireland and the United Kingdom. Ultimately, greater NCA engagement provides fro
greater entanglement and produces largely inescapable path choices. The criminal offence route
provides another and arguably the best means to enable the pursuit, detection and ultimate
deterrent for anyone intending to engage in cartel offences.
The significance of this drift towards the criminalisation of cartel offences for the
development of the Union should not be underestimated for two reasons. Firstly, it would move
13
Council Regulation 1/2003 on the implementation of the rules as they apply
to articles 81 and 81 of the Treaty.
18
the EU system away from the current civil or administrative enforcement model and secondly,
because it firmly provides the EU with criminal powers and sanctions (that only exist within the
third pillar of Police and Judicial Co-operation in Criminal Matters as re-modified by the 1999
Treaty of Amsterdam. Nowhere in the EU treaty base is there a definition of what constitutes
criminal enforcement and leads us to consider what it is. To understand the pull of
criminalisation we need look no further than practices in the USA, but what is meant by
criminalization, what does it entail, does it matter if antitrust enforcement is criminalized at
member state level and not at the EU level, can it be adopted at the EU level and if so, how does
its adoption change the institutional structures and procedures of EU antitrust.
The US model created by the Sherman Act built in criminal sanctions and it is interesting
if somewhat paradoxical that the US incorporated an approach that had originally be located
within the laws governing trade malpractices in Europe in the sixteenth and seventeenth
centuries. Criminal enforcement itself has, according to Wils (Wils, 2008; 156-8) a number of
distinguishing and very much interrelated characteristics. These encompass the use of
imprisonment for individuals (which does not occur under a civil or administrative system). In
this instance penalties for transgressing the competition rules are often directed under criminal
enforcement regimes more against individuals rather than corporate identities where it is argued
that the personal repercussions of anti-competitive activity has the most lasting impact. Such
criminal sanctions send out a clear signal of intent about the consequences for all other business
players than ever an administrative system could ever hope to achieve. Indeed the aim behind
criminal law is not to identify particular price bands for differing levels of anti-competitive
behavior but to prohibit it altogether. It is also assumed that criminal offences usually arise when
a deliberate course of action in contravention of existing law has taken place and is not the result
of negligence or accidental behaviour. Criminal intent is the starting point for the consideration
of criminal penalties under US law and price fixing arrangements are very much seen as
deliberate strategies to are thus depicted as immoral and even theft. Any moves towards criminal
enforcement also have repercussions for the architecture of competition governance itself. In the
first place it is normally accompanied by the granting of stronger investigative powers to the
appropriate competition authorities and secondly, sees the inclusion of stronger procedural
protection to avoid false conviction. Moreover, and an intriguing issue for the EU regime,
criminal enforcement regimes normally though not always operate on clearly demarcated
territories. In other words the decision-making functions are carried out by actors who are
separated from those conducting the investigations and prosecutions.
The practice of criminalizing antitrust enforcement is the cornerstone of the US antitrust
tradition and practices since the Sherman Act. In practice this approach has translated into the
imposition of fines on companies and individuals and also seen the use of imprisonment as a
weapon within the US system. Both weapons have been `modernized’ in recent decades in so far
as the maximum levy on firms had increased to $100 million by 2004 in conjunction with the
rise in the actual length of prison sentence which has increased from the original one year term in
1890, to three years after 1974 and to 10 years after 2004.14 Although the first prison sentence
was not actually handed down until 1959 this route has been pursued with greater vigour and
14
For details of the original fines and prison terms see the Sherman Act,
ch.647, 26 Stat 209. It is interesting to note that a number of US federal
states had already adopted a criminal stance on cartels that pre-dated the
Sherman Act.
19
determination since the early 1990s and primarily for engaging in cartel activities.15 The trend
has already been identified who records how over 75 years of imprisonment had been imposed
on individuals in the four years up to 2004.
Within the context of the EU the European Commission was and is empowered to levy
fines (Article 23(2) of Regulation 1/2003) on undertakings (that is economic units with legal
personality) for violations of Articles 81 and 82 but not on individuals. Interestingly criminal
intent is not an issue and Regulation 1 specifically states that such fines `shall not be of a
criminal law nature’. EU practices urIot thspecif breaches cartel activity Fines have Under Ec
comepirtion
CONCLUSIONS (to follow)
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APPENDICES
Table 2
The Ten largest Fines imposed by the Commission on Individual Companies for Cartel Membership
Company
Saint Gobain
EON with Ruhrgas
GDF Suez 1
ThyssenKrupp
Hoffmann-La Roche
Siemens
Pilkington
Sasol Limited
Fine (euros)
896 000 000
553.000.000
554.000 000
479 669 850
462 000 000
396 562 500
370 000 000
318 200 000
Year
2008 (Car Glass)
2009 (Gas)
2009 (Gas)
2007 (Lifts and Escalators)
2001 (Vitamins)
2007 (Gas Insulated Gear)
2008 (Car Glass)
2008 (Candle Wax)
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ENI SpA
Lafarge SA
BASF AG
Otis
272 250 000
249 600 000
236 845 000
224 932 950
2006 Synthetic Rubber
2002 (Plasterboard)
2001 (Vitamins)
2007 (Lifts and Escalators)
Source: European Commission website at
http://ec.europa.eu/competition/cartels/overview/faqs_en.html on 12. February 2010
Table 3
Table 4: Fines Imposed for Article 81 Violations, 1990-2009
YEAR
1990-1994
1995-1999
2000-2004
2005-2009 (Nov)
TOTAL
AMOUNT IN €
539.691.550
292.838.800
3,462.664.100
9.762.450.100
14, 057.653.150
Source: DG Competition website http://ec.europa.eu/competitionand sourced on 10.February
2010
Article 101
(ex Article 81 TEC)
1. The following shall be prohibited as incompatible with the internal market: all agreements
between undertakings, decisions by associations of undertakings and concerted practices which
may affect trade between Member States and which have as their object or effect the prevention,
restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
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(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby
placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with
the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:
- any agreement or category of agreements between undertakings,
- any decision or category of decisions by associations of underta
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