Nikoleta Dimitrova

The European Commissions Fight Against

Cartels in the European Economic Area
Maastricht University
School of Business & Economics
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Maastricht,
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November 12th 2016

Dimitrova, Nikoleta
Economics and Business
Economics

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Short Paper (Task 1)

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Competition offers consumers and businesses fair and competitive economy which brings
balance, innovation, variety, consumer satisfaction, and profits. Among others, the European
Commission of the European Union takes actions to protect that competitive surrounding in
the European Economic Area by sanctioning businesses for a) Anticompetitive Practices

Nikoleta Dimitrova
(Cartels), and b) Abuse of Dominance (Monopolies). This paper only looks into the former
and aims to explain what this procedure means for the businesses, exemplified by a real
Commission antitrust case the Steel Abrasives case.1
The European companies Ervin, Winoa, Metalltechnik Schmidt, Eisenwerk Wrth and
Pometon were reported to the European Commission of comprising a steel abrasives 2 cartel.
Due to the unstable price of the essential metal scrap from which their final product is made
both in regards of fluctuations and variance among the EEA countries, and the energy crisis
of 2008, the companies at stake introduced few illegal surcharges (the scarp surcharge or
scrap cost variance and the energy surcharge/complement), and agreed not to compete
against one another on price with respect to individual customers.3
In such a case, Directorate-General Competition of the European Commission may start
unexpected investigations for suspected violations of EU antitrust law (namely Art.101 TFEU
and Art.53 EEA Agreement). The first step in them is that a Statement of Objections is sent to
each party that informs them of the objections raised against them and gives them access to
the Commission's investigation file, possibility to reply in writing, and request an oral hearing
to present their comments on the case before representatives of the Commission and national
competition authorities. Meanwhile, the Commission is collecting evidence and once
infringement is established, it can issue a decision prohibiting the conduct and fining the
company up to 10% of its annual worldwide turnover.
In the Steel abrasives case, Ervin was the applicant to the Commission revealing the
existence of the cartel, therefore, it benefited from an immunity under the EU Leniency
policy4 and was not sentenced to any fine. The rest of the companies, apart from Pometon,
decided to settle with the Commission (to plead guilty of illegal colluding) which reduced

Steel abrasives case 39792, Retrieved from: http://ec.europa.eu/competition/elojade/isef/case_details.cfm?

proc_code=1_39792

Steel abrasives are loose steel particles used for cleaning or enhancing metal surfaces in the steel, automotive, metallurgy
and petrochemical industries

European Commission (April 2014) Antitrust: Commission fines producers of steel abrasives 30.7 million in cartel
settlement. Retrieved from: http://europa.eu/rapid/press-release_IP-14-359_en.htm

Leniency notice 2006

Nikoleta Dimitrova
their fines with 10%.5 Pometon decided to go through the Standard Cartel Procedure by
denying its participation, and was found guilty at court which resulted in a full fine.
The total fines imposed are as follows:
Reduction under
the Leniency
Notice

Reduction under the

Settlement Notice

100%

10%

Winoa (France)

10%

27 565 000

Metalltechnik Schmidt
(Germany)

10%

2 079 000

Eisenwerk
(Germany)

10%

1 063 000

Ervin (US-UK)

Wrth

Total

Fine ()

30 707 000
6

Once a decision is pronounced, the manner in which fines are imposed is regulated by the
2006 Guidelines on the methods of setting fines imposed pursuant to Art.23(2)a R 1/2003
(which substituted the 1998 Guidelines), and according to them, fines must be high enough as
to grant deterrence of future offences. The existing rules on leniency, nevertheless, continue
to apply unaffected by the Guidelines. There are three main changes in the 2006 Guidelines:
the introduction of an entry fee, strengthening the link between the fine and the duration of
the infringement, and an increase of the fine for repeat offenders.
The entry fee means that the Commission may add to the amount as calculated above a sum
equal to 15% to 25% of the yearly relevant sales regardless of the length of the infringement.
Moreover, fines are now based on a percentage up to 30% of the yearly sales in the relevant
sector for each company participating in the infringement multiplied by the number of years
of participation in the infringement. Lastly, instead increasing the fine by 50% where the
undertaking has been found to have been previously involved in one or more similar
infringements like before 2006, the new Guidelines suggested that: the Commission will now
consider not only its own precedents, but also those of the National Competition Authorities 7;
5 European Commission Settlement Procedure for Cartels Settlement Notice June 2008
6 European Commission (May 2016). Antitrust: Commission fines Pometon 6.2 million for participation in steel abrasives
cartel. Retrieved from: http://europa.eu/rapid/press- release_IP-16-1907_en.htm

7 http://ec.europa.eu/competition/nca/index_en.html

Nikoleta Dimitrova
also, the increase may be up to 100%, and finally, any prior infringement is a justification of
an increase of the fine.8 In addition, citizen are allowed to claim damages from the companies
if affected by the infringement.9 These changes send companies three clear signals Dont
break the anti-trust rules; if you do, stop it as quickly as possible, and once youve stopped,
dont do it again.10
In conclusion, cartels are only good for the cartelists and stand in contrast with the European
Economic Area and the European Unions values for a single, equal, democratic and tolerant
market, with constructive competition and innovation, therefore, the European Commission is
putting a lot of efforts to curb these practices by punishing them as strict as possible with
both retributive and deterrence purpose. A central document in this cause is the 2006
Guidelines on the methods of setting fines imposed and key factors are the duration of the
infringement, the amount of the illegal profit, and the prior record.

8 European Commission (June 2006). Competition: Commission revises Guidelines for setting fines in antitrust cases.
Retrieved from: http://europa.eu/rapid/press-release_IP- 06-857_en.htm?locale=en

9 The Directive on Antitrust Damages Actions - http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv

%3AOJ.L_.2014.349.01.0001.01.ENG

10 European Commission (June 2006). Competition: Commission revises Guidelines for setting fines in antitrust cases.
Retrieved from: http://europa.eu/rapid/press-release_IP- 06-857_en.htm?locale=en

Nikoleta Dimitrova
List of References:
European Commission (June 2006). Competition: Commission revises Guidelines for setting
fines in antitrust cases. Retrieved from: http://europa.eu/rapid/press-release_IP- 06857_en.htm?locale=en
European Commission (April 2014) Antitrust: Commission fines producers of steel abrasives
30.7 million in cartel settlement. Retrieved from: http://europa.eu/rapid/press-release_IP14-359_en.htm
European Commission (December 2014) Antitrust: Commission sends Statement of
Objections to Pometon for suspected participation in a steel abrasives cartel. Retrieved from:
http://europa.eu/rapid/press-release_IP-14-2361_en.htm
European Commission (May 2016). Antitrust: Commission fines Pometon 6.2 million for
participation in steel abrasives cartel. Retrieved from:
http://europa.eu/rapid/pressrelease_IP-16-1907_en.htm