Short Reads

Court of Justice dismisses appeals in the Calcium Carbide Cartel

Court of Justice dismisses appeals in the Calcium Carbide Cartel

Court of Justice dismisses appeals in the Calcium Carbide Cartel

01.07.2016 NL law

On 16 June 2016, the Court of Justice ("the Court") dismissed two appeals brought by Evonik Degussa GmbH ("Degussa") and SKW Stahl-Metallurgie Holding AG ("SKW Holding") concerning the Commission decision relating to the calcium carbide cartel. The Court’s judgments deal with the concept of the liability of a parent company holding all or almost all capital in a subsidiary. The judgments confirm that there is a high threshold to rebut the presumption that a parent company has actually exercised decisive influence over its subsidiary.

 

In 2009, the Commission adopted a decision relating to a price-fixing cartel on the calcium carbonate and magnesium market between 2004 and 2007. In particular, the Commission found that SKW Stahl-Metallurgie GmbH ("SKW") had participated directly in the cartel. Due to the fact that SKW was a subsidiary of Degussa between April 2004 and August 2004, and of SKW Holding between September 2004 and January 2007, the Commission also held these subsequent parent companies liable for SKW’s participation. After the General Court (“GC”) dismissed most of their grounds of appeal against the decision in 2014, both Degussa and SKW Holding appealed to the Court [see our February 2014 newsletter].

Degussa had explicitly instructed SKW not to participate in any competition law infringement. The GC, rather counter-intuitively, found that the fact that SKW participated in the infringement in contravention of Degussa's instructions was a strong indication of the actual exercise of decisive influence by Degussa over SKW. Degussa objected to this reasoning. The Court of Justice sided with Degussa, stating that although an express instruction can be a strong indication of the actual exercise of decisive influence by a parent over a subsidiary, the fact that a subsidiary does not comply with that explicit instruction cannot be regarded as such an indication. Despite this, the Court held that Degussa had failed to prove that it was SKW's normal practice not to carry out instructions from its parent company. Therefore, the Court concluded that the GC had not erred in law in finding that Degussa had failed to rebut the presumption that it exercised decisive influence over SKW.

SKW Holding argued in its appeal that its right to be heard was infringed because the Hearing Officer refused a request for a closed hearing during the administrative proceedings before the Commission. SKW Holding had wished to put forward arguments concerning the role of Degussa in the period following the sale of SKW to SKW Holding, without Degussa being present during such hearing. The Hearing Officer had refused, arguing that SKW Holding's right of defence did not take priority over that of Degussa.

The Court held that the Hearing Officer should not have refused SKW Holding's request. As Degussa was never accused of having participated in the cartel in respect of the period following the sale of SKW to SKW Holding, it was a third party to the proceedings in respect of that period. Accordingly, Degussa's right of defence would not have been harmed. Notwithstanding this error, the Court held that SKW Holding had failed to show that the outcome of the proceedings would have been different had the closed hearing been granted.

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

1. General Court confirms that the financial position of shareholders and the possibility to increase credit facilities are relevant when assessing an inability to pay request
2. General Court confirms illegality of non-compete clause in telecoms transaction
3.
District Court of Rotterdam rejects the applicability of arbitration clauses in antitrust damages litigation
4.
Update on changes in antitrust damages claims legislation in the Netherlands
5.
New maximum fines for competition law infringements in the Netherlands as of 1 July 2016
6.
General Court rules that an implicit and unlimited guarantee does not necessarily constitute State aid

Related news

02.07.2020 NL law
European Commission to pull the strings of foreign subsidies

Short Reads - The European Commission is adding powers to its toolbox to ensure a level playing field between European and foreign(-backed) companies active on the EU market. On top of merger control and Foreign Direct Investment screening obligations, companies may also need to account for future rules allowing scrutiny of subsidies granted by non-EU governments if those subsidies might distort the EU Single Market.

Read more

04.06.2020 NL law
Please share – ACM conditionally clears shared mobility platform merger

Short Reads - There may soon be a new competition tool available to tackle structural competition concerns in dynamic tech and platform markets. Until then, competition authorities resort to existing tools to deal with these markets. The Dutch competition authority (ACM) recently subjected the merger of two emerging platforms – without significant market footprint – to behavioural remedies. On 20 May 2020, the ACM cleared the merger between the travel apps of Dutch rail operator NS and transport company Pon.

Read more

02.07.2020 NL law
New competition tool: something old, something new, something borrowed

Short Reads - Large online platforms may face more regulatory obligations, whilst non-dominant companies’ unilateral conduct may soon be curbed. The European Commission intends to tool up its kit by adding a new regulation to keep digital gatekeepers in check, as well as providing more clarity on how to define digital markets in its new Market Definition Notice.

Read more

04.06.2020 NL law
No proof of competitive disadvantage? No abusive favouritism

Short Reads - Companies claiming abuse of dominance in civil proceedings have their work cut out for them, as demonstrated by a ruling of the Amsterdam Court of Appeal. Real estate association VBO had accused dominant online platform Funda of favouritism. However, in line with the District Court’s earlier ruling, the Appeal Court dismissed the claim for insufficient evidence of negative effects on competition. The ruling confirms that the effect-based approach also applies in civil abuse claims, and that the standard of proof is high.    

Read more