1. The Court of Justice reduced Guardian's flat glass cartel fine on the basis of the principle of equal treatment
On 12 November 2014, the Court of Justice published its judgment regarding Guardian's appeal against the General Court's ("GC") ruling in the flat glass cartel. With reference to the principle of equal treatment, the Court of Justice found that the GC had partially erred in law when it rejected Guardian's earlier appeal against the imposition of a EUR 148 million fine by the Commission. The Court of Justice therefore decided to reduce the fine by 30% to EUR 103.6 million.
On appeal before the Court of Justice, Guardian argued that the GC had failed to apply the principle of equal treatment correctly by upholding the Commission's original decision. In that decision, the Commission had, for the purpose of calculating the amount of the fines, limited itself to the participants' external sales (sales to independent third parties) thereby excluding internal sales (sales between entities belonging to the same undertaking). This meant that the relative weight of one of the other participants in the infringement (a vertically integrated company) was reduced whereas that of Guardian (a non-vertically integrated company) was increased commensurately.
Guardian accordingly argued that the GC had failed to ensure that the fines imposed by the Commission would not discriminate between vertically integrated and non-vertically integrated firms. The Court of Justice accepted this reasoning. It subsequently decided to substitute its own appraisal for the Commission's and reduced Guardian's fine by 30%.
This judgment represents a fairly rare instance in which the Court of Justice reduced the amount of a fine upheld earlier by the GC. It also provides further guidance as to how the amount of a fine should be calculated in the light of the principle of equal treatment. In that respect, the Court of Justice has made clear that the method for calculating fines should include both internal and external sales in order to avoid discriminatory outcomes between vertically integrated and non-vertically integrated firms.
2. The General Court confirmed- Orange raid did not violate the ne bis in idem principle
On 25 November 2014, the General Court ("GC") confirmed the Commission's unannounced inspection on Orange's premises (Case T-402/13) in relation to an alleged infringement of Article 102 TFEU in the market for internet connectivity services. Noteworthy is that the GC confirmed and further clarified the powers of the Commission to investigate practices that had been investigated earlier by a national competition authority.
At an inspection nine months prior to the Commission's raid, the French Competition Authority did not find an infringement of competition law. However, to address certain concerns, it placed binding commitments on Orange. Orange alleged that the Commission's inspections related to identical practices as those investigated by the French Competition Authority, and that it was therefore in violation of the ne bis in idem principle. The GC held, however, that no national competition authority is empowered to find that Articles 101 or 102 TFEU were not infringed. The GC confirmed that the Commission is competent to adopt decisions on Articles 101 and 102 TFEU even if these contradict findings by national competition authorities. Therefore, the principle of ne bis in idem does not apply in this context.
Furthermore, that the Commission did not intervene during the French Competition Authority's inspection under Article 11(6) Regulation 1/2003, did not mean that the Commission had accepted the findings of the French Competition Authority. Therefore, the GC dismissed Orange's appeal entirely.
3. The General Court upheld a fine for failing to comply with the Commission's IT -instructions during unannounced inspections
On 26 November, the General Court ("GC") upheld a decision by the European Commission ("Commission") to impose a EUR 2.5 million fine on two Czech companies for refusing to submit to an inspection in 2009. This judgment serves as a reminder that companies are responsible for ensuring that all of the persons acting on their behalf do so in accordance with the Commission's instructions during unannounced inspections.
In this particular case, two incidents had occurred during unannounced inspections that led to the Commission's decision to impose a fine. First, the Commission had found that the companies had negligently allowed access to a blocked e-mail account of a person holding a key position. This had happened after a subordinate of the person responsible for the companies' IT services had reset the password of the blocked e-mail account after receiving a phone call from the owner of that account. Second, the Commission had discovered that one of the key person's inboxes did not contain any new e-mails, because the IT department had been instructed to prevent the e-mails addressed to the account from arriving in that inbox. The Commission qualified these incidents as a refusal to submit to inspections.
In its judgment, the GC followed the Commission's reasoning. As regards the first incident, the GC agreed with the Commission that when an inspection decision has been correctly notified to an authorized person within an undertaking, the Commission must be able to carry out the investigation without being under an obligation to inform each person concerned of his duties. Thus, after the Commission had correctly notified the inspection decision, it was up to the companies under inspection to take all the necessary measures to implement the Commission's instructions and to ensure that the persons authorized to act on their behalf did not obstruct the process. As regards the second incident, the GC agreed with the Commission that this constituted an intentional diversion of e-mails that thwarted the Commission's instructions and the purpose of its investigation.
This judgment underlines the need for companies to ensure that both employees and other persons acting on their behalf, including IT departments, are made fully aware of the Commission's instructions during unannounced inspections and subsequently closely observe those instructions.
The GC's ruling comes several weeks after the European Court of Human Rights ("ECHR") ruled that unannounced inspections by the Czech Antitrust Office in 2003 had violated the right to a private life. Specifically, the ECHR considered that Czech legislation did not provide sufficient ex post facto control measures by an independent court to counterbalance the absence of ex ante court approval for the execution of unannounced inspections. As a result, the Czech Antitrust Office has temporarily stopped conducting unannounced inspections.
4. The General Court annulled the Commission’s decision holding Alstom jointly and severally liable for the infringement of its wholly owned subsidiary
On 27 November 2014, the General Court ("GC") annulled the Commission’s 2009 decision in so far as it held Alstom to be jointly and severally liable for the payment of the fine imposed on its wholly owned subsidiary, Areva T&D, for its participation in the power-transformer cartel.
On October 2009, the Commission adopted a cartel decision against several companies, including Areva T&D, for dividing the European and Japanese power transformer market by means of a verbal "gentlemen’s agreement". Since Areva T&D was at the time of the infringement wholly owned by Alstom, the Commission held the latter jointly and severally liable for the infringement committed by its subsidiary.
The GC recognized that, according to established case law, the conduct of a subsidiary may be imputed to the parent company where it is found that the subsidiary does not decide independently upon its own conduct on the market, but carries out the instructions given to it by the parent company. In the specific situation where the parent company has a 100% shareholding of its subsidiary there is a rebuttable presumption that the parent company does in fact exercise such a decisive influence over the conduct of its subsidiary.
According to the GC, Alstom brought forward elements specifically aiming to prove that, during the given period, its subsidiary had acted independently on the market, but that the Commission had failed however to properly explain why those elements were not sufficient to rebut the presumption. The GC recalled that, even if the Commission considers that the evidence adduced by Alstom is insufficient to rebut the presumption, it is still obliged to state reasons for its decision on this issue.
5. The German Supreme Court overturned a judgment of The Higher Court on internal liability for competition fines
The German Bundesgerichtshof ("BGH") rendered a judgment in a case on the internal allocation within an undertaking of a jointly and severally imposed competition fine. [The judgment is not yet published; this report is based on the BGH press office's summary report].
The background to the case is the Calcium Carbide cartel decision by the European Commission in which it imposed a joint and several fine on several legal entities within one corporate group. The ultimate parent company, having paid a part of the fine, sued its (former) group companies for contribution.
It argued that in the internal relation between claimant and the former group companies, the latter were responsible for the payment since the claimant itself had not actively participated in the infringement.
The lower and higher courts dismissed the claimant's arguments. The Higher Court held that the claimant, being the ultimate parent company, is responsible for payment of the entire amount of the fine and could not claim contribution, since the benefits of participating in the cartel would have ultimately reached the claimant. The Higher Court added that this reasoning applies, irrespective of whether the cartel did in fact lead to financial benefits.
The BGH rendered its judgment on 18 November 2014. It referred to European case-law in which it was established that the question of internal contribution is governed by national law, and considered that for German law the relevant criterion is to be found in para. 426 German civil code ("BGB"). Para. 426 BGB stipulates that joint and several debtors are obliged in equal proportions in relation to one another unless otherwise determined. The BGH concluded that the Higher Court's judgment must be annulled. Rather, the Higher Court should have considered all relevant circumstances of the case to determine the internal allocation. The contribution claim of the ultimate parent company might be barred if it is established that there is an agreement in place under which the group companies must disgorge profits to the parent company (a "Gewinnabführungsvertrag").
The BGH referred the case back to the Higher Regional Court for determining those circumstances relevant for the case.
6. The Brussels Commercial Court rejected the Commission’s request for damages from four elevator manufacturers because causality and damage were not sufficiently established
On 24 November 2014, the Commercial Court in Brussels dismissed the European Union’s request for compensation for damage caused to European institutions by four elevator companies as a result of these companies’ alleged overcharges for the maintenance of elevators following the Commission decision of 21 February 2007.
Referring to the judgment of the European Court of Justice of 6 November 2012, the Commercial Court recalled that the Commission may seek damages based on its own infringement decisions. It then rejected the request of the European Commission to have all contracts declared null and void because it considered that there was no sufficient evidence of fraud. Next, the Commercial Court considered that the 2007 Commission decision established that the four lift producers committed “a fault” under Belgian tort law, although the Commercial Court remained silent on whether any fault regarding the specific contracts at stake had been proven. The Commercial Court then analyzed whether there was damage and a causal link and concluded that the EU had not established that it had suffered any damage in connection with the maintenance contracts for the elevators concerned.
The Commercial Court came to that conclusion on the basis of current Belgian legislation, considering that the European Directive on Antitrust Damages Actions is not yet the relevant legislative framework. Applying the “counterfactual scenario” (i.e. the scenario where there would have been no infringement), the Commercial Court evaluated the indirect evidence of alleged damage that were submitted by the EU as follows:
•The 2007 Decision of the Commission did not establish a price increasing effect.
•Referring to the specific nature of cartels regarding market allocations (as was the case) and the presence of public tenders, the court held that no automatic price effect of the cartel could be assumed. The Commercial Court in this respect also referred to the presence of competing elevator producers on the market.
•The economic study submitted by the Commission did not prove that the EU effectively suffered any certain and concrete damage. The Commercial Court referred to a number of errors in the reports (such as the inclusion of Luxembourg contracts for the analysis of the Belgian market and the limited selection of contracts).
The Court thereupon also rejected the EU’s request to have an expert appointed because the EU did not show sufficiently certain, concrete, and effective damage in the first place.