CIRFS
GUIDELINES FOR COMPLIANCE WITH
EUROPEAN COMMUNITY COMPETITION
LAW
May 2002
BRUSSELS, [_] 2002
D:\533559885.doc
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INTRODUCTION: CIRFS AND COMPETITION LAW
The Comité Internationale de la Rayonne et des Fibres Synthétiques (hereinafter
"CIRFS") as an organisation is very conscious of its responsibilities not to infringe
European or national competition law itself or enable other parties to do so.
It is the stated and express policy of CIRFS that all activities carried out within the ambit
of CIRFS shall at all times be in compliance with applicable competition laws.
Whilst a trade association such as CIRFS is established for the purposes of supporting
and representing its industry sector, and as such serves a legitimate and useful purpose,
care must be taken that the association not become involved in practices contrary to
competition laws.
For this purpose, the present Guidelines have been established by CIRFS to direct the
activities of CIRFS itself as well as those of its members within the ambit of CIRFS so as
to ensure that these activities are compliant with applicable competition law.
It is important that CIRFS and its members, by complying with these Guidelines, ensure
not only that CIRFS' own activities be beyond reproach from the point of view of
competition law, but also that the same standards apply to the behaviour of CIRFS
members within the ambit of CIRFS' activities. Indeed, failure to ensure compliance
could mean that both CIRFS members and CIRFS itself could become involved in
infringements of EC competition law by, for example, having been a conduit for illegal
co-operation between companies. CIRFS and its members could thereby be exposed to
the risk of sanctions.
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APPLICABLE RULES
The rules on competition in the EC Treaty consist of two Articles, namely:
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Article 81, which prohibits agreements or concerted practices between companies;
and
Article 82, which prohibits the abuse, by a company holding a so-called "dominant
position", of that position.
Whilst these Guidelines focus on EC competition law, CIRFS must of course also operate
in compliance with national competition laws. The latter however tend to be broadly
similar to these articles and the principles set out in these Guidelines are therefore of
general application.
The most important EC Treaty provision for the purposes of these Guidelines is Article
81 which states in the relevant part:
"The following shall be prohibited as incompatible with the common market: all agreements
between undertakings, decisions by associations of undertakings and concerted practices which
may affect trade between Member States and which have as their object or effect the prevention,
restriction or distortion of competition within the common market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby
placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with the
subject of such contracts.
…Any agreements or decisions prohibited pursuant to this Article shall be automatically void".
First, the provision covers restrictive "agreements" or "concerted practices". In practice,
this means that any explicit or tacit meeting of wills between companies, be it in the form
of a written or oral agreement, a "gentlemen's agreement", a practice of tacitly following
a commonly agreed course of action, or any other means of co-ordination of commercial
behaviour. The provision also covers decisions of CIRFS itself ("decisions by
associations of undertakings").
Second, the practices in question must affect trade between EU Member States and have
an appreciable impact on competition. Given the size of most CIRFS members, this can
be presumed to be the case.
Last, the practices must have as their aim to, or have the effect of, prevent, restrict or
distort competition between companies. This covers inter alia practices which serve to
reduce or eliminate competition between companies (e.g. by the formation of a cartel), to
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coordinate their competitive behaviour (e.g. agreements on prices or discounts) or to
exclude other companies from a market (e.g. by discriminatory behaviour). The Article
itself provides a list of practices which has such effects; the list is however not
exhaustive.
Failure to comply with Article 81 results in the infringing agreement or practice being
void in law.
A breach of Article 81 moreover exposes CIRFS and/or its member companies to the risk
of the Commission imposing sanctions, in particular fines. The amounts of fines imposed
by the Commission for infringements of the competition rules have increased markedly
over the last few years, easily reaching € 40-60 million per company and sometimes
much more for serious infringements.
The Commission may often discover infringements ex officio, or it may do so following a
complaint. Moreover, in recent years, several cartels have also often been discovered as a
result of the Commission's policy not to impose fines on participants in a cartel who have
informed the Commission of the illegal activity they were taking part in.
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ACTIVITIES TO BE AVOIDED
CIRFS carries out a number of activities, including the following:
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technology and the environment, including development of new standards and
regulations affecting man-made fibre products;
relations with European Union authorities on specific issues such as environment,
trade and state aids;
economic and regulatory analyses of market conditions, including the initiation of
trade measures; and
production of statistics.
Some of these activities take place in committees and working parties in which the
CIRFS members are represented. However, none of CIRFS' activities have a direct
bearing on the commercial situation of individual CIRFS members.
CIRFS as well as its member companies shall at all times ascertain that no practices in
breach of Article 81 occur in the framework of the aforementioned activities. Should this
nonetheless occur, it shall immediately and explicitly be made clear to the parties
involved that such practices are unacceptable and should cease. This should moreover be
recorded in the minutes of the meeting.
In particular, care should be taken to avoid the following.
Discussions between companies regarding commercially sensitive matters
No discussions shall take place within CIRFS and between its member companies on
subjects which can be considered to be commercially sensitive, and/or which relate to
specific companies or their present or future commercial policy.
The following examples of topics to be avoided can be mentioned (the list is not
exhaustive):
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pricing policy; this includes the pricing policy of the industry as well as that of
individual companies, time and amount of price alterations, discounts or
surcharges, terms of sale, credit terms etc.;
sales volume or value and/or market shares;
costs of production or manufacture; including cost of raw materials, machinery,
selling costs;
distribution or branding strategies;
size of inventories, stock etc.;
issues relating to research and development or proprietary technology;
discussions relating to the situation of particular companies, since such discussions
can very easily be misinterpreted as having anticompetitive purposes (save that it is
not prohibited to estimate periodically non-members' aggregate capacity and
production for strict statistical purposes).
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CIRFS and its members shall moreover refrain from discussions the topics of which are
clearly anti-competitive, such as:
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fixing of prices, conditions of sale or elements thereof, such as discount rates;
sharing of markets, customers or sources of supply between companies;
limiting of production, investment or technological development, such as the
setting of production quotas and import restrictions;
commercial measures having their object or effect to affect competitors, customers
or suppliers, such as a boycott action; or
measures discriminating against one or several parties.
In addition to discussions, for reasons explained under the following heading CIRFS
members shall refrain from unilateral statements on the above subjects.
Explicit or tacit agreement on commercial policy
In addition to refraining from discussing such matters, CIRFS members shall of course
strictly refrain from agreeing or concerting upon or in any other way coordinate any
aspect of their companies' commercial policies. Particularly sensitive areas of such
policies, where it can be expected that heavy fines will be imposed for coordination,
include:
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pricing policy;
sharing of markets or customers;
coordination or limitation of production or sales; or
collective action against competitors, customers or suppliers (this does not affect
CIRFS' right to take action in enforcement of national, European or international
law).
It should be noted that the notion of "agreement" or "concerted practice" can be very
large, encompassing oral or written agreements (whether binding or non-binding),
"gentlemen's agreements", or even tacit agreements such as where, following a unilateral
declaration by one company that it will raise prices by a given amount, its competitors
perform similar price increases.
It is true that in the course of its functions, CIRFS will from time to time be called upon
by its members to represent their collective position on a particular issue before e.g. the
Commission. While this is a form of agreement, such agreement is normally in
compliance with competition rules provided that it remains general in nature and does not
relate to specific companies or specific commercial behaviour. As an example, whilst it
can be agreed that CIRFS shall express an opinion on proposed product standards to the
Commission, no measures can be taken to affect member companies' choice of whether
to comply with such standards.
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Exchange of statistics
In the course of its activities, CIRFS produces certain statistics on synthetic fibre sales
which it subsequently makes available to its members.
The production and dissemination of such statistics is not in itself contrary to EC
competition law. However, it is necessary that:
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data on the basis of which statistics are produced be submitted directly to CIRFS or
a third party producing the statistics and kept by in confidence by such party, and
not disseminated to third parties, including other CIRFS members;
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the data disseminated to CIRFS members not allow the identification of the
competitive position or commercial strategy of individual companies. For these
purposes, CIRFS should refrain from disseminating recent individualised data
relating to sensitive information such as prices, sales, market share etc. and should
in particular ensure that all figures disseminated, if they are less than twelve months
old, contain an aggregate of data from at least three companies.
In any event, exchange of data on particularly sensitive subjects, such as prices, should be
avoided.
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INSPECTIONS BY OFFICIALS FROM THE EUROPEAN COMMISSION
European Commission officials are entitled to, without warning CIRFS in advance, carry
out on-site inspection visits at CIRFS' premises to gather evidence of possible
infringements of the EC competition rules. The below sets out some brief rules of thumb
on how to deal with such inspections.
Similar rules exist under some national competition laws; for guidance on such
investigations, please contact the contact person indicated below.
The following measures should be taken immediately:
The receptionist should ask the Commission officials to fill in a visitor form and then
invite them to wait in the waiting room, and should immediately contact the Director
General.
CIRFS' external lawyers should also be immediately contacted. The inspectors will
normally be prepared to wait for some limited time (30-45 minutes) for their arrival.
In the meantime, the person responsible for the inspection should ask to see the (i) ID
cards of the Commission officials and (ii) the authorisation or decision under which the
inspection is to be carried out. The names of the officials should be noted and a copy of
the authorisation or decision taken.
Once the inspection starts, the officials are empowered to
"… examine the books and other business records, to take copies or extracts from
the books and business records, to ask for oral explanations on the spot, and to enter
any premises, land and means of transport of undertakings."
These rights are in principle limited by two factors only:
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the inspection can only relate to the subject matter of the investigation. Thus, if the
inspection is made on suspicion of an anticompetitive practice regarding a specific
products, information on manufacturers of other products is a prior not relevant;
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legal privilege: the Commission cannot ask to see advice received by CIRFS from
external lawyers.
In practice, this means that the officials may enter all CIRFS premises land and means of
transport and examine all papers (official and unofficial) and records, including, for
example, computer records, electronic mail, photographic materials, magnetic tapes,
travel tickets, agendas, and expense claims. Private homes cannot be inspected.
Specific documents requested should be produced; giving general access to the files is
neither sufficient nor advisable. There is a duty to find the documents requested by the
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officials. The latter have the right to see the contents of any drawers, desks or filing
cabinets indicated by them and to be given the means to access computer records
(including e-mail).
Lawyers or CIRFS staff should always accompany the officials.
The inspection team is entitled to take copies of the documents, computer files, etc.
which it has reviewed and normally it does so. It is absolutely essential that CIRFS keep
a full inventory and make separate copies for CIRFS' use of all documents and disks
copied by the inspection team, as well as indications of the office and file from which the
document was extracted. Copies should be carefully checked and numbered at the end of
the inspection visit and, if the visit lasts several days, at the end of each day.
Any confidential document should, if this is not already the case, be marked as such.
The Commission also has the right to put questions on the spot. Questions should solely
concern the documents being reviewed by the Commission officials. It is essential that
only staff with a sufficient knowledge of the business should answer the Commission’s
questions. Do not respond if you are unsure of the correct answer. Replies should be
given in the presence of a lawyer or the person responsible and a note of the answer be
taken.
The Commission is not entitled to ask questions to which the answers may involve an
admission by CIRFS of an infringement of EC competition rules. For example, while the
Commission officials may ask whether a member of CIRFS staff attended a specific
meeting, they are not allowed to ask whether the person participated in making an illicit
agreement with competitors.
Normally, at the end of the visit, the Commission officials will draft a short report
describing:
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which documents were requested but were not provided and the reasons given for not
doing so;
 the questions asked and the answers given or any refusal to answer.
The Commission will ask the inspected company to countersign the report. If you do not
agree with the report, the report should be signed with the appropriate reservation.
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CONTACT PERSONS
Competition law is a complex subject, and the present Guidelines can necessarily offer
only a "first aid" in relation to competition law issues that may come up in the daily
activities of CIRFS.
Should you be uncertain about the compatibility of a given activity with competition law,
you should contact the Director General.