General Court partially annuls fines imposed on Japanese participants in gas insulated switchgear cartel
On 12 July 2011, the General Court ("GC") handed down its judgments in four appeals brought by addressees of the European Commission's gas insulated switchgear cartel decision. In its underlying decision, the Commission found that manufacturers of gas switchgear used to insulate electrical equipment ("GIS") had engaged in bid-rigging on the European market. According to the Commission, the cooperation of the companies was facilitated by the allocation of markets among the European and Japanese GIS manufacturers. After ruling on the first set of appeals brought by the European manufacturers in January 2011 (see VBB on Competition Law, Volume 2011, No. 3), the GC has now handed down its judgments concerning the appeals brought by the Japanese producers, i.e., Hitachi, Toshiba, Mitsubishi and Fuji.
Hitachi claimed in its appeal that it had provided the Commission with a plausible alternative explanation of the events interpreted by the Commission as participation in the cartel. The company argued that, in the absence of documentary evidence of its participation, the Commission should have accepted Hitachi's explanation. This argument was rejected by the GC, which considered that an alternative interpretation of one's conduct is to be accepted only where the evidence submitted by the Commission does not allow the existence of the infringement to be unequivocally established. According to the GC, this was not the case in the proceedings at hand, as Hitachi's involvement in the unlawful practices had been clearly demonstrated. The GC accordingly dismissed Hitachi's appeal in its entirety.
In contrast, the GC annulled on procedural grounds the fines imposed on Toshiba and Mitsubishi. These undertakings created a joint venture company (TM T&D) in 2002, which took over their GIS activities together with the cartel arrangements. According to the Commission, the shareholding structure of the joint venture (50/50) did not reflect the actual impact of the parties on the GIS market during the duration of the infringement. As a result, the Commission took 2001 as the reference year for calculating the starting amount of the fine for these companies, which was the last year before their GIS activities were transferred to the joint venture. The GC agreed with the appellants that this method of calculation was discriminatory, since the Commission took 2003 as the reference year for the other cartel participants. The GC considered that the Commission could instead have taken the starting amount of TM T&D's fine using turnover from 2003 and divided it between Mitsubishi and Toshiba in accordance with the proportion of switchgear sales made by those companies during the year prior to the creation of the joint venture.
As regards the appeal brought by Fuji, the GC rejected Fuji's claim that it should not have been held responsible for the infringement committed by the subsidiary that it set up with Hitachi in 2001. The GC ruled that, in order to attribute liability for the actions of a jointly controlled subsidiary, it was not necessary to demonstrate the direct involvement of its parents in the cartel. Instead, liability may be attributed to parents if they determine the conduct of a joint venture, for instance, through joint management required by the articles of the company.
In contrast, the GC released from liability one of the Fuji group companies, finding that the Commission had failed to explain the extent to which it was involved in the cartel arrangements. In addition, the GC reduced the fine for the Fuji group by € 200,000 as reward for information provided by the Fuji group which had a direct effect on the presumed duration of the cartel.
General Court partially annuls Commission's decision in synthetic rubber cartel case for lack of evidence
On 13 July 2011, the General Court ("GC") handed down its judgments on appeals brought against a European Commission decision of 29 November 2006 fining several companies for their participation in a cartel on the synthetic rubber market. The GC annulled the Commission's decision in relation to Trade-Stomil and also in relation to Unipetrol and its subsidiary Kaučuk, and reduced the fine imposed on Eni and its subsidiary Polimeri Europa.
On 29 November 2006, the Commission imposed fines totalling more than € 519 million on 13 companies for agreeing on price targets, sharing customers and exchanging sensitive information on prices, competitors and customers on the synthetic rubber market. The companies concerned brought actions before the GC for annulment of the Commission's decision or reduction of their fines.
With regard to Unipetrol, its subsidiary Kaučuk and Trade-Stomil, the GC found that the Commission had not established to the requisite standard of proof that these companies had participated in the cartel meetings at which the unlawful agreements were reached. The GC noted that, where there were doubts about the evidence relied on, this must operate to the advantage of the companies concerned.
The Commission had doubled the fine imposed on Eni and its subsidiary Polimeri Europa for repeated infringement since these companies had participated in two earlier cartels. However, the GC found that the Commission did not adequately take into account the complex evolution in structure and control of these companies and that, as a result, the Commission had not provided sufficient evidence that they had repeated an infringement. Accordingly, the fine imposed jointly and severally on Eni and its subsidiary was reduced from € 272.25 million to € 181.50 million.
With regard to Dow Deutschland, the GC partially annulled the Commission's decision, finding that the period during which Dow had participated in the infringement had been overestimated by the Commission. However, the amount of the fine remains unchanged since the Commission's error did not have any effect on the increase applied for the duration.
The GC dismissed Shell's appeal in its entirety.
General Court reduces fine on ThyssenKrupp; rejects other appeals in lifts and elevators cartel
On 13 July 2011, the General Court ("GC") handed down its judgments in the appeals brought by companies of the Otis, KONE, Schindler and ThyssenKrupp groups against a European Commission decision finding that they had infringed Article 101(1) TFEU by operating a cartel on the market for elevators and escalators. The GC reduced the fines imposed by the Commission on ThyssenKrupp and its subsidiaries but dismissed the appeals brought by the other companies.
By a decision of 21 February 2007, the Commission imposed fines exceeding € 992 million on the ThyssenKrupp, Otis, Kone and Schindler groups of companies for having participated in a price-fixing, market-sharing, information exchange and bid-rigging cartel on the market for elevators and escalators in Benelux and Germany. The Commission concluded that 17 named subsidiaries of these groups had participated in the infringement and that the parent companies should be held jointly and severally liable for these infringements. The four corporate groups subsequently lodged appeals against the Commission decision, each seeking the annulment of the decision and/or a reduction of the fines imposed.
As regards the appeal brought by German steel-maker ThyssenKrupp, the GC dismissed all but one of its grounds of appeal. The fine imposed on ThyssenKrupp had been doubled by the Commission as it considered ThyssenKrupp a repeat offender. More particularly, in 1998, members of the ThyssenKrupp group were fined for price fixing in the market for alloys used in elevators. However, the GC agreed with ThyssenKrupp's arguments that its convictions in this earlier cartel could not be considered a repeat infringement. In this respect, it was relevant that the Commission only fined ThyssenKrupp subsidiaries in 1998, not the parent company itself. Moreover, in the earlier cartel decision, the Commission had not established that the subsidiaries and their parent companies formed an economic entity. Accordingly, the GC reduced the fines imposed on the ThyssenKrupp group of companies from € 480 million to € 320 million.
In contrast, all arguments raised on appeal by Otis, Kone and Schindler, relating to, inter alia, parent liability, violation of the rights of the defence and miscalculation of fines were rejected by the GC. The GC considered that the Commission had not made any error of assessment and had met the required standard of proof for imputing liability to the concerned undertakings. Consequently, these parties' appeals were dismissed in their entirety and their respective fines were upheld.
General Court dismisses action brought by Elf Aquitaine, Total and Arkema France in bleaching chemicals cartel
On 14 July 2011, the General Court ("GC") handed down two judgments dismissing appeals brought by Elf Aquitaine, Total and their subsidiary Arkema France against the European Commission's bleaching chemicals cartel decision.
By its decision of 3 May 2006, the Commission found that nine companies had infringed Article 101 TFEU by their participation in a cartel on the market for bleaching chemicals. The Commission imposed fines totalling € 388.13 million on seven of the companies, including a fine of € 78.66 million on Arkema France, for which Total and Elf Aquitaine were jointly and severally liable. The three companies subsequently lodged appeals against this decision before the GC.
In its 2006 decision, the Commission had found that Elf Aquitaine's shareholding of 97.5% in Arkema sufficed to presume that Arkema's conduct had been determine by its parent company and that the parent company and its subsidiary formed one single economic unit. Similarly, the Commission held Total jointly and severally liable as a result of its 99% shareholding in Elf Aquitaine from April 2000. In their appeal, the applicants challenged the Commission's approach by arguing that the Commission could not rely on Elf's 97.5% shareholding alone to establish the existence of a decisive influence over Arkema. According to the applicants, the Commission was obliged to underpin that finding with additional evidence demonstrating the exercise of a parent's influence over the subsidiary. The companies also submitted arguments based on an alleged infringement of their rights of defence, the principle of legal certainty, and the principle of sound administration.
The GC rejected the reasoning of the applicants and applied the Akzo case-law (see VBB on Competition Law, Volume 2009, No. 9) according to which there is a presumption that a subsidiary that is wholly-owned by its parent company does not decide independently its own conduct on the market. The Commission was therefore able to address a decision imposing fines to the parent company without having to establish the personal involvement of the latter in the infringement, unless the parent company adduced sufficient evidence to rebut the presumption. The GC observed that, once Elf Aquitaine's 97.5% shareholding in Arkema had been established, the Commission was not obliged to provide any additional evidence confirming that Arkema could not act freely on the market. The GC also rejected the remaining arguments put forward by the applicants, dismissing both appeals in their entirety.
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