Short Reads

Court of Justice dismisses Toshiba's appeal against the gas-insulated switchgear fine

Court of Justice dismisses Toshiba's appeal against the gas-insulated

Court of Justice dismisses Toshiba's appeal against the gas-insulated switchgear fine

01.08.2017 NL law

On 6 July 2017, the European Court of Justice dismissed an appeal brought by Toshiba regarding its participation in the gas-insulated switchgear (GIS) cartel, upholding the General Court's (GC) judgment of 19 January 2016 and making the fine imposed on Toshiba final. The judgment shows that the European Commission is able and willing to repair any breach of the principle of equal treatment in the rare occasions in which this leads to the annulment of a fining decision.

Background of the dispute

In January 2007, the Commission imposed fines amounting to EUR 750 million on twenty European and Japanese companies for in essence reserving the EU market for the European producers and the Japanese market for the Japanese producers, including Toshiba.

On 12 July 2011, the GC partially annulled the 2007 decision on the ground that the Commission had infringed the principle of equal treatment in the calculation of the fine imposed on Toshiba by taking a different reference year than for the European members of the cartel. The Commission subsequently re-imposed the fines using the correct reference year, following a simple letter of facts and without issuing a new Statement of Objections (SO).

Toshiba's appeal against the new Commission decision was entirely dismissed by the GC in 2016. This judgment has now been confirmed by the Court of Justice.

No infringement of Toshiba's rights of defence

The Court of Justice held that the applicant's right to be heard was satisfied by simply issuing a letter of facts and not a second SO. In its reasoning, the Court of Justice found that the re-imposition of the fine was merely an extension of the 2007 procedure and the partial annulment of the original Commission decision did not affect the validity of the preparatory measures.

Interestingly, the Court confirmed that, though "it may be desirable", the parties' right to be heard does not require the Commission to specify "the way in which it proposes to employ the imperative criteria of the gravity and the duration of the infringement when determining the amount of the fines".

No error in the calculation of the fine

The Court of Justice also dismissed Toshiba's arguments with regard to the calculation of the fine.

Although Toshiba's fine was calculated under the old Commission Fining Guidelines, it is interesting to note that the Court confirmed the use of the starting amount of the fine assigned to TM T&D, the 50:50 joint venture in which Toshiba had transferred its GIS activities in 2002. Since following the transfer of activities to TM T&D, Toshiba had no sales in 2003 – the relevant reference year for the calculation of the fine – its fine could not be calculated in the exact same manner as that of the European producers. In addition, calculating a virtual 2003 turnover for Toshiba by splitting TM T&D's turnover and comparing it to the actual turnover of the European cartel participants, as Toshiba proposed, would not appropriately reflect the weight in the infringement that was exerted through TM T&D.

This article was published in the Competition Law Newsletter of August 2017. Other articles in this newsletter:

1. Recent enforcement action demonstrates an increasing focus on compliance with procedural EU merger rules
2. Trade and Industry Appeals annuls fine imposed on real estate traders
3. District Court of Rotterdam upheld ACM's decision to clear lottery merger
4. ACM closes probe into Fox over live-soccer TV rights due to lack of evidence of consumer harm
5. District Court of The Hague rules on ACM's powers to select and inspect digital data

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