EU antitrust regulators defend huge fines for cos.

NEW YORK, Sept 24 (Reuters) - European antitrust regulators defended on Thursday huge fines imposed on European and U.S. companies for price fixing or abusing their market power.

European Union competition commissioner Neelie Kroes said smaller fines had proven to be ineffective.

"Year after year we would catch a cartel and impose a fine that would have little or no effect on a company's incentives. What is the point of that?," Kroes said at an antitrust conference at Fordham University Law School.

The European Commission, the EU's antitrust watchdog, fined German utility E.ON (EONGn.DE) and GDF Suez (GSZ.PA) 553 million euros each ($77 million) in July for a 1975-2005 agreement not to compete in their national gas markets.

The biggest Commission fine on a single company was the 1.06 billion euro ($1.45 billion) fine imposed on chipmaker Intel Corp in May.

"Taking better account of the economic impacts of abuses and cartels, we fine in order to deter, linking the fine to the relevant sales of the infringing company," Kroes said.

"And if we catch recidivists, the French glass company Saint-Gobain is a good example, the fine increases are severe," she said. Glass maker Saint-Gobain (SGOB.PA) was fined 896 million euros last year for price fixing.

Over the years, the European Commission has imposed fines totaling 1.68 billion euros ($2.5 billion) on Microsoft Corp (MSFT.O) for infringing EU antitrust rules. It could levy another hefty penalty if it were to rule against the company in the web browsers case.

Asked about Intel, which was fined 4.15 percent of its 2008 sales, Kroes said: "It's all about behaving.

"If you are active in Europe, you have to play by the rules."

Philip Lowe, director general for competition at the European Commission, said guidelines for calculating fines were clear and that fines had been upheld by a court.

"People say, 'Shouldn't these fines simply be lower because you only need a small fine' for deterrence?" said Lowe. "If a fine represents only 1 percent of annual profits, what kind of deterrence is that to a company?" (Reporting by Diane Bartz)