Short Reads

Envelope maker's cartel fine annulled in first successful European settlement appeal

Envelope maker's cartel fine annulled in first successful European settlement appeal

Envelope maker's cartel fine annulled in first successful European settlement appeal

02.01.2017 EU law

On 13 December 2016, the General Court ("GC") annulled the € 4.7 million cartel fine the European Commission imposed on envelope maker Printeos. The GC ruled that the Commission failed to state adequate reasons in the settlement decision with regard to why the cartelists were granted different fine reductions.

On 10 December 2014, the Commission fined five envelope makers for coordinating prices and allocating customers for certain types of envelopes. The envelope makers had entered into a voluntary settlement for which they each received a ten per cent fine reduction. In addition, Printeos received a fifty per cent fine reduction because it cooperated with the Commission during the investigation. The Commission further adjusted the fines of the cartelists on the basis of paragraph 37 of the fining guidelines. This paragraph allows the Commission to depart from the methodology set out in the fining guidelines if the particularities of a given case require such an adjustment.

Printeos appealed the settlement decision arguing that the Commission failed to provide the reasons why it adjusted the basic amount of the fines imposed on the cartelists. In particular, Printeos complained that it was unclear why one of the parties received an additional fine reduction and that therefore it was unable to assess whether the settlement decision was in line with the principle of equal treatment.

The GC agreed with Printeos. It ruled that the principle of equal treatment requires the Commission to explain with sufficient clarity and precision how it deviated from the methodology of the guidelines. Because the underlying decision did not contain sufficient reasoning, Printeos was not in a position to effectively dispute the merits of the Commission’s approach. Subsequently, the GC was unable to fully exercise its powers of judicial review with regard to whether the principle of equal treatment had been complied with.

Therefore, the GC concluded that the contested decision was vitiated by a failure to state adequate reasons. As a consequence, the GC annulled the contested settlement decision. The judgement shows that undertakings can successfully appeal settlement decisions and underlines the Commission’s duty to adequately state reasons for its settlement decisions.

This article was published in the Competition Law Newsletter of January 2017. Other articles in this newsletter:

1. General Court rules on the concept of a single and continuous infringement in the smart card chips cartel case 
2. District Court of Limburg rules that damages claims in the Dutch prestressing steel case are time-barred
3. ACM established guiding principles in relation to sustainability arrangements
4. Belgian Competition Authority confirms that the acquisition by a dominant player of a small competitor is not automatically an abuse of a dominant position

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