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General Court largely confirmed Commission's freight forwarding cartel decision

General Court largely confirmed Commission's freight forwarding cartel decision

General Court largely confirmed Commission's freight forwarding cartel decision

01.03.2016 NL law

On 29 February 2016, the General Court ("GC") dismissed most of the appeal grounds brought by 14 international groups of air freight forwarders and largely upheld the fines for their participation in several price fixing cartels. Only as regards one of the companies involved, UTi Worldwide, the GC decided to reduce the fine from EUR 3.07 million to EUR 2.97 million.

In 2012, the Commission imposed fines of EUR 169 million on the freight forwarders for breaching Article 101 TFEU by participating in one or more of four separate price fixing agreements. The Commission found that the freight forwarders coordinated pricing of international air freight forwarding services by fixing four different surcharges and pricing mechanisms. For instance, the freight forwarders agreed to introduce a common surcharge for administrative costs relating to US custom regulations, and conspired to align the implementation date and level of "peak season surcharges".

On appeal before the GC, the freight forwarders brought forward a large number of substantive and procedural arguments against the Commission's decision, including alleged errors of fact and law in relation to the definition of the relevant market, the duration of the infringement and the calculation of the fines. The GC rejected the majority of the appeal grounds. In particular, the GC found that the agreements on the surcharges and pricing mechanisms affected freight forwarding services as a "package of services" on the trade lanes affected, and the Commission was entitled to base its fine calculations on the total value thereof.

The GC only recalculated the fine imposed on freight forwarder UTi Worldwide. UTi Worldwide was held liable purely for the behaviour of its subsidiaries UTi Nederland and UTI Worldwide (UK). In its decision, the Commission rounded down the infringement periods imputed to the subsidiaries, but failed to do so for UTi Worldwide. The GC confirmed the principles laid down in Tomkins and Total [see our October 2015 newsletter] and ruled that the liability of a parent company cannot exceed that of its subsidiary when its liability is purely derivative of that of its subsidiary, and no other factor individually distinguishes the conduct for which the parent company is held liable. Consequently, the GC recalculated the fine initially imposed on UTi Worldwide and reduced it from EUR 3.07 million to EUR 2.97 million.

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

1. CBb ruled that the ACM wrongfully blocked merger between baking companies
2. European Commission qualified Dutch and Belgian tax regimes for seaports as state aid

Team

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