Articles

Competition Law Newsletter May 2014

Competition Law Newsletter May 2014

Competition Law Newsletter May 2014

02.05.2014 NL law

 

Contents

 

 

 

  1. The Court of Justice rules on internal fine allocation between companies belonging to the same undertaking and on joint and several liability of successive parent companies   
  2. District Court annuls fining decision against insulated glass producers because of unreliable leniency statements   
  3. Commission issues SO for "gun jumping" 
  4. Dutch Appeals Court ruled that three nurseries cartel did not have an effect on trade between EU Member States 
  5. The Brussels Court of Appeal annuls cartel fine on the basis of the ne bis in idem principle  Appeals against use of dawn raid documents in Belgium suspend the time limitation periods

 

 

 

 

 

 

1. The Court of Justice rules on internal fine allocation between companies belonging to the same undertaking and on joint and several liability of successive parent companies

On 10 April 2014, the Court of Justice handed down two judgments concerning the gas insulated switchgear cartel (Joint cases C-231/11, C-232/11 P and C-233/11 P European Commission v Siemens AG Österreich and Others and Siemens Transmission & Distribution Ltd and Others v European Commission; Joint cases C-247/11 P and C-253/11 P  Areva SA and Others and Alstom Grid AG and Others v Commission).

In Siemens, the Court of Justice stated that although the Commission has the power to hold a number of companies jointly and severally liable for the payment of a fine if they form part of the same undertaking, (see Article 23 of Regulation No 1/2003), it cannot determine the shares of the fines to be paid by those held jointly and severally liable from the perspective of their internal relationships.

The Court firstly confirmed the General Court's ("GC") consideration that where several legal persons may be held responsible for participating in an infringement committed by one and the same undertaking for the purposes of competition law, they must be regarded as jointly and severally liable for that infringement. The objective of joint and several liability is therefore to provide the Commission with an additional legal device to strengthen the effectiveness of the action taken by it for the recovery of fines imposed for anti-competitive behavior.

Nevertheless, the Court points out that the determination of the shares that each of the involved entities must pay does not pursue this objective considering that the Commission loses its interest once it has obtained the payment of the fine in full by one or more of those held liable. The determination of the internal relationship of those held jointly and severally liable for the payment of the fine and consequently the determination of the respective shares that they will be required to pay, is a contentious issue that should be resolved by the national courts by applying the national law applicable to the dispute, in a manner consistent with EU law. Therefore, the Court concludes that the GC had erred in law in finding that it is exclusively for the Commission in exercising its power to impose fines, to determine the respective shares of the various companies of the fines imposed on them jointly and severally, insofar as they formed part of the same undertaking, and that such task could not be left to the national courts.

In the Areva/Alstom judgment, the Court of Justice concluded that the GC had wrongly applied the rules governing joint and several liability for the payments of fines. The GC had confirmed the decision in which the Commission had imposed de facto joint and several liability on Alstom and Areva, two successive parent companies of a subsidiary who had participated in the cartel, even though those parent companies had never constituted an economic unit between them.

Despite the fact that there were no corporate ties between Areva and Alstom, the joint and several liability established between the subsidiary and the successive parent companies, would force one of them to pay the entire fine. Consequently, once the whole fine has been paid, the parent company would have to seek recovery from the other parent company by means of an action before a national court. According to the Court such a definition of joint and several liability is at odds with the principle that the penalty must be specific to the offender and the offence. The Court continues by pointing out that, although joint and several liability enables the Commission to reduce the risk of insolvency of one of the companies forming part of the same undertaking, it cannot be used to force one company to bear the risk of the insolvency of another company with which it has never formed part of the same undertaking. Moreover, since the contested decision did not enable the parent companies to ascertain precisely the amount of the fine they should pay in respect of the period during which they were held jointly and severally liable, the Court concluded that the principle of legal certainty had also been infringed.


2. District Court annuls fining decision against insulated glass producers because of unreliable leniency statements

On 3 April 2014, the District Court of Rotterdam issued a judgment in a case regarding an alleged cartel of producers of insulated glass units. The District Court reversed a fining decision by the Netherlands Authority for Consumers and Markets ("ACM") against Pilkington and Scheuten Glas. As a result, the EUR 4,097,000 fine that was imposed on Pilkington and the EUR 1,626,000 fine that was imposed on Scheuten were annulled in their entirety.

According to the ACM, four undertakings in the insulated glass market had agreed on the use of a minimum price list and price increases during the period 2004-2005. The ACM based its case on leniency statements of two of the undertakings, Saint Gobain and Asahi Glass. However, the District Court considered that the leniency statements were unreliable. Firstly, the District Court found that the ACM had asked leading questions and provided considerable information to the leniency applicants before asking questions. Secondly, the inconsistencies between the statements of the leniency applicants also affected the reliability of the statements. The other evidence could not confirm the allegations to a sufficient degree.

The District Court also considered that the ACM should not have refused to provide Pilkington access to the full leniency statements in the case file. The District Court agreed with Pilkington that leniency statements regarding other glass markets and other periods were relevant for the assessment of the reliability of the statements. Therefore, the rights of defence of Pilkington were violated by not providing access. This is without consequences, however, because the decision was already annulled on the above mentioned grounds. The decision is open for appeal to the Trade and Industry Appeals Tribunal (CBb).


3. Commission issues SO for “gun jumping”

On 31 March 2014, the Commission issued a Statement of Objections to Marine Harvest ASA ("Marine Harvest") for implementing a transaction prior to having obtained the required clearance from the Commission under the EU merger control rules. Whilst not all details of the case are available at this stage of the procedure, it is worthwhile making some preliminary observations given that violations of the stand-still obligation (sometimes referred to as "gun jumping") are rarely straightforward and the Commission has proven to nonetheless vigorously enforce this rule.

Background

On 9 August 2013, Marine Harvest notified its planned acquisition of control over competitor Morpol, listed on the Oslo stock exchange, obtaining clearance from the Commission subject to conditions on 30 September 2013. However, the Commission considered that by acquiring a 48.5% stake in Morpol on 18 December 2012, Marine Harvest already had taken control over Morpol. According to the Commission, the transaction was implemented only four days after it was signed, that is, eight months before the notification to the Commission and ten months before the Commission cleared the transaction. Marine Harvest, however, had specified in its notification form that following its purchase of the 48.5% stake it would not exercise de facto or de jure control over the target pending approval by the Commission. In any event, the Commission has now taken the preliminary view that as a result of the purchase of the 48.5% stake, Marine Harvest has implemented the acquisition of Morpol prior to its notification and clearance by the Commission, in breach of Articles 4(1) and 7(1) of the EU Merger Regulation 139/2004.

Preliminary words of caution to prevent “gun jumping”

There are diverging rules concerning the stand-still obligation for transactions with a target listed at a stock exchange. The EU Merger Regulation includes a specific regime for transactions concerning a listed target (Article 7(2)):

The general stand-still obligation] shall not prevent the implementation of a public bid or of a series of transactions in securities including those convertible into other securities admitted to trading on a market such as a stock exchange, by which control [...] is acquired from various sellers, provided that:

(a) the concentration is notified to the Commission [...] without delay; and

(b) the acquirer does not exercise the voting rights attached to the securities in question or does so only to maintain the full value of its investments based on a derogation granted by the Commission [...].

In view of Marine Harvest’s explicit comment that it would not exercise de facto or de jure control over the target pending approval by the Commission, it appears that it considered its actions to be covered by the provision included above. Such assumption may have led it to believe that its purchase of the 48.5% stake could take place without prior approval. If it indeed acted on this assumption, it appears to have overlooked that the latter transaction did not qualify as “a public bid” or as “a series of transactions” within the meaning of the cited provision, but rather a single purchase of a block of shares. Whilst only the fining decision can confirm this reasoning, this issue may be at the heart of the Commission’s case.

In addition, the acquisition of minority stakes may qualify as “control” triggering an obligation to obtain clearance. Both in the context of transactions with “private” companies and those that are listed, obtaining a minority stake may result in de facto or de jure control over the target in violation of the stand-still obligation. It is noteworthy that the Commission has imposed a EUR 20 million fine on Electrabel for failure to notify a transaction providing it with (only) a minority stake in the target that according to the Commission resulted in control. The General Court upheld this fine at first instance, see T-332/09 (appeal to the Court of Justice is pending, see C-84/13 P).


4. Dutch Appeals Court ruled that tree nurseries cartel did not have an effect on trade between EU Member States

On 10 April 2014, the Administrative High Court for Trade and Industry (College van Beroep voor het bedrijfsleven, "CBB") rendered two judgments concerning the tree nurseries (boomkwekerijen) cartel. The Dutch Competition Authority had imposed fines on various companies for their participation in the tree nurseries cartel. On appeal, the Rotterdam District Court ("District Court") upheld the main findings of the Authority but annulled the fines partially. Both the companies and the Authority appealed against that ruling of the District Court. On appeal, the CBB concluded that the EU cartel prohibition (Article 101 TFEU) was not violated, contrary to what the District Court had found, because the behaviour did not have an appreciable effect on trade between Member States. The appeal of the Competition Authority against the District Court judgement was partly upheld (ECLI:NL:CBB:2014:118).

The CBB found that the cartel, which included bid rigging, did not function where competitors outside the cartel (e.g. foreign tree nurseries) participated in tenders. Moreover, the cartel did not cover the entire Dutch territory. Finally, the tree nurseries involved in the cartel were active only locally and were not involved in import or export. In view of these facts, the CBB concludes that the behaviour at issue could not have affected trade between Member States within the meaning of Article 101 TFEU.


5. The Brussels Court of Appeal annuls cartel fine on the basis of the ne bis in idem principle

On 28 February 2013, the Belgian Competition Council imposed fines on five flour mills for participating in a cartel on the market for the production and sale of flour in Belgium. The incriminating practices consisted of horizontal agreements, including the exchange of commercially sensitive information and the coordination of price increases with the purpose of stabilizing the market position of the participating flour mills. The Council did not determine the cartel participants' fines based on their Belgian turnover but imposed lump sum fines amounting to EUR 100,000 for three of the undertakings concerned.

The Council’s investigation was prompted by leniency applications following the initiation of investigations in other Member States, such as Germany and the Netherlands. The Dutch Competition Authority imposed fines on most of the undertakings involved in the Belgian investigation but not on Brabomills.

Brabomills appealed the decision of the Belgian Competition Council alleging an infringement of the ne bis in idem principle. Referring to the EU Court of Justice's judgment in the Toshiba case, the Belgian Court of Appeal upheld this ground of appeal. It determined that the Competition Council’s method for calculating the fine – the lump sum – did not make it possible to determine whether or not the appellant had been sanctioned for consequences of the infringement that occurred in the Netherlands and for which it had been acquitted by the Dutch Competition Authority. Because the infringement related to a single and continuous cartel in the Benelux and the Council did not indicate clearly that the fine it imposed only related to the consequences of the infringement on the Belgian territory, the Court could not rule out that this fine was (partly) a sanction for effects of the cartel on the Dutch territory. To rule out "bis in idem", the Brussels Court of Appeal decided to annul the EUR 100,000 fine imposed on Brabomills.


6. Appeals against use of dawn raid documents in Belgium suspend the time limitation periods

The new Belgian Competition Act, which entered into force on 6 September 2013, introduced a possibility to appeal decisions of the Belgian competition authority to use documents obtained in the context of dawn raids.

According to the new Act, such decisions may be appealed when the prosecutor submits his statement of objections and he uses the obtained documents to substantiate the statement of objections. Parties then have 30 days to lodge their appeal before the Brussels Court of Appeals against the competition authority’s decision to use those documents.

Several undertakings have made use of this possibility to appeal since the new Act entered into force. The Belgian legislature now adopted a new Act of 2 April 2014 whereby if an appeal against the use of such Dawn Raid documents is filed, the time bar periods that apply to infringements of Belgian competition laws are suspended pending the procedure before the Court of Appeals. The new Act of 2 April enters into force 31 May 2013.

 

 

 

Team

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