Free Competition Case Study

1. Introduction

The European Commission considers free competition between companies as vital for market economy. Free competition leads companies to offer the best goods or services at the lowest prices. Hence, in a free competitive market, consumers are more likely to pay less for more quality. However, some companies try to limit this free competition by fixing higher prices, limiting production or sharing markets and consumers between them. This behaviour is illegal under European Union laws and heavily fined by the European Commission. Indeed, in 2006, the Commission voted new guidelines that revised those adopted in 1998. In these new guidelines, the European Commission specified a new method of setting fines to cartels in antitrust cases. This new

After some investigations, the EC discovered that “Lutèce”, “Prochamp” and “Bonduelle”, three producers of canned mushrooms, participated in a cartel. These cartelists agreed to produce less output than they would if they acted independently in order to stop a decrease of prices. Consequently, the market price increased and these firms earned higher profits. As the EC indicates (2014), these firms were fined €32,225,000 because they coordinated their prices and also allocated customers between them. They were involved in this cartel for more than one year so all consumers have certainly been affected. “Lutèce” did not have to pay any fine because this company revealed the existence of such a cartel and so helped the European Commission in its fight against these anticompetitive practices. By doing that, the European Commission wants to encourage firms that are involved in cartels to denounce other firms outlawed. “Prochamp” and “Bonduelle” have seen their fines reduced by 10% each because they acknowledged their participation in the cartel and their liability in their infringement (European Commission,