Short Reads

General Court underlines importance of Commission's duty to state reasons

General Court underlines importance of Commission's duty to state rea

General Court underlines importance of Commission's duty to state reasons

01.08.2018 NL law

On 13 July 2018, the General Court annulled the EUR 1.13 million fine imposed on Stührk Delikatessen Import GmbH & Co. KG (Stührk) by the European Commission in 2013 for Stührk's participation in the shrimp cartel. The Court ruled that the Commission had failed to adequately state reasons in the contested decision as to why the cartel participants were granted divergent fine reductions.

On 27 November 2013, the Commission fined four North sea shrimp traders a total of EUR 28.7 million for making price fixing agreements and sharing sales volume information between 2000 and 2009, which constituted a single and continuous infringement. The Commission reduced the individual fines on the basis of paragraph 37 of the fining guidelines, which allows it to depart from the methodology set out in the fining guidelines if this approach can be justified by the peculiarities of a given case.

In 2014, Stührk appealed the decision and sought to annul both the decision and the fine on the basis of nine grounds of appeal. In one of the grounds of appeal, Stührk claimed that the Commission had erroneously concluded that it could be held liable for the infringements committed by the other three participants. The General Court held that the Commission may attribute liability for the single and continuous infringement as a whole to an undertaking participating in only some anticompetitive acts, if that participant was aware of all the other infringements committed by the other participants or could reasonably foresee those infringements and was prepared to take the risk. The Court ruled that, as Stührk had obtained price information from Klaas Puul through Heiploeg, it must have been aware that the coordination of prices with Heiploeg extended beyond its relationship with Heiploeg and at least included Klaas Puul. Therefore, the Court rejected this ground of appeal and ruled that the Commission was right to consider Stührk liable for the anticompetitive acts committed by the other participants comprising the single and continuous infringement.

However, the General Court went on to annul the fine imposed on Stührk on the basis of the last ground of appeal, complaining that the Commission had applied the reductions under paragraph 37 of the fining guidelines contrary to the principle of equal treatment. Stührk argued that the Commission had granted the other participants a greater reduction of their respective fines, despite their larger roles in the cartel. The Court held that where the Commission exercises its wide margin of discretion to grant a fine reduction under paragraph 37 of the fining guidelines, the duty to state reasons is all the more important to properly assess whether the Commission observed the principle of equal treatment. Subsequently, the Court introduced an ex officio ground that the Commission had failed to state reasons. According to the Court, it was unclear which criteria the Commission had used for calculating the respective fine reductions, to the extent that the participants were not able to contest the Commission's approach nor was the Court able to assess whether the principle of equal treatment had been applied. To conclude, the Court ruled that the Commission had failed to provide adequate reasoning within the meaning of Article 296 TFEU in determining the fines and therefore annulled the fine imposed on Stührk.

The judgment clarifies the requisite degree of awareness of, or ability to foresee, anticompetitive acts committed by other participants in establishing liability. In addition, the judgment once more  underlines the duty of the Commission to adequately state reasons for its fine decisions [see our January 2017 Newsletter].

This article was published in the Competition Law Newsletter of August 2018. Other articles in this newsletter:

  1. European Court of Justice dismissed Orange Polska’s appeal in abuse of dominance case
  2. General Court dismisses appeals by investor against power cable cartel fine
  3. Google receives a second record fine of EUR 4.34 billion for imposing restrictions on Android device makers
  4. European Commission issues a new Best Practices Code for State aid control
  5. District Court in the Netherlands rules on limitation periods in CRT case
  6. Court of Appeal in the Netherlands decides to appoint independent economic experts in TenneT v ABB
  7. Belgian Court of Cassation annuls decision prohibiting pharmacists from using Google Adwords

Team

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A problem shared is a problem halved: fine reduction and fine liability are correlated

Short Reads - Companies should beware that when held jointly responsible for a cartel infringement, a fine reduction granted to one of them could affect the joint and several liability of fines allocated to the remaining companies. According to the General Court, in applying the principle of equal treatment, the remaining liability for fine payment should be distributed proportionately by the Commission.

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