Short Reads

A problem shared is a problem halved: fine reduction and fine liability are correlated

A problem shared is a problem halved: fine reduction and fine liabili

A problem shared is a problem halved: fine reduction and fine liability are correlated

01.11.2018 NL law

Companies should beware that when held jointly responsible for a cartel infringement, a fine reduction granted to one of them could affect the joint and several liability of fines allocated to the remaining companies. According to the General Court, in applying the principle of equal treatment, the remaining liability for fine payment should be distributed proportionately by the Commission.

This approach was not taken by the Commission in its heat stabilisers cartel decision as it only applied a fine adjustment to one part of the fine, leaving another company solely responsible for the second part of the fine. The Commission should have applied the reduction proportionally to both parts instead to ensure an equal distribution of liability. Companies are well advised to double check whether any increase in liability resulting from a fine reduction is shared fairly between the remaining co-debtors.

In 2009, the Commission imposed a total fine of EUR 173 million on ten heat stabilisers producers for participating in a cartel. The Commission imposed fines on Aachener Chemische Werke Gesellschaft für glastechnische Produkte und Verfahren mbH (ACW), Chemson Polymer Additive AG (CPA) and GEA Group AG (GEA) as follows:

  1. GEA, ACW and CPA were held jointly and severally liable for EUR 1,913,971
  2. GEA and ACW were held jointly and severally liable for a fine EUR 1,432,229.

In 2010, the Commission amended its decision because ACW's fine exceeded the 10% of total turnover-cap under Regulation 1/2003. In the amending decision, the total fines imposed on CPA and GEA remained the same but the allocation of joint and several liability was adjusted as follows:

  1. GEA, ACW and CPA were held jointly and severally liable for EUR 1,086,129
  2. GEA and CPA were held jointly and severally liable for EUR 827,842
  3. GEA was held solely liable for EUR 1,432,229.

On appeal at the General Court, GEA argued that the Commission had breached the principle of equal treatment because the loss of all joint and several co-debtors for part of the fine left GEA at a disadvantage when compared to CPA. GEA claimed the Commission should have applied the 10%-cap proportionally to both fines. The General Court agreed. It found that GEA and CPA were in a comparable situation, since they were both jointly and severally liable for payment of a fine with ACW. By applying the fine reduction granted to ACW only to the fine jointly and severally imposed on GEA, CPA and ACW, the Commission had infringed the principle of equal treatment without any objective justification. The General Court therefore annulled the Commission's decision.

 

 

This article was published in the Competition Law Newsletter of November 2018. Other articles in this newsletter:

  1. Franchise argument in laundry cartel does not wash with Dutch court
  2. Rotterdam District Court rules on follow-on damages claim in relation to Dutch bitumen cartel
  3. ACM bound by its own rules during dawn raids
  4. European Court of Justice clarifies the application of choice of forum clauses in competition damages claims

 

Team

Related news

24.09.2020
Stibbe hosts a webinar on dawn raids organised by IBJ/IJE

Seminar - On 24 September 2020, several Stibbe lawyers ​​​​​explain the rights and obligations of companies when confronted with announced or unannounced raids. What do to when, for example, tax authorities, the competition authorities, police services or a bailiff are at your doorstep?

Read more

03.09.2020 NL law
Home, but not alone: Commission may complete dawn raids from home

Short Reads - The European Court of Justice (ECJ) has rejected Nexans’ appeal in the power cables cartel case. The Commission started the dawn raid at Nexans’ premises, but due to lack of time finished the raid at the Commission’s premises in Brussels. The ECJ found that the Commission can copy data and assess its relevance to the investigation at its own premises, while safeguarding companies’ rights of defence.

Read more

03.09.2020 NL law
COVID-19 impacts level and payment of antitrust fines

Short Reads - As well as granting companies leeway on certain COVID-19 initiated collaborations (see our May 2020 newsletter), the coronavirus outbreak has also led competition authorities to take a more lenient stance towards fine calculations and payments. The European Commission has extended the due date for fine payments by an additional three months in response to potential short-term liquidity issues brought about by the pandemic. Similar reasons led the Dutch Trade and Industry Appeal Tribunal to reduce a EUR 1 million cartel fine to just EUR 10,000.

Read more

03.09.2020 NL law
The ACM’s Green Deal: achieving sustainability via competition law?

Short Reads - The ACM has issued draft guidelines on the application of competition law to sustainability agreements. Companies entering into agreements that restrict competition but contribute to governmental sustainability objectives – i.e. lower CO2 emissions – may expect more room for collaboration. The proposed framework would allow these types of agreements if their anti-competitive effects are outweighed by their environmental benefits to society as a whole (rather than to in-market consumers only, as under the existing framework).

Read more

02.07.2020 NL law
European Commission to pull the strings of foreign subsidies

Short Reads - The European Commission is adding powers to its toolbox to ensure a level playing field between European and foreign(-backed) companies active on the EU market. On top of merger control and Foreign Direct Investment screening obligations, companies may also need to account for future rules allowing scrutiny of subsidies granted by non-EU governments if those subsidies might distort the EU Single Market.

Read more