Court of Justice upholds fines imposed on ArcelorMittal and ThyssenKrupp in steel beams cartel and alloy surcharge cartel cases
On 29 March 2011, the European Court of Justice ("ECJ") dismissed an appeal brought by ArcelorMittal Luxembourg SA (formerly Arbed SA) against the judgment of the General Court confirming the Commission's decision to impose a fine totalling € 10 million on it for its participation in a cartel on the steel beams market (see VBB on Competition Law, Volume 2006, No. 11; Volume 2007, No. 4; and Volume 2009, No. 4). On the same date, the ECJ also dismissed in its entirety an action by ThyssenKrupp Stainless AG (formerly Krupp Nirosta GmbH) against the General Court's judgment confirming the Commission's decision to impose a fine totalling € 3.168 million on it for its participation in the alloy surcharge cartel (see VBB on Competition Law, Volume 2007, No. 1 and Volume 2009, No. 7).
ArcelorMittal and ThyssenKrupp had appealed against the re-adoption by the Commission in 2006 of its decisions relating to the steel beams and alloy surcharge cartels, following ECJ judgments that partially annulled the Commission's original decisions of 1994 and 1998 on the ground of breaches of the companies' rights of defence.
In their appeals against the General Court's judgments, the two companies challenged, in particular, the General Court's findings that the Commission was entitled to fine them on the basis of Article 65 of the European Coal and Steel Community (ECSC) Treaty and the procedural framework set out in Regulation 1/2003, despite the expiry of the ECSC Treaty in 2002.
In its judgments, the ECJ held that the Commission was indeed entitled to find that there had been an infringement, and to impose a fine, on the basis of the ECSC Treaty. According to the ECJ, it would be contrary to the objectives and the coherence of the Treaties, and also against the continuity of the EU legal order, if the Commission did not have jurisdiction to ensure the uniform application of the rules deriving from the ECSC Treaty. The ECJ also ruled that Commission's power to impose the fines derived from the provisions of Regulation 1/2003, as these embodied the procedural framework in force at the time the Commission adopted its decision.
ArcelorMittal also raised a number other issues in its appeal, such as a parent company's responsibility for its subsidiary's actions, the limitation periods applicable to competition law infringements and alleged breaches of its rights of defence. Confirming its Akzo jurisprudence, the ECJ concluded that the Commission is not precluded from imposing a fine on a parent company for an infringement committed by its subsidiary, where the parent company exercises decisive influence over the conduct of its subsidiary. The ECJ also dismissed claims that the company's rights of defence were harmed by the length of the procedure, resulting in the disappearance of relevant evidence, by stating that the company must provide information showing that its difficulties in gathering relevant evidence did not derive from its own failure to comply with its obligation of diligence.
ThyssenKrupp, on the other hand, also claimed that the General Court had insufficiently reasoned its judgment. It also claimed that the General Court had misapplied the rules governing limitation periods and the principle of res judicata (i.e., the principle that matters already settled by judgment are considered final). However, the ECJ ultimately dismissed ThyssenKrupp's appeal.
General Court partially annuls fines imposed by Commission in copper fittings cartel case
On 24 March 2011, the General Court ("GC") handed down its judgments on appeals brought by three producers of copper fittings, who in a 2006 decision were found by the European Commission to have fixed prices, discounts and rebates and to have co-ordinated price increases and exchanged confidential information (see VBB on Competition Law Volume 2006, No. 9). In its judgments, the GC reduced the fines imposed on Pegler and Tomkins; and annulled a € 102.8 million fine levied on Aalberts.
In the decision under appeal, the Commission found that a cartel had been operated by 30 companies active in the supply of copper fittings between 1988 and 2004. This finding, among other matters, was challenged by the three companies in their appeals against the decision.
Pegler questioned its involvement in the cartel before October 1993 on the grounds that it did not exercise any economic activity and therefore could not infringe the EU competition rules. Pegler argued that, during that period, it had formed a dormant subsidiary under English law. The GC agreed with Pegler that in the absence of any assets, personnel, losses or profits, it could not be regarded as an independent economic entity. As a result, the GC found that the Commission had wrongly interpreted the internal relationships within the Tomkins group (of which Pegler was part) and had held directly liable for the infringement a company that had no economic activity. As a result, the GC reduced the fine imposed on Pegler by the Commission.
The outcome of Pegler's case was crucial for the appeal brought by its parent company, Tomkins. Tomkins had argued before the GC that since its subsidiary Pegler had been unlawfully held liable for an infringement for a longer period of time than supported by the evidence, the fine imposed on Tomkins was excessive. The GC noted in this respect that liability of a parent company, which was held responsible for an infringement committed by its subsidiary, is strictly linked to the liability of the latter. Therefore, the partial annulment of the fine for Pegler also required an appropriate reduction of the amount for which Tomkins was held jointly and severally liable with Pegler.
In the third of the appeals, the GC annulled the fine imposed on Aalberts, which had been held liable for the infringement committed by its subsidiaries Aquatis and Simplex (acquired by Aalberts in 2002) between 2003 and 2004. On the facts, the GC agreed with Aalberts that the Commission had failed to meet the requisite standard of proof to find Simplex liable for participation in the infringement during the period in question. A similar conclusion was also reached with respect to Aquatis, albeit on different grounds. In the case of Aqautis, the GC had to rule on whether, after participating in the infringement in years 1991-2001, Aquatis had rejoined the cartel in 2003. Taking up this issue, the GC observed that the subject of the meetings in which Aquatis had taken part in 2003 had not been to restrict competition, as their scope was limited to new packaging of products. In addition, the GC noted that the company was not aware that its competitors also used those gatherings for the purposes of anticompetitive practices. In this connection, the GC ruled that in order to hold an undertaking liable for an infringement, it is necessary to show that the undertaking intended to contribute to the objectives of the agreement, which it was or should have been aware of. On the facts, the GC concluded that the Commission had failed to demonstrate that Aquatis had known or ought to have known that, through participation in the said meetings, it contributed to the activities of the cartel. As a consequence the GC annulled the fine imposed on Aalberts for the infringement committed by its subsidiaries between 2003 and 2004.
General Court partially reduces fines in gas insulated switchgear cartel appeal
On 3 March 2011, the General Court ("GC") ruled on a number of appeals brought against the Commission's 2007 decision concerning the gas insulated switchgear cartel. The appellants raised a number of claims against the decision, relating mainly to inaccuracies allegedly committed by the Commission in the process of calculating the amount of the fines. In its judgment, the GC partially annulled the Commission's decision and reduced the fines initially imposed by the Commission. The GC's reasoning sheds some light on the concept of a "leader" of a cartel, as well as elaborating the obligation on the Commission to reflect the type of liability at issue (sole liability or joint and several liability) when fixing the amount of the fine.
In the decision under appeal, the Commission fined eleven producers of gas insulated switchgear a total of € 750 million for various practices, including bid rigging, price fixing and market allocation (see VBB on Competition Law, Volume 2007, No. 2). The highest fine - € 396 million - was levied on Siemens. In its appeal, Siemens requested the GC to reduce the fine arguing, among other things, that the Commission's findings were time-barred with respect to the arrangements in place between 1988 and 1999. Siemens argued that the period of limitation ran from 1999 and lapsed in 2004, i.e., before the Commission took any action. This was because - according to Siemens - the two consecutive infringement periods (the first between 1988 and 1999 and the second between 2002 and 2004) could not be regarded as a single and continuous infringement in the absence of a common intention by the infringers to restrict competition during both periods. In its judgment, the GC disagreed with Siemens, holding that solely objective factors are relevant for the assessment of whether separate sets of practices can be seen as a single infringement. These elements include the similarity of the objectives pursued by the practices in question, of the products or services concerned, of the undertakings involved in the cartel and of its modus operandi. Applying these principles to the facts of the case, the GC held that both periods should be regarded as a single infringement and thus that the period of limitation started to run from the moment when the second, later period ended.
Moreover, Siemens questioned in its appeal the role of leader of the cartel, which the Commission had attributed to it in the decision, resulting in a 50% increase in the fine. Siemens argued in this respect that the Commission had violated the principle of equal treatment in that the Commission had treated Siemens much more severely than co-defendant ABB, which in Siemens' eyes should have been regarded as the instigator of the cartel. The GC rejected this argument on the grounds that, even if it were true that ABB was an instigator of the cartel arrangements, this did not rule out Siemens' leadership of the cartel. More importantly, the GC went on to explain the difference between the concept of an instigator and a leader of a cartel: while the role of the former is crucial to the establishment and development of the cartel, the latter looks after the proper functioning of the cartel. As a consequence, the GC found that the situation of Siemens could not be compared to that of ABB and dismissed Siemens' plea.
The question of leadership of the cartel was also central to the appeal brought by Areva. Areva argued that by applying a 50% increase to the fine to both Siemens and companies from the Areva group for their leading role in the cartel, the Commission had treated all these entities alike. Yet, according to Areva, the role in the cartel played by companies belonging to its group could not be compared to that of Siemens. In particular, according to Areva, Siemens led the arrangement for three quarters of its duration, while a similar role was taken by companies from the Areva group for a much shorter period of time. Taking up this argument, the GC noted that, unlike the role of instigator, the role of leader of a cartel is bound to occur over a certain period. Accordingly, in line with the principle of equal treatment, the period over which a company acted as leader of a cartel should be taken into consideration when adjusting the basic amount of the fine. Accordingly, the GC lowered the increase on account of the leading role played by two companies of the Areva group from 50% to 35% and 20% respectively.
Finally, in the appeal brought by several companies that were formerly part of one undertaking, VA Tech, the GC considered allegations that the Commission had violated the principle that penalties must be specific to the offender and to the offence in its imposition of joint and several liability on the companies concerned. The GC found that joint and several liability for the payment of a fine can only cover the period of the infringement during which the companies formed a single undertaking for the purposes of EU competition law. In this case, the GC found that the Commission had incorrectly calculated the companies' joint and several liability, with the result that the companies could not determine from the decision the amount of the fine which they were each required to bear relative to the other joint and several debtors. On these grounds, the GC annulled in part the Commission's decision, stressing that the principle that penalties must be specific to the offender requires that the amounts set by the Commission reflect in so far as possible the weighting of the individual shares in the joint liability of each different company.
General Court reduces fine imposed on World Wide Tobacco España in Spanish raw tobacco cartel appeal
On 8 March 2011, the General Court ("GC") handed down a judgment reducing the fine imposed by the European Commission on World Wide Tobacco España ("WWTE") in the Spanish raw tobacco case.
WWTE, an indirect subsidiary of the US-based Standard Commercial Corporation, was a Spanish tobacco processor, which was found by the Commission to have been involved in a cartel with other tobacco processors aimed at fixing the average delivery price for different varieties of raw tobacco and at allocating the quantities of each variety of raw tobacco that were to be bought. In October 2004, the Commission adopted its decision in the case in which the Commission imposed on WWTE a fine of € 1.8 million for its participation in the cartel. Four other undertakings were also fined.
Before the GC, WWTE argued that it was entitled to a larger reduction in the fine as a result of its cooperation with the Commission under the 1996 Leniency Notice. In the decision, the Commission had decided to limit the reduction granted to WWTE on the ground that WWTE had contested certain facts in its response to the Statement of Objections. Moreover, WWTE claimed that, in calculating the fine, the Commission had violated the principle of equal treatment by applying to WWTE a multiplier for deterrence different to that applied to the other undertakings fined in the decision.
In its judgment, the GC upheld WWTE's claim concerning the level of reduction granted on account of its cooperation with the Commission. According to the GC, claims made by WWTE in its reply to the Statement of Objections relating to the limited market impact of the cartel could not reasonably be considered as challenging the correctness of the facts on which the Commission based its finding of infringement. Accordingly, the GC found that the Commission had erred in limiting the reduction granted to WWTE for its cooperation and reduced the fine imposed by 10% from € 1.8 million to € 1.57 million.
However, the GC dismissed WWTE's claim of an alleged infringement by the Commission of the principle of equal treatment in applying a different deterrence multiplier to WWTE in setting the fine. The GC pointed out that the Commission is entitled to take into account the size and global resources of the undertaking in question in order to determine the multiplier for deterrence. On this basis, the GC found that the Commission had been entitled to apply a different multiplier to WWTE on account of the overall size and resources of the Standard group to which it belonged, compared to the other addressee undertakings of the decision.
Commission formalises Visa Europe commitments on multilateral interchange fees
On 12 March 2011, the European Commission published a summary decision under Article 9(2) of Regulation 1/2003, accepting the commitments proposed by Visa Europe on its multilateral interchange fees ("MIFs") for point-of-sale transactions with immediate debit payment cards within the EEA. The Commission's decision follows an earlier public consultation on the commitments submitted by Visa Europe (see VBB on Competition Law, Volume 2010, No. 6). In the commitments, Visa Europe committed to cap its yearly weighted average MIFs for immediate debit transactions at 0.2% of the transaction cost. The cap will apply to cross-border immediate debit transactions within the EEA, as well as to domestic immediate debit rates set directly by Visa Europe. Further commitments were proposed relating to certain network rules in order to increase transparency and competition in the payment cards markets.
The commitments were offered following the Commission's Statement of Objection of April 2009 in which the Commission expressed concerns that the MIFs set directly by Visa Europe could restrict competition between banks and, thus, infringe Article 101(1) TFEU.
The Commission considered the proposed commitments appropriate and sufficient to address the expressed concerns. Therefore, the Commission decided to make the commitments binding on Visa Europe.
Whilst the Commission's proceedings concerning Visa Europe's MIFs for consumer immediate debit payment card transactions are now brought to an end, the Commission will continue to investigate Visa Europe's MIFs for consumer credit and deferred debit payment card transactions.
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