Case T‑337/17

(publication in extract form)

Air France-KLM

v

European Commission

 Judgment of the General Court (Fourth Chamber, Extended Composition), 30 March 2022

(Competition – Agreements, decisions and concerted practices – Airfreight market – Decision finding an infringement of Article 101 TFEU, Article 53 of the EEA Agreement and Article 8 of the Agreement between the European Community and the Swiss Confederation on Air Transport – Coordination of elements of the price of airfreight services (fuel surcharge, security surcharge, payment of commission on surcharges) – Exchange of information – Territorial jurisdiction of the Commission – Single and continuous infringement – Attributability of unlawful conduct – Conditions for granting immunity – Equal treatment – Obligation to state reasons – Amount of the fine – Value of sales – Gravity of the infringement – Duration of participation in the infringement – Mitigating circumstances – Encouragement of anticompetitive conduct by public authorities – Proportionality – Unlimited jurisdiction)

1.      Competition – Transport – Competition rules – Air transport – Regulation No 411/2004 – Scope – EU-third country routes and non-EU EEA-third country routes – Inbound freight services – Included

(Arts 101 and 102 TFEU; EEA Agreement, Arts 53 and 54 and Annex XIII and Protocol 21, as amended by the Decision of the EEA Joint Committee No 40/2005; Council Regulations No 1/2003, Art. 32(c), and No 411/2004, Arts 1 and 3)

(see paragraphs 90-97)

2.      Competition – EU rules – Territorial scope – Competence of the Commission – Conformity with public international law – Implementation or qualified effects of abuse in the EEA – Alternative methods – Criterion of immediate, substantial and foreseeable effect – Scope where conduct has the object of restricting competition

(Art. 101 TFEU; EEA Agreement, Art. 53)

(see paragraphs 99-101, 116, 118-127, 138-140, 146-154, 156-158, 167-173)

3.      Action for annulment – Pleas in law – Lack of competence of the institution which adopted the contested measure – Examination by the EU Courts of their own motion – Condition – Compliance with the principle that the parties should be heard

(Art. 263 TFEU)

(see paragraphs 188, 189)

4.      Competition – Administrative procedure – Commission decision finding an infringement – Identification of the offences subject to penalties – Requirements arising from the principle of effective judicial protection – Clarity and precision of the operative part of the decision – Assessment – Pre-eminence of the wording of the operative part over the grounds

(Art. 101(1) TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Arts 8 and 11(2); Charter of Fundamental Rights of the European Union, Art. 47)

(see paragraphs 195, 196, 200-205)

5.      Competition – EU rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Actual exercise of decisive influence over the conduct of the subsidiary which may be inferred from a body of evidence concerning economic, organisational and legal links with its parent company – Circumstances allowing the existence of decisive influence to be established – Holding virtually all the capital and nearly half of the subsidiary’s voting rights – Influence over strategic choices – Overlapping mandates within the executive bodies of the parent company and those of its subsidiary

(Art. 101(1) TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Council Regulation No 1/2003, Art. 2)

(see paragraphs 220, 221, 255, 270-278)

6.      Competition – EU rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Presumption that a parent company exerts a decisive influence over its wholly owned subsidiaries – Rebuttable – Burden of proof on the parent company – Factors which are not sufficient to rebut the presumption

(Art. 101(1) TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Council Regulation No 1/2003, Art. 2)

(see paragraphs 223, 224, 254, 256, 258-268)

7.      Acts of the institutions – Statement of reasons – Obligation – Scope – Decision imposing fines for breach of the competition rules and concerning a number of addressees – Attribution of the practices of a subsidiary to its parent company – Need for an adequate statement of reasons – Combining the presumption that a parent company actually exerts a decisive influence over its wholly owned subsidiaries with other evidence

(Arts 101(1) and 296 TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Charter of Fundamental Rights of the European Union, Art. 41(2)(c); Council Regulation No 1/2003, Art. 2)

(see paragraphs 224-228)

8.      Competition – EU rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Infringement committed by a subsidiary – Attribution to the parent company based on the decisive influence exercised over that subsidiary since its acquisition – Transformation of the parent company into a holding company and change of company name – Irrelevant

(Art. 101(1) TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Council Regulation No 1/2003, Art. 2)

(see paragraphs 243-248)

9.      Competition – EU rules – Infringements – Attribution – Legal person responsible for the operation of the undertaking at the time of the infringement – Transformation of that legal person into a holding company together with a transfer of its operational activities to another company owned by the latter – Responsibility of the holding company as legal successor– Compliance with the principles of personal liability and that penalties and sanctions should fit the individual offender

(Art. 101(1) TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Council Regulation No 1/2003, Art. 2)

(see paragraphs 245, 303, 309-313, 318)

10.    Action for annulment – Actions brought separately by a parent company and its subsidiary against a Commission decision imputing to them the infringing conduct on the part of a company which preceded them – Responsibility of the parent company as legal successor – Parent company disputing the contested behaviour being imputed to its subsidiary as economic successor – Inadmissibility of the complaint

(Arts 101 and 263 TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8)

(see paragraphs 313, 314)

11.    Competition – Administrative procedure – Commission decision finding an infringement – Use of information and evidence provided by an undertaking in an immunity application – Permissible regardless of the outcome of the leniency application

(Art. 101 TFEU; EEA Agreement, Art. 53; EC-Switzerland Air Transport Agreement, Art. 8; Commission Notices 2002/C 45/03, points 11(b) and 33, and 2006/C 210/02points 31 and 37)

(see paragraphs 326-338)

12.    Competition – Fines – Assessment by reference to the individual conduct of the undertaking – Irrelevant that no penalty imposed on another economic operator – Compliance with the principle of equal treatment must be reconciled with the principle of legality – Scope of the obligation to state reasons

(Arts 101 and 296 TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Charter of Fundamental Rights of the European Union, Art. 20)

(see paragraphs 347, 351, 352, 357-361)

13.    Competition – Fines – Amount – Determination – Determination of the basic amount – Determination of the value of sales – Value of sales directly or indirectly related to the infringement – Cartel in the airfreight services sector – Cartel covering a number of elements of the price of freight services – Account taken of the entire amount of sales connected with freight services – Whether permissible – Breach of the principle of proportionality and of the principle of that offences and penalties must be defined by law – None

(Art. 101 TFEU; EEA Agreement, Art. 53; EC-Switzerland Air Transport Agreement, Art. 8; Council Regulation No 1/2003, Arts 23(2) and (3); Commission Notice 2006/C 210/02, points 6 and 13)

(see paragraphs 401-408, 410-421, 423-430)

14.    Competition – Fines – Amount – Determination – Setting the basic amount – Determination of the value of sales – Account taken solely of the value of sales directly or indirectly related to the infringement in the geographic sector concerned – Sales carried out within the territory of the European Economic Area – Cartel in the airfreight services sector – Account taken of the value of sales of inbound freight services – Whether permissible

(Art. 101 TFEU; EEA Agreement, Art. 53; EC-Switzerland Air Transport Agreement, Art. 8; Council Regulation No 1/2003, Art. 23(2); Commission Notice 2006/C 210/02, point 13)

(see paragraphs 439-451)

15.    Competition – Fines – Amount – Determination – Determination of the basic amount – Gravity of the infringement – Criteria for assessment – Nature of the infringement – Horizontal cartel concerning prices – Inherent gravity of such an infringement justifying the choice of a high gravity factor

(Art. 101 TFEU; EEA Agreement, Art. 53; EC-Switzerland Air Transport Agreement, Art. 8; Council Regulation No 1/2003, Art. 23(2) and (3); Commission Notice 2006/C 210/02, points 19 to 23)

(see paragraphs 470-475)

16.    Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission – Extent of the burden of proof – Proof of the infringement having been interrupted

(Art. 101 TFEU; EEA Agreement, Art. 53; EC-Switzerland Agreement on Air Transport, Art. 8; Council Regulation No 1/2003, Arts 2 and 23(2) and (3))

(see paragraphs 534-547)

17.    Competition – Fines – Amount – Determination – Adjustment of the basic amount – Mitigating circumstances– Participation allegedly under pressure – Scope of the Commission’s obligation to state reasons

(Arts 101(1) and 296 TFEU; EEA Agreement, Art. 53; EC-Switzerland Air Transport Agreement, Art. 8; Council Regulation No 1/2003, Art. 23(2) and (3); Commission Notice 2006/C 210/02, point29)

(see paragraphs 553, 554, 564-576)

18.    Competition – Fines – Amount – Determination – Judicial review – Unlimited jurisdiction of the EU Courts – Scope – Limit – Compliance with the principle of non-discrimination – Account taken of the Guidelines on the method of setting fines

(Art. 261 TFEU; Council Regulation No 1/2003, Art. 31; Commission Notice 2006/C 210/02)

(see paragraphs 586-592)

Résumé

The applicant, Air France-KLM, is a company arising from the transformation into a holding company and the change of corporate purpose and name of the former Air France company. It holds 100% of the voting and economic rights in Air France (‘Air France’) and 49% of the voting rights and 93.63% of the economic rights in Koninklijke Luchtvaartmaatschappij NV (‘KLM’), two airline companies operating in the airfreight services market.

The applicant, Air France and KLM are among the 19 addressees of Commission Decision C(2017) 1742 final of 17 March 2017 relating to a proceeding under Article 101 TFEU, Article 53 of the EEA Agreement and Article 8 of the Agreement between the European Community and the Swiss Confederation on air transport (Case AT.39258 – Airfreight) (‘the contested decision’). By that decision, the European Commission found a single and continuous infringement of those provisions through which the undertakings in question had coordinated, over periods between 1999 and 2006, their pricing behaviour in the provision of freight services worldwide. Accordingly, holding the applicant liable for that infringement for the conduct of Air France between 7 December 1999 and 14 February 2006 and the conduct of KLM between 5 May 2004 and 14 February 2006, the Commission imposed two fines on them, one set at EUR 182 920 000, jointly and severally with Air France, and the other in the amount of EUR 124 440 000, jointly and severally with KLM.

On 7 December 2005, the Commission received, under its 2002 Leniency Notice, (1) an immunity application submitted by Lufthansa and two of its subsidiaries (‘Lufthansa’). That application referred to the existence of anticompetitive contacts between a number of undertakings operating in the sector (‘the carriers’) with respect to various elements forming part of the prices charged for services in that context, namely the imposition of ‘fuel’ and ‘security’ surcharges as well as, in essence, the refusal to pay commission to freight forwarders on those surcharges. The evidence collected by the Commission and its investigations led it to send, on 19 December 2007, a statement of objections to 27 carriers, and then to adopt a first decision, on 9 November 2010, against 21 carriers, including the applicant, Air France and KLM. (2) That decision was, however, set aside by the General Court, by judgments of 16 December 2015, (3) within the limits of the respective forms of order to that end, on the grounds of there being contradictions vitiating the statement of reasons of that decision.

In its judgment, the Court dismisses the claims for annulment of the contested decision, as well as the claims seeking a reduction of the fines imposed on the applicant. Accordingly, it confirms, in particular, the grounds relied on for the purpose of holding the applicant answerable for the conduct of its subsidiaries and of the former Air France company. However, it provides clarification on the use of evidence adduced by an undertaking in the context of an application for immunity from fines, the scope of the Commission’s territorial jurisdiction when faced with the practices implemented, in part, outside the European Union, and on the application of the criteria for determining the amount of fines in such circumstances.

Findings of the Court

In the first place, the Court holds that the Commission did not exceed the limits of its own territorial jurisdiction when it found that there was a single and continuous infringement of Article 101 TFEU, Article 53 of the EEA Agreement and Article 8 of the EC-Switzerland Air Transport Agreement, according to the routes concerned, and within the territorial and temporal limits described in the contested decision. (4)

In the second place, the Court finds that the Commission cannot be criticised by the Court for having imputed the unlawful practices of Air France and KLM to the applicant. First, it states that the applicant could be held liable for the unlawful practices of the former Air France company and, as from 5 May 2004, for those of KLM, that being the date when KLM was acquired by the former Air France company. According to the Court, the applicant and the former Air France company are one and the same legal person, the latter having ‘become’ the first on 15 September 2004, by its being transformed into a holding company, accompanied by a change of name and corporate purpose.

As regards Air France’s practices after that date, first, the Court recalls that the applicant’s holding of all the capital and voting rights associated with its subsidiary’s shares made it possible to presume that it exercised decisive influence over its subsidiary. The Commission set out to the requisite legal standard, and without making any error, the reasons why none of the evidence put forward by the applicant was sufficient to rebut that presumption. Second, the Commission was entitled to rely on a series of factors establishing that the applicant exercised decisive influence over Air France, namely the applicant’s powers of management, guidance and control over its operations, the existence of a structure which was common to Air France and KLM as regards specifically freight and the number of directors’ functions being combined across the applicant and Air France.

As regards KLM, the Commission did not rely on the presumption that decisive influence was exercised, but was able to rely on factors comparable to those used against Air France in order to conclude that KLM did not act autonomously on the market.

In the third place, in response to the applicant’s plea by which it argued that the evidence adduced by Lufthansa in the context of its application for immunity from fines ought to have been removed from the file on the ground that Lufthansa was ineligible for such immunity given that its unlawful conduct was alleged to be continuing, the Court observes that the conditions for granting immunity from fines do not concern the lawfulness of the collection of evidence upon which, as appropriate, the Commission’s ability to use it depends. In any event, the Court observes that making the use of evidence adduced in the context of an immunity application subject to compliance with those conditions would undermine the practical effect of the leniency procedure.

In the fourth place, the Court examines the applicant’s objections to the determination of the amount of the fines imposed upon it by the Commission, in particular those concerning the taking into account, by the Commission, of the gravity and the duration of the single and continuous infringement, in the circumstances described in the 2006 Guidelines. (5) In that regard, first, the choice of a gravity factor of 16%, on a scale of 0 to 30% is found not to be an error. On the one hand, such a gravity factor is very favourable to the applicant in view of the gravity inherent in the practices at issue, which must be characterised as an agreement or horizontal pricing practice. On the other hand, the applicant either had not challenged or had not succeeded in calling into question the three additional factors on which the Commission had relied in determining the gravity factor, namely the combined market shares of the carriers at issue, the geographic scope of the single and continuous infringement and the implementation of the practices at issue. Second, in so far as the applicant relied on the lack of sufficient evidence establishing Air France’s uninterrupted involvement in the infringement for the duration of the period under consideration, the Court finds an absence of direct evidence concerning the continuation of collusive contacts during the infringement period of 11 months and 13 days. Nonetheless, in the absence of any public distancing by Air France or any evidence that it had resumed fair and independent competitive conduct on the market during that period, the Court points out that such circumstances cannot be regarded as an interruption to its participation in the single and continuous infringement, but are rather explained by the nature of that infringement and by the functioning of the freight market and the cartel in question.

Lastly, the Court rejects the form of order seeking the reduction of the fines imposed without departing from the calculation method followed by the Commission in the contested decision.

1      Commission notice on immunity from fines and reduction of fines in cartel cases, (OJ 2002 C 45, p. 3).

2      Commission Decision C(2010) 7694 final of 9 November 2010 relating to a proceeding under Article 101 TFEU, Article 53 of the EEA Agreement and Article 8 of the Agreement between the European Community and the Swiss Confederation on Air Transport (Case COMP/39258 – Airfreight).

3      Judgments of 16 December 2015, Air Canada v Commission (T‑9/11, not published, EU:T:2015:994), Koninklijke Luchtvaart Maatschappij v Commission (T‑28/11, not published, EU:T:2015:995), Japan Airlines v Commission (T‑36/11, not published, EU:T:2015:992), Cathay Pacific Airways v Commission (T‑38/11, not published, EU:T:2015:985), Cargolux Airlines v Commission (T‑39/11, not published, EU:T:2015:991), Latam Airlines Group and Lan Cargo v Commission (T‑40/11, not published, EU:T:2015:986), Singapore Airlines and Singapore Airlines Cargo Pte v Commission (T‑43/11, not published, EU:T:2015:989), Deutsche Lufthansa and Others v Commission (T‑46/11, not published, EU:T:2015:987), British Airways v Commission (T‑48/11, not published, EU:T:2015:988) SAS Cargo Group and Others v Commission (T‑56/11, not published, EU:T:2015:990), Air France KLM v Commission (T‑62/11, not published, EU:T:2015:996), Air France v Commission (T‑63/11, not published, EU:T:2015:993), and Martinair Holland v Commission (T‑67/11, not published, EU:T:2015:984).

4      See, in that regard, the presentation of the judgment of 30 March 2022, Japan Airlines v Commission (T‑340/17).

5      Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (OJ 2006 C 210, p. 2).