Cartel Regulation 2013 - Luxembourg

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through – Cartel Regulation 2013, (published in November 2012; contributing editor: D Martin Low QC of McMillan

Legislation and jurisdiction

1 Relevant legislation

What is the relevant legislation and who enforces it?

The Law on Competition of 23rd October 2011 (Memorial A 2011, No. 218, p 3755) (the 2011 Law) has abrogated the Law on Competition of 17 May 2004 (the 2004 Law) with effect as of 1 February 2012. The 2011 Law does not change the provisions of the prohibition of cartels (article 3 of the 2011 Law).

The 2011 Law provides for the enforcement of articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (ex articles 81 and 82 of the EC Treaty) and basically mirrors EU Regulation No. 1/2003.

The 2004 Law authorised the setting up of the Council and the Investigation Division. The Council, an independent administrative authority composed of three members, was in charge of the decision making process in order to enforce competition law.

The Investigation Division, a service of the Ministry of Economics and Foreign Trade, was in charge of the registration of the complaints of infringements of competition law, the investigation and the submission of reports to the Council. The Investigation Division was entitled to require the undertakings to provide all necessary information by simple request or decision, interview natural or legal persons and conduct all necessary inspections. Generally, the powers of the Investigation Division were similar to the powers of the European Commission, and were subject to the same conditions as set out in Regulation No. 1/2003.

The 2011 Law provides for the merger of the Investigation Division into the Council. The Council remains the decision-making body but is also in charge of the investigation. The members of the Council who will investigate competition law matters in the future are not entitled to take part in the decision-making process to decide whether an infringement of the competition law has occurred.

The 2011 Law provides for other changes to the competition law regime:

the modification of the proceedings in order to make them more effective and less cumbersome; the differentiation of the maximum amount of the fines according to whether the undertaking was a party to a cartel or has abused its dominant position, or has refused to submit information to the Council during the investigation of the case; and the adaptation of the leniency regime to the European Competition Network Model Leniency Programme. 2 Proposals for change

Have there been any recent changes or proposals for change to the regime?

The 2011 Law has abrogated the 2004 Law with effect as of 1 February 2012 (see question 1).

No bill of law is pending.

3 Substantive law

What is the substantive law on cartels in the jurisdiction?

Articles 3 and 4 of the 2011 Law, which mirror article 101 TFEU, provide for the prohibition of cartels. According to article 3, a cartel is defined as being all agreements between undertakings, decisions by associations of undertakings and concerted practices that have as their object or effect the prevention, restriction or distortion of competition within a market and, in particular, those that:

directly or indirectly fix purchase or selling prices or any other trading conditions; limit or control production, markets, technical developments or investment; share markets or source of supply; apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations, which, by their nature or according to commercial usage, have no connection with the subject of such contracts. Such agreements, decisions or concerted practices are automatically null and void.

However, article 4 of the 2011 Law declares the provisions of article 3 inapplicable to agreements or categories of agreements between undertakings, decisions or categories of decisions by associations of undertakings and concerted practices or categories of concerted practices that contribute to improve the production or distribution of goods or to promote technical or economic progress, while allowing consumers a fair share of the resulting benefit, and that do not impose on the undertakings concerned restrictions that are not indispensable for the attainment of these objectives; and afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

4 Industry-specific offences and defences or antitrust exemptions

Are there any industry-specific offences and defences or antitrust exemptions?

There are no industry-specific offences, defences or exemptions regarding cartels.

Competition law in principle applies to all economic sectors. However, certain sectors are regulated by specific rules under the supervision of a regulator. The Luxembourg regulatory authority (the ILR) is the regulatory body for:

the postal sector (Law of 15 December 2000 on postal services and financial postal services, as amended); the electronic communications sector (Law of 27 February 2011 on the networks and services of electronic communications); the electricity sector (Law of 1 August 2007 on the organisation of the electricity market, as amended); and the gas sector (Law of 1 August 2007 on the organisation of the natural gas, as amended). Article 2(2) of the 2011 Law also authorises the government to proceed to price fixing in some sectors in certain circumstances such as when competition on prices is too weak or when there is a cyclical market failure in one or more sectors.

5 Application of the law

Does the law apply to individuals or corporations or both?

The 2011 Law applies to undertakings, individuals and corporations. It also applies to entities other than corporations (eg, de facto associations, trade unions, professional organisations).

6 Extraterritoriality

Does the regime extend to conduct that takes place outside the jurisdiction? If so, on what legal basis does the authority claim jurisdiction?

The 2011 Law does not prevent the Council from taking into account behaviour or actions that occurred outside Luxembourg that have an effect on the territory of Luxembourg.

Investigation

7 Steps in an investigation

What are the typical steps in an investigation?

The Council may start its investigation either at its own initiative or as a result of a complaint lodged by a person having a legitimate interest or by the minister.

After a preliminary investigation, the Council may decide to close the file (due, for example, to the absence of jurisdiction in Luxembourg).

If the Council decides to continue its investigation, it may ask for information from the relevant undertakings or their employees (article 14 of the 2011 Law). It may also carry out searches, proceed to the seizure of documents (see question 8) and ask for expert opinion...