On 8 May 2013, the Court of Justice of the European Union (ECJ) dismissed an appeal lodged by ENI against a judgment of the General Court (GC) which largely upheld the fines imposed by the European Commission for ENI's participation in the synthetic rubber cartel.
In November 2006, the European Commission announced that it had imposed fines totalling €519 million on five groups of companies for infringing Article 101(1) TFEU by participating in a price-fixing and market-sharing cartel in the markets for butadiene rubber and emulsion styrene butadiene rubber (see VBB on Competition Law, Volume 2006, No. 11, available at www.vbb.com). In July 2011, the GC ruled on ENI's appeal against the Commission's decision, reducing ENI's fine but rejecting ENI's submissions regarding its actual influence over its subsidiary Versalis (see VBB on Competition Law, Volume 2011, No. 7, available at www.vbb.com). ENI appealed before the ECJ.
In its judgment, the ECJ rejected ENI's claim that the GC had failed to take a specific position on ENI's argument that the Commission had the obligation to prove the actual exercise of decisive influence by ENI on its subsidiary Versalis. In this respect, the ECJ recalled, in applying established case-law, that where a parent company holds all or almost all of the capital in a subsidiary, there is a rebuttable presumption that the parent company actually exercises decisive influence over its subsidiary. Similarly, where a holding company holds 100% of the capital of an interposed company which, in turn, holds the entire capital of a subsidiary of its group, there is also a rebuttable presumption that the holding company exercises decisive influence over the conduct of the interposed company and also indirectly, via that company, over the conduct of the subsidiary. In such situations, it is sufficient for the Commission to prove that all or almost all of the capital in the subsidiary is held by the parent company in order to take the view that the presumption is fulfilled. The ECJ noted that, for the entire duration of the infringement, ENI held, directly or indirectly, at least 99.7% of the capital in the companies that were directly active in its group in the butadiene rubber and emulsion styrene butadiene rubber sectors. The ECJ concluded that the presumption of exercise of decisive influence was, therefore, applicable to ENI.
In addition, the ECJ rejected ENI's claims regarding the lawfulness of the presumption of decisive influence, as well as a number of other arguments raised by ENI as regards parental liability. In particular, the ECJ noted that even if the factors relied on by ENI to rebut the presumption had been sufficient to demonstrate that Versalis enjoyed a certain degree of autonomy as regards its chemicals activities, this would not be sufficient in itself to establish that ENI and Versalis did not form a single undertaking for the purpose of Article 101 TFEU. The fact that ENI was a technical and financial coordinator and that it provided its subsidiaries with financial and investment assistance showed that it did not refrain from exercising a decisive influence over its subsidiaries. Moreover, for the purposes of finding that the companies constituted a single economic unit it was not relevant that ENI had never operated directly in the chemicals sector or that there had never been any management overlap between the parent company and its subsidiaries.
The ECJ equally dismissed a cross-appeal brought by the Commission. Among other findings, the ECJ found that the GC had not erred in law by holding that the Commission had failed to provide sufficient detailed and precise evidence in its decision to support a finding of repeated infringement of ENI and Versalis. The ECJ agreed that the Commission had failed to provide evidence that the same "undertaking" within the meaning of Article 101 TFEU had repeated an infringement. Therefore, the GC had been correct to reduce the fine imposed on ENI from €272.25 million to €181.50 million to reflect this.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
