What are the Penalties for Violating European Competition Law?

by | Jan 23, 2023 | Antitrust

The competition authorities in the European Union aggressively try to blatant anti competitive behaviour. EU competition law in particular seeks to ensure that firms do not abuse their dominant position. All firms, but particularly those in a dominant position, should not, among other things, fix prices or agree to divide a market either by customer type or geography. The European Commission forbids, in general, the same conduct the Federal Trade Commission and Dept. of Justice, do when they use in particular the Sherman Act to protect competition in the United States.

EU competition law allows the European Commission to impose on a firm which violates competition law a fine of up to 10% of its global turnover. The European Commission has imposed very significant fines on, in particular, the big tech companies for violating EU rules. In the Google Shopping case the European Commission forced Google to pay a fine of €2.4 billion. Google had appealed this case to the General Court, which upheld the European Commission’s conclusion that Google abused its dominant position by improperly directing search results to its service, Google Shopping. And in another case, which the General Court largely upheld, though it slightly lowered the fine Google must pay to €4.1 billion, the Commission concluded that Google abused its dominant position regarding Android. And while Google has appealed this case the European Court of Justice, the European Commission, showing its continued aggressiveness, is now investigating whether Google is abusing the dominant position of its Play Store.

EU antitrust officials can also impose a fine of up to 10% of global turnover if an undertaking, as the EU rules call a company, violates the Digital Markets Act. And if a firm violates the General Data Protection Regulation, the EU data privacy rules commonly known as the GDPR, the European Commission can impose the still hefty fine of 4% of the worldwide turnover of the firm. This gives the EU Commission extensive powers to impose very significant fines as it acts to protect European consumers and prevent anticompetitive conduct throughout the European Union.

In addition to the European Commission’s power to impose significant fines, the competition authority of a member state may be able to also impose a fine. In theory the competition authority of a member state may also be able to, as in the United States, sentence a corporate officer who commits a very serious antitrust violation to a term in prison. Irish regulators in 2006 were able to send to prison for six-month corporate officers who blatantly violated the competition rules by entering into a cartel to fix the price of heating oil. This lead many to believe the Irish watchdog would use this new power to send to prison those who harmed competitors by abusing their market power. But Irish regulators have since then obtained only a few suspended sentences. And in no other EU country has a corporate officer served a prison sentence to violating an antitrust law, although, when the United Kingdom was a member of the European Union a few corporate officers did serve prison sentences there for blatantly violating the competition rules.

As the European Commission continues its aggressive efforts to stop anti competitive behaviour it may obtain the power to send to prison those who blatantly violate European competition law. Because its leniency program, under which it promises to lower or even eliminate the fine it will impose on those who violate EU law, has not in recent years encouraged enough firms to report violations of a competition act, the European Commission very recently made changes to encourage an undertaking to report anticompetitive conduct. Many believe that if this does not help to increase the number of firms which report violations of EU law, then the European Commission will seek the authority to send to prison those who engage in a blatant infringement of a European competition act. The competition authority in Europe wants the same powers as its equivalent competition authority in the United States. It too wants to aggressively protect competition, and no tool can help it do so as effectively as the threat of imprisonment.