On 3 March 2011, the General Court ruled upon several appeals brought against the Commission's gas insulated switchgear cartel decision. Back in January 2007 the Commission had imposed fines totalling over €750m on eleven groups of companies for infringing Article 101(1) TFEU by participating in an illegal collusive tendering cartel in the market for gas insulated switchgear projects.
The General Court has left the fine of €396.56m imposed on Siemens AG unchanged (having rejected all of its arguments) but has reduced the amounts imposed on certain of the other appellants (namely, Alstom and Areva and the Siemens Austria subsidiaries). In addition the Court has provided helpful guidance on the issues surrounding the question of liability where there is changing ownership.
In relation to the Siemens group of companies, ownership had shifted during the relevant period of the cartel. The General Court laid down the principle that a company that has participated independently in the cartel, and which is subsequently acquired by another company, must bear responsibility for its conduct prior to that acquisition where it continues its activities as a subsidiary (rather than having been fully absorbed into the acquiring company). Where the infringement continues post acquisition, the acquiring company may be liable from that time onwards.
Further, on the facts, the court extended this principle to a company which had participated in the infringement initially as a subsidiary of one group, but which had then been acquired by another.
The Court also explained that joint and several liability for payment of the cartel fine can only apply in respect of the period during which the various companies formed an 'economic unit' (and thus constituted a single undertaking for the purposes of competition law). The Court confirmed that the Commission has discretion to determine what proportion of a fine each company within the undertaking should bear in apportioning the liability and that, in the absence of any contrary finding, equal liability is presumed.
Such apportionment of the fine needs to be strictly in line with the duration of each company's participation in the cartel, which in essence means the Commission must only impose penalties that are specific to the offender and the offence. On this occasion the Commission had failed to apply this principle correctly and certain of the fines were adjusted accordingly, albeit the overall amount stayed the same.
Applying similar principles, the Court reduced the quantum uplift in fines applied to Alstom and Areva as a penalty for the role of leader they played as 'European Secretary' to the cartel (along with Siemens), despite the Court agreeing with the findings of liability of the Commission. The Court reduced the uplift on the basis that the amount was not proportionate, and did not exhibit equal treatment, in relation to the period during which the different undertakings played the role of leader in the infringement.
Appeals by the Japanese companies Hitachi, Toshiba, Fuji and Mitsubishi against the Commission's decision are still pending.
To view Community Week, Issue 512; 11th March 2011 in full, Click here.
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