European Union: EU Cartel Enforcement In June 2016

In the following sections, we first provide a factual overview of significant case developments at EU level, and thereafter provide a detailed analysis of important substantive or procedural developments addressed in these cases.

1. Summary of Significant Case Developments

General Court confirms Commission's decision in pre-stressing steel cartel case against four producers

On 2 June 2016, the General Court ("GC") of the European Union issued a judgment upholding the Commission's 2010 decision against a price-fixing and market-sharing cartel for pre-stressing steel (see VBB on Competition Law, Volume 2010, No. 6, available at www.vbb.com).  The judgment addresses appeals brought by four producers.  In its joined judgment, the GC dismissed all of the allegations of Commission errors, including on the attribution of liability, the existence of a single economic unit and of a single and continuous infringement, the calculation of the fine and the applicants' ability to pay the fine (Joined Cases T 426/10 to T 429/10, T 438/12 to T 441/12, Moreda-Riviere Trefilerías and others).

Court of Justice upholds General Court's judgment in Spanish bitumen cartel case

On 9 June 2016, the Court of Justice of the European Union ("ECJ") dismissed appeals by Proas, Repsol and Cepsa concerning the Commission's 2007 decision against a market sharing and price coordination cartel for the supply of bitumen in Spain (see VBB on Competition Law, Volume 2007, No. 10, available at www.vbb.com).  The ECJ's judgment follows the previous judgment of the GC, upholding the Commission's decision and rejecting the parties' appeals (see VBB on Competition Law, Volume 2013, No. 9, available at www.vbb.com). In its judgments, the ECJ rejected all the claims brought by Proas, Cepsa and Repsol, which related, inter alia, to the interpretation of the 2002 Leniency Notice, the proportionality of the fine imposed and the observation of a reasonable period for adjudication (Case C-608/13,  Compañía Española de Petróleos (CEPSA); Case C-616/13, Productos Asfálticos (PROAS); Case C-617/13, Repsol).

Court of Justice dismisses appeals in calcium and magnesium reagents cartel case

On 16 June 2016, the ECJ dismissed appeals by Evonik Degussa (Case C-155/14, Evonik Degussa) and SKW Holding (Case C-154/14, SKW Holding) concerning the Commission's 2009 decision against a price fixing and market sharing cartel for calcium carbide and magnesium-based reagents (see VBB on Competition Law, Volume 2009, No. 8, available at www.vbb.com). The ECJ's judgment follows the previous judgments of the GC, which dismissed the appeal brought by SKW Holding, but decreased the fine imposed on Evonik Degussa because the Commission had erred in the calculation of the fine and in the application of the Leniency Notice (see VBB on Competition Law, Volume 2013, No. 1, available at www.vbb.com).  The pleas discussed, and ultimately rejected by the ECJ, included the right to be heard and the principle of proportionality, the application of parental liability, the principle of equal treatment in calculating the fine and the interpretation of the Leniency Notice.

2. Analysis of Important Substantive and Procedural Developments

Spanish Bitumen cartel case: The principle of observance of a "Reasonable Period"

Under the Charter of Fundamental Rights of the European Union, parties appealing a decision have the right to have a case adjudicated within a reasonable period of time. In the present case, the judicial proceedings before the GC had lasted over five years, which the appellants argued breached this principle, and thus the parties requested that the ECJ reduce the fine imposed by the Commission.

In the Proas and Cepsa judgments, the ECJ, in line with its established case law, held that claims for breach of the principle of observance of a "reasonable period" may be brought in a separate appeal before the GC, under Article 256(1) TFEU. A claim for compensation for the damage caused by the GC's failure to adjudicate within a reasonable time may not be made directly to the ECJ in the context of an appeal against the original Commission decision.

However, the ECJ also held that it may note, where it is clear, the fact that the GC infringed, in a sufficiently serious manner, its obligation to adjudicate on the case within a reasonable time. The ECJ noted that this applied in the case at hand, where the proceedings before the GC had lasted almost 5 years and 9 months, including a period of 4 years and 1 month between the end of the written procedure and the hearing in which no procedural step took place, a duration which could not be explained by either the nature or the complexity of the case or by its context. If the appellants now were to decide to pursue a separate action for damages in the matter before the GC, these findings of the ECJ would likely be very helpful for their case.

Spanish Bitumen cartel case: Leniency – reduction of fines: Clarifications as to the meaning of the wording "facts previously unknown"

The leniency procedure rewards undertakings involved in a cartel which are willing to put an end to their participation in the infringement and assist the Commission with its investigation of the infringement. The first applicant can be granted immunity from the fine. Subsequent applicants can be granted fine reductions if the information they provide represents significant added value with respect to the evidence already in the Commission's possession. In addition, if a subsequent applicant provides evidence relating to "facts previously unknown" to the Commission that have a direct bearing on the gravity or duration of the alleged cartel, the Commission will not take these aggravating elements into account when setting the fine with regard to that applicant, so that the applicant will not be more severely sanctioned due to these aggravating elements.

In the Repsol judgment, the ECJ held that evidence provided by a leniency applicant will only relate to "facts previously unknown" to the Commission if this evidence objectively presents significant added value with respect to the evidence already in the Commission's file.

The issue in the present case was raised after a subsequent leniency applicant claimed that, although the Commission was in possession of evidence showing the actual (longer) duration of an alleged infringement, the Commission had no "cognitive knowledge" of such longer duration as it had not yet reviewed all the relevant documents in its possession and thus had not gained "cognitive knowledge" of the longer duration of the infringement. The immunity applicant had, in its immunity application, indicated a shorter duration of the infringement. The subsequent leniency applicant therefore claimed that before it provided information on the actual duration of the infringement in its leniency application, that information was unknown to the Commission, and thus it should not have been taken into account by the Commission when computing the fine to be imposed on the leniency applicant.

The ECJ dismissed the "cognitive knowledge" criterion put forward by the leniency applicant on two grounds.

First, it relied on the general scheme of the 2002 Leniency Notice which only grants reductions of fines to subsequent leniency applicants if the evidence provided by them has significant added value compared to that already in the Commission's possession. The ECJ found this general principle (pertaining to the Commission already being in possession of evidence) to also be applicable to additional information provided by subsequent leniency applicants with regard to the gravity or the duration of the alleged infringement.

Second, the ECJ found that physical possession of evidence by the Commission amounts to knowledge of the facts it contains, regardless of whether the Commission has already examined or analysed that evidence. It follows from the above that a subsequent leniency applicant merely highlighting elements that were already in the Commission's file will not be entitled to claim that these facts should not be taken into account when setting the fine to be imposed on that applicant.

Calcium and magnesium reagents cartel case: The rebuttable presumption of decisive influence

Under EU law, a parent company can be held liable for its subsidiary's illicit behaviour. A rebuttable presumption of the "actual exercise of decisive influence" by the parent company over its subsidiary is considered to apply if the parent company holds, directly or indirectly, all or almost all of the capital of a subsidiary. This presumption can in principle be rebutted by adducing evidence relating to the organisational, economic and legal links between the two companies which demonstrates that the two companies do not form a single economic entity. No exhaustive list of factors which can constitute such evidence exists. The EU courts must therefore take into consideration all relevant factors depending on the case at issue. 

In the Evonik Degussa judgment, the appellants claimed that the GC had infringed Article 101 TFEU and the principles of personal responsibility and the presumption of innocence by making the rebuttal of the presumption overly strict, contrary to its rebuttable nature.

In the ECJ's response rejecting the arguments put forward by the appellants, two points are noteworthy. First, although in principle it is incumbent upon the GC to carry out an assessment of the facts which are contemporaneous with the period of the infringement, it may rely on elements relating to a prior period, to the extent that the GC is able to establish the relevance of those elements for the period of the infringement.

Second, the GC had held that the fact that a subsidiary did not comply with express instructions from its parent company to refrain from participating in anti-competitive practices was a strong indication of the actual exercise of decisive influence by the parent company. The ECJ however criticised the GC for this reasoning, holding that the existence of such instructions constitutes only an indication of the actual exercise of decisive influence. Nonetheless, according to previous case law, it is not necessary for the subsidiary to comply with all of the parent company's instructions in order to demonstrate decisive influence, so long as failure to carry out those instructions is not the norm. Despite the ECJ's correction of the GC's finding, it remains difficult to rebut the presumption that a parent company and its subsidiary form a single economic unit.

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