On 19 May 2010, the European Commission imposed its first set of fines under the new settlement procedure for antitrust cases in the DRAM investigation.
The Commission formally institutionalised a settlement procedure for antitrust cases in July 2008, the objective being to achieve procedural economy in straightforward cases. The Commission has complete freedom in choosing which cases can go to settlement and will write to parties asking whether they are interested in following the settlement procedure. If the parties accept the Commission’s offer, they will be granted access to the Commission’s file in order to assess the evidence against them. The object of this part of the settlement procedure is for the parties and the Commission to reach a “common understanding regarding the scope of the potential objections and the estimation of the range of likely fines.” In practice, the Commission unilaterally communicates a range of fines determined by it, once a common understanding has been reached on the scope of the infringement. The Commission will then invite the parties to make settlement submissions formally requesting to settle the case, on condition that the fine imposed does not exceed the maximum of the range communicated by the Commission.
The benefits of the settlement procedure to the parties are not limited to the 10 per cent fine reduction and reduced legal costs that flow from a simpler administrative procedure. Unless a company has a cast iron defence to the Commission’s allegations, there is also considerable benefit in being able to have a dialogue with the Commission case team within the non-contentious atmosphere of a settlement procedure. The DRAM case illustrates that the parties were able to succeed on some very favourable claims under the 2006 Fining Guidelines and the 2006 Leniency Notice. All of the companies involved obtained the benefit of a month-by-month calculation of the duration of the fine, rather than semester by semester. In addition to full immunity for the “whistle-blower”, another party obtained partial immunity because it provided the Commission with information enabling the Commission to extend the investigation’s product scope. The Commission accepted a reduction of the fine for mitigating circumstances in some cases where involvement in the infringement was partial or sporadic.
It should be emphasised that the Commission was not inclined to grant concessions just for the sake of making settlement procedures more attractive. The basis parameters of the calculations, namely the gravity and entry fee coefficients, as well as the deterrence multipliers, were generally in conformity with the Commission’s published practice so far. The benefit of the settlement procedure, as illustrated in DRAM, is that the parties are able to have a complete and open discussion with the case team about the manner in which these parameters should be applied long before the matter (and the proposed level of fines) become public.
Lastly, the Commission was very sensitive to the concern that participation in the settlement procedure should not put the parties at a disadvantage vis-à-vis third parties with respect to possible third party claims. For this reason the Commission showed great flexibility in accepting oral statements, in the same way as it does with respect to leniency applications.
Clearly not all cases are suitable for settlement, and the pros and cons will need to carefully weighed in each individual case. The result reached in the DRAM matter, however, demonstrates that in appropriate cases, the Commission's settlement procedure offers potential benefits that can be very significant.
The McDermott Difference
McDermott represented one of the parties in this landmark case, in which it secured a 10 per cent reduction in the fine, on top of some further substantial savings for our client as a result of the McDermott team’s discussions with the Commission regarding the fining methodology originally proposed. The results achieved in DRAM, and, perhaps even more importantly, the means by which these results were achieved, teach some very important lessons about the practical implications of the Commission's new settlement procedure.
McDermott’s global antitrust practice has extensive experience in advising clients on the handling of complex multi-jurisdictional litigation in antitrust matters.