LACCF 2019 - Fining methodologies - Background paper - OECD Secretariat
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This presentation of the Background paper by Lynn Robertson from the OECD Competition Division was made during the discussion on Fining methodologies for competition law infringements at the 2019 edition of the OECD-IDB Latin American and Caribbean Competition Forum held in San Pedro Sula, Honduras on 24-25 September 2019. Find all related materials at the forum website http://oe.cd/laccf.
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LACCF 2019 - Fining methodologies - Background paper - OECD Secretariat
- 1. FINING METHODOLOGIES FOR COMPETITION LAW INFRINGEMENTS Presentation of the OECD Background paper Lynn Robertson OECD Competition Division LACCF Session I - 24 September 2019
- 2. • Objectives with fining policy – Deterrence, punishment, disgorgement or compensation – The objectives and the method of fines • Anticompetitive conduct subject to fines – Abuse of market dominance – Cartel • Addressees of fines – Individuals and companies Objectives of antitrust fines, anticompetitive conduct and addressees 2
- 3. • (i) Determination of basic fine – Relevant turnover vs. Total turnover – The gravity of the infringement and the duration • (ii) Adjustments – aggravating circumstances • Recidivism, Leading role in the infringement, etc. – mitigating circumstances • Co-operation with the authorities, compliance programmes, etc. • (iii) Comparison to limits – a percentage of annual turnover vs. a percentage relevant turnover – Consideration for proportionality and bankruptcy – Inability to pay claim • (iv) Considerations related to leniency programmes Common steps in setting of fines 3
- 4. • Parental liability – Determination of maximum fining cap – Establishment of recidivism • Suspensory effect of judicial scrutiny – Weakening deterrent effect of fines • Collection of fines – Appeals court slow to decide – Liquidation with subsequent formation of different entities – No power to collect fines • Imposition of fines on trade association – Low relevant turnover, limited assets Challenges in determining fines 4
- 5. Thank you For more information: www.oecd.org/competition
Hinweis der Redaktion
- Thank you. The following presentation is based on the Secretariat background paper written for this meeting
- Most competition authorities pursue one or more of the following objectives with their fining policy: deterrence, punishment, disgorgement or compensation. The methodology for choosing a fine may differ depending upon the objective the authorities prioritise. Although competition authorities impose fines on abuse of market dominance and cartel conduct, most fines are against cartel conduct which is what the paper focuses on. The level of the fine generally depending upon the objective and the conduct under sanction. Most competition agencies have the power to impose fines on undertakings. Also in some jurisdictions, agencies can impose a fine on an actual person. Individual fines might have a limited effect for several reasons such as that companies can reimburse the individual for the fines
- Many competition authorities adopt several common steps in setting fines. 1. Determination of base fine 2. Adjustment 3. Comparison to limits 4. Consideration related to lenience programmes of authority Authorities may defer to the relevant turnover as the basis of calculation for the fine because they consider this concept as a proxy for the illegal gain In determining the amount of fine most authorities take into account aggravating or mitigating circumstances. Comments and concerns include less supervision, the role of the undertaking in the infringement, cooperation with authorities and the compliance programme. A number of jurisdictions institute a maximum fining cap for undertaking due to consideration for proportionality and bankruptcy. Most take the form of a percentage of the global turnover while others use a percentage of the relevant turnover. In some jurisdiction a percentage of the worldwide turnover is another cap for the maximum fine. And as mentioned, consideration of whether a leniency programme exists or not.
- Challenges: Competition authorities often confront several challenges. First challenge is how to consider parental liabilities. These parental liabilities have potential consequences on the way fine is calculated, due to determination of maximum fining cap and establishment of recidivism. Second is the suspensory effect of judiciary scrutiny. In some jurisdictions the application of the decision is suspended until the review of the decision is complete. In this case, the effect of the fine could be weakened. Third is the actual collection of fine. Imposition of fine will not deter anticompetitive activities unless the fines are actually collected. However, some competition authorities are having difficulties collecting the fines they imposed. Fourth is the importance of fines on trade associations, as trade associations have, not only have poor turnover but also limited assets.