On Nov. 12, 2014, the Court of Justice of the European Union (CJEU) issued its judgment in Guardian v. European Commission. Guardian, fined €148 million (US$184 million) by the Commission in 2007 for its participation in the "Flat glass" cartel, asked the CJEU to set aside the General Court's judgment dismissing the company's original appeal to have its fine reduced. Upholding Guardian's arguments that the Commission had infringed the principle of equal treatment, the CJEU reduced the fine imposed on Guardian by 30 percent to €103.6 million (US$128.8 million). The CJEU clarified that, for the purpose of fine calculation, the proportion of the overall turnover derived from the sale of products in respect of which the infringement was committed best reflects the economic importance of the infringement. Thus, when determining value of sales, the Commission must not draw a distinction between internal sales and sales to independent third parties. The exclusion of internal sales had, in the present case, led to the relative weight of one vertically integrated company (Saint Gobain) being reduced and that of Guardian being increased commensurately.
Guardian argued that since it was the only non-vertically integrated company to be fined for participation in the cartel, the Commission's excluding of internal sales during fine calculation resulted in discrimination between Guardian and the vertically integrated participants. This was contrary to the principle of equal treatment, enshrined in Articles 20 and 21 of the Charter of Fundamental Rights of the European Union. Guardian argued that the only way to restore equal treatment was to reduce the amount of the fine imposed on it by 37 percent―a percentage corresponding with the proportion of internal sales in relation to the total volume of sales on the relevant market.
The CJEU clarified that determining the amount of the value of sales, as set out in the 2006 Fining Guidelines, carries the objective of reflecting the economic importance of the infringement and the relative weight of each of the participants. It is the proportion of the "overall" turnover derived from the sale of the cartelized products that best reflects the economic importance of the infringement. Should the Commission, when determining the value of sales, exclude internal sales, it would be favouring vertically integrated companies by reducing their relative weight in the infringement to the detriment of other participants. The Court noted that vertically integrated companies involved in horizontal price-fixing agreements may also benefit in downstream markets that use the cartelised products as inputs.
The CJEU also pointed out that while the scope of the value of sales cannot extend to sales that do not fall within the scope of the alleged cartel, it was wrong to say that the only turnover to be counted was the turnover achieved from sales shown to be actually affected by the cartel. Such a limitation would artificially minimise the economic significance of the infringement to only those sales implicated by direct evidence and would reward an attitude of secrecy by cartel participants.
The judgment of the CJEU is available here.
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