Well to understand this you need to know some history, the EU when founded was around the Coal and steel industries in the 50s, and if we fined them only on local revenue they would not have been impacted at all considering they where industrial giants and kind of important for the European states ( and colonies) of the day.
Original 6 members(ECSC) this was 12 in the EEC in the 80s, and 15 in the 90s. compared to 27 of today.
- The legal framework of the ECSC and EEC included provisions for imposing fines that were intended to be punitive and corrective. This framework evolved over time to become more structured and rigorous.
Early Days: ECSC and EEC
European companies between 1950-1990
- ECSC Era (1952-2002):
- During the European Coal and Steel Community (ECSC) period, fines were primarily based on the severity and impact of the anti-competitive behavior. The fines were significant but not explicitly tied to a percentage of the company’s revenue. The focus was on ensuring fair competition in the coal and steel industries.
- EEC Era (1957-1993):
- Similarly, during the European Economic Community (EEC) period, fines were determined by the nature and gravity of the infringement, the duration of the anti-competitive behavior, and its impact on the market. The fines aimed to be punitive and corrective but were not calculated as a specific percentage of revenue.
- Transition Period: 1990s to Early 2000s
Increasing Fines: 1990-2002
- Throughout the 1990s, the European Commission began imposing larger fines to enhance the deterrent effect. These fines were still based on the severity and impact of the violations but started to reflect a more structured approach.
European companies between 1990-2002
- Notable Cases: Significant fines during this period included those against companies like Volkswagen and Tetra Pak for restrictive practices and abuse of dominant positions. These fines were substantial but not yet tied to a percentage of global turnover.
- Regulation (EC) No 1/2003
Introduction of Percentage-Based Fines:
- The major shift occurred with the adoption of Regulation (EC) No 1/2003, which came into effect on May 1, 2004. This regulation empowered the European Commission to impose fines of up to 10% of a company’s total annual global turnover for breaches of EU competition law.
- Rationale: The rationale behind this change was to ensure that fines were significant enough to serve as a strong deterrent. By linking fines to a percentage of global turnover, the EU aimed to impose penalties that reflected the economic impact of the violations and discouraged large multinational companies from engaging in anti-competitive behavior.
European companies between
2002- today
These measures collectively aimed to maintain fair competition and prevent monopolistic practices, even before the more formalized approach of fines based on a percentage of turnover was introduced.
These fines reflect the EU’s efforts to maintain fair competition and prevent monopolistic practices during that period
American companies wasn’t even on the map to punish, as it’s just what naturally developed as more power moved to EU, things become more procedures become codified.
Why should market share have any relevance to the size of your fine? Especially when the market doesn’t tell you much compared to revenue.
It becomes much harder to play long term investments by eating local symbolic fines. You no longer can include the breaking of the law as cost of business but be incentivized to be more law abiding if the risk is years of profits getting wiped out for knowingly breaking the law.
It’s simply that “dissuasive/ deterrent” fines are intended to be substantial enough to ensure that companies take compliance seriously and do not simply factor the fines into their operating costs.
An opinion based on nothing sounds like faith, while your interpretation of som facts, such as the meaning of a word, sentence or legal text is an opinion.
Or is your opinion just made up of make believe? Like aliens are grey/ green or that Unobtainium is an indestructible element that tastes like cheddar cheese?
Well I could argue it’s biased against large companies, and America is especially hit as you have mostly large ones.
Even tho I would argue it’s not the intent but side effects considering it’s similar to how it’s always been done. Just look how large telecommunications companies, oil companies or any other large dominant industries and firms where handled in europe (by the ECSC & EEC that predates EU)
In The US they where broken up, while in The EU’s regulatory framework they instead requires incumbent operators to provide access to their networks to competitors, ensuring a level playing field.
- U.S.: Antitrust enforcement and structural remedies (e.g., breakups).
- EU: Regulatory oversight and behavioral remedies (e.g., access requirements).