After some last-minute delays, the Royal Decree of 31 July 2020 introduced the concept of abuse of economic dependence in Belgium (for further details please see "New prohibition on abuses of economic dependence enters into force"). Following this royal decree, the Belgian Competition Authority (BCA) announced an update to its fining guidelines so that they apply to this new abuse.
The Code of Economic Law (CEL) provides that the BCA may impose fines of up to 2% of the annual turnover of the undertaking concerned in the case of abuse of economic dependence(1) and up to 10% of the annual turnover of the undertaking concerned for other competition law infringements.(2) The BCA can also impose a penalty payment of up to 2% (in the case of abuse of economic dependence)(3) or 5% (for other competition law infringements)(4) of the average daily turnover to ensure that its decision is respected. However, this only imposes a maximum that the BCA cannot exceed and the law remains silent with regard to which factors the BCA should take into account to determine the amount of its fine.
Previously, the BCA's fining guidelines did not apply to abuse of economic dependence and so had to be updated following the Royal Decree of 31 July 2020. The BCA has broadened the scope of its fining guidelines to apply them to abuses of economic dependence.(5) The BCA's fining guidelines broadly follow the European Commission's guidelines on the method of setting fines (the EU guidelines), with the following exceptions.
Relevant turnover
Relevant turnover is the turnover (in)directly linked to competition law infringement in Belgium by the relevant undertakings. If a relevant undertaking has no such turnover, but has a consolidated turnover in Belgium as defined in Article IV.84 of the CEL,(6) the basic amount will be calculated as follows:
- In the case of a market sharing agreement (in which one or several undertakings agree not to sell in Belgium), the turnover taken into account for the undertaking with no activities in Belgium will be their turnover relating to the products and services (in)directly linked to the infringement on the geographic markets in which these undertakings were active.
- In other cases, the turnover taken into account for the undertaking with no activities in Belgium will be the average of the turnover (in)directly linked to the infringement achieved in Belgium by the undertakings participating in the infringement and which had activities in Belgium.
Leniency and settlement
The BCA will apply its own guidelines on leniency applications. When a BCA procedure combines a leniency application and a settlement decision, a prosecutor will calculate the amount of the fine by calculating:
- the fine based on the BCA's guidelines;
- a reduction based on the BCA's leniency guidelines; and
- a (potential) reduction of the fine under the Belgian rules on settlement decisions.(7)
Same or similar infringement
Paragraph 28 of the EU guidelines provides for an increase of the fine by up to 100% if an undertaking continues or repeats the "same or a similar infringement". In its fining guidelines, the BCA states that it will apply this provision only when the same or a similar infringement in question has:
- taken place in an EU member state; and
- been the subject of a decision by either the European Commission or the National Competition Authority of a neighbouring country (ie, Germany, France, the Netherlands or Luxembourg) or the United Kingdom.
Further, there is no recidivism under the BCA's fining guidelines when a parent company and a subsidiary are guilty of the same (or similar) infringement if the control of the subsidiary had been acquired after it had ceased its participation in the infringement.
These guidelines entered into force on 16 September 2020 and apply to all cases in which a motivated decision proposal has not been transmitted by the prosecutor's office to the BCA's Competition College. Settlement cases in which the prosecutor has already communicated a (potential) amount for the fine are also excluded (but only if a settlement decision is indeed adopted).
By announcing that it will also apply its fining guidelines to the abuse of economic dependence shortly after the entry into force of the new prohibition, the BCA has preferred legal certainty instead of the potential uncertainty of new rules. For years, these fining guidelines have been widely used and practitioners are accustomed to applying them in different contexts. As such, practitioners should continue to watch this space for updates to the fining guidelines.
Endnotes
(1) Article IV.79, Section 2 of the CEL.
(2) Article IV.79, Section 1 of the CEL.
(3) Article IV.79, Section 2 of the CEL.
(4) Article IV.79, Section 1 of the CEL.
(5) The newest version is available (in Dutch and French) here.
(6) Article IV.84 of the CEL states that the turnovers of different companies forming one single economic entity are combined to form the relevant turnover. The turnover includes amounts resulting from the sale of products by the company in the ordinary course of business, net of sales deductions and value added tax and other taxes directly relating to turnover. The turnover does not include sales between companies of the same single economic entity.
