The aim of the proposals — as confirmed by Commissioner Kroes in a speech on 19 November, 2007, in
The procedure is intended to free up EC resources, allowing it to handle existing cases more efficiently. The EC is estimated to have 30-40 open cases, largely due to the success of the European Union (EU) leniency programme. Investigations have become increasingly complex; investigation can last more than five years, with possible appeals before the Court of First Instance and the Court of Justice taking the overall duration up to 10 years or more.
The proposals are also intended to allow companies that are investigated and subject to fines to benefit from reduced fines and lower legal and administrative costs. Use of the settlement procedure is thus intended to be a win-win situation for the EC and parties that settle.
Companies under investigation will have no right or duty to request a settlement but may indicate their interest to the EC in exploring settlements at an early stage. The EC will have a wide discretion to identify cases suitable for a settlement based on the likelihood of the Commission and the parties to the investigation reaching — within a reasonable timeframe — a “common understanding” regarding the scope of the potential infringements as well as an estimation of the likely fine.
During the settlement discussions, the EC will disclose to the parties the essential elements of the infringement, such as the facts, their legal qualification, the evidence used to establish liability, the gravity and duration of the infringement, the attribution of liability and an estimation of the range of fines. This is likely to take the form of a written statement of facts with an outline calculation of the fine and the main variables (time, scope, etc) to give the defendant companies sufficient information and incentive to come forward and discuss the parameters for settlement.
The parties will be able to submit their views on the allegations raised against them in this written statement as part of the settlement discussions, although there will be no negotiations as such. Once a common understanding has been reached, the EC will give each of the parties a final deadline for submitting a final written settlement submission (WSS). The WSS will have to contain an express acknowledgment of the parties’ liability for the infringement as well as an indication of the maximum fine the parties expect to be imposed. In addition, the parties will be required in their WSS to waive their right expressly to an oral hearing, to access the file and to receive the Statement of Objections (SO), the document setting out the charges against the company, in the EU language of their choice.
The EC is then likely to issue a short form SO. If the SO endorses the parties’ settlement submissions, the parties will have a deadline of at least one week in which they must confirm their commitment to the settlement. After consultation with the Advisory Committee, the EC will adopt a final decision, without any further procedural steps.
The EC will retain the ability, at any time prior to adopting a final decision, to abandon the settlement process and return to the ordinary procedural framework. Any stipulations as to facts or liability contained in the WSS will be deemed as withdrawn and cannot be used against the parties.
Finally, the decision adopting the settlement will provide for the same, as yet unspecified, reduction of the fine as a reward for cooperation for all parties who engaged in settlement discussions and joined in the settlement submission. This reduction will be in addition to any reduction granted under the EU Leniency Programme.
It is clear that the introduction of a settlement procedure will force companies under EU cartel investigation to make strategic decisions much earlier and under greater time pressure.
Two key issues are likely to determine the viability of the proposals. First, the extent to which defendants with an arguable case on legal or factual issues have an incentive to settle for the same reduction of the fine as defendants that do not have such arguments.
Second, whether settlements will be available in cases where not all the defendants are prepared to settle. Denying settlements where some companies are unwilling to settle would hand very substantial leverage to companies that hold out in a settlement negotiation. This is true even where, as proposed, settlement negotiations remain confidential.
Companies in such a situation will be in the classic prisoners’ dilemma, where each company’s outcome is dependent on the other players in the game. They may view the procedure as a zero sum game rather than a win-win situation.
Omar Shah is an associate in the global antitrust and competition practice at Latham & Watkins in
