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Court of Justice allows use of evidence received from national tax authorities

Court of Justice allows use of evidence received from national tax au

Court of Justice allows use of evidence received from national tax authorities

01.05.2017 NL law

On 27 April 2017, the Court of Justice delivered its judgment on the appeal of the Pacific Fruit ruling that the European Commission could rely on evidence that it obtained from the Italian tax authority in a cartel case. Importantly, this judgment clarifies the legality of information exchanges between national authorities other than competition authorities and the Commission.

In 2011, the Commission imposed a fine on Pacific Fruit for colluding with Chiquita on banana prices in Southern Europe. In 2015, the General Court (GC) reduced the fine because the company's participation in the cartel had been interrupted [see our July 2015 Newsletter]. The GC, however, confirmed the admissibility of evidence obtained from the Italian tax authority. Pacific Fruit appealed the GC's ruling of 16 June 2015.

Pacific Fruit argued that the Commission was not allowed to rely on the personal notes of a Pacific Fruit employee which the Italian police had obtained during a search at that employee's home as part of a criminal tax investigation.

The Court, however, noted that the lawfulness of the transmission of information obtained in a criminal investigation to the Commission is governed by national law. Subsequently, the Court agreed with the GC's rejection of Pacific Fruit's argument that the Commission can use the documents received from a national authority as evidence only in respect of the matter subject to investigation. According to the Court, there is no general rule "preventing the Commission from using information transmitted by national authorities other than the Member States' competition authorities on the sole ground that that information was obtained for other purposes". The Court also ruled that the Commission was not obliged to inform Pacific Fruit that the Italian tax authority had transmitted the evidence to the Commission immediately.

Finally, the Court also rejected the argument on appeal that the GC had not sufficiently examined the legal and economic context of the relevant conduct for it to be qualified as a restriction "by object". Noting that the facts and evidence had led the GC to agree with the characterization of the behaviour as a price-fixing cartel, the Court held that the analysis of the economic and legal context of the practice may be limited to what is strictly necessary in order to establish the existence of a restriction of competition by object. In the case of price fixing conduct such examination can be very succinct, according to the Court of Justice. As such, the judgment reconfirms the low threshold for finding object infringements when competitors exchange price related information.

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

  1. Court of Justice clarifies parental liability rules in the context of prescription
  2. European Commission publishes report on effectiveness of enforcement in online hotel booking sector
  3. Dusseldorf Court confirms that Asics' online sales restrictions violate competition law
  4. Hague Court of Appeal rules on interpretation of object infringements
  5. Commercial Court of Ghent grants compensation to parallel importers for competition law infringement by Honda

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