Keywords
Summary

Keywords

1. Community law – Interpretation – Acts of the institutions – Statement of reasons

2. Competition – Agreements, decisions and concerted practices – Prohibition – Infringements – Agreements and concerted practices capable of being treated as constituting a single infringement – Imputation of liability to an undertaking by reason of its participation in an infringement considered as a whole – Lawfulness

(Art. 81(1) EC)

3. Competition – Agreements, decisions and concerted practices – Imputation to an undertaking – Responsibility for conduct of other undertakings in the context of the same infringement – Lawfulness – Criteria

(Art. 81(1) EC)

4. Competition – Administrative procedure – Bringing infringements to an end – Commission's powers – Injunctions to undertakings

(Council Regulation No 1/2003, Art. 7(1))

5. Competition – Fines – Amount – Determination – Maximum amount

(Council Regulations Nos 17, Art. 15(2), and 1/2003, Art. 23(2))

6. Competition – Fines – Amount – Determination – Criteria – Gravity and duration of the infringement – Possibility of raising the level of fines in order to increase their deterrent effect

(Council Regulations Nos 17, Art. 15(2), and 1/2003, Art. 23(2))

7. Competition – Fines – Amount – Whether appropriate – Judicial review

(Arts 229 EC and 253 EC; Council Regulations Nos 17, Art. 17, and 1/2003, Art. 31)

8. Actions for annulment – Judicial review – Limits on jurisdiction

(Art. 233 EC)

9. Competition – Fines – Amount – Determination – Criteria – Actual impact on the market – Criteria for assessment

(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03)

10. Competition – Fines – Amount – Determination – Criteria – Duration of the infringement – Infringements of long duration

(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1B, first para.)

11. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Mitigating circumstances – Agreement not implemented in practice – Assessment at the level of the individual conduct of each undertaking

(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Sections 1A, first para., and 3)

12. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Mitigating circumstances – Passive or ‘follow-my-leader’ role of the undertaking

(Art. 81 EC; Council Regulation No 17, Art. 15; Commission Notice 98/C 9/03, Sections 2 and 3)

13. Procedure – Introduction of new pleas during the proceedings – Conditions – New plea – Concept

(Rules of Procedure of the General Court, Art. 48(2))

14. Competition – Fines – Amount – Determination – Criteria – Reduction of the fine for cooperation of the fined undertaking – Conditions – Discretion of the Commission

(Council Regulation No 17; Commission Notice 96/C 207/04, Title D, Section 2)

15. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Determination of the fine in proportion to the factors for assessment of the gravity of the infringement

(Council Regulation No 17, Art. 15(2))

Summary

1. The enacting terms of an act are indissociably linked to the statement of reasons for those provisions, so that, when they have to be interpreted, account must be taken, if necessary, of the reasons which led to their adoption.

(see para. 41)

2. An infringement of Article 81(1) EC may result not only from an isolated act but also from a series of acts or from continuous conduct. That interpretation cannot be challenged on the ground that one or more elements of that series of acts or continuous conduct could also constitute, in themselves and in isolation, an infringement of that provision.

A single and continuous infringement frequently consists of a series of acts which follow each other in time and which, in themselves, at the time when they occur, can also constitute an infringement of the competition rules. The distinctive feature of those acts is that they form part of an overall strategy.

(see paras 45-46)

3. An undertaking which has participated in a single complex infringement through its own conduct – conduct which meets the definition of an agreement or concerted practice with an anti-competitive object for the purposes of Article 81(1) EC, and which was intended to help bring about the infringement as a whole – may also be liable for the conduct of other undertakings in the context of the same infringement throughout the period of its participation in the infringement, where it is proved that the undertaking in question was aware of the unlawful conduct of the other participants, or could reasonably have foreseen such conduct, and was prepared to accept the risk.

An undertaking can infringe the prohibition laid down in Article 81(1) EC where the purpose of its conduct, as coordinated with that of other undertakings, is to restrict competition on a specific relevant market within the common market, and that does not mean that the undertaking has itself to be active on that relevant market.

(see paras 50, 53)

4. The Commission’s power to issue injunctions is to be applied according to the nature of the infringement found.

In so far as an undertaking has ceased to trade in the sector in question, it is no longer concerned by the injunction to bring the infringements to an end. There cannot therefore be a breach of the principle of proportionality in that regard.

The application of Article 7(1) of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC] may involve a prohibition on continuing certain activities, practices or situations which have been found to be unlawful, but also a prohibition on adopting similar future conduct or any measure having the same or equivalent object or effect.

Where the undertaking concerned has given an undertaking to refrain from repeating its anti-competitive conduct, the Commission is justified in including that injunction in the enacting terms of the contested decision even if that undertaking has ceased to trade in the sector concerned by the cartel.

Such obligations on undertakings must not, however, exceed the limits of what is appropriate and necessary to achieve the aim pursued.

(see paras 61, 63, 65, 67)

5. In determining the ‘preceding business year’, the Commission must assess, in each specific case and having regard both to the context and to the objectives pursued by the scheme of penalties created by Regulation No 17 and Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC], the intended impact on the undertaking in question, taking into account in particular a turnover which reflects the undertaking’s true economic situation in the period during which the infringement was committed.

It is clear, however, both from the objectives of the system of which Article 15(2) of Regulation No 17 and the second subparagraph of Article 23(3) of Regulation No 1/2003 form part and from the case-law, that the application of the 10% upper limit of turnover presupposes, first, that the Commission has at its disposal the turnover figure for the last business year preceding the date of adoption of the decision and, second, that those data represent a full year of normal economic activity over a period of 12 months.

Thus, if the business year had ended before the adoption of the decision but the annual accounts of the undertaking in question had not yet been drawn up or had not been disclosed to the Commission, the latter would have the right, indeed the obligation, to use the turnover achieved in an earlier business year in order to apply Article 15(2) of Regulation No 17 and the second subparagraph of Article 23(2) of Regulation No 1/2003. Similarly, if, as a result of a reorganisation or a change in accounting practices, an undertaking has, for the preceding business year, produced accounts which relate to a period shorter than 12 months, the Commission is entitled to rely on the turnover achieved in an earlier complete year in order to apply those provisions. The same is true if an undertaking has not carried on any economic activity during the preceding business year and, accordingly, the Commission does not have at its disposal a figure for the undertaking’s turnover, representing economic activity carried on by it during that year. Contrary to the requirements of the case-law, the turnover for that period gives no indication of the size of the undertaking and, in consequence, cannot serve as a basis for determining the maximum amount permissible under Article 15(2) of Regulation No 17 and Article 23(2) of Regulation No 1/2003.

Even in a year of normal business activity, the turnover of an undertaking may fall significantly, or indeed substantially, as compared with previous years, for various reasons, such as a difficult economic context, a crisis in the sector concerned, an accident or a strike. However, as long as an undertaking has in fact achieved a turnover during a complete year in which economic activities, albeit on a reduced scale, have been carried on, the Commission must take account of that turnover for the purposes of determining the maximum amount permissible under Article 15(2) of Regulation No 17 and Article 23(2) of Regulation No 1/2003. Accordingly, at least in situations where there is no indication that an undertaking has ceased its commercial activities or has diverted its turnover in order to avoid the imposition of a heavy fine, it is appropriate to regard the Commission as obliged to fix the maximum limit of the fine by reference to the most recent turnover corresponding to a complete year of economic activity.

(see paras 89-90, 94-97)

6. The power of the Commission to impose fines pursuant to Article 15(2) of Regulation No 17 and Article 23(2) of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC] is one of the means given to the Commission so as to enable it to carry out the task of supervision entrusted to it by Community law.

That task includes the duty to investigate and punish individual infringements, but it also encompasses the duty to pursue a general policy designed to apply, in competition matters, the principles laid down by the Treaty and to guide the conduct of undertakings in the light of those principles. That task thus also includes the curbing of illegal activities and the prevention of repeat offences.

It follows that the Commission must ensure that fines have a deterrent effect.

(see paras 79, 91)

7. The Community judicature has, in regard to actions contesting Commission decisions imposing fines on undertakings for infringement of the competition rules, power to assess, in the context of the unlimited jurisdiction accorded to it by Article 229 EC, Article 17 of Regulation No 17 and Article 31 of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC], the appropriateness of the amounts of fines. That assessment may justify the production and taking into account of additional information which is not as such required, by virtue of the duty under Article 253 EC to state reasons, to be set out in the decision imposing the fine.

(see paras 105-106)

8. If an addressee of a decision decides to bring an action for annulment, the matter to be adjudicated by the Community judicature relates only to those aspects of the decision which concern that addressee. Unchallenged aspects concerning other addressees, on the other hand, do not form part of the matter to be adjudicated by the Community judicature.

(see para. 112)

9. In order to assess the actual impact of an infringement on the market, the Commission must take as a reference the competition which would normally have existed if there had been no infringement. In order to conclude that there has been an impact on the market, it is sufficient that the agreed prices have served as a basis for determining individual transaction prices, thereby limiting customers’ room for negotiation.

On the other hand, the Commission cannot be required, where the implementation of a cartel has been established, systematically to demonstrate that the agreements in fact enabled the undertakings concerned to achieve a higher level of transaction prices than that which would have prevailed in the absence of a cartel. It would be disproportionate to require such proof, which would absorb considerable resources, given that it would necessitate making hypothetical calculations based on economic models whose accuracy it would be difficult for the Court to verify and whose infallibility has in no way been demonstrated. In order to assess the gravity of the infringement, the decisive point is whether the cartel members did all they could to give practical effect to their intentions. What then happened at the level of the market prices actually obtained is liable to have been influenced by other factors outside the control of the members of the cartel. The cartel members cannot therefore benefit from external factors which counteracted their own efforts by turning them into factors justifying a reduction of the fine.

The actual conduct which an undertaking claims to have adopted is irrelevant for the purposes of assessing the impact of a cartel on the market. Only the effects resulting from the whole of the infringement are to be taken into account. Thus, consideration of the unlawful conduct of an undertaking concerned with regard to competition sheds light on the individual situation of the undertaking, but can have no bearing whatsoever on the categorisation of the infringement as ‘very serious’.

With an infringement of long duration, it is unlikely that the producers regarded the practices complained of at the time as wholly ineffective and pointless.

The nature of the infringement plays a major role, in particular, in distinguishing ‘very serious’ infringements. It is clear from the description of very serious infringements given in the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty that agreements or concerted practices which are designed, inter alia, to fix prices may, on the basis of their nature alone, be categorised as ‘very serious’, without there being any need to distinguish such conduct by reference to a particular impact or geographic area. The description of very serious infringements makes no mention of any requirement as to actual market impact or effects produced in a particular geographic area.

(see paras 126, 128-130, 133-134, 136-137)

10. The duration of the infringement is one of the factors to which regard is to be had in fixing the amount of the fine to be imposed on undertakings which have infringed the competition rules. In relation to infringements of long duration, the Commission may automatically apply the maximum increase of 10% of the amount used to calculate the gravity of the infringem ent for each year thereof. Even though the third indent of the first paragraph of Section 1B of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty does not provide for an automatic increase of 10% per year for long-term infringements, it leaves the Commission a measure of discretion in that regard

There is nothing in the Guidelines to prevent the actual duration of the infringement from being taken into account in the calculation of the amount of the fine. Such an approach is entirely logical and reasonable and falls, in any event, within the Commission’s discretion.

Where it is established that an undertaking was aware of the offending conduct of the other participants or that it could reasonably have foreseen it and that it was prepared to take the risk, it is also regarded as responsible, throughout the entire period of its participation in that infringement, for conduct put into effect by other undertakings in the context of the same infringement The Commission is right to consider, implicitly, that the duration of the infringement could not be divided on the basis of the intensity of the participation of the applicant undertaking in the markets concerned. If the role played in a cartel by an undertaking has been correctly taken into account in determining the starting amount for the fine, the fact that the undertaking did not take part in all the conduct by which the cartel is identified cannot once again be taken into account in determining the duration of the infringement.

The increase in the amount of the fine in relation to the duration of the infringement is calculated by the application of a certain percentage to the starting amount which is determined according to the gravity of the infringement as a whole, thus already reflecting the varying levels of intensity of the infringement. Thus, it would not be logical to take into account, for the increase of that amount on the basis of the duration of the infringement, a variation in the intensity of the infringement during the period concerned. A distinction should always be made between the duration of the actual operation of the cartel and the gravity thereof as resulting from its particular nature.

(see paras 147-148, 150, 152, 156-157, 159-160)

11. The mitigating circumstances provided for in Section 3 of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty are all based on the individual conduct of each undertaking. In order to assess any mitigating circumstances, including those relating to the non-implementation of agreements, it is necessary to take into account not the effects arising from the infringement as a whole, which must be taken into consideration in assessing the actual impact of an infringement on the market for the purposes of determining its gravity, but the individual conduct of each undertaking, for the purposes of examining the relative gravity of the participation of each undertaking in the infringement.

Undertakings must therefore put forward other arguments which are capable of showing that, during the period in which they were party to the unlawful agreements, they actually avoided implementing those agreements by adopting competitive conduct on the market or, at the very least, that they clearly and substantially breached the obligations relating to the implementation of the cartel to the point of disrupting its operation.

(see paras 178, 180)

12. A passive role implies that the undertaking adopted a ‘low profile’, that is to say, that it did not actively participate in the creation of any anti-competitive agreements. Amongst the circumstances that may indicate the adoption by an undertaking of a passive role within a cartel is the situation where the undertaking’s participation in cartel meetings is significantly more sporadic than that of the ‘ordinary’ members of the cartel, and likewise its belated entry to the market where the infringement occurred, regardless of the duration of its participation in the infringement, or again the existence of express statements to that effect emanating from representatives of other undertakings which participated in the infringement.

It is only in certain specific circumstances that the small size of an undertaking is an important factor to take into consideration. When the managers of the undertaking chair and organise several meetings, the Commission is entitled to conclude that it is not playing a passive role. It is settled law that convening meetings, proposing an agenda and distributing preparatory documents for such meetings are incompatible with a low-profile since such initiatives show the positive and active attitude of the undertaking concerned to the founding, continuation and control of the cartel.

The Commission is not bound by a decision-making practice: because, in previous cases, it took account of the economic situation in the sector as a mitigating circumstance does not mean that it must necessarily continue to do so. The Commission is required to carry out an individual appraisal of the circumstances of each case, without being bound by previous decisions concerning other undertakings, other product and service markets or other geographical markets at different times.

(see paras 184-185, 189, 193-195)

13. Under Article 48(2) of the Rules of Procedure of the General Court, no new plea in law may be introduced in the course of proceedings unless that plea is based on matters of law or of fact which have come to light in the course of the procedure.

However, a plea which may be regarded as amplifying a plea put forward previously, whether directly or by implication, in the original application, and which is closely connected therewith, will be declared admissible.

(see paras 198-199)

14. The Commission has a broad discretion as regards the method of calculating fines and may, in that regard, take account of numerous factors, including the cooperation provided by the undertakings concerned during the investigation conducted by its departments. An undertaking's cooperation with the Commission can justify a reduction of the fine pursuant to the Commission Notice on the non-imposition or reduction of fines in cartel cases solely if it has made it easier for the Commission to establish an infringement and to put an end to it.

The Commission is not bound by a previous decision-making practice when it grants a certain rate of reduction for a particular kind of conduct; it is not required to grant a reduction of the same proportion when assessing similar conduct in the course of a later administrative procedure.

The Commission enjoys a broad discretion in assessing the quality and usefulness of the cooperation provided by an undertaking, especially in comparison with the contributions made by other undertakings. In that context, the Commission is required to make complex assessments of fact, such as those relating to the cooperation provided by the individual undertakings concerned. The list of circumstances which may give rise to a reduction of the fine, set out in Section D2 of the Leniency Notice, is merely illustrative.

The Commission cannot disregard the usefulness of the information provided, which inevitably depends on the evidence already in its possession. Where an undertaking providing cooperation does no more than confirm, in a less precise and explicit manner, certain information that has already been provided by another undertaking, that does not facilitate the Commission’s task significantly and does not justify a reduction in the fine for cooperation.

Leniency is a reward granted by the Commission in return for facilitating establishment of the infringement, whatever the stage at which the undertaking provided assistance and regardless of whether the assistance consisted in the provision of new information and evidence, or in the admission of facts or of the legal characterisation of the facts.

A reduction in the fine in recognition of cooperation depends principally on the quality and usefulness of the cooperation provided, which is a matter for the Commission to assess in the exercise of its broad discretion, of which only a manifest abuse of that discretion can be censured.

When assessing the cooperation provided by undertakings, the Commission cannot ignore the principle of equal treatment, which is infringed where comparable situations are treated differently or different situations are treated in the same way, unless such treatment is objectively justified.

The assessment of the usefulness of cooperation is in no way based on an arithmetical formula automatically indicating a reduction of at least 20% if the two indents of Section D of the Leniency Notice are found to apply.

(see paras 219-225, 238, 246, 248)

15. The principle of proportionality requires that measures adopted by Community institutions must not exceed the limits of what is appropriate and necessary for attaining the objective pursued.

When it comes to the calculation of fines, the gravity of infringements has to be determined by reference to numerous factors and it is important not to confer on one or other of those factors an importance which is disproportionate in relation to other factors.

In this context, the principle of proportionality requires the Commission to set the fine proportionately to the factors taken into account for the purposes of assessing the gravity of the infringement and also to apply those factors in a way which is consistent and objectively justified.

Thus, the Commission is not required, when determining the amount of the fine, to take into account the poor financial situation of an undertaking, since recognition of such an obligation would be tantamount to conferring an unfair competitive advantage on the undertakings least well adapted to market conditions. In any event, even if a measure taken by a Community authority were to lead to the liquidation of an undertaking, such a liquidation of the undertaking in its existing legal form – although it may adversely affect the financial interests of the owners, investors or shareholders – does not mean that the personal, tangible and intangible elements represented by the undertaking would also lose their value.

Thus, neither Regulation No 17, nor Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC], nor the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty provide that the amount of fines must be determined in direct relation to the size of the affected market, that being only one relevant factor among others.

Although the Guidelines do not state that fines should be calculated according to the overall turnover of the undertakings concerned or their turnover on the relevant market, nor do they preclude the Commission from taking either figure into account in determining the amount of the fine, in order to ensure compliance with the general principles of Community law and where circumstances so require. The turnover derived from the goods in respect of which the infringement was committed is likely to give a fair indication of the scale of the infringement and the liability of each cartel member on the relevant markets. That turnover figure constitutes an objective criterion which gives a proper measure of the harm which the offending conduct in question represents for normal competition and it is therefore a good indicator of the capacity of each undertaking to cause damage. However, there is no general principle that the penalty be proportionate to the turnover which the undertaking made from the sale of the product in respect of which the infringement was committed.

The Commission is under no obligation, where fines are imposed on a number of undertakings involved in the same infringement, to ensure that the final amounts calculated for the fines reflect every difference between the undertakings concerned in terms of their overall turnover or their turnover on the market for the product in question. The Commission is not required to take account of the size of the undertakings concerned when it determines the amount of the fine; there is no reason to treat small and medium-sized undertakings differently from other undertakings since that does not exempt them from their duty to comply with the competition rules.

(see paras 260-261, 264, 266-267, 275, 277-283)