Appealing EU cartel decisions: prospects for success

Since 2000, the European Commission has adopted 74 cartel decisions, involving a total of 442 parties.  272 of the parties appealed, whether individually or in joint proceedings, against the Commission’s decision on the basis of liability, magnitude of the fine, or both.  More than half of these appeals are still pending before the General Court.  The most recent decisions of the General Court were the annulment of the Commission’s June 2008 decision imposing a €9.9 million fine on Aragonesas and Uralita for participating in the sodium chlorate cartel, and the annulment of the Commission’s April 2007 decision imposing a €31.66 million fine on Koninklijke Grolsch NV (KGNV) for its participation in a cartel on the Dutch beer market.  The time lag on appeals to the General Court following a Commission decision is generally around 5 years and the average duration of competition proceedings before the General Court is 45 months. 

For onward appeals to the European Court of Justice (ECJ), the time lag is approximately a further 2 years, i.e. the cases currently being decided by the ECJ generally relate to  Commission decisions taken in and around 2004. 

The outcomes on appeals are approximately as follows:

• in 50% of appeals, the General Court upheld the fine imposed by the Commission
• in one case, BASF’s appeal in the choline chloride cartel, the fine was increased (on the basis of a technical error in the Commission’s calculations)
• 30% of cases have been appealed to the ECJ
• overall, 17% of appeals were successful in having the Commission’s decision annulled and fines cancelled
• 33% secured partial annulments or a reduction in fines
• of the cases appealed to the ECJ and decided, 25% secured an annulment or reduction that had not been achieved before the General Court.

Looking more closely this year to date, there have been 15 General Court decisions on cartel appeals and 3 ECJ decisions.   Detailed below are some of the grounds of appeal that have met with success.

Calculation of fine incorrect

Duration of participation in infringement

In calculating the level of the penalty, the Commission takes account of the duration of a company’s participation in the infringement.  In a number of cases, the penalty has been reduced on the ground that the Commission has failed to prove participation in the cartel for the duration on the basis of which it set the fine.  Examples include: Kaimer and others in the copper fittings cartel (from €7.97 million to €7.15 million); Solvay in the bleaching agents cartel (fine reduced from €167.06 million to €139.50 million); Romana Tabacchi in the Italian raw tobacco cartel (fine reduced from €2.05 million to €1 million); and Gosselin in the international removals market cartel (fine reduced from €3.28 million to €2.32 million).

Unwarranted increases

In gas insulated switchgear, the Commission increased the basic amount of the fine imposed on Alstom/Areva was increased by 50% as a result of their leading role.  The Court found that there was no factual evidence that Alstom/Areva had played a leading role: Siemens had been “European Secretary” to the cartel for far longer than Alstom/Areva and therefore, the increase in fine was not justified.  In the acrylic glass cartel, the Commission imposed an increase of 200% on the basic amount of Arkema France’s fine, in order to have a sufficient deterrent effect, taking into account the size and economic strength of the corporate group.  The increase was based on Total’s worldwide turnover.  The Commission took its decision on 31 May 2006.  On 18 May 2006, Arkema was floated on the stock exchange and was, therefore, at the time of the Commission’s decision, no longer part of the Total Group.  The Court held that the deterrence multiplier could only be calculated by reference to the situation of the undertaking on the day the fine was imposed.

Attribution of liability to parent

As a matter of EU law there is a rebuttable presumption that parent companies exercise decisive influence over the commercial policy of their wholly owned subsidiaries.  This enables the Commission to hold parent companies liable for the misdeeds of their subsidiaries and can also elevate significantly the level of the penalty ceiling.  This year, for the first time, in two separate cases, parent companies managed to avoid liability for the conduct of their wholly owned subsidiaries.  In the bleaching agents cartel appeal, the Commission’s decision was annulled in respect of L’Air Liquide and Edison because it had failed to consider detailed evidence put forward by the parties rebutting the presumption.  In the Dutch beer cartel appeal, the Court annulled the Commission’s decision in respect of parent company KGNV, because the Commission had failed to explain the economic, legal and commercial links between parent and subsidiary.  A consequence of the failure was that the Commission denied KGNV the opportunity to rebut the decisive influence presumption. 

Procedural errors

The most notable example of procedural errors being used successfully against the Commission is Solvay’s appeal in the soda ash cartel.  The genesis of the case dates back to the 1980s, when judicial proceedings were brought in Belgian courts by a US soda ash producer, challenging ‘total requirements’ contracts that Solvay had entered into with three Belgian glassmakers.  The case was dismissed by the Belgian courts, but the European Commission took up the mantle and initiated its own investigation.  The Commission took an infringement decision in December 1990 imposing fines of €23 million on Solvay. This decision was annulled by the General Court and the ECJ because, during the administrative proceedings, the Commission had failed to grant to Solvay sufficient access to potentially exculpatory documents.  Following the annulment, the Commission adopted a new decision which was substantially identical in content to the previous decision and again imposing fines of €23 million on Solvay.  However, the new decision was taken without opening a new administrative procedure, which meant that it was taken without Solvay having an oral hearing.  In addition, the Commission lost a number of its files and was unable to draw up a list of documents which the lost files contained, because the indexes to the lost files had also been lost.  On appeal, the General Court found in favour of the Commission: because the new decision was substantively identical to the earlier decision, it was not required to hear Solvay again.  In addition, the fact that the existing files contained proof of Solvay’s alleged misconduct precluded the possibility that the missing files might have contained documents useful for its defence. 

The ECJ disagreed, noting that this was not just a few missing documents, the contents of which could have been reconstructed from other sources, but rather, whole sub-files which could have contained essential documents that may have been relevant to Solvay’s defence.   In addition, the failings in the proceedings first time around meant that Solvay should have had the benefit of a hearing under a new administrative procedure.

The General Court’s decision was set aside and the Commission’s decision annulled.

Article by John Cassels, Partner in the Competition & EU group at Fieldfisher.