Abuse of economic dependence – How to calculate potential fines?

Abuse of economic dependence – How to calculate potential fines?
September 28, 2020

After some last-minute delays, the Royal Decree of 31 July 2020 has introduced the concept of abuse of economic dependence in Belgium (for more on this concept, see here). Following this Royal Decree, the Belgian Competition Authority (“BCA”) has now announced how it will calculate fines imposed on undertakings in such cases.

Who can impose fines?

The Belgian Code of Economic Law (“BCEL”) provides that the BCA may impose fines up to a maximum of 2% of the annual turnover of the undertaking concerned. The BCA can also impose a penalty payment up to a maximum of 2% of the daily turnover to ensure respect for its decision. But this only imposes a maximum that the BCA cannot exceed and the law remains silent about which factors the BCA should take into account to determine the amount of its fine.

How will these fines be calculated?

The BCA has recently announced that it will follow the European Commission’s Guidelines on the method of setting fines (the “Guidelines”)[1] to calculate the fines for abuse of economic dependence. The principal steps of these guidelines are as follows:

  • Calculation of the value of the sales
    This will be done on the basis of the turnover achieved in Belgium by the undertaking concerned that is directly or indirectly related to the infringement. A specific rule will apply if the undertaking in question does not have any relevant turnover in Belgium.
  • Determination of the basic amount of the fine
    The basic amount of the fine will be based on a proportion of the value of sales, depending on the degree of gravity of the infringement, multiplied by the number of years of infringement.
  • Adjustment of the basic amount
  1. Aggravating circumstances
    The basic amount might be increased in particular circumstances (refusal to cooperate with the BCA, repeated offences etc.).
  2. Mitigating circumstances
    The basic amount can be decreased in particular circumstances (effective cooperation with the BCA beyond the legal obligation to do so, the infringement was committed as a result of negligence etc.).
  3. Specific increase for deterrence
    If the BCA considers that the amount of the fine is, at this stage, insufficient to have a deterrent effect, then it has the discretion to increase the fine. For example, this could be the case if the undertaking in question has a particularly large turnover beyond the sales of goods or services to which the infringement relates.
  • Legal maximum
    It is only at the end of the calculation that the BCA will verify that the fine does not exceed the 2% threshold and reduce it if that is the case.

Conclusion – Legal certainty

By announcing that it will also apply the 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. These Guidelines have, for years, been widely-used at the European and national level and practitioners are used to applying them in different contexts. For more information on these guidelines and on the new prohibition on abuse of economic dependence, please do not hesitate to contact our specialist Carmen Verdonck.

[1] With some minor deviation. For more information: Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (2006/C 210/02), available at: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52006XC0901(01)&from=FR.

Written by

  • Carmen Verdonck

    Partner

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