On 26 September 2013, the Court of Justice of the European Union ("ECJ") handed down judgments dismissing in their entirety appeals lodged by the companies Alliance One International and Agroexpansión ("Alliance One"), as well as a cross-appeal lodged by the European Commission, against earlier judgments of the General Court ("GC") which largely upheld the Commission's findings in its 2004 decision in the Spanish raw tobacco cartel case, while granting a small reduction of the fines imposed on Alliance One for its participation in the cartel.
In October 2004, the Commission imposed fines totalling € 20 million on five companies for infringing Article 101 TFEU by participating, during a period from 1996 to 2001, in a cartel on the Spanish raw tobacco market through fixing the prices to be paid to tobacco growers and sharing the quantities of raw tobacco that each company would purchase at the time of delivery. In October 2011, the GC ruled on Alliance One's appeal against the Commission's decision and granted a further reduction of 5% of the fine imposed on Agroexpansión in addition to the 20% reduction previously granted by the Commission, on the basis of its co-operation during the investigation (see VBB on Competition Law, Volume 2011, No. 10, available at www.vbb.com). As a result, Alliance One's fine was fixed at the total amount of € 2.43 million. Furthermore, the GC annulled the Commission's decision insofar as it attributed joint and several liability to Alliance One International for the infringement for the period priorto 18 November 1997, being the date on which Alliance One International acquired a 100% shareholding in Agroexpansión.
In its appeal, Alliance One argued, among other grounds, that the GC had exceeded the limits of its jurisdiction by attempting to correct ex post facto the Commission's insufficient reasoning for its decision to attribute parental liability to Alliance One International (for the period from 18 November 1997). According to Alliance One, the Commission explained for the first time in the proceedings before the GC that it had employed the so-called "dual basis" method to attribute liability (i.e., to hold parent companies liable only when there is evidence to support the presumption of the actual exercise by the parents of decisive influence which arises from the parents' holding a 100% shareholding in the subsidiaries). Alliance One further pointed out that, in a reply to a written question from the GC, the Commission had explained that it had held Agroexpansión's parent responsible for the infringement solely on the basis of the presumption arising from its 100% stake in Agroexpansión. Alliance One argued that the application of the dual basis method was arbitrary since it was not a prerequisite of the attribution of parental liability, and that in the current case the method had been applied in a discriminatory fashion as it had only been applied to some, but not all, parent companies.
In its judgment, the ECJ pointed out that, although a parent company's 100% shareholding in a subsidiary creates a rebuttable presumption that the parent company exercises decisive influence over that subsidiary, the case law does not imply that the Commission is bound to rely exclusively on that presumption.
Accordingly, there is nothing to prevent the Commission from establishing a parent's actual exercise of decisive influence over its subsidiary by means of other evidence or by a combination of such evidence and of that presumption. The ECJ also found that the GC had based its assessment of the "dual basis" method adopted by the Commission on its own interpretation of the decision, and not on the Commission's explanations during the proceedings before the GC, and that the GC had therefore not exceeded the limits of its jurisdiction. Furthermore, the ECJ concluded that the GC's finding could not be invalidated by the Commission's reply to a question from the GC during the course of the proceedings, even if Alliance One's interpretation of that reply were to be correct. Finally, the ECJ agreed with the GC that the Commission had applied the "dual basis" method in the same way to all the parent companies concerned in the proceedings.
In its cross-appeal, the Commission argued that the GC had not explained why it found it appropriate to grant a further reduction of Alliance One's fines on the basis of its co-operation, and also pointed out that the GC had granted a reduction although Alliance One had not put forward arguments in support of such a request for reduction. The ECJ dismissed the Commission's arguments, stating that it was clear from the judgment under appeal that the reduction was made by the GC in the exercise of its unlimited jurisdiction.
The ECJ thus dismissed the appeals in their entirety and upheld the GC's findings.
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