1. General Court reduces the fine of two appellants in the calcium carbide and magnesium reagents cartel case
On 23 January 2014, the General Court (“GC”) handed down judgments on three appeals from the calcium carbide and magnesium reagents cartel for SKW, Degussa and AlzChem, and Gigaset (formally known as Arques Industries). With regard to the first, the General Court dismissed the appeal. However, it reduced the fine in the cases: Evonik Degussa and AlzChem v Commission (T-391/09) and Gigaset v Commission (T-395/09). Degussa and AlzChem's fines were reduced due to the Commission’s error in applying a recidivism multiplier, while Gigaset saw its fine reduced because the Commission had incorrectly set the duration multiplier.
The Commission had applied a recidivism multiplier on AlzChem, which the appellants complained was an error, given that AlzChem was not part of the Degussa group of undertakings that had been fined previously (in the animal feeds case). The Commission decided that a multiplier for recidivism could be applied to a subsidiary of one group on the basis of a previous infringement of another subsidiary in the same group. However, the General Court disagreed. It based its reasoning on the Court of Justice decision in the Aristrain case (C-196/99). In that case the Court of Justice held that the “simple fact” that two separate companies had share capital held by the same family is “insufficient, in itself, to establish that those two companies are an economic unit” which would result in vicarious liability. The GC went further to reject the application of recidivism as an aggravating circumstance to a subsidiary that had not been penalized by the Commission and was not an addressee of the statement of objections, given that it had not had an opportunity to object to a finding that it formed an economic unit with the infringing subsidiary (thereby confirming the GC judgment in ThyssenKrupp joined cases T-144/07).
In addition, the GC accepted the appeal ground that the Commission had breached the principle of equal treatment. The Commission imposed joint and several liability on SKW, for the whole of the amount imposed on SKW Holding and Gigaset. However, it imposed joint and several liability in relation to Degussa and AlzChem only for part of the fine. The GC agreed that the Commission was correct in stating that, given its purpose, an undertaking should only bear once the cost of the deterrence imposed on the basic fine. However, this did not preclude a finding of SKW jointly and severally liable with Degussa and AlzChem for the totality of the fine.
In Gigaset, the GC reduced the fine because it held that the Commission had infringed the principle of equal treatment when it calculated the fine. The Commission had applied a multiplier of 2.5 to both SKW and Arques for the duration of the infringement, although SKW was found to have participated in the cartel for a longer period.
A relevant element in this judgment was the Commission’s application of a multiplier of 0.5 for periods of over three months, even though the 2006 Fining Guidelines state that a multiplier of 0.5 will be used for every period of less than six months. The GC held that such deviations are only allowed if they are in accordance with general principles of law, including the principle of equal treatment. By treating two different situations in an equal manner, without basing it on objective and reasonable criteria, the Commission had breached the principle of equal treatment.
The GC rejected the Commission's argument that on the basis of case law (SCA Holding v Commission T-327/94 and HFB and Others v Commission T-9/99), Arques could not benefit from an illegality committed in favor of SKW. The GC dismissed the Commission's argument by stating that a deviation from the guidelines cannot be regarded as a breach of the law in the sense of the aforementioned case law. In that respect the GC noted that the Commission has the ability to deviate from guidelines and that under the 2006 Fining Guidelines, the Commission furthermore can use a different calculation method in specific circumstances. In addition, guidelines are not a legal norm but a standard of conduct that is to be followed by the Commission and that should be in line with the principle of equal treatment. Therefore, the GC not only considered that the Commission breached the principle of equal treatment, but that this inequality of treatment should be remedied by reducing the multiplier.
2. In interim relief proceedings, Dutch Civil court follows earlier assessments of the ACM about joint purchasing by banks
On 18 December 2013, the District Court of Amsterdam (“District Court”) ruled in interim relief proceedings that there was no reason to deviate from earlier assessments made by the ACM on the compatibility of a joint purchasing agreement by banks with competition law. This judgment is interesting because the Court in civil proceedings followed assessments that the ACM made earlier both formally and informally.
This case was initiated by Brink’s, an undertaking active on the market for secure cash transports. In 2011, a consortium of Dutch banks established the undertaking GSN in order to jointly purchase cash transport and cash processing services. Before formally establishing GSN, the banks had drafted a ‘self-assessment’ of GSN’s compatibility with competition law and had it approved by the ACM informally. Subsequently, Brink’s lodged a complaint with (what is now) the ACM in 2012, claiming that banks’ partnership violated Dutch and EU competition law. Again, though this time formally, the ACM considered that GSN was compatible with competition law. Brink’s subsequently appealed against this decision.
In 2013, GSN put out a tender for the performance of cash transport services. Brink’s submitted a bid but was not selected because it had, according to GSN, scored insufficiently on the criterion of Partnership due to, among others, its aforementioned legal battle against the initiative. In these interim relief proceedings under Dutch civil law, Brink’s demanded that the Court order GSN to stop the tender and retract its rejection of GSN’s bid due to the violation of both competition and public procurement law. The Court dismissed Brink’s demands. It pointed out that the ACM had judged the banks’ partnership on two occasions and found insufficient grounds to deviate from the ACM’s assessments in those instances.
This ruling shows that the Dutch civil courts are prepared to follow the ACM’s earlier assessments, provided that the litigants are unable to put forward sufficient grounds or evidence that justifies any deviation. Moreover, the courts in civil law proceedings may not only rely on formal ACM assessments but also informal ones.
3. The Belgian Competition Authority adopts and codifies new dawn raid guidelines
The Belgian Competition Authority (“BCA”) is empowered to carry out dawn raids while investigating alleged breaches of competition law. Since 2011, the BCA during a dawn raid handed over guidelines on dawn raids to the raided undertaking. To bring these guidelines in line with the provisions of Book IV of the Economic Code (Wetboek economisch recht / Code du droit économique) which recently entered into force, the BCA adopted on 17 December 2013 new guidelines which have been codified and published in the Belgian Official Journal (Belgisch Staatsblad / Moniteur Belge).
Firstly, the guidelines point out that a dawn raid starts as soon as the undertaking concerned receives the decision issued by the competition prosecutor and the investigating magistrate. The undertaking will have to submit itself to the investigating measures, but has the right to be assisted by external counsel. However, the presence of external counsel is not legally required. The BCA is therefore not obliged to await its arrival in order to start its investigation.
Considering that information is increasingly stored electronically, the guidelines describe in detail the different methods which, depending on the specific circumstances, the BCA will use while investigating electronic data. Two different methods of investigation are described: the software based search and the manual search. Under both methodologies the documents will only be selected in the presence of representatives of the undertaking.
In the first case the BCA conducts its investigation through the use of specialized software and specific keywords which need to be sufficiently linked to the practices under investigation. The selected documents are then transferred and stored in reserved storage (such as an external hard drive). Data processing takes place without consulting the content of the documents. However, it is possible that, after the relevant documents have been gathered, they are immediately consulted while taking into account the “out of scope” or “LLP” character of the documents.
The other method consists of the BCA conducting its investigation manually. Once again the selected relevant electronic documents will be transferred to a reserved storage. However, the content of the documents will be analyzed immediately.
Special attention is given to the qualification of the documents/data. After the documents have been selected they must be categorized and classified in one of three different indexes depending on their qualification. The system aims at making a clear distinction between documents which are connected to the practice under investigation (“in scope”), the documents which according to the undertaking concerned fall outside the scope of the BCA’s investigation mandate (“out of scope”) and the documents that are protected by the legal professional privilege (“LPP-documents”). This differentiation is especially relevant in light of the judgment of the Brussels’s Court of Appeal (“CoA”) of 5 March 2013 (see April 2013 Newsletter). In that judgment the CoA confirmed that advice given by an in-house counsel to its employer as well as the related correspondence, such as advice or drafts, is protected by the legal professional privilege and therefore is confidential. Nevertheless, the documents will no longer be considered confidential once the employer shares the documents with someone outside of the company. It is also important to note that LPP can only be enjoyed if the in-house counsel is a member of the Belgian Institute for in-house counsel (Instituut voor Bedrijfsjuristen / Institut des juristes d'entreprise).
Finally, the guidelines determine that the undertakings concerned must be given at least 10 working days depending on the amount of documents and the complexity of the case, to review and justify the selection of the “out of scope” and “LPP” documents.