Short Reads

Court of Justice ends Pilkington's fight against fine in the car glass cartel

Court of Justice ends Pilkington's fight against fine in the car glas

Court of Justice ends Pilkington's fight against fine in the car glass cartel

03.10.2016 NL law

On 7 September 2016, the Court of Justice dismissed the appeal by various entities of the Pilkington group ("Pilkington") concerning its role in the car glass cartel.

[See our January 2015 newsletter on the judgment of the General Court ("GC") in this case]. In its judgment, the Court of Justice confirmed the Commission's interpretation and application of the 2006 Fining Guidelines relating to the inclusion of sales arising from contracts outside the infringement period in the basic amount of the fine, the appropriate currency conversion methods and the proportionality of the fine to the total turnover of an undertaking.

Pilkington's first ground of appeal concerned the sales arising from contracts which pre-dated the infringement and which were not re-negotiated during that period of time. The Court dismissed Pilkington's arguments and concluded that those sales fell within the scope of the cartel for the purpose of calculating the basic amount of the fine in so far as they were capable of reflecting the economic importance of the infringement.

The Court argued that taking into account the findings of fact made by the GC in relation to the scope of the cartel, its mode of operation and its overall objective of stabilizing market shares, the GC rightly found that it was not necessary to collude on each supply contract in order to achieve that objective. The cartels' overall plan was to allocate supplies of automotive glass between the cartel participants, including existing supply contracts. As a result, if the Commission were not entitled to include the sales at issue, the resulting fines would not reflect the economic significance of the infringement.

Pilkington's second ground of appeal concerned the Commission's use of the average exchange rate of the year preceding the adoption of the decision to convert Pilkington's worldwide turnover from pound sterling to euros in the calculation of the 10% statutory ceiling of the fine.

The Court concluded that the conversion method used by the Commission is in line with the choice of the legislature that the turnover figures for the last full business year are most likely to reflect the financial capacity of an undertaking and therefore meets the objective behind the 10% statutory ceiling. The Court considered that the use of the daily exchange rate applicable on the day when the decision was adopted, as suggested by Pilkington, was "bound to be uncertain and unpredictable". In addition, it rejected Pilkington's argument that the statutory ceiling is designed to ensure absolute protection against monetary fluctuations.

The Court also dismissed Pilkington's third ground of appeal in which it essentially argued that the proportion of its fine in relation to its total turnover was significantly higher compared to the other addressees of the decision because it was not a diversified undertaking. Interestingly, the Court ruled that this result is inherent to the fine calculation method envisaged in the 2006 Fining Guidelines and that the Commission is not required to ensure that the final amounts of the fines reflect any distinction between the undertakings concerned in terms of their overall turnover. Pilkington's argument that account was taken of such considerations in other decisions of the Commission was also rejected as the Court reiterated that "the Commission’s practice in previous decisions does not serve as a legal framework for the fines imposed in competition matters".

 

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

  1. Court of Justice ends Pilkington's fight against fine in the car glass cartel
  2. General Court upholds Commission's decision that reverse payment settlements constitute a 'by object' infringement
  3. European Commission puts price signalling on the agenda
  4. European Commission orders Ireland to recover illegal tax benefits worth up to €13 billion from Apple
  5. Commission publishes Preliminary Report on the e-commerce sector inquiry
  6. Brussels Court of Appeal confirms interim measures against exclusive TV broadcasting rights

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