General Court sets Cartel Settlement Procedure

The European Commission (“Commission”) can usually close cartel cases through either infringement or settlement decisions. The latter are generally shorter and less detailed, but can only be applied if a company cooperates with the Commission and is willing to acknowledge its participation and role in the relevant competition law infringement.

The procedures for cartel settlements are regulated since 2008. However, on 20.05.2015 the Court ruled in its case T-456/10, Timab Industries and CFPR vs. Commission, for the first time on this subject.

According to European Regulation 622/2008 the relevant company agrees to having committed the infringement and receives a reduction of 10% of the fine. However, it is up to the discretion of the Commission to decide, in which cases to settle and in which cases to proceed with an ordinary investigation and infringement decision. The criteria for the selection can be amongst others the number of participants involved in the cartel and leniency applicants as well as the degree of cooperation with the authorities. The Commission may also decide to settle with some cartel participants while proceeding with infringement decisions regarding other parties within the same cartel (so called “hybrid settlement case”).

In its first hybrid settlement cartel case the Commission imposed fines for an amount of EUR 175 Mio against animal feed phosphate producers, of which EUR 60 Mio were imposed on Timab Industries (“Timab”) for price fixing and market sharing.

Timab had initiated settlement negotiations with the Commission in order to avoid an infringement decision. The Commission informed Timab consequentially that the fine to be imposed will be around EUR 40 Mio. However, Timab decided to opt out of the negotiations and proceed with a normal investigation, expecting the fine to increase by a maximum of 10%. After being imposed with a fine of EUR 60 Mio, Timab decided to appeal the decision of the Commission claiming an infringement of its rights of defense.

The Court denied the appeal stating that the difference of the amount between the expected and imposed fine relied on further reductions the Commission was not required to apply within a standard procedure. Moreover, it also confirmed that the Commission had used the same calculating method for the fine during the settlement negotiations and the standard procedure. Thus, the Commission is not bound to the expected amount of a fine indicated during negotiations within settlement procedures if a company decides to opt out and continue with standard proceedings.


Dr. Christina Hummer
Ori Kahn