Joined Cases C-628/10 P and C-14/11 P

Alliance One International Inc., formerly Standard Commercial Corp.

and

Standard Commercial Tobacco Co. Inc.

v

European Commission

and

European Commission

v

Alliance One International Inc. and Others

‛Appeal — Competition — Agreements, decisions and concerted practices — Spanish market for the purchase and first processing of raw tobacco — Price-fixing and market-sharing — Infringement of Article 81 EC — Attributability of unlawful conduct of subsidiaries to their parent companies — Presumption of innocence — Rights of the defence — Obligation to state the reasons on which the decision is based — Equal treatment’

Summary of the Judgment

1. Competition — Community rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — Criteria for assessment — Presumption of decisive influence exercised by a parent company over its wholly owned subsidiaries — Whether open to the Commission to support the presumption with evidence intended to establish the actual exercise of decisive influence — Commission’s duty to respect the principle of equal treatment

   (Art. 81(1) EC))

2. Appeal — Grounds — Inadequate statement of reasons — Reliance by the General Court on implicit reasoning — Lawfulness — Conditions

   (Art. 256 TFEU; Statute of the Court of Justice, Arts 36 and 53, first para.)

3. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision to apply competition rules — Decision concerning a number of addressees — Decision attributing liability for the infringement to the parent company — Whether open to the Commission to adduce, during the proceedings, evidence of the liability of the parent company not mentioned in its decision — Not open

   (Arts 101 TFEU and 296 TFEU)

4. Appeal — Grounds — Mistaken assessment of the facts — Inadmissibility — Review by the Court of Justice of the assessment of the facts put before the General Court of First Instance — Possible only where the clear sense of the evidence has been distorted

   (Art. 256 TFEU; Statute of the Court of Justice, Art. 58, first para.)

5. Competition — Community rules — Infringements — Attribution — Parent company and subsidiaries — Subsidiary owned jointly by two companies, one also being the parent company of the other — Economic unit — Criteria for assessment

   (Art. 81(1) EC)

6. Appeal — Grounds — Ground submitted for the first time in the context of the appeal — Inadmissibility

   (Statute of the Court of Justice, Art. 58)

1.  In the specific case in which a parent company has a 100% shareholding in a subsidiary which has infringed the competition rules of the European Union, first, the parent company can exercise a decisive influence on the conduct of the subsidiary and, second, there is a rebuttable presumption that the parent company does in fact exercise such a decisive influence. In those circumstances, it is sufficient for the Commission to prove that the entire capital of a subsidiary is held by its parent company in order for it to be presumed that the parent exercises decisive influence over the commercial policy of that subsidiary. The Commission will then be able to regard the parent company as jointly and severally liable for the payment of the fine imposed on its subsidiary, unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market.

   However, the Commission is not obliged to rely exclusively on that presumption. There is nothing to prevent the Commission from establishing that a parent company actually exercises decisive influence over its subsidiary by means of other evidence or by a combination of such evidence and that presumption.

   The principle of equal treatment requires however that, where the Commission adopts a particular method in order to determine whether liability should be attributed to parent companies whose subsidiaries have taken part in the same cartel, the Commission must, save in specific circumstances, rely on the same criteria in the case of all those parent companies. Accordingly, where the Commission decides to hold the parent companies liable only where there is evidence to support the presumption of actual exercise by the parent companies of decisive influence over the subsidiaries (the ‘dual basis’ method) and waives reliance on the application solely of the presumption of decisive influence, the Commission cannot hold a parent company to be jointly and severally liable for payment of the fine imposed on its subsidiary solely on the basis of that presumption without discriminating against it as compared with other parent companies.

   (see paras 46-50, 55-57)

2.  See the text of the decision.

   (see para. 64)

3.  Where a decision concerning the application of the competition rules of European Union law affects several addressees and relates to whether liability for the infringement can be attributed, the decision must contain an adequate statement of reasons with respect to each of the addressees, in particularly those of them who, according to that decision, must bear the liability for that infringement. Accordingly, with regard to a parent company held to be responsible for the unlawful conduct of its subsidiary, such a decision must, as a general rule, contain a statement of reasons capable of justifying the attribution of liability for that infringement to the parent company.

   In that regard, the Commission’s rights of defence do not extend to the possibility that the Commission may defend the lawfulness of the contested decision against claims of discrimination by producing, during the proceedings, evidence which serves to establish the responsibility of a parent company but which is not mentioned in that decision.

   (see paras 75, 79)

4.  See the text of the decision.

   (see paras 84, 85)

5.  In the area of competition, the exercise of joint control, by two parent companies who are independent of each other, of their subsidiary does not, in principle, preclude a finding by the Commission of the existence of an economic unit comprising one of those parent companies and the subsidiary concerned. That applies even if the proportion of the subsidiary’s share capital owned by that parent company is smaller than that owned by the other parent company. A fortiori, a parent company and its subsidiary, which is itself a parent company of the company which has committed an infringement, can both be deemed to be members of an economic unit which includes the latter company.

   Moreover, the Commission may address a decision imposing fines to the parent company of a subsidiary which has participated in an infringement of Article 81 EC without being required to establish that parent company’s personal involvement in the infringement, provided that the parent company in fact exercises decisive influence over the commercial policy of that subsidiary. It follows that the mere fact that a parent company and its subsidiary exercise, during a certain period, only joint control over the subsidiary which committed the infringement does not preclude a finding that those companies formed an economic unit, provided that it is established that the two parent companies in fact exercised decisive influence over the commercial policy of the subsidiary which committed the infringement.

   (see paras 101-103)

6.  See the text of the decision.

   (see para. 111)

Joined Cases C-628/10 P and C-14/11 P

Alliance One International Inc., formerly Standard Commercial Corp.

and

Standard Commercial Tobacco Co. Inc.

v

European Commission

and

European Commission

v

Alliance One International Inc. and Others

‛Appeal — Competition — Agreements, decisions and concerted practices — Spanish market for the purchase and first processing of raw tobacco — Price-fixing and market-sharing — Infringement of Article 81 EC — Attributability of unlawful conduct of subsidiaries to their parent companies — Presumption of innocence — Rights of the defence — Obligation to state the reasons on which the decision is based — Equal treatment’

Summary of the Judgment

1. Competition — Community rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — Criteria for assessment — Presumption of decisive influence exercised by a parent company over its wholly owned subsidiaries — Whether open to the Commission to support the presumption with evidence intended to establish the actual exercise of decisive influence — Commission’s duty to respect the principle of equal treatment

   (Art. 81(1) EC))

2. Appeal — Grounds — Inadequate statement of reasons — Reliance by the General Court on implicit reasoning — Lawfulness — Conditions

   (Art. 256 TFEU; Statute of the Court of Justice, Arts 36 and 53, first para.)

3. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision to apply competition rules — Decision concerning a number of addressees — Decision attributing liability for the infringement to the parent company — Whether open to the Commission to adduce, during the proceedings, evidence of the liability of the parent company not mentioned in its decision — Not open

   (Arts 101 TFEU and 296 TFEU)

4. Appeal — Grounds — Mistaken assessment of the facts — Inadmissibility — Review by the Court of Justice of the assessment of the facts put before the General Court of First Instance — Possible only where the clear sense of the evidence has been distorted

   (Art. 256 TFEU; Statute of the Court of Justice, Art. 58, first para.)

5. Competition — Community rules — Infringements — Attribution — Parent company and subsidiaries — Subsidiary owned jointly by two companies, one also being the parent company of the other — Economic unit — Criteria for assessment

   (Art. 81(1) EC)

6. Appeal — Grounds — Ground submitted for the first time in the context of the appeal — Inadmissibility

   (Statute of the Court of Justice, Art. 58)

1.  In the specific case in which a parent company has a 100% shareholding in a subsidiary which has infringed the competition rules of the European Union, first, the parent company can exercise a decisive influence on the conduct of the subsidiary and, second, there is a rebuttable presumption that the parent company does in fact exercise such a decisive influence. In those circumstances, it is sufficient for the Commission to prove that the entire capital of a subsidiary is held by its parent company in order for it to be presumed that the parent exercises decisive influence over the commercial policy of that subsidiary. The Commission will then be able to regard the parent company as jointly and severally liable for the payment of the fine imposed on its subsidiary, unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market.

   However, the Commission is not obliged to rely exclusively on that presumption. There is nothing to prevent the Commission from establishing that a parent company actually exercises decisive influence over its subsidiary by means of other evidence or by a combination of such evidence and that presumption.

   The principle of equal treatment requires however that, where the Commission adopts a particular method in order to determine whether liability should be attributed to parent companies whose subsidiaries have taken part in the same cartel, the Commission must, save in specific circumstances, rely on the same criteria in the case of all those parent companies. Accordingly, where the Commission decides to hold the parent companies liable only where there is evidence to support the presumption of actual exercise by the parent companies of decisive influence over the subsidiaries (the ‘dual basis’ method) and waives reliance on the application solely of the presumption of decisive influence, the Commission cannot hold a parent company to be jointly and severally liable for payment of the fine imposed on its subsidiary solely on the basis of that presumption without discriminating against it as compared with other parent companies.

   (see paras 46-50, 55-57)

2.  See the text of the decision.

   (see para. 64)

3.  Where a decision concerning the application of the competition rules of European Union law affects several addressees and relates to whether liability for the infringement can be attributed, the decision must contain an adequate statement of reasons with respect to each of the addressees, in particularly those of them who, according to that decision, must bear the liability for that infringement. Accordingly, with regard to a parent company held to be responsible for the unlawful conduct of its subsidiary, such a decision must, as a general rule, contain a statement of reasons capable of justifying the attribution of liability for that infringement to the parent company.

   In that regard, the Commission’s rights of defence do not extend to the possibility that the Commission may defend the lawfulness of the contested decision against claims of discrimination by producing, during the proceedings, evidence which serves to establish the responsibility of a parent company but which is not mentioned in that decision.

   (see paras 75, 79)

4.  See the text of the decision.

   (see paras 84, 85)

5.  In the area of competition, the exercise of joint control, by two parent companies who are independent of each other, of their subsidiary does not, in principle, preclude a finding by the Commission of the existence of an economic unit comprising one of those parent companies and the subsidiary concerned. That applies even if the proportion of the subsidiary’s share capital owned by that parent company is smaller than that owned by the other parent company. A fortiori, a parent company and its subsidiary, which is itself a parent company of the company which has committed an infringement, can both be deemed to be members of an economic unit which includes the latter company.

   Moreover, the Commission may address a decision imposing fines to the parent company of a subsidiary which has participated in an infringement of Article 81 EC without being required to establish that parent company’s personal involvement in the infringement, provided that the parent company in fact exercises decisive influence over the commercial policy of that subsidiary. It follows that the mere fact that a parent company and its subsidiary exercise, during a certain period, only joint control over the subsidiary which committed the infringement does not preclude a finding that those companies formed an economic unit, provided that it is established that the two parent companies in fact exercised decisive influence over the commercial policy of the subsidiary which committed the infringement.

   (see paras 101-103)

6.  See the text of the decision.

   (see para. 111)