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Court of Justice reduced fine imposed on Galp Energía España and acknowledged excessive duration of General Court proceedings

Court of Justice reduced fine imposed on Galp Energía España and acknowledged excessive duration of General Court proceedings

Court of Justice reduced fine imposed on Galp Energía España and acknowledged excessive duration of General Court proceedings

02.02.2016 NL law

On 21 January 2016, the Court of Justice handed down its judgment on appeal brought by three legal entities of the Galp Energía group ("Galp"). Galp sought the annulment of a General Court ("GC") judgment partially upholding a 2007 Commission decision fining Galp for its participation in the Spanish penetration bitumen cartel. 

The Court of Justice partially set aside the GC judgment, ruling that the GC erred in law by exceeding its unlimited jurisdiction to set the amount of the fine because it relied on evidence not used in the Commission decision. Accordingly, the  Court of Justice reduced the fine imposed on Galp. Furthermore, it held that the GC breached its obligation to adjudicate cases within a reasonable time, and reaffirmed that the only effective remedy for this breach is an action for damages before the GC.

In the contested judgment, the GC ruled that the Commission had failed to establish Galp's participation in two components of the cartel: (i) a system for monitoring the implementation of the agreements and (ii) a compensation mechanism to correct deviations from the arrangements. Nevertheless, the GC concluded that Galp was aware of the participation of other members in these two components of the cartel. The GC deduced this from a statement from Galp's bitumen sales director, which had not been used by the Commission in order to establish Galp's liability. Taking into consideration Galp's awareness of the two cartel components, the GC only reduced Galp's fine by 4 per cent.

The Court of Justice ruled that the GC breached its unlimited jurisdiction under Article 261 TFEU and Article 31 of Regulation 1/2003, by relying on evidence not used in the contested Commission decision. When exercising their unlimited jurisdiction, EU Courts are empowered to substitute their own assessment for that of the Commission in relation to the determination of the amount of a penalty. However, the Court of Justice held that the scope of that unlimited jurisdiction is strictly limited to the amount of the fine and excludes any alteration of the constituent elements of the lawfully determined infringement. Consequently, the GC erred in law when it relied on the sales director's statement, as it was not used by the Commission to prove Galp's awareness of the two cartel components. Finding no evidence of Galp's awareness of these components in the contested decision, the Court of Justice further reduced the fine. Instead of the 4 per cent reduction granted by the GC, the Court of Justice lowered Galp's fine by 10 per cent.

Galp also argued that the GC's judgment should be annulled because the GC did not adjudicate the case within a reasonable time. The Court of Justice acknowledged that the length of the GC proceedings – five years and nine months – was excessive and could not be justified by the nature, complexity or context of the case. However, the  Court of Justice did not annul the GC judgment, considering that the only effective remedy for this breach is an action for damages before the GC.

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

  1. Court of Justice confirmed independence of EU and national leniency programmes
  2. Court of Justice clarified the concept of a concerted practice for unilateral announcements
  3. Court of Justice dismissed Toshiba's appeal in the power transformers cartel case
  4. Belgium's "excess profit" tax scheme qualified as illegal state aid
  5. German Competition Authority fined ASICS for restricting Internet sales of its distributors

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