1. © Hogan & Hartson LLP. All rights reserved. Cartels Fines, Leniency, Settlement John Pheasant November 28, 2007 Brussels

2. © Hogan & Hartson LLP. All rights reserved. Outline Fining policy Leniency The proposed settlement procedure

3. © Hogan & Hartson LLP. All rights reserved. Total Cartel Fines Imposed

4. © Hogan & Hartson LLP. All rights reserved. Fines - 2006

5. © Hogan & Hartson LLP. All rights reserved. Fines - 2007

6. © Hogan & Hartson LLP. All rights reserved. Fines The New Fining Guidelines 1. Up to 30% of relevant turnover 2. Multiplied by each year of the infringement 3. 15 to 25% for cartel “entry fee” 4. Adjusted for aggravating and/or mitigating factors, including 5. 100% recidivist uplift (for each previous infringement) 6. Increase for deterrence

7. © Hogan & Hartson LLP. All rights reserved. Fines 1. Relevant turnover=100x20%=20 2. Duration=5 yearsx5=100 3. + entry fee+25%=125 4. Aggravation/ mitigation +0=125 5. Recidivism (one previous infringement) +100%=250 6. Deterrence+0=250

8. © Hogan & Hartson LLP. All rights reserved. Fines First case under the New Guidelines Professional Videotape: Sony, Fuji, Maxell Total annual sales=€115m (in 2001) Duration=3 years Total fines=€ 75m

9. © Hogan & Hartson LLP. All rights reserved. Fines Professional Videotape €m 115x20%=23 x3 years=69 AggravationSony+30% LeniencyFuji-40% Maxell-20% 75

10. © Hogan & Hartson LLP. All rights reserved. Leniency Immunity applicant:100% First leniency applicant:30-50% Second leniency applicant:20-30% Subsequent leniency applicants:up to 20%

11. © Hogan & Hartson LLP. All rights reserved. Settlement 200+ leniency applications since 2002 Fewer than 10 cartel decisions annually Significant backlog (the time bomb) Need for an expedited administrative procedure

12. © Hogan & Hartson LLP. All rights reserved. Stage 1 - Commencement Party requests settlement discussions Commission does not consider case suitable at any time Standard procedure Commission considers case suitable Min. 2 weeks for other parties to declare Bilateral procedure

13. © Hogan & Hartson LLP. All rights reserved. Stage 2 – Disclosure and Discussion Disclosure by Commission of essential elements: alleged facts gravity duration attribution of liability range of fines evidence Party can assert views and decide whether to settle Common understanding: scope of objections range of fines Possible access to Commission’s file: re any other aspect of the cartel if procedural efficiencies not jeopardised

14. © Hogan & Hartson LLP. All rights reserved. Stage 3 – Settlement Submissions Commission sets time limit for final WSS WSS acknowledgement facts legal qualification duration as per Stage 2 maximum amount of fine rights of defence respected no access to file or hearing Community language WSS = commitment to cooperate irrevocable unless Commission does not endorse WWS in SO and then Decision

15. © Hogan & Hartson LLP. All rights reserved. Stage 4 – Statement of Objections & Reply SO: Endorses WSS if it reflects: description of cartel undertaking’s involvement legal qualification Reply: Min. 1 week time-limit: simple/unequivocal confirmation that SO and WSS correspond continued commitment to settlement procedure SO: Does not endorse: standard procedure acknowledgements in WSS withdrawn New Defence No confirmation: Standard procedure

16. © Hogan & Hartson LLP. All rights reserved. Stage 5 – Decision & Settlement Reward Consultation with Advisory Committee NO other procedural step, e.g. no hearing or access to file Decision: if consistent with WSS, settlement request cannot be revoked amount of the fine Commission may still adopt a different position New SO Reduction in the fine ? Equivalent for all parties Increase for deterrence not greater than x 2 Added to leniency

17. © Hogan & Hartson LLP. All rights reserved. Stage 6 – Appeal Decision may be appealed to CFI

18. © Hogan & Hartson LLP. All rights reserved. Settlement - Issues Procedural efficiency v. Rights of the Defence Bilateral settlements in a multilateral environment Commission’s discretion: no certainty until Decision Determination of incentives: what is the discount? Is it too complicated?

19. © Hogan & Hartson LLP. All rights reserved. Final Thought BEWARE – THE TIME BOMB!

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