Cartel Cases and the Cartel Enforcement Process in the European Union 2001–2015

• Author: Kai Hüschelrath,Michael Hellwig
• DOI: 10.1177/0003603X17708357
• Date: 01 June 2017
• Published date: 01 June 2017
• Subject Matter: Articles

Article

Cartel Cases and the Cartel

Enforcement Process in the

European Union 2001–2015:

A Quantitative Assessment

Michael Hellwig* and Kai Hu

¨schelrath

**

Abstract

We provide a comprehensive quantitative assessment of cartels and the related cartel enforcement

process in the European Union (EU) from 2001 to 2015. In a first step, we present a detailed char-

acterization of all cartel cases decided by the European Commission (EC) with respect to various

criteria such as the number of involved firm groups, cartel market shares and market share asym-

metries, involved industries, affected countries, types of infringement, types of cartel breakdown, as

well as cartel duration. In a second step, we complement this cartel-based analysis with a quantitative

assessment of the public cartel enforcement process in the EU, subdivided further into its duration,

types of cartel detection, the leniency program, the settlement procedure, overall fines imposed, and

the conclusive appeals process with the General Court (GC) and the European Court of Justice (ECJ).

Keywords

competition policy, cartels, collusion, enforcement, European Union

Fighting cartels is one of the most important areas of activity of any competition authority and a clear

priority of the Commission. Cartels are cancers on the open market economy, which forms the very basis of

our Community. By destroying competition, they cause serious harm to our economies and consumers. In

the long run cartels also undermine the competitiveness of the industry involved, because they eliminate the

pressure from competition to innovate and achieve cost efficiencies.

—Mario Monti, European Commissioner for Competition (1999–2004)

1

*ZEW Centre for European Economic Research and MaCCI Mannheim Centre for Competition and Innovation, Mannheim,

Germany

**ZEW Centre for European Economic Research, MaCCI Mannh eim Centre for Competition and Innovation, Mannheim,

Germany; and University of Mannheim, Mannheim, Germany

Corresponding Author:

Kai Hu¨schelrath, ZEW Centre for European Economic Research, D-68034 Mannheim, Germany.

Email: hueschelrath@zew.de

1. Speech on “Fighting Cartels Why and How? Why Should We Be Concerned with Cartels and Collusive Behaviour?” at the

3rd Nordic Competition Policy Conference, Stockholm (Sep. 11, 2000), SPEECH/00/295.

The Antitrust Bulletin

2017, Vol. 62(2) 400-438

ªThe Author(s) 2017

Reprints and permission:

sagepub.com/journalsPermissions.nav

DOI: 10.1177/0003603X17708357

journals.sagepub.com/home/abx

I. Introduction

Among the few things most economists would likely agree on is the social harmfulness of cartels.

Defined as a “group of firms who have agreed explicitly among themselves to coordinate their

activities in order to raise market price ...,”

2

a perfectly functioning cartel—involving all firms in

the market and referring to substitute products—is not only expected to cause static losses in consumer

and overall welfare due to elevated monopoly prices but is also likely to generate dynamic inefficien-

cies in the form of, for example, reduced incentives for product or process innovations. As Sir John

Hicks once put it, “The best of all monopoly profits is a quiet life.”

3

As cartels—in contrast to mergers—usually do not create any kind of benefits to society which

could be traded off against their anticompetitive effects, they are a prime example for a per se

prohibition reflected in many antitrust legislations around the world, the European Union (EU) being

no exception. At the latest since the tenure of Mario Monti from 1999 to 2004, all European Commis-

sioners for Competition have clearly committed to the fight against cartels as top priority in European

competition policy. While Neelie Kroes (2004–2010) reiterated that one of her key objectives was not

only to “ ... merely destabilize cartels. I want to tear the ground from under them,”

4

her successor,

Joaquin Almunia (2010–2014), reinforced the adamant stance: “The Commission will continue its

relentless fight against cartels.”

5

Consistent with these clear general statements of former Commissioners on the importance of the

fight against cartels, the European Commission (Commission or EC) was very active in both refining

and extending EU cartel policy tools. In particular, since the beginning of the new century, the

Commission implemented two revisions of the leniency program, completed a major reform of the

fine guidelines, introduced a settlement procedure, intensified cooperation between competition

authorities in the fight against particularly international cartels, and—finally yet importantly—pro-

moted the private enforcement of anticartel laws.

From an academic perspective, the identified policy changes together with the availability of

detailed cartel- or even firm-specific data—published by the Commission, the General Court (GC),

and the European Court of Justice (ECJ) as part of their respective decisions or judgments—provide an

ideal environment for conducting quantitative research. However, while both a significant number of

specific econometric studies

6

—for example, evaluating the Commission’s leniency policy or investi-

gating the determinants of cartel duration—as well as more survey-type assessments

7

exist, a

2. LYNNE PEPALL,DANIEL RICHARDS,&GEORGE NORMAN,INDUSTRIAL ORGANIZATION:CONTEMPORARY THEORY AND PRACTICE 345

(1999).

3. John Hicks, Annual Survey of Economic Theory: The Theory of Monopoly,3E

CONOMETRICA 1, 8 (1935).

4. Speech on “Tackling Cartels—A Never-Ending Task” at an Anti-Cartel Enforcement: Criminal and Administrative Policy

Panel Session, Brasilia (Oct. 8, 2009), SPEECH/09/454.

5. Speech on “First Cartel Decision under Settlement Procedure—Introductory Remarks” at the European Commission,

Brussels (May 19, 2010), SPEECH/10/247.

6. Aiming at increasing the readability of the article, we refrain from providing reviews of the rather large theoretical and

empirical literature on cartels and cartel policies in various jurisdictions. For detailed assessments, see Martin Carree, Andrea

Gu

¨nster, & Maarten Pieter Schinkel, European Antitrust Policy 1957-2004: An Analysis of Commission Decisions,36R

EV.

INDUS.ORG.97(2010);andKaiHu

¨schelrath & Ju

¨rgen Weigand, Fighting Hard Core Cartels,in THE INTERNATIONAL

HANDBOOK OF COMPETITION 307 (2nd ed., Manfred Neumann & Ju

¨rgen Weigand eds., 2013).

7. To the best of our knowledge, a comprehensive quantitative assessment of EU cartels and the cartel enforcement process does

not exist. Harrington also makes use of the detailed cartel case information provided by the Commission to study how

competitors manage to implement and stabilize cartel agreements. See Joseph E. Harrington, How Do Cartels Operate?,2

FOUNDATIONS &TRENDS IN MICROECONOMICS 1 (2006). Veljanovski and Wils both provide detailed assessments of particularly

the fining policy of the European Commission in light of the introduction of the 1998 fine guidelines. See Cento Veljanovski,

Cartel Fines in Europe: Law, Practice and Deterrence,30W

ORLD COMPETITION L. & ECON.REV. 65 (2007); Cento

Veljanovski, Deterrence, Recidivism, and European Cartel Fines,7J.COMPETITION L. & ECON. 871 (2011); and WOUTER

Hellwig and Hu

¨schelrath 401

comprehensive quantitative assessment of both detected cartels as well as the carte l enforcement

process in light of the recent policy changes is currently missing. Although such studies admittedly

face the usual disadvantages attached to the use of descriptive empirical analysis, they have the key

advantage of being able to provide a full picture on cartel cases and the enforcement process, thus

promising to generate substantial value for both academic and practical purposes.

In this context, we provide such a comprehensive quantitative assessment of detected and decided

cartels and the related cartel enforcement process in the EU from 2001 to 2015. Section II provides a

general initial characterization of cartels and cartel enforcement in the EU. In parallel to a description

of the entire cartel enforcement process, the section also introduces the major changes in EU cartel

rules and policies. Furthermore, a description of our database on EU cartel cases is provided. Section

III continues with a detailed characterization of all cartel cases decided by the European Commission

between 2001 and 2015 with respect to various criteria such as the number of involved firm groups,

cartel market shares and market share asymmetries, involved industries, affected countries, types of

infringement, types of cartel breakdown, as well as cartel duration. In Section IV, we complement this

cartel-based analysis with a quantitative assessment of the cartel en forcement process in the EU,

subdivided further into its duration, types of cartel detection, fines levels, the leniency program, the

settlement procedure, and the conclusive appeals process with the GC and the ECJ. Section V closes

the article with a discussion of its main insights and an identification of avenues for future research.

II. Cartels and Cartel Enforcement in the European Union: An Initial

Characterization

In this section, we provide an initial high-level characterization of public cartel enforcement

8

in the

EU. In parallel to the description of the entire enforcement process in the subsequent subsection, we

briefly introduce the four major changes in EU cartel rules and policies in our observation period from

2001 to 2015: (1 and 2) the revisions of the leniency program in 2002 and 2006 (originally introduced

in 1996), (3) the revision of the fine guidelines in 2006 (originally introduced in 1998), and (4) the

introduction of the settlement procedure in 2008. The section is closed by a description of our database

of EU cartel cases, which provides the basis for our quantitative assessment of EU cartel cases and EU

cartel enforcement in Sections III and IV.

A. The Cartel Enforcement Process in the European Union

Article 101 of the Treaty for the Functioning of the European Union (TFEU) prohibits agreements

between companies that prevent, restrict, or distort competition in the EU and that may affect trade

between Member States. Although the prohibition generally applies to both (anticompetitive) hori-

zontal and vertical agreements, in the following, we will focus on a brief characterization of the EU

enforcement process for horizontal “hard-core” cartel agreements, which can broadly be subdivided

WILS,THE OPTIMAL ENFORCEMENT OF EC ANTITRUST LAW (2002). Finally yet importantly, Carree et al. and Russo et al. provide

detailed assessments of European Commission decisions on competition including cartel agreements. However, both studies

do not provide a complete quantitative assessment of EU cartel cases and the cartel enforcement process and make use of a

data set that ends in 2004 (thus preventing an investigation of the effects of EU cartel policy changes in the new century). See

CARREE ET AL., supra note 6; and FRANCESCO RUSSO,MAARTEN PIETER SCHINKEL,ANDREAGU

¨NSTER,&MARTIN CARREE,EUROPEAN

COMMISSION DECISIONS ON COMPETITION:ECONOMIC PERSPECTIVES ON LANDMARK ANTITRUST AND MERGER CASES (2010).

8. In this article, we concentrate on the public enforcement of anticartel laws in the European Union. For a law and economics

perspective on the private enforcement of anticartel laws and its interaction with public enforcement, see Kai Hu

¨schelrath &

Sebastian Peyer, Public and Private Enforcement of Competition Law: A Differentiated Approach,36W

ORLD COMPETITION L.

&ECON.REV. 585 (2013).

402 The Antitrust Bulletin 62(2)