Opinion

The message from the European Commission and the Office of Fair Trading (OFT) is that life is getting more and more dangerous for cartels.
In the last weeks of 2001, there was an unprecedented run of decisions from the commission imposing record fines on companies involved in price-fixing agreements. The opening salvo was a record fine of more than €855m (£530m) imposed on vitamin manufacturers – Hoffmann-La Roche received a fine of €462m (£290m), the largest fine ever to be imposed on an individual company.
The commission went on to fine five German banks €100m (£62m) for fixing commissions for changing euro-zone bank notes. In four further decisions concerning price-fixing and market-sharing cartels, 10 manufacturers of carbonless paper were fined €313.7m (£195m); five manufacturers of citric acid, including Hoffmann-La Roche, were fined more than €135m (£84m); four Belgian brewers were fined more than €91m (£56m); and six zinc phosphate manufacturers were fined almost €12m (£7.4m). The commission seems to be particularly interested in beer, it fined three Luxembourg brewers €448,000 (£277,000) for sharing out the Luxembourg beer market between them. It is also investigating suspected cartels in other EU beer markets.
The commission's fines show why many competition lawyers advise companies to go straight to the commission as soon as they discover that their employees have been involved in a cartel. In the vitamins case, Aventis was given immunity from fines for most of the cartels in which it had been involved. That was because it was the first to reveal the cartel to the commission and to supply it with decisive evidence. Hoffmann-La Roche also received a 50 per cent discount for cooperating. In the carbonless paper case, one company got a 100 per cent discount for blowing the whistle before the commission had begun any investigation. In the citric acid case, one company gave the commission decisive evidence of the cartel after the commission had begun investigating the sector and got a 90 per cent discount.
But discounts of this size are only available to the first company to speak up. So lawyers who find out about cartel activity must act immediately.
The commission's 'get tough' policy is being followed by the UK competition authorities. The OFT says that it is investigating a number of cartels and is expecting to take a number of fining decisions soon. It has the power to impose fines of up to 10 per cent of a company's total UK turnover over three years.
Companies involved in cartels also have to worry about being sued by their customers. Last September, in Courage v Crehan the European Court of Justice confirmed that third parties harmed by cartels have the right to sue for damages in national courts. The Enterprise Bill will make such actions easier by making it clear that once the competition authorities have found that companies have been involved in a cartel, they cannot later dispute that finding in court when they are sued. The Government also wants to encourage representative actions by consumer groups on behalf of consumers harmed by cartels, with damages going to good causes. The bill is also likely to give the specialist Competition Commission Appeal Tribunal the power to award damages to third parties, as well as to hear appeals from the OFT against fines.
However, the Government is concerned that some business people might still make a cynical calculation that the gains from cartel activity outweigh the risks. To account for this the Enterprise Bill will make it a criminal offence for individual managers to be involved in price-fixing cartels. Managers who break the law could be fined or sent to prison for up to five years.
Companies and managers cannot treat antitrust law as a strange creature that is only really dangerous to those who are crazy enough to fix prices in the US. All lawyers must push the message that antitrust violations on this side of the Atlantic can seriously damage a company's bottom line, in fines and in embarrassing and expensive litigation. Lawyers must tell managers who are stupid enough to believe that they can play real life Monopoly that they will soon find that they are not collecting £200, but are going directly to jail.