The European Commission has fined defence company Diehl €1.2 million for participating in a cartel concerning the sale of military hand grenades together with its rival RUAG. Both companies admitted their involvement in the cartel and agreed to settle the case. RUAG was not fined as it revealed the cartel to the Commission under the leniency programme.
The product concerned by the cartel is military hand grenades.
The Commission investigation revealed that the two manufacturers split national markets across the European Economic Area ('EEA') between themselves during almost 14 years. Following this allocation, only the designated manufacturer was entitled to sell military hand grenades in its allocated territory unless the other party gave its consent.
The Commission investigation revealed the existence of a single and continuous infringement in the EEA spanning from 7 November 2007 to 23 November 2021. RUAG's participation in the infringement ended on 15 April 2021.
The fines were set on the basis of the Commission's 2006 Guidelines on fines ("Guidelines" - see also MEMO).
In setting the fines, the Commission took into account in particular, the nature of the infringement, its geographic scope and its duration. Moreover, since by applying the general methodology of the Guidelines the resulting fine would have been very low, to achieve sufficient deterrence the Commission used its discretion under point 37 of the Guidelines to significantly increase its amount.
Both companies cooperated with the Commission under the leniency programme (2006 Leniency Notice):
- RUAG received full immunity for revealing the cartel, thereby avoiding a fine of ca. € 2.5 million.
- Diehl benefited from a 50% reduction of the fine for its cooperation with the Commission's investigation. The reduction reflects the timing of its cooperation and the extent to which the evidence it provided helped the Commission prove the existence of the cartel in which it was involved.
In addition, under the Commission's 2008 Settlement Notice, the Commission applied a reduction of 10% to the fines imposed on the companies in view of their acknowledgment of their participation in the infringement and of their liability in this respect.
Background
Article 101 of the Treaty on the Functioning of the European Union ('TFEU') and Article 53 of the EEA Agreement prohibit cartels and other restrictive business practices. This is the first cartel case in the defence sector.
The Commission's investigation was triggered by an immunity application under the Commission's 2006 Leniency Notice submitted by RUAG, which was followed, after the inspections in November 2021, by an application for reduction of the fine by Diehl.
