On 11 July 2014, the General Court ("GC") handed down three judgments reducing the fines imposed by the Commission's decision of 1 October 2008 in the candle wax cartel case following appeals lodged by Sasol, Esso France and ExxonMobil, and RWE AG.
On 1 October 2008, the Commission imposed fines totalling over € 676 million on nine groups for having participated in a cartel on the EEA paraffin wax market and the German slack wax market from 1992 until 2005 (see VBB on Competition Law, Volume 2008, No. 10, available at www.vbb.com). Appeals were subsequently lodged before the GC.
GC reduces fine on Esso France and ExxonMobil by € 20.8 million
The GC upheld Esso France's (formerly Mobil Corp. prior to 2003) and Exxonmobil's (the 1999 merged entity of Exxon Corp. and Mobil Corp.) claims that the Commission had made an error of law in calculating the fine by failing to take account of the fact that Exxon Corp. did not participate in the infringement prior to the 1999 Exxon/Mobil merger in breach of Article 23(3) of Regulation 1/2003 and the principles of equal treatment and proportionality. When calculating the amount of the fine imposed on the applicant, the Commission had taken account of the value of the sales after the ExxonMobil merger (the average of years 2000 to 2002) for the period 1992-1999 despite the fact that Mobil Corp. alone participated in the cartel during that period. As a result, the Commission imposed the same amount of fine on Esso France as if Exxon had participated in the infringement for more than 7 years prior to the merger.
The GC, while acknowledging that the Commission had a certain amount of discretion in selecting the reference year(s) of the infringement, held that the reference year must constitute an "appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement" for the entire duration of the infringement. In this case, since a merger had taken place during the course of a cartel in which only one of the parties had participated in the infringement before the merger (i.e., Mobil Corp.), the GC ruled that the value of sales of the merged entity was not an appropriate proxy. As a result, the GC reduced the fine imposed on Esso France by slightly more than € 20.8 million (from € 83,588,400 to € 62,712,895) by splitting Exxonmobil's period of involvement into a pre-merger and a post-merger period to reflect the fact that Exxon was not involved in the infringement between 1992 and 1999.
GC substantially reduces fine on Sasol group by € 170 million
In the Commission's decision against Sasol, the Commission imposed fines totalling over € 318 million on the Sasol group for the illegal conduct of Sasol Wax (formerly known as Schumann Sasol). Sasol Wax was a subsidiary of Sasol Wax International (formerly known as Schumann Sasol International), which was itself a joint venture held by Sasol Holding (66%) and by Vara (33%), although Vara was not held liable for any infringement. Sasol Holding itself was the subsidiary of Sasol Ltd. The Commission found the Sasol group had committed a single and continuous infringement during three successive periods between 1992 and 2005, namely the "Schumann period" (1992 to 1995), the "joint venture period" (1995 to 2002) and the "Sasol period" (2002 to 2005). During the last period, Sasol Ltd acquired the remaining 33% of the shares of joint venture Sasol Wax International and was found jointly and severally liable by the Commission (which it did not contest).
The GC rejected a number of pleas lodged by Sasol including those relating to the fine imposed (e.g., the finding of an aggravated circumstance that Sasol Wax played a leading role; the calculation of the basic amount of the fine regarding slack wax; and the failure to grant Sasol Wax's full immunity for certain parts of the fine). However, the GC upheld one of Sasol's pleas relating to attribution of liability. More particularly, the GC considered that the Commission had failed to show that Sasol Ltd (via its subsidiary Sasol Holding) determined unilaterally the resolutions of the board of joint venture Sasol Wax International during the "Schumann period" and the "joint venture period".
The GC recalled that, in order to impute the anti-competitive conduct of one company to another under Article 101 TFEU, the Commission cannot rely solely on the ability to exercise decisive influence, but must ascertain whether that influence had actually been exercised. The GC also stated that the Commission and EU Courts may presume that the agreements and rules relating to the operation of an undertaking (e.g., articles of incorporation) have been implemented and complied with. In that regard, when the applicable provisions enable one parent company alone to determine the decisions of the governing bodies of the joint venture, in the absence of proof to the contrary, the Commission may find that the parent company exercised decisive influence over these decisions. However, the parties may adduce evidence to demonstrate that, despite the legal provisions, decisions were in fact taken by the shareholders. Applying the law to the facts, considering that the second parent company (i.e., Vara) was not found liable of any infringement, the GC criticised the Commission for concluding that Sasol exercised decisive and unilateral influence over the commercial conduct of Sasol Wax International on the basis of an abstract and prospective analysis (equivalent to an assessment of control for the purposes of the EU Merger Regulation) given that the examination concerning the actual exercise of decisive influence is retrospective and may therefore be based on concrete evidence. In that regard, the GC found that the Commission had not, inter alia, established that Sasol had exercised decisive influence over the management board of Sasol Wax International considering that the chairman of the board had special and close links with Vara, which could cause the commercial policy of Sasol Wax International to be aligned with that of Vara's.
Considering that Sasol Ltd and its subsidiary Sasol Holding did not exercise actual and decisive control over the joint venture, the GC found they were not liable for the illegal conduct of Sasol Wax during the "joint venture period" and the "Schumann period". As a result, because the amount of the fine imposed had to be capped at 10% of the turnover of Sasol Wax International and Sasol Wax (and not of the whole Sasol group) during the "Schumann period" and the "joint venture period", the GC substantially reduced the fine imposed on the Sasol group by over € 170 million, from € 318 million to € 149 million.
GC slightly reduces fines imposed on RWE AG by € 1.5 million
The Commission fined RWE AG over € 37 million for participating in a single and continuous infringement between: (i) 3 September 1992 and 1 January 2002 for exercising decisive influence and effective control over 99.4%-owned subsidiary Dea Mineraloel; and (ii) between 2 January 2002 and 30 June 2002 for exercising decisive influence and effective control over the joint venture Shell and RWE/Dea. Shell and RWE/Dea was a 50/50 joint venture owned by Shell and RWE and was created from the existing subsidiary Dea Mineraloel. The joint venture was set up with the intention that on 1 July 2004 Shell would acquire sole control. RWE AG appealed against the Commission's decision claiming that it had not exercised decisive influence over its subsidiary between 1992 and 2002 and over its joint venture during the first 6 months of 2002.
Concerning period (i), the GC rejected RWE AG's claim that it was not liable for the conduct of its 99.4%-owned subsidiary Dea Mineraloel on the grounds that it had not rebutted the presumption that it had exercised decisive influence. In that regard, the GC considered that the fact that a parent company is not involved in operational management is not decisive as regards the question of whether it should be considered to constitute a single economic unit with the operational units of the group. Nor did the GC find the fact that the paraffin wax business constituted only 0.1 to 0.2% of the parent company's turnover relevant.
However, concerning period (ii), the GC considered that the Commission had failed to establish that RWE AG exercised decisive influence over its joint venture. The GC criticised the Commission for relying on an abstract and prospective analysis of the joint venture agreement by not determining whether RWE AG actually exercised decisive influence in practice. According to the GC, the Commission had not established that the two parent companies had managed the joint venture in strict collaboration and that the adoption of board decisions reflected the will of both parents (e.g., by producing minutes of the meetings). In addition, while the members of the management board were equally appointed by the shareholders, the GC placed significant weight on the fact that the chairman of the joint venture's management board, who had a decisive vote, was a Shell nominee.
As a result, the GC slightly reduced the amount of the fine imposed on RWE AG by € 1.56 million, from € 37.44 to € 35.88 million.
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