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ACM lowered fines in the pepper cartel case

ACM lowered fines in the pepper cartel case

ACM lowered fines in the pepper cartel case

02.08.2016 EU law

On 18 July 2016, the Authority for Consumers and Markets ("ACM") published a revised decision in the pepper cartel case. In 2012, the ACM imposed fines on pepper grower cooperatives and sales organisations for participating in a price-fixing cartel.

In its revised decision, the ACM lowered the fines after the Rotterdam District Court ruled that the ACM had to re-apply the fining caps. In addition, the ACM adjusted the fines in view of the parties' inability to pay.

Under the applicable fining rules, the ACM could impose fines for cartel infringements of up to EUR 450,000 or 10% of the company's annual turnover, whichever amount was higher. In its judgment, the Court confirmed that when fines are imposed on associations of undertakings, such as the pepper grower cooperatives, the ACM could impose a maximum fine of 10% of the combined annual turnover of its members. Therefore, the fine of the cooperatives should have been based on the total turnover of their pepper growing members (i.e. turnover not limited to pepper sales). The ACM corrected this in its recent decision.

Unlike the cooperatives, the ACM did not consider the sales organisations to qualify as 'associations of undertakings'. Consequently, the Court determined that when calculating the fines, the ACM should have taken into account the turnover of the sales organisations themselves rather than that of the pepper growers.

Although the fines were imposed on the cooperatives and sales organisations, the ACM took into account that the pepper growers would ultimately bear the cost of the fines. Therefore, in order to avoid double fining, the fines imposed on the cooperatives were lowered by the amounts imposed on the sales organisations.

After the Court referred the case back to the ACM, the cooperatives submitted that they were (partially) unable to pay the fines. The ACM determined that the fine calculation should depend on a party's "ability to pay in a broad sense", i.e. on the whole organisation's ability to pay over the long term. Where it concerns associations of undertakings, this means account has to be taken of the financial standing of the associations' members. The financial information provided by the cooperatives led the ACM to further lower the fines. The total fines of EUR 14 million initially imposed on the cooperatives and sales organisations were reduced to EUR 1.63 million.

This article was published in the Competition Law Newsletter of August 2016. Other articles in this newsletter:

  1. Court of Justice clarifies the legality of royalty payments in the event of revocation or non-infringement of the licensed patent 
  2. General Court confirms fines imposed on the basis of economic continuity in maritime hose cartel 
  3. European Commission imposes record cartel fine on truck manufacturers for price fixing 
  4. European Commission deems support measures in favour of Dutch football clubs in line with State aid rules 
  5. Dutch District Court ruled that parent companies cannot be held liable for damages arising from antitrust infringements committed by their subsidiaries 
  6. ACM lowered fines in the pepper cartel case 
  7. Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation 
  8. Brussels Court of Appeal rules that concerted lobbying efforts of cement producers do not breach competition law 
  9. Belgian competition authority upholds licence refusal to football club White Star

Source: Competition Law Newsletter August 2016

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