On the 6th of December, Mr Kevin Coates, the Head of Unit G1 of Cartels in the European Commission delivered a talk entitled ‘Cartel Enforcement: Policy and Practice.’ The talk attracted a wide-ranging audience, including both academics and law and non-law students.
Mr Coates divided his talk into three main areas of focus, commencing with a brief introduction about the nature of cartels, explaining the overlap between his work and the law. He described the economic reasons behind the formation of cartels, citing the intense competition companies face through factors ranging from prices to quality as potential causes. He highlighted that companies do not only fix prices, but also attempt to set interests rates as well. When assessing the illegality of the act of forming a potential cartel, the authorities construe a balancing exercise between the potential harm caused by the particular conduct (such as joint ventures and abuses of mergers) and the possible benefits a company may enjoy. He used the example of the Lysine Cartel to foster our understanding of the essence of cartels.
Next, Mr Coates explored the evolution of cartels over time. He began by depicting the “classical form” of cartels that many still have in mind: a group of men from different companies sitting around a table smoking cigars and drinking whiskey whilst discussing prices. This continued to be somewhat of an accurate picture until the 1980’s, when authorities began taking steps to ensure that the public became more aware of the seriousness and illegality of cartels. Just like every other aspect of our lives, cartels have now taken on a more technological turn, with less verbal communication amongst price fixers and a higher rate of information exchange regarding prices and other elements of anti-competition methods. Here he raised the example of the infamous Apple e-books case. Apple wanted to enter the e-book market in competition with Amazon’s Kindle. In order to attract a higher amount of different publishers, Apple offered them (the publishers) the ability to set the retail price for their publications. Although this was not an example of a classical cartel arrangement, this could have led to higher prices, giving Apple an unfair advantage over Amazon, which would have been illegal.
Finally, the enforcement, leniency and fining policies of the Commission were explained. Whilst prohibiting cartel arrangements, the authorities focused heavily on gathering evidence. Over the years, this practice has undergone change in that electronic evidence has become more prevalent than documents on paper. Mr Coates also stressed the importance of maintaining awareness about the atmosphere in a company whilst the search for evidence is underway. Regarding leniency, he explained the possibility that “whistle-blowers” can obtain immunity from fines. The concept of leniency works because there are many circumstances under which a cartel can destabilize.
At the end of the presentation, questions were raised about Mr Coates’s talk, one of them being whether the future of the EU would hold that individuals found in cartel arrangements could be charged for criminal activity. The answer to this question remains open-ended.
DELI is very grateful to have had the pleasure of listening to Mr Coates’s work experiences, and looks forward to having him speak at our institute again.
Summary prepared by Ipek Akay and Kata Szeidovitz
Student Representatives at DELI