Short Reads

Court of Justice clarified rules on recidivism and liability for cartel violations of subsidiaries

Court of Justice clarified rules on recidivism and liability for cartel violations of subsidiaries

Court of Justice clarified rules on recidivism and liability for cartel violations of subsidiaries

01.04.2015

On 5 March 2015, the Court of Justice dismissed all appeal grounds in two cases regarding the Chloroprene Rubber ("Rubber") cartel (Joined cases Commission v Versalis SpA and Eni SpA C-93/13 P and Versalis SpA and Eni SpA v Commission C-123/13 P). The judgment provides clarification on the application of the concepts of economic succession and recidivism, at the core of which is the concept of "economic unit" or "undertaking".

Economic Succession

Through economic succession, the authorities are empowered to hold an entity liable for a competition law infringement if it has acquired the business related to the infringement from another entity. In their appeal, Eni and Versalis claimed that the concept of economic succession can only be applied in exceptional cases "where the infringing entity has ceased to exist, either in law or economically". In the present case, EniChem transferred its Rubber business to Versalis, both companies belonging to the same Eni Group. Given that EniChem still exists, the parties claimed an error on the application of economic succession.

The Court of Justice dismissed these arguments and ruled that the Commission is not precluded from imposing penalties on the acquiring entity, even if the transferring entity still exists, when both entities constitute one economic entity. The Court further elaborated that in particular, this application of economic succession is permissible where both entities have been subject to control by the same person and have carried out the same commercial instructions, given their close economic and organizational links.

Recidivism

On appeal, the Commission claimed that the GC erred in law by ruling that, in order to take into account a previous infringement for which a legal entity from the Eni group was penalized and apply an increase in the fine on account of recidivism, the parent company, Eni, should have been an addressee of the statement of objections and the decision of the previous infringement.

The Court of Justice sided with the Commission and ruled that in order to establish a repeated infringement on the part of a parent company, it is "not necessary for that company to have been subject to previous legal proceedings" that gave rise to a statement of objections or the decision, or to have been able to dispute at that time, that it formed a single economic unit with other entities against which proceedings were brought. The Court of Justice emphasized that what matters is that the parent company is able to defend itself "at the time when the repeated infringement is alleged against it". At that moment, the Commission should issue a statement of objections that contains information demonstrating that the conditions for a finding of repeated infringement are satisfied. In particular, this information should show that the legal person formed, at the time of the first infringement, a single undertaking with the company found to have committed the first infringement. The Court of Justice concluded that that was not the case here as the decision at issue neither contained sufficient reasoning enabling Eni to defend itself nor the EU judicature to carry out its review. It thus ultimately dismissed the Commission's appeal.

From this judgment it follows that undertakings should be aware of the potential repercussions that can arise, at any point in time, due to previous infringements of their subsidiaries or the businesses that they acquire. This is particularly worrisome if one considers that the Court confirmed that the time elapsed between infringements is irrelevant and would only be taken into account when assessing the undertakings' disposition to infringe competition rules and the possible difficulties to exercise their rights of defense. 

Team

Related news

07.10.2021 NL law
Commission’s record fine for gun jumping upheld

Short Reads - Pre-closing covenants protecting the target’s value or commercial integrity pending merger clearance from the European Commission must be drafted carefully. The General Court confirmed the Commission’s record-breaking fines on Altice for violating the EU Merger Regulation’s notification and standstill obligations. According to the General Court, the mere possibility of exercising decisive influence over the target can result in a gun jumping breach.

Read more

07.10.2021 NL law
ACM walks the walk: first-ever vertical price coordination fine

Short Reads - The Dutch Competition Authority (“ACM”) has claimed a first victim in its vertical restraints battle. Samsung Electronics was fined nearly EUR 40 million for having meddled in the online resale prices for televisions at seven retailers. Compared to the European Commission’s fines on four consumer electronics producers for resale price maintenance (“RPM”), the ACM’s summary decision seems to refer to a ‘light’ version of RPM: systematic price coordination without any threats, sanctions or incentives for the retailers to stick to the price.

Read more

07.10.2021 NL law
Commission reveals first piece of antitrust sustainability puzzle

Short Reads - The European Commission has published a Policy Brief setting out its preliminary views on how to fit the European Green Deal’s sustainability goals into the EU competition rules. Companies keen to be green may be left in limbo by a looming clash with more far-reaching proposals from national competition authorities. More pieces of the antitrust sustainability puzzle will fall into place as soon as the ongoing review of the guidelines on horizontal cooperation is finalised.

Read more

13.09.2021 NL law
Adopting the new Standard Contractual Clauses to secure international personal data transfers

Short Reads - Recently, the European Commission issued an implementing decision on standard new contractual clauses (“SCCs”) for the transfer of personal data to countries outside the European Economic Area. Organisations need to use the new SCCs from 27 September 2021 and onwards. Transitional periods apply for existing international data transfer agreements. To meet their obligations under the General Data Protection Regulation, organisations need to make the appropriate changes in time.

Read more

07.10.2021 NL law
Court of Appeal provides guidance for further course of proceedings in prestressing steel litigation

Short Reads - On 27 July 2021, the Court of Appeal of Den Bosch issued an interim judgment in the Dutch prestressing steel litigation, ruling on three issues: (i) the obligation of claimant to furnish facts; (ii) the assignment of claims; and (iii) the liability of the parent companies. In short, the Court of Appeal allowed the claimant Deutsche Bahn another opportunity to supplement the facts needed to substantiate its claims in the next phase of the proceedings.

Read more

09.09.2021 BE law
Digital Law Up(to)date: (1) Parliamentary initiatives about cyber attacks; (2) ‘Zero tariff’ options before the CJEU; and (3) Council of State, GDPR and encryption

Articles - In this blog, we briefly present three interesting news in the field of digital law: (1) Parliamentary initiatives to tackle cyber attacks (2) "Zero tariff" options and open internet access do not mix! (3) Council of State, GDPR and encryption: validation of a decision of the Flemish Authorities

Read more