European Union: General Court Rules On 12 Pre-Stressing Steel Cartel Appeals

On 15 July 2015, the General Court ("GC") largely upheld the EU Commission's decision in the pre-stressing steel cartel case in ten judgments on 12 separate appeals brought against the decision. However, the GC reduced the fine imposed on several applicants on the grounds that: (i) the Commission had erred in finding that they had committed a single and continuous infringement in relation to all aspects of the infringement; (ii) the Commission had breached the principle of equal treatment; and (iii) the Commission had made errors in the calculation of the fine.

The judgments arise from the Commission's June 2010 decision fining 17 producers of pre-stressing steel over €518 million for their involvement between 1984 and 2002 in a complex single and continuous infringement involving price-fixing and market-sharing cartels, both at European level (the so-called "Zurich Club"/"Club Europe" cartels) and national and regional levels (the so-called "Club Italia"/"Club Espana" cartels), in breach of Article 101 TFEU (See VBB on Competition Law, Volume 2010, No. 6, available at www.vbb.com).

While the GC dismissed the majority of the actions, namely those brought by Socitrel and Companhia Previdente (joined cases T-413/10 and T-414/10), Nedri Spanstaal (case T-391/10), HIT Groep (case T-436/10), Emesa-Treflieria and Industrias Galycas (case T-406/10), Radaelli Tecna (case T-423/10) and WDI and Pampus (case T-393/10), the GC upheld a number of the pleas raised in certain of the other actions as detailed below.

Single and continuous infringement

With two exceptions, the GC dismissed arguments made by several of the applicants that the Commission erred in finding that the activities of the cartel participants gave rise to a single and continuous infringement. The arguments upheld by the GC are detailed below.

In Emme Holding's appeal (case T-422/10), the GC concluded that the Commission had erred in finding that Emme Holding had participated in a single and continuous infringement between 1997 and 2002, because the Commission had not established that before 2000 Emme Holding knew or ought to have known that by participating in one aspect of the cartel ("Club Italia"), it was also participating in a pan-European cartel. The GC found support for this conclusion in the fact that Emme Holding had never made sales outside of Italy.

In SLM's appeal (joined cases T-389/10 and T-419/10), the GC ruled that the Commission had erred in setting the starting date of the infringement as February 1997, instead of April 1997, on the grounds that a note dated April 1997 indicated SLM had doubts about the cartel activities. The GC however considered the meeting note clearly established SLM's participation in the infringement from April 1997.

Breach of rights of defence and fairness of proceedings

The GC rejected most of the pleas raised by the applicants relating to alleged breaches of their rights of defence, in particular those relating to alleged breaches of the principles of legal certainty and good administration, to alleged breaches of the duty to give reasons, and to the alleged infringement of Article 6 of the ECHR.

The GC nevertheless upheld the equal treatment plea made by Fapricela (case T-398/10). In the contested decision, the Commission classified the cartelists into three separate categories depending on their level of involvement in the cartel and applied different gravity factors in its calculation of the fine. Fapricela and two other cartelists had been classified in the second category, and their fines calculated based on an 18% gravity factor, due to their participation in the "Club Espana" part of the infringement and their later knowledge of the pan-European aspect of the cartel. However, considering the GC had ruled that the Commission had not established that Fapricela was aware of the pan-European dimension of the cartel, the GC held that Fapricela should not have been placed in the same category as the two other cartelists who were aware of the pan-European aspect of the cartel.

Errors in the calculation of the fine

The GC dismissed a number of arguments raised by the applicants alleging errors relating to the Commission's calculation of the fines, including that insufficient reasons were provided for the calculation of the fine, that the Commission had erred in its application of the 2006 Fining Guidelines, and that the Commission had breached the principle of equal treatment in granting reductions to certain undertakings for their cooperation. However, as detailed below, the GC ruled that five of the penalties imposed did not accurately reflect the participation of the undertakings in question in the infringement.

In the case of Austria Draht (case T-418/10), the GC considered that the fine imposed breached the principle of proportionality and should be reduced from €22 million to €7.5 million. In fixing the value of sales used as the basis for the computation of the fine, the GC considered that the Commission had been wrong to take account of Austria Draht's EEA sales where Austria Draht had essentially participated in one aspect of the cartel, and only on the Italian market, via its commercial agent in Italy.

In Ori Martin (joined cases T-389/10 and T-419/10), the GC criticised the Commission for not reducing the fine for which Ori Martin was found jointly and severally liable with its subsidiary SLM, despite the fact that the Commission had previously corrected the fine imposed on SLM from €19.8 million to €15.9 million. As a result, the GC reduced the part of the fine for which Ori Martin was jointly and severally liable from €14 million to €13.3 million to reflect SLM's reduction.

In three other cases, although the GC found that the Commission had erred in calculating the fine, the amount of the fines ultimately imposed on the applicants was not impacted as they in any case exceeded the maximum fine ceiling of 10% of group worldwide turnover. In Fabricela, as noted above, the GC found that the Commission had erred in finding that Fabricela was aware of the pan-European dimension of the cartel and, as a result, reduced the fine from €18.4 million to €17 million. However, the amount Fabricela had to pay was, in any event, limited to €8.8 million as a result of the 10% ceiling.

Similarly, in Emme Holding, as noted above, while the GC reduced the fine imposed from €10 million to €5 million to reflect the fact Emme Holding was not aware of the pan-European aspect of the cartel before 2000, the final fine imposed was limited to €3.2 million to account for the 10% ceiling.

Finally, in SLM's case, the GC reduced the fine from €19.8 million to €19 million on the grounds that the Commission had erred with respect to the starting date of SLM's participation in the infringement and for not considering other special circumstances of the case (i.e., SLM did not have sales in France and Germany, SLM had never participated in discussions relating to Austria, and SLM was aware of the pan-European dimension of the cartel only at a much later stage). However, the fine ultimately imposed on SLM remained €1.9 million as a result of the 10% cap.

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