The Shortcomings of Hybrid Settlement Cases : A Balancing Exercise of Irreconcilable Interests

Abstract: When the Commission introduced the settlement procedure in 2008, it was not possible to foresee the issues that so-called hybrid cases would give rise to. A hybrid settlement case emerges when some of the parties of a cartel decide to settle with the Commission, while one or several parties decline or opt out of the settlement procedure. The Commission is then left with a choice. It can either discontinue the settlement procedure and pursue with the standard cartel procedure for all parties, or it can conduct two separate proceedings resulting in the adoption of split decisions, a so-called hybrid settlement case. The purpose of this thesis is to conduct a comprehensive review of the hybrid settlement procedure in order to assess whether adjustments should be made to the current practice. This will be done by evaluating how the hybrid cases affect both the settling parties and the non-settling parties, as well as identifying any other interests that might have an impact on the assessment. For the non-settling parties, the way that the Commission conducts the hybrid settlement procedure leads to certain fundamental rights issues. Especially, claims that the Commission has breach the presumption of innocence and the right to good administration has been made. When determining whether adjustments could be made to relieve any fundamental rights issues, consideration must be given to the effective enforcement of EU competition law. As for the settling parties, hybrid cases result in onerous private litigation following the adoption of the settlement decision. Cartel victims have a right to be compensated for damages suffered by the cartel and may base such claims on an infringement decision adopted by the Commission. Private litigation will usually start based on the settlement decision, as it is mostly not appealed, in comparison to the decision addressed to the non-settling parties. This is problematic for the settling parties as the damage claims brought against the cartel can be substantial. Hybrid cases could thus have a negative effect on the attractiveness of the settlement procedure, to the detriment of the Commission’s effective enforcement of competition law. To make adjustments in order to preserve the attractiveness of the settlement procedure could however have a negative impact on the cartel victims’ right to full compensation. It thus appears as though the different interests at play are to some extent irreconcilable. This entails that a careful balancing exercise of the different interests must be performed in order to determine if and how the hybrid settlement procedure could be adjusted.