Antitrust: Commission fines car parts suppliers of € 18 million in cartel settlement

This article is brought to you in association with the European Commission.

The European Commission has fined Brose and Kiekert a total of € 18 million for taking part in two cartels concerning supplies of closure systems for cars in the European Economic Area (EEA). Magna was not fined as it revealed both cartels to the Commission.

Magna, based in Canada and Brose, based in Germany took part in a bilateral cartel concerning supplies of door modules and window regulators for a certain car model of Daimler group. Magna and Kiekert,  based in Germany, took part in a separate bilateral cartel concerning supplies of latches and strikers to BMW group and Daimler group. All three companies acknowledged their involvement in the cartels and agreed to settle the case.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Components such as door modules, window regulators and latching systems are essential for the proper functioning of cars, they provide protection against injury and ensure safety and comfort. The three suppliers colluded to increase their profits from the sale of these components. These cartels ultimately hurt European consumers and adversely impacted the competitiveness of the European automotive sector.”

The three car equipment suppliers addressed in this decision coordinated their pricing behaviour and exchanged commercially sensitive information. The aim of the three companies involved in both cartels was to preserve each party’s existing business and to avoid a deterioration of the prevailing pricing levels of the supplies. The coordination took place through meetings, phone calls or e-mail exchanges.

The Commission’s investigation revealed the existence of two separate infringements. The following table details the participation and the duration of each company’s involvement in each of the two infringements:

Fines

The fines were set on the basis of the Commission’s 2006 Guidelines on fines (see also MEMO).

In setting the level of fines, the Commission took into account, in particular, the sales value in the EEA achieved by the cartel participants for the products in question, the serious nature of the infringements, their geographic scope and their duration.

Under the Commission’s 2006 Leniency Notice:

• Magna received full immunity for revealing both cartels, thereby avoiding an aggregate fine of ca. €6 million.
• Brose and Kiekert benefited from reductions of their fines for their cooperation with the Commission investigation. The reductions reflect the timing of their cooperation and the extent to which the evidence they provided helped the Commission to prove the existence of the cartel in which they were involved.
• Additionally, Kiekert was granted partial immunity for the second infringement for the period from 15 June 2009 to 4 October 2010, as it was the first company to submit compelling evidence that enabled the Commission to extend the duration of the second alleged infringement until 15 June 2009.

In addition, under the Commission’s 2008 Settlement Notice, the Commission applied a reduction of 10% to the fines imposed on the companies in view of their acknowledgment of the participation in the cartel and of the liability in this respect.

The breakdown of the fines imposed on each company is as follows:

Background

Automotive closure systems cover products such as door modules, window regulators and latching systems (latches and strikers) that are supplied to car manufacturers. These systems provide protection against injury and ensure proper closing of all doors, windows and trunks to prevent the cars from being stolen. They also play a major role in increasing passenger comfort and safety while driving.

Today’s decision is part of a series of major investigations into cartels in the automotive parts sector starting back in 2013. The Commission has also fined suppliers of automotive bearings, wire harnesses in cars , flexible foam used (inter alia) in car seats, parking heaters in cars and trucks, alternators and starters, air conditioning and engine cooling systems, lighting systems, spark plugs braking systems, seat belts, airbags and steering wheels. Today’s decision brings the total amount of Commission fines for cartels in this sector to €2.17 billion.

Procedural Background

Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the Agreement on the European Economic Area prohibit cartels and other restrictive business practices, including collusion on selling prices.

The Commission’s investigation in this case started in May 2015 with an application under the Commission’s 2006 Leniency Notice submitted by Magna, followed by applications for reduction of fines by other parties.

Fines imposed on companies found in breach of EU/EEA antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but Member States’ contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers.

More information on this case will be available under the case number AT.40299 in the public case register on the Commission’s competition website, once confidentiality issues have been dealt with. For more information on the Commission’s action against cartels, see its cartels website.

The settlement procedure

Today’s decision is the 34^th settlement since the introduction of this procedure for cartels in June 2008 (see press release and MEMO). In a settlement, parties acknowledge their participation in a cartel and their liability for it. Settlements are based on the Antitrust Regulation 1/2003 and allow the Commission to apply a simplified and shortened procedure. This benefits consumers and taxpayers as it reduces costs. It also benefits antitrust enforcement as it frees up resources to tackle other suspected cartels. Finally, the parties themselves benefit in terms of quicker decisions and a 10% reduction in fines.

Action for damages

Any person or company affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision constitutes binding proof that the behaviour took place and was illegal. Even though the Commission has fined the cartel participants concerned, damages may be awarded without being reduced on account of the Commission fine.

The Antitrust Damages Directive, which Member States had to transpose into their legal systems by 27 December 2016, makes it easier for victims of anti-competitive practices to obtain damages. More information on antitrust damages actions, including a practical guide on how to quantify antitrust harm, is available here.

Whistleblower tool

The Commission has set up a tool to make it easier for individuals to alert it about anti-competitive behaviour while maintaining their anonymity. The tool protects whistleblowers’ anonymity through a specifically-designed encrypted messaging system that allows two way communications. The tool is accessible via this link.