Cartels & Leniency 2020

1. THE LEGISLATIVE FRAMEWORK OF THE CARTEL PROHIBITION

   1.1 What is the legal basis and general nature of the cartel prohibition, e.g. is it civil and/or criminal?

   The Competition Act of 23 October 2011 ("loi du 23 octobre 2011 relative à la concurrence"). The general nature of the cartel prohibition is administrative (with the potential imposition of administrative fines). Of course, the cartel prohibition has also civil aspects as arrangements and practices (potentially agreements) which are contrary to this prohibition are automatically null and void and of course can lead to damages claims (which are facilitated by the Competition Damages Actions Act of 5 December 2016 ("Loi du 5 décembre 2016 relative à certaines règles régissant les actions en dommages et intérêts pour les violations du droit de la concurrence") implementing Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union).

   The Competition Act itself does not provide for criminal penalties for infringements of these provisions and/or Article 101 or 102 TFEU. However, some infringements of competition law could also amount to an infringement of Article 311 of the Luxembourg Criminal Code ("Code penal"). According to the latter provision, legal or natural persons (including the managers of a company) who, by whatever fraudulent means (e.g., cartel practices), have operated an increase or decrease of prices for commodities and goods, are punished with an imprisonment of one month to two years and with a fine of 500 EUR to 25,000 EUR (to be doubled for legal persons). Services do not seem to be concerned directly.

   1.2 What are the specific substantive provisions for the cartel prohibition?

   Article 3 of the Competition Act prohibits cartels on a national level and mirrors Article 101 TFEU with the exception that the latter provision requires there to be an effect on trade between EU Member States.

   Article 3 of the Competition Act prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices that have as their object or their effect the prevention, restriction or distortion of competition on a market, and in particular those which:

   directly or indirectly fix purchase or selling prices or any other trading conditions; limit or control production, markets, technical development, or investments; share markets or sources of supply; apply dissimilar conditions to equivalent transactions with other trading partners, thereby placing them at a competitive disadvantage; and make the conclusion of contracts subject to the acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. The legislation applicable prior to the 2004 predecessor of the Competition Act, the 1970 Restrictive Commercial Practices Act, contained a condition that did not exist under EU competition law, namely that only anti-competitive agreements that affect the general interest in the economic sense are illegal. This condition related to the public order ("ordre public") character of competition law in Luxembourg but was abolished following the 2004 Competition Act.

   If an agreement is anti-competitive and cannot be exempted, it is automatically void according to Article 3 of the Competition Act and, if having EU relevance, according to Article 101(2) TFEU. The illegality of a clause under Article 101(2) TFEU (or Article 3 of the Competition Act) does not necessarily affect the agreement in its entirety if the illegal clauses are severable from the rest of the agreement, a question which must be assessed under the law applicable to the agreement. If the applicable law is Luxembourg law, the entire agreement will - in the absence of a severability clause - be null and void, if the void clause is an essential clause that is intimately related to the other clauses of the agreement and, hence, constitutes an indivisible whole with the rest of the agreement. However, Luxembourg case law on anti-competitive clauses in distribution agreements accepts rather easily that an anti-competitive clause is not essential and thus can be severed from the rest of the agreement.

   Article 4 of the Competition Act corresponds to Article 101(3) TFEU and contains the legal basis of which anti-competitive agreements within the meaning of Article 3 can be exempted. More particularly, according to Article 4, the provisions of Article 3 do not apply to any agreement or category of agreements between undertakings, to any decision or category of decisions by associations of undertakings and to any concerted practices or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which do not:

   impose on the undertakings concerned restrictions which are not indispensable to 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. With the exception of the agreements that can be exempted on the basis of Article 4 of the Competition Act or an applicable EU block exemption, no other specific agreements have been excluded. The 1970 Restrictive Commercial Practices Act explicitly excluded agreements resulting from the application of a legislative or regulatory text, an exclusion ground removed by the Competition Act. It is possible that national courts would still apply this exclusion ground on a case-law...