The Appeals Process in the European Commission's Cartel Cases: An Empirical Assessment

Abstract

The appeals process is an important mechanism to correct legal errors and to improve existing laws and regulations. We use the data of 467 firm groups that participated in 88 cartels convicted by the European Commission between 2000 and 2012 to study both the characteristics of firm groups filing an appeal and the factors that determine their successfulness in terms of fine reduction. Applying a discrete choice and a two‐stage hurdle model, we find that while some characteristics—particularly the reform of the fine guidelines—only affect the probability of filing an appeal, other factors, such as the size of the fine imposed, in connection with characteristics such as ringleader, repeat offender, or leniency applicant, influence both the probability and the success of an appeal. We build on these results to derive conclusions for both firms and public policymakers.

Cartel Cases and the Cartel Enforcement Process in the European Union 2001 2015: A Quantitative Assessment

“…In absolute terms and referring to the entire observation period from 2001 to 2015, the general appeal success rates diverge substantially between the two stages. While in sum 119 of the 273 first-stage appeals were successful (about 44 percent), the respective numbers drop substantially for second-stage appeals with only 12 successful out of 84 second-stage appeals leading to a success rate of about 14 percent (see, e.g., Hüschelrath and Smuda (2016) for an econometric analysis).…”

Settlements and Appeals in the European Commission’s Cartel Cases: An Empirical Assessment

“…), consulting the statistics of past appeals cases can provide important insights. In this respect, Hüschelrath and Smuda (2015) recently find that, in the period from 2000 to 2012, about 50 percent of 467 firm groups fined by the EC decided to hand in an appeal with the GC. Out of this sub-sample of 234 firm groups, roughly 47 percent were eventually successful in the sense of receiving a reduction of the fine originally imposed by the EC.…”

“…17 However, it has to be added that the companies on average waited about 57 months from the beginning of the appeals process to the final decision (either by the GC or the ECJ). See Hüschelrath and Smuda (2015) for further information. As this waiting period generates a substantial amount of additional costs, the benefit of an appeals process is reduced.…”

“…As any decision by either a court or a public authority is made under uncertainty, it is considered a constitutional (or even human) right of the losing party to seek a reconsideration of their arguments as part of an appeals (or judicial review 3 ) process (see Hüschelrath and Smuda (2015) for a review of the law and economics literature). Under EU competition law in general, and for EC cartel cases in particular, the appellate court proceedings can be either one-or two-stage.…”

“…In this respect, our choice of variables is generally guided by the analysis of Hüschelrath and Smuda (2015), however, we implemented a few adjustments to improve the forecast performance of our models using a longer data set. 28 As already mentioned in Section 4.1 above, we generally differentiate between three sets of independent variables that are likely to influence the probability to file an appeal: legal environment-related, grouprelated and case-related.…”