Setting of Fines for Cartels in ICN Jurisdictions - International ...

8. INTERACTIONS WITH DIRECT SETTLEMENTS
8. INTERACTIONS WITH DIRECT SETTLEMENTS 39
Plea bargaining or settlements with companies implicated in cartel conduct may be another factor that leads
to a reduction in the fines that otherwise would have been imposed on these companies 54 .
Settlements are particularly useful for those competition enforcers that have managed to establish a proven
track record against cartels and thus in general have been able to impose significant sanctions. They have also
been able to create a significant fear of detection among cartel participants through the use of their investigative
powers. Finally, they have been able to put in place effective leniency programmes that contributed to
destabilise cartels, increasing further the risk of detection. The combination of these factors has increased
the number of investigations carried out by those competition agencies. However the resources constraints
faced by competition agencies, make the timely investigation and resolution of cartel cases a bigger and bigger
challenge. For certain agencies this is only part of the picture as they also have to defend their successful
cases before the courts. It is therefore not surprising that cartel settlement attracts growing interest among
competition enforcement agencies.
Six competition agencies which responded to the questionnaire on the setting of fines indicated that in their
jurisdiction a form of settlement for cartel cases exists. These are Brazil, Canada, France, New Zealand,
Switzerland and the United States. All these jurisdictions have indicated that in their system, it is possible
to offer settlements on certain conditions. However not all of them have already applied this instrument. The
European Commission has launched a proposal for a settlement procedure, which is likely to enter in force in
2008. The amount of reduction in fines for settlement is not quantified in this proposal.
In Brazil, the amount of the fine to be paid in the context of a settlement must be at least 1% of the gross revenue
of the company. There is no maximum determined by the law. The final amount is determined on a case
by case basis, taking into account the timing of the cooperation with the competition agency or the adoption
of a compliance programme by the company. In Canada, New Zealand and in the USA, plea bargaining is an
essential component of the criminal justice system. In Canada, the final discretion as to the sanction imposed
rests with the Courts. In New Zealand, to date the Courts have accepted the penalty recommended by the
competition agency in every case. The US has the largest number of cases settled in the last 5 years: 207
companies have accepted to settle their cases. Switzerland foresees the possibility of settlements but does
not have provisions regarding negotiated settlements in the determination of fines.
8.1 Interplay of settlement and fines
One of the key issues that cannot be ignored while balancing the benefits and the risks of a settlement system
is the discount a competition agency is prepared to grant companies in exchange of settlement. Certainly,
this is not the only benefit as a settlement system may also involve for companies lower procedural costs or
a shorter reputation damage for being named and shamed as a cartel participant. However, discussions with
the business community show that the reduction of the fine allowed by a settlement system remains pivotal
for companies to decide whether to accept settlement proposals. The more specificity that the prosecuting
agency can provide as to the amount of the fine and its determination, the easier it will be for the settling party
to take a decision on the settlement proposal. To provide the greatest transparency, prosecuting agencies may
enumerate, to the possible extent, the elements it would take into consideration in determining the sanction,
including the amount of reduction for leniency and or for settlement.
In jurisdictions where the maximum penalty for cartel conduct is not very high, the margin of manoeuvre for
providing settlement incentives sufficiently attractive beyond those that can be provided under the leniency
programme is rather limited. As identified in the ICN Cartel settlement paper, this concern may be addressed
by cumulatively or separately seeking to increase the level of sanctions and introducing other types of non-
54 This section develops the main elements concerning the determination of fi nes that can be found in the separate report
on settlements presented by the ICN cartel Working Group to the 2008 ICN conference. In addition to the eight jurisdictions
that replied to the questionnaire on Cartel settlement indicating that such instrument is currently available for them,
New Zealand also replied to question 11 of the questionnaire on the setting of fi nes, indicating that agreed penalties
recommendations are possible in their jurisdiction.
ICN — SETTING OF FINES FOR CARTELS IN ICN JURISDICTIONS