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The Luxembourg Competition Council sanctions a cartel and imposes fines – Allen and Overy

22 March 2010 – LawFuel.com – Gabriel Bleser
Senior Associate, Luxembourg

The Luxembourg Competition Council sanctions a cartel between seven tiling companies and imposes fines.
The Luxembourg Competition Council (the Council) imposed on 5 March 2010 (1) fines totalling EUR145,000 on seven tiling companies for cartel. Since the entry into force of the Luxembourg act dated 17 May 2004 on competition, as amended (the Competition Act 2004), this case is the first case where the Council has adopted a decision based on merits and imposed fines after a statement of objections was sent by the competition inspectorate (the Inspectorate).

Facts and procedure

The case commenced with the introduction of a complaint from the Ministry of public works in November 2005 following suspicion of a cartel practice between various temporary tiling associations relating to public works on the construction site of the Saint Esprit Plateau (Cité judiciaire du Plateau du Saint Esprit) (the Cité judiciaire).

In December 2005, the Inspectorate made, for the first time, surprise visits (so called dawn raids) at the premises of three tiling companies. After enquiry, the Inspectorate sent, in August 2009, a statement of objections to various tiling companies. In January 2010, a hearing of the concerned parties was organised. The Inspectorate alleged in the statement of objections that the companies conspired two lots of the Cité judiciaire’s construction site.

Market allocation and price fixing cartel

The Council was only able to sanction an offence of a very short time period, here from June 2005 to December 2005 and based on only two public submissions (two lots of the Cité judiciaire’s construction site). Although certain elements of the case could have alluded to a longer and more routine cartel between certain companies in the public works context, the enquiry led by the Inspectorate did not confirm the existence of such a wider cartel.

Fines and application of the leniency programme

The fines imposed by the Council may, prima facie, appear rather low. The Council may impose fines up to a maximum of 10% of the worldwide turnover of the company concerned. In the present case, the Council could henceforth have imposed fines up to EUR500,000. It should be pointed out that given the limited period of time of the offence (7 months) and the fact that the cartel was simply maintained for two specific public works, the amount of the imposed fines is not insignificant.

One of the concerned companies benefited from a 50% reduction of the imposed fine following the application of the leniency programme pursuant to article 19 of the Competition Act 2004. Other companies had sought to benefit from reduction in the imposed fines but the requisite conditions enabling use of the leniency programme were not met.

It is important to note that the mere confession of having participated in a cartel without having submitted to the competition authorities value added information yet unknown to the latter would not be sufficient to enable companies to benefit from the leniency programme.

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