- Consultation on draft bill doubling ACM fine maximum
- Rotterdam Court largely upholds findings of Dutch flour cartel but acquits individual millers
- EUR 20 million fine confirmed as the EU fine for "gun jumping" the EU Merger Control process
- General Court reduces ExxonMobil's fine in the paraffin wax cartel
1. Consultation on draft bill doubling ACM fine maximum
The Minister of Economic Affairs (the "Minister") published a draft bill for consultation on 11 July 2014. The draft bill includes a proposal to double the fine maximum for the Authority for Consumers & Markets ("ACM"). The amendment aims to ensure the effectiveness and deterrent effect of the ACM’s market supervision. The consultation process allows interested parties to react to the proposal, after which the Minister intends to propose a final bill proposal to the Dutch Parliament for adoption.
The proposal follows reports commissioned by the Minister. These reports concluded that the existing fines have an insufficient deterrent effect. In order to have the required deterrent effect, the Minister proposes several measures. The most important measures are the following:
- Instead of a fine maximum of 10% of the annual turnover, the maximum fine for cartels will be set at 10% of the infringer's turnover for the period of the infringement, up to a four year maximum.
- The applicable fine maximum will be doubled in case of recidivism within a period of five years prior to the adoption of the ACM's statement of objections. This applies to all types of infringements.
- The fine maximum for minor infringements will be doubled from 1% to 2% of the infringer's annual turnover (in those cases in which the fine is established as a percentage of the turnover).
2. Rotterdam Court largely upholds findings of Dutch flour cartel but acquits individual millers
On 17 July 2014 the District Court of Rotterdam (the "Court") issued judgments relating to an alleged cartel on the Dutch market between Dutch, Belgian and German milling companies. The Netherlands Authority for Consumers & Markets ("ACM") originally fined 15 milling companies for approximately EUR 82 million for a cartel infringement, including an agreement not to poach each other’s customers. The Court confirmed the ACM's finding of a single continuous infringement. However, the Court found that the ACM had not adduced sufficient proof of an infringement for six individual companies. Furthermore, the Court decided another company should have received full immunity from fines instead of just a reduction of its fine for bringing the cartel to light.
The Court ruled that the ACM had found sufficient evidence of the existence of a single continuous infringement on the basis of leniency statements and supporting documentation. The Court considered that even though the leniency applicants had described the cartel in different wordings, the main elements of the alleged single continuous infringement were sufficiently similar.
However, the Court found that the ACM had adduced insufficient proof for the participation of certain individual milling companies in this infringement. The Court stated that there was no or insufficient evidence corroborating the alleged participation of these milling companies, who had denied their involvement, also in view of proposed alternative interpretations of the evidence the ACM relied on.
Another interesting aspect of the judgments is the Court's consideration that the first leniency applicant should have received full immunity from fines instead of a reduction. The Court found that this leniency applicant had formally decided to start the investigation by submitting its application before the Board of the ACM. Contrary to the ACM's view the Court held that an internal ACM email about the matter, which was sent on a date before the leniency application, cannot be qualified as the start of an investigation by the ACM.
The judgments are open for appeal to the highest administrative court, the Trade and Industry Appeals Tribunal and can be found through the following links: Joined Cases ROT 12/1710, 12/1721, 12/1722, 12/1764, 12/1765, 12/1766, 12/1804, 12/1809, Case ROT 12/1810, Case ROT 12/1762 and Case ROT 12/1784.
3. EUR 20 million fine confirmed as the EU fine for "gun jumping" the EU Merger Control process
Ignoring the stand-still obligation under the EU Merger Control Regulation ("EMCR") leads to very high fines. This was confirmed by European Commission (the "Commission") and EU Court of Justice decisions last month (Case C-84/13) On 3 July 2014 the EU Court of Justice reconfirmed the validity of a 2009 Commission decision imposing a fine of EUR 20 million for the acquisition of control by Electrabel over a company without having obtained prior approval from the Commission under the EMCR. On 23 July 2014 the Commission imposed a fine of exactly the same amount on Marine Harvest for a similar omission.
Interestingly, both cases relate to acquisitions of ("de facto") sole control over a company on the basis of a minority shareholding: both Electrabel and Marine Harvest held less than 50% of the outstanding shares and voting rights after the transaction. The cases therefore show that also in transactions leading to the acquisition of relatively low shares, merger control filing obligations, including stand-still provisions, may be triggered. We note that there are of course also national competition law regimes (including those in Germany and the UK) requiring prior notification of the acquisition of minority shares, irrespective of the question whether decisive control is acquired. Moreover, the Commission is contemplating the introduction at the EU level of a notification regime for minority shareholdings.
Both the EU Court of Justice and the Commission emphasize that a violation of the stand-still obligation is serious because early implementation of a notifiable transaction affects the structure of the market and may make it considerably more difficult for the Commission to restore effective competition where the transaction is capable of restricting competition. The notification obligation, the Commission's review of the effects of the transaction and the ensuing stand-still obligation are there to avoid any permanent and irreparable damage to effective competition.
As to the level of the fine, the Commission takes into account the (inherent) seriousness of the violation and its duration. In spite of the fact that failing to do the filing and respecting the stand-still obligation can be considered a "one-off" infringement, it is the Commission's view that it is a continuous infringement for the period between the implementation of the transaction and the ultimate approval of the transaction – the end of the standstill obligation – by the Commission.
In the case of Electrabel the Commission and the EU Court of Justice did not consider the fact that the transaction did not lead to any competition law concerns to be a factor worthy of mitigating the level of the fine. In the Marine Harvest decision the Commission considered the fact that the transaction entailed substantive competition law concerns (requiring "remedies" before approval could be granted) as an aggravating circumstance. Conversely, the fact that Marine Harvest did not exercise its control (use its voting rights) after closing and before Commission approval and the fact Marine Harvest itself notified the Commission about the transaction shortly after its closing were mitigating circumstances.
4. General Court reduces ExxonMobil's fine in the paraffin wax cartel
On 11 July 2014 the General Court ("GC") rendered its decision T-540/08 on appeal by Esso Deutschland GmbH, Esso S.A., ExxonMobil Petroleum and Chemical BVBA and ExxonMobil Corporation (jointly the "Applicants") against the European Commission's (the "Commission") decision finding that the Applicants participated in a cartel on the paraffin wax market and the German slack wax market. Amongst other things, the Applicants held that the Commission had erred in its calculation of the fine.
The Commission had taken into account the average sales of the ExxonMobil group over the years 2000-2002. It subsequently applied a multiplier of 11.5 for the duration of the infringements, which ended in November 2003. As a result the final fine also comprised the sales generated by Exxon in the period from 1992 to 1999. However, during that period Exxon and Mobil did not form one undertaking.
The Applicants submitted that taking the pre-merger period into account is inconsistent with the findings of fact made in the contested decision. They furthermore stated that the Commission's approach infringed the principles of equal treatment and proportionality. The GC accepted the Applicants' arguments.
According to the GC, an individual undertaking cannot compel the Commission to rely upon a period different from that used for the other undertakings, unless it proves that its turnover in the latter period does not reflect its true size and economic power or the scale of the infringement. Such particular reasons were found in the case at hand on the basis that Exxon kept aloof from any cartel infringements from 1992 to 1999. In view of the fact that Exxon was treated equally in a different situation, the GC found that the Commission had breached the principle of equal treatment.
Moreover, the GC concluded that the Commission had breached the principle of proportionality. By multiplying the value of sales of the post-merger entity also by the number of years in which only one of the parties to the merger participated in the infringement, the Commission artificially increased the fine in a manner which does not reflect economic reality. On this basis, the GC recalculated the fine of ExxonMobil without having regard to the value of Exxon's paraffin wax sales in the period prior to the merger.