CELEX: 61999TJ0031
Competition
Cartel
District heating pipes
Article 85 of the EC Treaty (now Article 81 EC)
Principle of sound administration
Fine
Guidelines on the method of setting fines
Legitimate expectations

Grounds
Facts of the case
1 The applicant is a multinational group active in the power generation sector, the power transmission and distribution sector, the industrial and building systems sector and the transportation sector. In the ABB Asea Brown Boveri Ltd group (the ABB group), the district heating business involves the Danish undertaking ABB IC Møller A/S (ABB IC Møller), located in Fredericia (Denmark), and other production and/or distribution undertakings in Germany, Finland, Poland and Sweden.
2 In district heating systems, water heated in a central site is taken by underground pipes to the premises to be heated. Since the temperature of the water (or steam) carried in the pipes is very high, the pipes must be insulated in order to ensure an economic, risk-free distribution. The pipes used are pre-insulated and, for that purpose, generally consist of a steel tube surrounded by a plastic tube with a layer of insulating foam between them.
3 There is a substantial trade in district heating pipes between Member States. The largest national markets in the European Union are Germany, with 40% of Community consumption, and Denmark, with 20%. Denmark has 50% of the manufacturing capacity in the European Union and is the main production centre in the Union, supplying all Member States in which district heating is used.
4 By a complaint dated 18 January 1995, the Swedish undertaking Powerpipe AB informed the Commission that the other manufacturers and suppliers of district heating pipes had shared the European market in a cartel and that they had adopted concerted measures to harm its activities or to confine those activities to the Swedish market, or simply to force it out of the sector.
5 On 28 June 1995, acting under a Commission decision of 12 June 1995, officials of the Commission and representatives of the competition authorities of the Member States concerned carried out simultaneous and unannounced investigations at 10 undertakings or associations of undertakings in the district heating sector, including ABB IC Møller.
6 The Commission then sent requests for information under Article 11 of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87), to ABB IC Møller and most of the undertakings concerned.
7 On 20 March 1997, the Commission served a statement of objections on the applicant and the other undertakings concerned. A hearing of the undertakings concerned took place on 24 and 25 November 1997.
8 On 21 October 1998, the Commission adopted Decision 1999/60/EC relating to a proceeding under Article 85 of the EC Treaty (Case No IV/35.691/E-4: - Pre-Insulated Pipe Cartel) (OJ 1999 L 24, p. 1), corrected before publication by a decision of 6 November 1998 (C(1998) 3415 final) (the decision or the contested decision) finding that various undertakings and, in particular, the applicant had participated in a series of agreements and concerted practices within the meaning of Article 85(1) of the EC Treaty (now Article 81(1) EC) (hereinafter the cartel).
9 According to the decision, at the end of 1990 an agreement was reached between the four Danish producers of district heating pipes on the principle of general cooperation on their domestic market. The parties to the agreement were ABB IC Møller, Dansk Rørindustri A/S, also known as Starpipe (Dansk Rørindustri), Løgstør Rør A/S (Løgstør) and Tarco Energi A/S (Tarco) (the four together being hereinafter referred to as the Danish producers). One of the first measures was to coordinate a price increase both for the Danish market and for the export markets. For the purpose of sharing the Danish market, quotas were fixed and then implemented and monitored by a contact group consisting of the sales managers of the undertakings concerned. For each commercial project (project), the undertaking to which the contact group had assigned the project informed the other participants of the price it intended to quote and they then submitted tenders at a higher price in order to protect the supplier designated by the cartel.
10 According to the decision, two German producers, the Henss/Isoplus group (Henss/Isoplus) and Pan-Isovit GmbH, joined in the regular meetings of the Danish producers from the autumn of 1991. In those meetings negotiations took place with a view to sharing the German market. In August 1993, these negotiations led to agreements fixing sales quotas for each participating undertaking.
11 Still according to the decision, agreement was reached between all those producers in 1994 to fix quotas for the whole of the European market. This European cartel involved a two-tier structure. The directors' club, consisting of the chairmen or managing directors of the undertakings participating in the cartel, allocated quotas to each of those undertakings in the market as a whole and in each of the national markets, including Germany, Austria, Denmark, Finland, Italy, the Netherlands and Sweden. For certain national markets, contact groups consisting of local sales managers were set up and given the task of administering the agreements by assigning individual projects and coordinating tender bids.
12 With regard to the German market, the decision states that following a meeting between the six main European producers (the applicant, Dansk Rørindustri, Henss/Isoplus, Løgstør, Pan-Isovit and Tarco) and Brugg Rohrsysteme GmbH (Brugg) on 18 August 1994, a first meeting of the contact group for Germany was held on 7 October 1994. Meetings of this group continued long after the Commission carried out its investigations at the end of June 1995 although, from that time on, they were held outside the European Union, in Zurich. The Zurich meetings continued until 25 March 1996.
13 As a characteristic feature of the cartel, the decision refers in particular to the adoption and implementation of concerted measures to eliminate Powerpipe, the only major undertaking which was not a member. The Commission states that certain members of the cartel recruited key employees of Powerpipe and gave Powerpipe to understand that it should withdraw from the German market. Following the award to Powerpipe of an important German project, a meeting is said to have taken place in Düsseldorf in March 1995 which was attended by the six major producers and Brugg. According to the Commission, it was decided at that meeting to organise a collective boycott of Powerpipe's customers and suppliers. The boycott was subsequently implemented.
14 In the decision, the Commission sets out the reasons why not only the express market-sharing arrangements concluded between the Danish producers at the end of 1990 but also the arrangements made after October 1991, taken as a whole, can be considered to constitute an agreement prohibited under Article 85(1) of the EC Treaty. Furthermore, the Commission stresses that the Danish and European cartels were merely the manifestation of a single cartel which originated in Denmark but which from the start had the long-term objective of extending the control of participants to the whole market. According to the Commission, the continuous agreement between the producers had an appreciable effect on trade between Member States.
15 On those grounds, the operative part of the decision is as follows:
Article 1
ABB Asea Brown Boveri Ltd, Brugg Rohrsysteme GmbH, Dansk Rørindustri A/S, Henss/Isoplus Group, Ke Kelit Kunststoffwerk GmbH, Oy KWH Tech AB, Løgstør Rør A/S, Pan-Isovit GmbH, Sigma Tecnologie Di Rivestimento S.r.L. and Tarco Energie A/S have infringed Article 85(1) of the Treaty by participating, in the manner and to the extent set out in the reasoning, in a complex of agreements and concerted practices in the pre-insulated pipes sector which originated in about November/December 1990 among the four Danish producers, was subsequently extended to other national markets and brought in Pan-Isovit and Henss/Isoplus, and by late 1994 consisted of a comprehensive cartel covering the whole of the common market.
The duration of the infringements was as follows:
- in the case of ABB, ... from about November/December 1990 to at least March or April 1996,
...
The principal characteristics of the infringement consisted in:
- dividing national markets and eventually the whole European market amongst themselves on the basis of quotas,
- allocating national markets to particular producers and arranging the withdrawal of other producers,
- agreeing prices for the product and for individual projects,
- allocating individual projects to designated producers and manipulating the bidding procedure for those projects in order to ensure that the assigned producer was awarded the contract in question,
- in order to protect the cartel from competition from the only substantial non-member, Powerpipe AB, agreeing and taking concerted measures to hinder its commercial activity, damage its business or drive it out of the market altogether.
...
Article 3
The following fines are hereby imposed on the undertakings named in Article 1 in respect of the infringements found therein:
(a) ABB Asea Brown Boveri Ltd, a fine of ECU 70 000 000;
...
16 The applicant was notified of the decision by letter of 12 November 1998, received on its behalf by ABB IC Møller the following day.
Procedure and forms of order sought by the parties
17 By application lodged at the Registry of the Court of First Instance on 27 January 1999, the applicant brought the present action.
18 Seven of the nine other undertakings held liable for the infringement also brought actions against the decision (Cases T-9/99, T-15/99, T-16/99, T-17/99, T-21/99, T-23/99 and T-28/99).
19 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Fourth Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure, requested the defendant to answer a number of written questions and to produce certain documents. The defendant complied with those requests.
20 The parties presented oral argument and answered the questions put by the Court at the hearing held in open court on 26 October 2000.
21 The applicant claims that the Court should:
- annul Article 3 of the contested decision in so far as it is addressed to the applicant;
- alternatively, reduce the amount of the fine;
- order the defendant to pay the costs.
22 The defendant contends that the Court should:
- dismiss the application;
- order the applicant to pay the costs.
Substance
23 The applicant relies in essence on five pleas in law. The first plea alleges factual errors in applying Article 85(1) of the EC Treaty. The second alleges infringement of the rights of defence. The third alleges infringement of the principle of sound administration. The fourth alleges infringement of general principles and factual errors in determining the fine. The fifth alleges that the obligation to state reasons was infringed in connection with the determination of the fine.
First plea in law, alleging factual errors in applying Article 85(1) of the Treaty
Arguments of the parties
24 The applicant criticises the Commission for failing to prove its assertions concerning the involvement of the ABB group's senior management in the cartel and concerning the use of its resources as a multinational company to reinforce the effectiveness of the cartel.
25 First, the applicant disputes the Commission's allegation that the cartel represented a strategic plan conceived, approved and directed at a senior level of group management. First, the conception of the cartel cannot be attributed to the senior management of the ABB group. The most senior manager involved in the cartel was at the time the President of the Danish subsidiary Asea Brown Boveri A/S Odense (ABB Odense), Mr V., who only became an executive vice-president of the group in January 1993, whereas the first agreement of the cartel was concluded at the end of 1990. Second, there is no evidence that any member of the board of directors of the group other than Mr V. was involved in the matter. Mr V. could not approve a measure which he himself had allegedly conceived. Third, although Mr V. was kept informed of certain activities of the cartel after becoming an executive vice-president, he did not participate in the cartel to the extent of being able to direct it. Last, within the ordinary meaning of the expression, group management involves managers who are responsible for more than one business area, which was not the case for Mr V. before he was appointed an executive vice-president of the group or for the successive managing directors of ABB IC Møller.
26 Next, the Commission has adduced no evidence that the senior group management took measures to deny and conceal the infringement and to continue its operation after the Commission had commenced its investigation. The applicant refers, in that regard, to the steps taken by the senior group management vis-à-vis the district heating division, which showed that the senior group management was deceived by the district heating management.
27 Last, there is no evidence in the case-file that the applicant, as a multinational group, used its resources and activities outside the district heating market to reinforce the effectiveness of the cartel or to ensure the compliance of the members of the cartel. The only economic influence that the district heating division used to implement the cartel arose from its position in the market and not from any subsidy by or assistance from group management or resources.
28 In that regard, the applicant disputes the facts cited by the Commission before the Court as evidence that it used, or threatened to use, its economic power. As regards the plan to employ one of Powerpipe's key employees, who was eventually employed as a consultant in the applicant's lobbying office in Brussels, in activities unconnected with district heating, the applicant states that this was indeed a step that formed part of a common agreement between it and Løgstør. The reason why the person concerned was eventually employed outside the district heating sector was that Powerpipe had objected, invoking the clause in his contract which prohibited him from competing with his former employer. As regards the threats of legal action and the reference to reprisals, it is necessary to take account of the fact that ABB's legal counsel, who had signed the letter sent to Powerpipe in Annex 17 to the statement of objections, was at the time convinced, having himself been deceived by the district heating division, that Powerpipe's allegations were unfounded and that he was acting in the legitimate interest of the undertaking.
29 As explained in point 169 of the decision, it was on the basis of all those disputed allegations that the Commission, in the decision, increased the fine in order to ensure that it was sufficiently dissuasive in the light of the alleged involvement of the senior group management. Contrary to what the defendant claims, point 169 of the decision is not therefore intended to establish the applicant's responsibility as a group. The questions raised by the responsibility of the group, in particular the determination of the addressee of the decision and the relevance of the turnover of the district heating division for the purposes of Article 15(2) of Regulation No 17, are specifically dealt with elsewhere in the decision.
30 The defendant observes, as regards the involvement of ABB senior management, that the file provides ample evidence of the direct involvement in the cartel's activities of managers who must be regarded as belonging to a senior level of group management. That is the case not only of Mr V. but also of the two persons who successively held the post of managing director of ABB IC Møller, the company leading the district central heating business activity, involving more than 30 undertakings in the ABB group, including, inter alia, ABB Isolrohr GmbH, the main subsidiary of the group in Germany.
31 According to the defendant, the decision does not claim to demonstrate that the entire group executive committee is charged with managing the cartel, as the applicant seeks to show. The only question dealt with in the decision is whether highly placed executives, who may reasonably be regarded as occupying senior management responsibilities within the ABB group, approved and were involved in the conception and direction of the cartel. In that regard, the decision provided sufficient evidence. The applicant's attempt to minimise the involvement in the cartel of the most senior levels of management within the group serves little purpose, since the applicant does not dispute the conclusion drawn from such involvement, namely the attribution of responsibility to the whole ABB group.
32 As regards the applicant's use of its economic power as a multinational undertaking, the decision does not state that the applicant used resources attributable to business areas other than district heating. It only states the undisputed fact that the applicant put its economic power and resources as a major multinational company to work for the cartel. Even if the applicant's interpretation is accepted, the decision gave a number of examples of the use of or threats to use the applicant's economic power.
Findings of the Court
33 The Commission's allegations concerning the role played in the cartel by the highest level of group management are sufficiently supported by the evidence adduced by the Commission, in particular as regards the role played by Mr V., who was initially responsible for the ABB group's activities in Denmark as President of ABB Odense and, from November 1992, as an executive vice-president of the ABB group, and as regards the conduct of the successive managing directors of ABB IC Møller.
34 In that regard, the applicant does not dispute the Commission's assertions concerning the role played in the cartel by each of the abovementioned executives, but contends that they are not all part of the ABB group management.
35 Contrary to what the applicant claims, however, the expression group management cannot be limited only to the management responsible for more than one of the group's business areas. In the structure of the ABB group as explained by the applicant, the district heating sector is not completely autonomous, since all the undertakings active in that sector operate, in commercial terms, under a director responsible for the district heating sector, who is at the same time Managing Director of ABB IC Møller, while they are also subordinate to the main ABB subsidiary in their country or region. In those circumstances, both the persons responsible for ABB's activities in a country or region and the person responsible within the ABB group for the commercial management of all district heating undertakings may be considered to form part of the ABB group management. Furthermore, it is apparent from the ABB group's annual reports that both the managers responsible for a country or a region and the managers responsible for all the undertakings active in a specific sector are referred to in the list of the management of the ABB group.
36 The designation of the managing directors of ABB IC Møller as belonging to the ABB group management is not contradicted by the fact that, in the organisation of the ABB group, the district heating division is generally directly responsible to a member of the executive committee, in particular Mr V. The additional responsibility of a member of the most senior body of ABB cannot prevent the managers directly responsible within the group for all the undertakings active in a specific sector from also being considered to form part of the group management.
37 Since not only Mr V., as an executive vice-president of the ABB group, but also the successive managing directors of ABB IC Møller and also Mr V. prior to his appointment to the Executive Committee of the ABB group, when he was responsible for ABB's activities in Denmark, performed duties at ABB group management level, the applicant cannot rely on the fact that Mr V. was the only member of the ABB group Executive Committee responsible for district heating in order to substantiate its claim that the cartel cannot have been conceived, approved and directed at senior group management level.
38 As regards the measures taken within the ABB group management to deny or conceal the existence of the cartel, even after the investigations, it should be observed, first of all, that the applicant does not deny that the managing director of ABB IC Møller represented ABB at the directors' meetings which continued until March 1996. As the applicant itself has stated, it was decided at a directors' meeting held after the Commission had carried out its investigations that the date and place of the meetings would be kept secret and that all meetings of the directors' club would be held outside the European Union (applicant's reply of 13 August 1996 to the request for information of 13 March 1996). The applicant's statement should be read in conjunction with Løgstør's statement that, after the investigations, there was strong pressure by ABB to maintain the agreement and that all the others were afraid (Løgstør's comments on the statement of objections). Mr V. continued to be informed of the cartel's activities even after being appointed to the ABB Executive Committee, as may be seen from ABB internal memoranda sent on 19 and 22 April and 2 July 1993 (annexes 26, 29 and 48 to the statement of objections). As regards the concerted measures against Powerpipe, it is apparent from the letters of 4 March and 2 May 1994 from Mr V. to Powerpipe, in reply to the allegations concerning ABB's anti-competitive activities of which Powerpipe was the victim, that Mr V. continued to deny the existence of such anti-competitive activities (annexes 2 and 7 to the statement of objections). In addition, it is apparent from the faxes in annexes 11, 13 and 16 to the statement of objections that in December 1994 Mr V. was involved in drafting ABB's response to the allegations of Powerpipe's lawyers, denying that the undertaking's activities were anti-competitive. Consequently, both the managing director of ABB IC Møller and Mr V. were involved, as members of the ABB group senior management, in the attempts to deny or conceal the cartel.
39 It follows from the foregoing that the Commission was correct to find, in points 121 and 169 of the decision, that the applicant's participation in the cartel was conceived, approved and directed at a senior level of ABB group management, as were the measures to deny or conceal the existence of the cartel and to continue its operation after the investigation. The assertion that group management had already instructed the district heating division in November 1995 to comply with the competition rules cannot invalidate that finding.
40 As regards the applicant's use of its economic power and its resources as a multinational company, it is sufficient to observe that the decision cites a number of facts, not disputed by the applicant, which testify to the applicant's use of its economic power, in particular during its attempts to obtain shareholdings in other undertakings present in the sector (points 37, 46, 48, 91 and 106 of the decision).
41 In addition, it is apparent from the file, as stated in point 156 of the decision, that the applicant's efforts to eliminate Powerpipe and to secure the interests of the cartel were exerted through companies outside the district heating sector.
42 In that regard, it should be observed, first of all, as regards the recruitment of one of Powerpipe's key employees, that it is apparent from the ABB internal memorandum in annex 27 to the statement of objections that the initial plan was to employ that person in a Spanish subsidiary of ABB which had no connection with the district heating sector. Even though it had been impossible to employ that person in the district heating sector owing to his contractual obligations, the fact remains that the members of the applicant's staff who, within the district heating sector, were making arrangements for his employment must have known that other undertakings in the ABB group were prepared to lend their support.
43 Second, the district heating division's activities against Powerpipe were continued and supported by persons in undertakings which, according to the structure of the ABB group, did not form part of the district heating division. First of all, it follows from the correspondence in annexes 9, 11, 13, 15 and 16 to the statement of objections that the position adopted by ABB during contacts with Powerpipe was coordinated not only with Mr V. and the managing director of ABB IC Møller but also with a person in the German subsidiary Asea Brown Boveri AG Mannheim. Similarly, the letters in annexes 144 and 146 to the statement of objections show that a member of the management of that German subsidiary intervened, in March 1995, in relation to the award of the Leipzig-Lippendorf project, to advise the awarding body not to award it to Powerpipe. Last, the fax in annex 159 to the statement of objections shows that the person hired from Powerpipe, even after being employed in an ABB transport division in Belgium, continued to monitor Powerpipe's activities with a view to keeping the managing director of ABB IC Møller informed of those activities. Although it is true that the person concerned had been active in the district heating sector and that ASA Brown Boveri AG Mannheim was an undertaking acting in Germany as the parent company of the ABB undertakings active in the German district heating market, the fact remains that the activities against Powerpipe were continued by members of the staff of ABB undertakings whose business was not district heating.
44 It must therefore be concluded that the Commission was correct to find, in point 169 of the decision, that the applicant systematically used its economic power and resources as a major multinational company to reinforce the effectiveness of the cartel and to ensure that other undertakings complied with its wishes.
45 The plea must therefore be rejected.
Second plea in law, alleging infringement of the right to be heard
Certain aspects taken into consideration for the purpose of increasing the fine
- Arguments of the parties
46 The applicant states that the statement of objections contains no allegation that the cartel was conceived, approved and administered at senior group management level, although that allegation was made in the decision to justify increasing the starting point for setting the fine. The statement of objections referred to the role of senior management only in order to ascertain whether the decision should be notified to the applicant as a group or to its main subsidiary in the district heating sector, in the completely different context of establishing the responsibility of the ABB group rather than of one of its subsidiaries. However, during the administrative procedure the Commission never disclosed its intention to use the alleged involvement of senior group management as justification for increasing the fine. Since senior management were involved in the cartel in all the undertakings concerned by the proceedings in question, the applicant had no reason to assume that the Commission would make the alleged involvement of members of its senior management a central element in calculating the fine.
47 Next, the statement of objections made no reference to the fact that the applicant was warned, at high level, by the Directorate-General for competition at the Commission that evidence of participation in a very serious infringement had been obtained during the investigations. Since that fact is one of the elements set out in the decision as justification for increasing the starting point for the fine, the defendant cannot argue that it is an anecdotal element from which it does not draw any substantive conclusion.
48 Last, the statement of objections made no reference to the allegation, also set out in the decision, that the applicant used its economic power and its resources as a multinational undertaking in order to reinforce the effectiveness of the cartel and to ensure that the other undertakings complied with it. Having regard to the brevity of the reasons stated in the decision for increasing the starting point of the fine, the Commission cannot argue that that allegation had no consequences on the calculation of the fine. Nor did the Commission criticise the applicant in the statement of objections for having employed the resources resulting from its activities outside the district heating business in order to impose its wishes on other participants in the cartel or on Powerpipe. In so far as the Commission intended to rely on the references in the observations of other undertakings in the statement of objections to the fact that those undertakings were faced with a multinational company or to their fear of a strong and powerful multinational, it should have put the applicant on notice of its intention.
49 The applicant maintains that the factual considerations relating to the involvement of senior management and the use of its power as a multinational company are central to the Commission's argument. Thus, they were used in the decision both in order to calculate the starting point for the fine and in taking aggravating circumstances into account. If the applicant had been heard on those allegations, it would have been able to establish during the administrative procedure that those allegations were unfounded and that they were even contradicted by the documents in the file.
50 The defendant observes, first of all, that the statement of objections contained a number of considerations relating to the participation of the applicant's senior management in the cartel and to the attribution of the infringement to the applicant as a group. The participation of senior management, and in particular of the Executive Vice-President, formed the subject-matter of most of the observations which the applicant addressed to the Commission. The applicant was also informed that ABB's responsibility as a group would have consequences on the assessment of the fine. Thus, the Commission stated in the statement of objections that, in assessing the fine to be imposed on each individual undertaking, it would have regard, if appropriate, to their total turnover, in order to take account of the size and economic power of the undertaking in question and to achieve the necessary deterrent effect.
51 The decision draws no conclusion from the warning given to the applicant at high level, but merely mentions it in order to show that the cartel was deliberately continued after the investigations, although the participants had been aware that their cartel had been discovered.
52 As regards the applicant's use of its economic power as a multinational undertaking, that factor is not an aggravating circumstance, but is mentioned in the decision simply to provide further support for the conclusion that the infringement is attributable to the applicant as a group. In any event, even accepting, which the defendant does not, the argument that the decision criticises the applicant for having used resources attributable to business sectors other than district heating, the statement of objections provides a number of examples of the use or threatened use of the applicant's economic power.
- Findings of the Court
53 Observance of the rights of the defence, which constitutes a fundamental principle of Community law and which must be respected in all circumstances, in particular in any procedure which may give rise to penalties, even if it is an administrative procedure, requires that the undertakings and associations of undertakings concerned be afforded the opportunity, from the stage of the administrative procedure, to make known their views on the truth and relevance of the facts, objections and circumstances put forward by the Commission (Case 85/76 Hoffman-La Roche v Commission [1979] ECR 461, paragraph 11, and Case T-11/89 Shell v Commission [1992] ECR II-757, paragraph 39).
54 According to the case-law, the statement of objections must set out the objections in terms that, albeit succinct, are sufficiently clear to enable the parties concerned properly to take cognisance of the conduct complained of by the Commission. It is only on that condition that the statement of objections can fulfil its function under the Community regulations of giving undertakings and associations of undertakings all the information necessary to enable them to defend themselves properly, before the Commission adopts a final decision (Joined Cases C-89/95, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 Ahlström Osakeyhtiö and Others v Commission [1993] ECR I-1307, paragraph 42, and Case T-352/94 Mo och Domsjö v Commission [1998] ECR II-1989, paragraph 63).
55 In that context, the applicant criticises the Commission because, although it stated in the statement of objections that a member of ABB's senior management was involved in organising the cartel, it mentioned that fact solely in order to ascertain whether the final decision should be notified to ABB as a group and did not indicate that the involvement of senior management would lead to an increase in the fine. It further criticises the Commission for failing to mention in the statement of objections the fact that the applicant used its economic power and its resources as a multinational undertaking and that the applicant was warned, at high level, by the Directorate-General for Competition at the Commission, although those factors were also taken into account in the decision in increasing the starting point of its fine.
56 However, those arguments are based on an incorrect reading of the decision.
57 In the first paragraph of point 168 of the decision, the Commission stated that, in determining the penalty to be imposed on the applicant, it would take account of the applicant's actual economic capacity to cause significant damage to competition and the need to set the fine at a level which would ensure by its deterrent effect that there would be no repetition. It stated that, in the applicant's case, further upward adjustment was necessary in order to take account of its position as one of Europe's largest industrial combines. In that regard, the Commission set out in the same point, as reasons for such upward adjustment, first, the need to set the fine at a level which would ensure that there would be no repetition and, second, the fact that such undertakings had legal and economic knowledge and infrastructures which enabled them more easily to recognise that their conduct constituted an infringement and be aware of the consequences stemming from it under competition law. It follows that, according to the Commission's assessment, the fact that an undertaking participates in an infringement of competition law as a group constitutes in itself a factor that increases the seriousness of the infringement.
58 In that context, the Commission stated in point 169 of the decision that the applicant's involvement in the violation of Article 85 of the Treaty was not, as the applicant had initially attempted to portray it, the unauthorised and atypical action of a minor subsidiary in a decentralised management structure. In that regard, the Commission stated that the organisation of the cartel represented a strategic plan by the applicant to control the district heating industry which was conceived, approved and directed at a senior level of group management, as were the measures to deny and conceal its existence and to continue its operation for nine months after the Commission's investigation. Next, the Commission stated that it was abundantly clear that the applicant had systematically used its economic power and resources as a major multinational company to reinforce the effectiveness of the cartel and to ensure that other undertakings complied with its wishes. The Commission further stated that by the stage of the oral hearing the applicant no longer contested the imputation of responsibility to the group, although it still maintained that the district heating business area constituted the relevant undertaking to which the 10% limit of turnover laid down in Article 15(2) of Regulation No 17 applied. The Commission did not accept that argument, but contended that the proven involvement in the cartel of the most senior level of management underlined the need to set the fine at a level which ensured it had sufficient deterrent effect.
59 It follows from the foregoing that the sole factor that induced the Commission to increase the starting point for calculating the fine was the fact that the applicant participated in the cartel at group level. In that context, the Commission cited the involvement of the applicant's senor management and the use of its resources as a multinational company in order to refute the applicant's subsequent arguments that the cartel should only have been attributed to a subsidiary of the ABB group and that, even if the cartel were imputable to the whole group, the Danish subsidiary of the group was the undertaking to which the maximum amount of the fine should apply. It follows that both the involvement of the applicant's senior management and the use of its resources as a multinational company are merely factors that go to confirm the Commission's finding that the applicant, as a group, participated in the cartel, so that, contrary to what the applicant claims, neither of those factors constituted an element that in itself justified increasing the starting point for calculating the fine to be imposed on the applicant.
60 Nor can a different interpretation be inferred from the fact that, in points 155 and 156 of the decision, the Commission dealt with the question of the attribution of the infringement to the applicant at group level, in particular in order to determine the undertaking within the meaning of Article 85 of the Treaty that had committed the infringement and to indicate the natural or legal person who, as the addressee of the decision, was to answer for the infringement committed by that undertaking. However, that does not mean that the Commission, having established that the infringement is to be attributed to the ABB group, cannot, in point 168 of the decision, draw from the applicant's responsibility as a group all the consequences considered necessary for the purpose of setting the fine to be imposed on the applicant.
61 As regards the correspondence between the accusations made in the decision and those set out in the statement of objections, the Commission clearly stated in the statement of objections the abovementioned factors that led to the infringement's being imputed to the ABB group and the consequences of such imputation for the applicant as a group.
62 First, as regards the fact that the involvement of the senior management of the applicant in the organisation of the cartel and the applicant's use of its resources as a multinational undertaking were taken into account, the passages referring to those factors, on page 55 of the statement of objections, correspond broadly to the objections set out in the third and fifth indents of point 156 of the decision, which state that the efforts of ABB to eliminate Powerpipe and/or to secure the interests of the cartel were exerted through companies outside the district heating business area and that both the cartel and the measures to deny and conceal its existence were conceived, directed and actively supported at a high level in group management. It is true that, as regards the involvement of the applicant's senior management, the Commission referred on page 55 of the statement of objections only to the role played by an executive vice-president of the group, whereas in point 156 of the decision it referred to activities at a high level in ... group management. However, having regard to the repeated references in the statement of objections to the role played by all the management of the undertakings in the cartel, the applicant cannot claim that the Commission failed to state that it was also objecting to the involvement in the cartel of managers other than Mr V., after the latter had been appointed an executive vice-president of the ABB group.
63 It follows that the applicant cannot claim that the references in the decision to the involvement of its senior management and to the use of its resources as a multinational company constitute objections on which it was not given the opportunity to express its views.
64 Next, as regards the attribution of the infringement to the ABB group, the Commission stated, on page 58 of the statement of objections, when setting out the factors to be taken into consideration in setting the fines, that the applicant, as the only multinational company and the ringleader of the cartel, must assume special responsibility and that, in order to assess the fine to be imposed on the applicant, the Commission would take account of the need to ensure that the fine would have the desired deterrent effect. The Commission further stated at the same point that multinational undertakings that commit serious and deliberate infringements of competition law must not be able to calculate the eventual cost and the probable benefits of that conduct on the basis that, owing to their size and their total turnover, any fine imposed would be negligible.
65 It follows that the Commission duly stated that ABB's position as a group would be taken into account in assessing the fine.
66 Nor was the Commission obliged to set out in the statement of objections all the consequences that would flow from the attribution of the infringement to ABB as a group. It follows from the case-law that to give indications as regards the level of the fines envisaged, before the undertaking has been invited to submit its observations on the allegations against it, would be to anticipate the Commission's decision and would thus be inappropriate (Joined Cases 100/80 to 103/80 Musique diffusion française and Others v Commission [1983] ECR 1825, paragraph 21, and Case 322/81 Michelin v Commission [1983] ECR 3461, paragraph 19).
67 Last, as regards the warning received by the applicant from officials in the Commission's Directorate-General for competition, it should be observed, first of all, that in the decision, contrary to what the applicant claims, the Commission did not regard the fact that the applicant received a warning as an element that in itself led to an increase in the fine.
68 As regards the express warning given to the applicant, the decision refers, among the aggravating circumstances taken into account in the applicant's case, to its continuation of such a clear-cut and indisputable infringement after the investigations despite having been warned at high level by the Directorate-General for Competition of the consequences of such conduct (point 171 of the decision). It is apparent from that passage that the Commission, when taking aggravating circumstances into account, relied not on the warning given to the applicant at high level but on the fact that the applicant deliberately continued an obvious infringement after the investigations. The interpretation that, in that context, the reference to the warning given to the applicant was only intended to confirm the fact that, when continuing the infringement, the applicant was aware, even at senior level, that its conduct was contrary to the competition rules is borne out, first, by the fact that it is again stated, in point 169 of the decision, that the measures which the applicant took to continue the operation of the cartel for nine months after the investigations were taken at a senior level of group management and, second, by the finding that, for other undertakings concerned by the decision, the continuation of the infringement after the investigations was also taken into account as an aggravating circumstance, even though they had not been given an express warning by the Commission.
69 Since the Commission, on page 58 of the statement of objections, cited the fact that the infringement had continued for at least six months after the investigations as an aggravating circumstance, the applicant had the opportunity to submit its views on that allegation.
70 It must be concluded, therefore, that the plea in law alleging infringement of the right to be heard in relation to certain aspects taken into consideration in increasing the fine imposed on the applicant must be rejected.
The application of the guidelines
- Arguments of the parties
71 The applicant criticises the Commission for having based its calculation of the fine on the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and of Article 65(5) of the ECSC Treaty (OJ 1998 C 9, p. 3, the guidelines), adopted after the statement of objections had been notified and after the hearing, without giving the applicant the opportunity to express its views on the new method of setting fines which those guidelines implied.
72 Although the Commission is not obliged to indicate in the statement of objections the amount of the fine it envisages imposing, it should have given at least a general indication of the criteria it envisaged using in setting the fine. By publishing the new guidelines, the Commission chose to anticipate its decision as to the method and level of the fine to be imposed in each specific case. The Commission should have sent the applicant a supplementary statement of objections setting out its reasons for deciding to apply to the present case a method of setting fines that would lead to a high fine, in particular its grounds for applying the new guidelines and also the main factors used in applying them to the present case. Since on a number of points the new guidelines leave a margin of discretion to the Commission, their application to the present case cannot be regarded as a general policy measure on which the applicant was not entitled to comment. As it was not so informed, the applicant was not in a position to tailor its response to the new method laid down in the guidelines and used by the Commission.
73 Last, the fact that the applicant submitted speculative calculations concerning the application of the guidelines cannot be treated as equivalent to its having been given a formal right to be heard, pursuant to the relevant rules of procedure.
74 The defendant observes that it did indeed fulfil its obligations in relation to the right to be heard in regard to fines. Not only did it warn the undertakings that it envisaged imposing fines, it also set out in detail the factors it would take into consideration in assessing the fines for each participant in the cartel. The applicant's observations on the statement of objections show that it commented extensively on the method to be used in the present case and, in particular, the possibility that the Commission would not limit the likely fines to a certain percentage of turnover in the relevant market.
75 Furthermore, the new guidelines provide undertakings with details of the method of calculating fines that would not have been previously available on the basis of the case-law. In that context, the voluntary restriction of the Commission's discretion which the guidelines entail reduces rather than increases the obligation to include in the statement of objections details of the criteria for calculating the fine.
76 Last, the applicant cannot claim that it did not have the opportunity to comment on the application of the new guidelines, since its representatives had submitted calculations of the fine to the Commission based on the guidelines and had discussed how they should be applied.
- Findings of the Court
77 It should be observed, in limine, that it is common ground that the Commission determined the fine imposed on the applicant in accordance with the general method for setting fines described in the guidelines.
78 It is settled case-law that where the Commission expressly states in its statement of objections that it will consider whether it is appropriate to impose fines on the undertakings and it indicates the main factual and legal criteria capable of giving rise to a fine, such as the gravity and the duration of the alleged infringement and whether that infringement was committed intentionally or negligently, it fulfils its obligation to respect the undertakings' right to be heard. In doing so, it provides them with the necessary means to defend themselves not only against the finding of an infringement but also against the imposition of fines (Musique diffusion française and Others v Commission, cited above, paragraph 21).
79 It follows that, so far as concerns the determination of the amount of the fines, the rights of defence of the undertakings concerned are guaranteed before the Commission by virtue of the fact that they have the opportunity to make their submissions on the duration, the gravity and the anti-competitive nature of the matters of which they are accused. Moreover, the undertakings have an additional guarantee, as regards the setting of that amount, in that the Court of First Instance has unlimited jurisdiction and may in particular cancel or reduce the fine pursuant to Article 17 of Regulation No 17 (Case T-83/91 Tetra Pak v Commission [1994] ECR II-755, paragraph 235).
80 In that regard, the Commission explained, on pages 53 and 54 of the statement of objections sent to the applicant, the duration of the infringement which it proposed to find in the applicant's case.
81 Then, on pages 57 and 58 of the statement of objections, the Commission set out its reasons for considering that the present infringement was a very serious infringement and also the factors constituting aggravating circumstances, namely the manipulation of the procedures for submitting tenders; the aggressive implementation of the cartel in order to ensure the compliance of all the participants in the agreements and to exclude the only competitor of any importance which did not participate in the agreements; and the fact that the infringement continued after the investigations had been carried out.
82 At the same place, the Commission stated that, in assessing the fine to be imposed on each individual undertaking, it would take into account, inter alia, the role played by each of them in the anti-competitive practices, all the substantial differences as regards the duration of their participation, their importance in the district heating sector, their turnover in the district heating sector, their total turnover, if appropriate, in order to take account of the level and economic power of the undertaking in question and to ensure a sufficiently deterrent effect and, last, all the mitigating circumstances.
83 Then, the Commission stated that the applicant, as the only multinational company and the instigator of the cartel, must assume special responsibility and that, in order to assess the fine to be imposed on it, the Commission would take account of the need to ensure that the fine would have the desired deterrent effect (see paragraph 64 above).
84 In doing so, the Commission set out in the statement of objections the elements of fact and of law on which it would base the calculation of the fine to be imposed on the applicant, so that, in that regard, the applicant's right to be heard was duly observed.
85 Since it had indicated the elements of fact and of law on which it was to base its calculation of the fines, the Commission was under no obligation to explain the way in which it would use each of those elements in determining the level of the fine. As stated in paragraph 66 above, to give indications as regards the level of the fines envisaged, before the undertaking has been invited to submit its observations on the allegations against it, would be to anticipate the Commission's decision and would thus be inappropriate.
86 Nor, consequently, was the Commission bound to inform the undertakings concerned, during the administrative procedure, that it intended to use a new method to calculate the amount of the fines.
87 In particular, the Commission was not bound to mention, in the statement of objections, the possibility of a change in its policy as regards the level of the fines, a possibility which depended on general considerations of competition policy having no direct relationship with the particular circumstances of these cases (Musique diffusion française v Commission, cited above, paragraph 22). The Commission is not under an obligation to put undertakings on notice by warning them of its intention to increase the general level of fines (Case T-12/89 Solvay v Commission [1992] ECR II-907, paragraph 311).
88 It follows that the applicant's right to be heard did not place the Commission under an obligation to inform it of its intention to apply the new guidelines in its case.
89 Furthermore, the applicant informed the Commission in its faxes of 29 September and 12 October 1998 of the way in which it considered the new guidelines should be applied to its case. It cannot therefore claim that it did not have the opportunity to state its views on the application of those guidelines.
90 For all those reasons, the plea in law relating to infringement of the right to be heard must also be rejected in so far as it concerns the application of the guidelines on setting fines.
Third plea in law, alleging infringement of the principle of sound administration
Arguments of the parties
91 The applicant states that the requirements of good administrative practice, objectivity and impartiality should form the guidelines for dealing with competition cases. However, it maintains that the Commission's principal case officer exhibited a fundamental bias against the applicant throughout the proceeding, a bias which found its manifestation in the decision as adopted by the College of Commissioners. To that effect, the applicant cites a number of facts which, it alleges, show bias on the part of the principal case officer.
92 First, in the spring of 1996, at the end of a meeting with representatives of Løgstør, that official assured them that Løgstør had nothing to fear, since ABB was the principal target of the investigation.
93 Second, at the beginning of the oral hearing on 24 November 1997, the same official gratuitously singled out the applicant for special opprobrium, when he said: ABB prides itself on its reputation as Europe's most respected company ... It may be that after the events of this case become generally known they are going to have to work very hard indeed to ensure that reputation is maintained. At the hearing the official also asked the applicant a number of pointless questions which could only be regarded as an attempt to embarrass it in that forum.
94 Third, on 9 November 1998, even before the Commission had served the text of its decision on ABB IC Møller, that official made derogatory remarks in the course of a presentation at a conference on competition law. During his presentation on the pre-insulated pipes case, he observed that the acronym ABB would take on a new meaning: A Bad Business. The Director-General of the Directorate-General for Competition later apologised for that incident. In that regard, the defendant's explanation that A Bad Business was the title of an article previously published in The Parliament is irrelevant, since the standard of conduct of a journalist cannot be compared to that of Commission officials discussing a case in their official capacity.
95 It is of no avail to argue that that incident took place after the decision had been adopted, since it is mentioned not as a procedural defect but as evidence of persistent bias on the part of the principal case officer throughout the procedure leading to the contested decision.
96 According to the applicant, the decision of the College of Commissioners was influenced by the bias of the case officer. Thus, certain defects in the decision can probably be explained by that official's zeal in singling out the applicant for punishment. On that point, the applicant observes, first of all, that the decision treats ABB as the only multinational involved although three other undertakings, Oy KWH Tech AB (KWH), Pan-Isovit and Sigma Tecnologie di rivestimento Srl (Sigma) also form part of large international groups and although, in Pan-Isovit's case, the file shows that members of its senior management participated in the cartel. Furthermore, the decision contains unsupported and misleading errors concerning the participation of members of ABB senior group management which were designed to influence the College of Commissioners against the applicant and to induce them to impose an extremely high fine on it. Having regard to the evidence adduced of the bias of the case officer and to the expression of that bias in the decision, it is for the Commission to show that the bias had no effect on the decision adopted by the College of Commissioners.
97 The defendant observes that, even if the facts mentioned are correct, it cannot find any bias in them. As regards the remarks to which the applicant refers, the remark made at the conference was made after the decision had been adopted and cannot therefore have affected its contents or its validity: and not only was the remark A Bad Business merely the title of an article published previously, but that article had been expressly referred to during the conference.
98 In any event, the applicant has failed to point to any illegality in the decision that would result from the alleged bias. The findings of the Commission in the decision and the fines imposed on the participants in the cartel are the consequence of their own behaviour and are justified by facts and circumstances which are fully supported by the file.
Findings of the Court
99 The guarantees conferred by the Community legal order in administrative proceedings include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case (Case T-44/90 La Cinq v Commission [1992] ECR II-1, paragraph 86, Case T-7/92 Asia Motor France and Others v Commission [1993] ECR II-669, paragraph 34, and Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 Métropole télévision v Commission [1996] ECR II-649, paragraph 93).
100 In that context, it is clear from the minutes of the hearing that while being heard on 24 November 1997 the applicant was subject to a derogatory remark concerning its reputation and to a series of tendentious questions about facts which it no longer disputed, all on the part of a Commission official dealing with the case which led to the contested decision. It is not disputed that, at a conference on issues of competition law held on 9 November 1998, the same official expressed his views using a quotation casting discredit on the applicant's activities.
101 It is true that those remarks show regrettable behaviour and language on the part of a member of the team responsible, within the Commission, for dealing with the present case. That is confirmed, moreover, by the fact that the Commission's Director-General for Competition apologised to the applicant following the remark made at the conference on 9 November 1998.
102 However, such remarks, however regrettable they may be, are not of such a kind as to cast doubt on the degree of care and impartiality with which the Commission conducted its investigation into the infringement committed by the applicant. The same would apply to the comment which the same official is alleged to have made to representatives of Løgstør, if it were proved, although the applicant has adduced no evidence that that comment was made.
103 Furthermore, as regards the remark made at the conference on 9 November 1998, even though the decision had not yet been served on the applicant when that conference took place, it had already been adopted. It follows from the case-law that the validity of a decision cannot be affected by acts subsequent to its adoption (Joined Cases 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82 IAZ and Others v Commission [1983] ECR 3369, paragraphs 15 and 16).
104 In so far as the applicant claims to see evidence of bias against it in the general remarks made by that official, regrettable conduct on the part of a member of the team dealing with a case does not in itself vitiate the legality of the decision adopted in that case. Even if that official did infringe the principle of sound administration, the contested decision was not adopted by the official in question but by the College of Commissioners.
105 In any event, the matters raised by the applicant are not of such a kind as to demonstrate that if the official concerned was biased against the applicant, that bias was reflected in the actual decision. First, as regards the allegation that senior ABB group management participated in the cartel, it is sufficient to refer to paragraphs 33 to 44 above, where it was established that the allegation is supported by the evidence gathered by the Commission. Second, as regards the fact that the Commission considered that ABB was the only multinational undertaking involved in the case, it must be pointed out that since the Commission did not find sufficient evidence to attribute the infringement to the groups to which KWH, Pan-Isovit and Sigma belong, it is for the applicant, which maintains that the involvement of such groups is evident from the file, to adduce the necessary evidence. However, the applicant has merely claimed, without adducing any evidence, that the senior management of the group to which Pan-Isovit belonged at the material time was informed of and approved the activities of the cartel. As regards the groups to which KWH and Sigma belonged, the applicant has referred to no evidence in the file capable of demonstrating that they were involved in the cartel. In that regard, since the Commission relied on a range of evidence in order to attribute the infringement to the ABB group, as may be seen from points 156 and 169 of the decision, it is not sufficient, in order to extend the responsibility of other participants to their parent companies, to state that they are part of an international group and that they themselves have international activities.
106 Furthermore, when it is established that an undertaking has been involved in a cartel at the level of the group to which it belongs, even evidence of a premature manifestation by the Commission of its conviction that the group in question was involved is not of such a kind as to deprive the actual evidence of such involvement of its reality.
107 For all those reasons, the plea alleging infringement of the principle of sound administration must be rejected.
Fourth plea in law, alleging infringement of general principles and errors of assessment in setting the fine
108 By its fourth plea, the applicant claims that there has been an infringement of the general principles relating to the protection of legitimate expectations, proportionality and equal treatment, and criticises the Commission for incorrectly assessing the duration of the infringement and the aggravating circumstances, the mitigating circumstances and the Commission Notice on the non-imposition or reduction of fines in cartel cases (OJ 1996 C 207, p. 4, the leniency notice).
109 However, it is necessary to examine, first, the admissibility of an annex to the reply in the form of an opinion drawn up by a professor at the University of Freiburg (Germany) and intended to support the plea alleging infringement of the principle of protection of legitimate expectations; that opinion, according to the applicant, concludes that the Commission, having embarked upon a course of cooperation with the applicant pursuant to the leniency notice, was no longer entitled to depart from its existing policy on fines.
Admissibility of the opinion attached to the reply
110 According to the defendant, the opinion attached to the reply must be excluded from the present proceedings. It is inadmissible under Article 48(2) of the Rules of Procedure of the Court of First Instance, since it relies on legal standards, in particular estoppel, self-binding of the administration, rights of the defence and fair administrative proceedings, that were not raised in the application. Furthermore, the opinion contains factual inaccuracies and incorrect basic assumptions concerning the case, the procedure and the Commission's position.
111 In that regard, the Court points out, first, that pursuant to Article 48(2) of its Rules of Procedure, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.
112 In the present case, the Court notes that the opinion attached to the reply refers to the application of certain general principles which were not raised in the application. Since no question arises of matters of law or of fact which have come to light in the course of proceedings, the introduction of that opinion does not satisfy the requirements of Article 48(2) of the Rules of Procedure and the opinion cannot therefore be taken into consideration in so far as it sets out pleas in law that were not raised in the application.
113 Furthermore, under Article 44(1)(c) of the Rules of Procedure, all applications must indicate the subject-matter of the proceedings and include a brief statement of the grounds relied on. It is settled case-law that, for an action to be admissible, the essential facts and law on which it is based must be apparent from the text of the application itself, even if only stated briefly, provided the statement is coherent and comprehensible. Although specific points in the text of the application can be supported and completed by references to specific passages in the documents attached, a general reference to other documents cannot compensate for the lack of essential information in the application itself, even if those documents are attached to the application (judgment in Case C-52/90 Commission v Denmark [1992] ECR I-2187, paragraph 17, order in Case T-56/92 Koelman v Commission [1993] ECR II-1267, paragraph 21, and judgment in Case T-84/96 Cipeke v Commission [1997] ECR II-2081, paragraph 33). It is not for the Court to seek and identify in the annexes the pleas and arguments on which it may consider the action to be based, since the annexes have a purely evidential and instrumental purpose (order in Case T-72/92 Benzler v Commission [1993] ECR II-347, paragraph 19, and judgment in Cipeke v Commission, cited above, paragraph 34). Similarly, it is certainly not for the Court, since part of the opinion in question cannot be taken into consideration, to seek and identify in that opinion the passages that might be taken into account as annexes supporting and supplementing the applicant's pleadings on specific points.
114 For those reasons, the opinion attached to the reply will not be taken into consideration, in whole or in part.
Infringement of the principle of protection of legitimate expectations
- Arguments of the parties
115 The applicant claims that the Commission infringed the principle of legitimate expectations by applying the new guidelines to the present case when the applicant cooperated with the Commission in order to take advantage of the policy set out in the leniency notice.
116 According to the applicant, it follows from the approach adopted by the Commission in its leniency notice that the legitimate expectations created by that notice must extend to the method used in calculating the fine that applied at the time when the undertaking decided to cooperate with the Commission. By determining the reductions from which an undertaking may benefit with reference to the fine that would have been imposed if it had not cooperated, the leniency notice implies that there is at the time when an undertaking decides to cooperate a discernible method for calculating the fine. The relatively detailed provisions on the available reductions set out in sections B to D of the leniency notice would be rendered meaningless if the undertakings were unable to have at least an approximate idea of the amount of the fine to which reductions would be applied. The legitimate expectation that case-law has recognised vis-a-vis the Commission in its legislative capacity in favour of undertakings which have been encouraged to rely on the Community legislation should also apply where the Commission exercises its discretion in order to introduce a new policy on the calculation of fines. Consequently, undertakings which decided to cooperate with the Commission by providing it with incriminating documents were entitled to believe that the method of calculating the fine would not change substantially.
117 In that regard, the applicant states that before January 1998, in cartel cases, the Commission systematically used the undertaking's turnover in the product concerned as the principal criterion for calculating fines. As a result, fines never exceeded 10% of an undertaking's turnover in the products affected by the infringements. Save in exceptional cases, such as Commission Decision 92/212/EEC of 25 March 1992 relating to a proceeding pursuant to Article 85 of the EEC Treaty (IV/30.717 - A - Eurocheque: Helsinki Agreement) (OJ 1992 L 95, p. 50), it was only in cases involving Article 86 of the EC Treaty (now Article 82 EC) or vertical agreements that the fines were not calculated as a percentage of turnover in the relevant market. In a press release relating to Commission Decision 94/815/EC of 30 November 1994 relating to a proceeding under Article 85 of the EC Treaty (Cases IV/33.126 and 33.322 - Cement) (OJ 1994 L 343, p. 1), the Commission explained that its normal procedure in cartel cases was to base fines on turnover in the relevant product in the European Union. None the less, the Commission imposed on the applicant a fine which, before the reductions for mitigating circumstances and for cooperation, corresponds to approximately 60% of its worldwide turnover in the district heating sector, or 110% of its turnover on those products in the European Union.
118 Furthermore, the new guidelines also involve a radical new approach to the treatment of the duration factor in assessing fines. Until the guidelines were adopted, the Commission had used the duration factor only in order to differentiate between several members of a cartel whose participation had not been established for the same length of time. However, the new approach has had the effect of increasing the basic amount of 10% for each complete year that the infringement lasted.
119 As regards the defendant's argument that the applicant is relying not on an expectation of a different method of calculating the fine but on the expectation of a lower level of fine, the applicant observes that the legitimate expectation referred to in relation to the method of calculating the fine cannot be dissociated from the legitimate expectation as to the level of the fine to be imposed, since there is a relationship of cause and effect between the change in the calculation method and the increase in the level of the fine. The applicant does not accept the Commission's conclusion that the interest which it seeks to protect is not a legitimate interest. The interest to be protected is perfectly legitimate, since the applicant was entitled not to cooperate. In that regard, the applicant observes that the right not to give self-incriminating evidence is one of the fundamental procedural guarantees provided by Regulation No 17. Save as regards the obligation to cooperate laid down in Article 11 of Regulation No 17, undertakings which are being investigated are therefore entitled to remain passive in the investigation.
120 The Commission observes that it does not deny that the leniency notice is a source of legitimate expectations, as it explicitly stated in the notice itself. Furthermore, the legitimate expectations that the applicant derived from the notice were scrupulously respected. Thus, its cooperation led, as provided for in section D of the notice, to a reduction of between 10% and 50% of the fine, in fact 30%. However, the legitimate expectation deriving from the notice should not extend to the method used to calculate the fine that applied at the time when the undertaking decided to cooperate. Since there is nothing in the notice remotely connected with the method used by the Commission to calculate the fines, the notice cannot be the source of any legitimate expectation in that regard.
121 Nor could the Commission's practice as to the level and method of calculating fines constitute a source of legitimate expectations. In determining the amount of fines, the Commission can take various factors into account, including overall turnover and turnover on the products affected by the infringement. There is no legal obligation to calculate fines as a percentage of turnover. In that regard, the Commission's practice of taking turnover on the relevant market into account is not consistent. In the past, it has imposed fines that were assessed not on turnover in the relevant market but by reference to other turnover figures or to the profits obtained by the participants in the infringement. Even if assessing the fine on the basis of turnover in the relevant market had been one of the most frequently-used methods, it was not a consolidated, immutable practice. The assertion that the Commission's previous practice could not give rise to legitimate expectations as regards the method and level of the fines also applies to the application of the duration factor.
- Findings of the Court
122 As regards the setting of fines for infringements of the competition rules, the Commission enjoys a discretion when fixing fines, in order that it may direct the conduct of undertakings towards compliance with the competition rules (Case T-150/89 Martinelli v Commission [1995] ECR II-1165, paragraph 59, Case T-49/95 Van Megen Sports v Commission [1996] ECR II-1799, paragraph 53, and Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689, paragraph 127). It is settled case-law that traders cannot have a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretion will be maintained (see Case 245/81 Edeka [1982] ECR 2745, paragraph 27, and Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 33).
123 On the contrary, the Commission is entitled to raise the general level of fines, within the limits laid down in Regulation No 17, if that is necessary to ensure the implementation of the Community competition policy. According to the case-law, the fact that in the past the Commission imposed fines of a certain level for certain types of infringement does not mean that it is estopped from raising that level within the limits indicated in Regulation No 17 if that is necessary to ensure the implementation of Community competition policy (Musique diffusion française and Others v Commission, cited above, paragraph 109, Case T-12/89 Solvay v Commission, paragraph 309, and Case T-304/94 Europa Carton v Commission [1998] ECR II-869, paragraph 89).
124 It follows that undertakings involved in an administrative procedure which may lead to a fine cannot acquire a legitimate expectation that the Commission will not exceed the level of fines previously applied.
125 Furthermore, the dissuasive effect of fines is one of the factors which the Commission may take into account in assessing the gravity of the infringement and, consequently, in determining the level of the fine, since the gravity of infringements has to be determined by reference to numerous factors, such as the particular circumstances of the case, its context and the dissuasive effect of fines; moreover, no binding or exhaustive list of the criteria which must be applied has been drawn up (order in Case C-137/95 P SPO and Others v Commission [1996] ECR I-1611, paragraph 54, and judgments in Case C-219/95 P Ferriere Nord v Commission [1997] ECR I-4411, paragraph 33, and Case T-295/94 Buchmann v Commission [1988] ECR II-813, paragraph 163).
126 In so far as the applicant refers to legitimate expectations deriving from the leniency notice, the Commission was required, in order to protect the legitimate expectation that all undertakings may base on that notice, to assess the cooperation of each undertaking by applying the criteria set out in that notice. In so far as the applicant's reasoning is based on the hypothesis that the Commission did not comply with the leniency notice, its arguments are the same as those based on a misapplication of the notice.
127 However, the applicant cannot derive from the leniency notice any legitimate expectation as regards the calculation of fines other than assessment of its cooperation during the administrative procedure. That notice clearly states that the Commission, when determining the reduction from which an undertaking may benefit for cooperation by comparison with the fine that would have been imposed if it had not cooperated, did not in any way prejudice its discretion under Article 15(2) of Regulation No 17. In that regard, the Commission stated in the leniency notice that [c]ooperation by an enterprise is only one of several factors which the Commission takes into account when fixing the amount of a fine (section A(5)).
128 Furthermore, unlike the position for the taking into account of the cooperation of undertakings involved in an administrative procedure, or where the legislative framework is amended, as relied on by the applicant, at the time of the infringement there was, as regards the other aspects of the calculation of the fines, no declaration on the part of the legislature or the Commission from which the undertakings concerned could derive a legitimate expectation.
129 As regards the calculation method used in the former practice, the applicant could not trust that the Commission would impose a fine calculated on the basis of turnover in the product concerned.
130 In that regard, the criteria for assessing the gravity of the infringement may include the volume and value of the goods in respect of which the infringement was committed, the size and economic power of the undertaking and, consequently, the influence which it was able to exert on the market. It follows that, on the one hand, it is permissible, for the purpose of fixing the fine, to have regard both to the total turnover of the undertaking, which gives an indication, albeit approximate and imperfect, of the size of the undertaking and of its economic power, and to the proportion of that turnover accounted for by the goods in respect of which the infringement was committed, which gives an indication of the scale of the infringement. On the other hand, it follows that it is important not to confer on one or the other of those figures an importance which is disproportionate in relation to the other factors (Musique diffusion française and Others v Commission, cited above, paragraphs 120 and 121, Case T-77/92 Parker Pen v Commission [1994] ECR II-549, paragraph 94, and Case T-327/94 SCA Holding v Commission [1998] ECR II-1373, paragraph 176).
131 It follows from the case-law that the Commission is entitled to calculate a fine according to the gravity of the infringement and without taking account of the various turnover figures of the undertakings concerned. Thus, the Community judicature has upheld the lawfulness of a calculation method whereby the Commission first determines the overall amount of the fines to be imposed and then divides that total among the undertakings concerned according to their activities in the sector concerned (IAZ and Others v Commission, cited above, paragraphs 48 to 53) or according to the level of their participation, their role in the cartel and their size on the market, calculated on the basis of average market share during a reference period.
132 Since the Commission's previous practice did not consist solely in using a method based on turnover in the relevant product, the applicant could not therefore legitimately expect that such a method would be applied to it.
133 Furthermore, when the Commission set out in the guidelines the method it envisaged applying when calculating fines imposed under Article 15(2) of Regulation No 17, it did not deprive itself of the possibility of taking account, when fixing fines, of the turnover of an undertaking in the relevant market.
134 Nor could the applicant expect that the Commission would take its turnover in the relevant market into account when applying the limit of 10% of turnover provided for in Article 15(2) of Regulation No 17. It is settled case-law that the turnover referred to in Article 15(2) of Regulation No 17 must be understood as referring to the total turnover of the undertaking concerned, which alone gives an approximate indication of its size and influence on the market (see Musique diffusion française and Others v Commission, cited above, paragraph 119, Case T-144/89 Cockerill-Sambre v Commission [1995] ECR II-947, paragraph 98, and Case T-43/92 Dunlop Slazenger v Commission [1994] ECR II-441, paragraph 160). Provided that it observes the limit laid down in the abovementioned provision of Regulation No 17, the Commission may fix the fine on the basis of the turnover of its choice, in terms of geographical area and relevant products.
135 As regards the duration of the infringement, the applicant cannot claim that the application, under the guidelines, of a multiplier based on the duration of an infringement is contrary to an administrative practice whereby duration is reflected in the amount of the fine only where the Commission is required to differentiate between the members of a cartel who have not participated for the same length of time. In so far as the applicant concludes that the Commission was not entitled to increase the fine to be imposed on it on the basis of the duration of the infringement, such an interpretation is contrary to Article 15(2) of Regulation No 17, which provides that [i]n fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement. Furthermore, even on the assumption that such an interpretation were correct, the applicant has not stated to what extent the Commission was not entitled in the present case, in which the various members of the cartel did not participate in the cartel for the same length of time, to differentiate between the fines to be imposed on the participants according to the duration of their participation.
136 It follows from all the foregoing that the complaint must be rejected in so far as the applicant relies on infringement of the principle of protection of legitimate expectations.
Infringement of the principle of proportionality
- Arguments of the parties
137 The applicant maintains that by giving disproportionate weight to its overall size and its activities outside the district heating sector as a multinational company, the Commission imposed a fine that was disproportionate to the gravity of the infringement. Not only is the fine disproportionate to the effect of the infringement in the relevant market, but the way in which it was set infringed the legal standard for determining gravity.
138 The applicant begins by observing that in the decision the Commission altered its practice of taking as the general starting point the turnover of the undertaking in the relevant market. In calculating the fine, the Commission first of all fixed a starting point of ECU 20 million, which was then subject to upwards adjustment to take account of ABB's position as one of Europe's largest industrial combines. Instead of its previous method, the Commission therefore used the method set out in the guidelines, under which turnover in the relevant market is almost irrelevant.
139 The applicant does not dispute that the Commission may take account not only of the undertaking's turnover in the relevant market but also of the total size and economic power of the undertaking concerned, for which total group turnover provides a rough indication. None the less, size and economic power play a role only to the extent to which they are actually manifested in the infringement itself. Consequently, group turnover can be taken into account only in so far as the undertaking was able, by virtue of its total size and economic power, to exert influence on the relevant market over and above that attributable to market position alone. In that regard, ABB's decentralised structure is such that the district heating division operates independently of the other production units and without synergy with them, and accounts for less than 0.44% of ABB's worldwide activities.
140 The applicant maintains that a fine cannot be assessed solely by means of a simple calculation based on total turnover. The determination of the gravity of an infringement involves examination of a number of factors. Thus, the applicant criticises the Commission for failing to take proper account of the conduct of each of the undertakings and the role played by each of them in the establishment of the concerted practices. There is no justification for imposing on the applicant a fine eight times higher than that imposed on Løgstør, when its turnover in the relevant products was not even twice Løgstør's turnover. The Commission did not strike the appropriate balance between the general size of the group and other relevant factors, such as the position of the undertakings on the relevant market, the profits they might have made from the infringement or the effects of the infringement on the market.
141 Next, the applicant denies that the need to ensure that the fine had a sufficiently deterrent effect justified increasing the penalty in accordance with the size of the undertaking. Deterrence cannot be a separate factor for determining the gravity of an infringement; rather, a fine that fully reflects the gravity of the infringement will automatically have the deterrent effect. Were the Court to uphold the argument that a fine must have a deterrent effect in order to reflect the gravity of the infringement, it would give the Commission carte blanche to set fines as high as it pleased. Nor can the deterrent effect be determined on the basis of an undertaking's ability to pay, especially in the present case, where the ability to pay depends on assets unrelated to the benefits derived from or losses caused by the infringement.
142 The applicant also disputes the Commission's assertion that it was entitled to adjust the fine upwards because large undertakings have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law (point 168 of the decision). Although it leaves open the question whether that argument might ever justify increasing a fine, the applicant observes that a large group may find it more difficult than a small undertaking to ensure that such illegal conduct does not occur. Thus, in a group like the applicant's, in which a multitude of individual businesses must be monitored, it is difficult to ensure that no illegal act is ever committed in any of the undertakings in the group.
143 Nor is the Commission's legal infrastructure theory compatible with the case-law of the Court of Justice, in so far as the latter does not consider it relevant, for the purpose of defining conduct as intentional or negligent, whether the undertakings concerned are or are not aware that they are infringing Article 85(1) of the Treaty, provided that they are aware of all the relevant facts that give rise to the infringement. Since ignorance of the illegality of anti-competitive conduct is no defence against, or even a factor in, the setting of a fine, the Commission could not attach such importance to the fact that large undertakings have greater legal resources and are thus better able to know that the conduct of one of their undertakings is illegal.
144 In any event, the Commission's argument cannot be accepted in respect of the cartel in question, since none of the participant undertakings can have considered it legal. None of them lacked the legal infrastructure necessary to understand that it would be liable to a fine if its conduct were discovered.
145 Last, the applicant claims the fine is disproportionate to the gravity of the infringement in so far as it exceeded 10% of the total turnover of the applicant's district heating division. Since the district heating division is a separate undertaking having neither synergy nor relationship with the essential activities of the ABB group, it must be regarded as an undertaking within the meaning of Article 85 of the Treaty. Consequently, it is to the turnover of the district heating division that the 10% limit provided for in Article 15(2) of Regulation No 17 must be applied.
146 In that regard, it is only because the economic unit operating in the district heating sector does not have separate legal personality that the decision had to be addressed to the ABB group, which thus became liable for the fine. The fact that the district heating division does not have separate legal personality may be explained by the organisation of the ABB group, in which undertakings are responsible, for commercial purposes, to the director of their branch of activity, whereas for legal purposes they come under the main subsidiary of their own country or region. In the district heating sector, the ABB subsidiaries operating in the district heating area are managed, for commercial purposes, by the director of district heating, who is also the director of ABB IC Møller. The applicant concludes that if each of the individual subsidiaries involved in district heating had become a subsidiary of ABB IC Møller, instead of remaining a subsidiary within the organisation of its own particular country, ABB IC Møller would have been the appropriate addressee of the decision and the turnover of that secondary group would have been the relevant turnover for the application of the 10% limit provided for in Article 15(2) of Regulation No 17. According to the applicant, the application of competition law is based on economic reality and not on legal formalities. Thus, the mere fact that the applicant uses a different organisational structure cannot lead to a different result under competition law.
147 The defendant states, first of all, that the new method for setting fines set out in the guidelines reflects the need to take account of a large number of factors in fixing fines. In order to ensure that they are effectively deterrent, the fines determined according to the new method no longer represent a percentage of the turnover of the undertakings concerned. The Commission now takes as a starting point an absolute figure chosen according to the overall gravity of the infringement.
148 The new method of setting fines corresponds to the multi-factor test referred to by the applicant. In that regard, it follows from the case-law that the Commission is required to take the intrinsic gravity and the nature of the infringement into consideration. In that context, it is open to the Commission to take a multitude of factors into account, subject to review by the Community judicature. Turnover figures are among the permissible factors, but are by no means obligatory. In any event, the applicant cannot maintain that fines calculated as a percentage of turnover in the relevant market constitute an appropriate deterrent. The limited deterrent effect of the Commission's former practice is indicated by the fact that the applicant was leading a pan-European cartel at the very time the Commission issued the Cement decision, cited above, and Commission Decision 94/601/EC of 13 July 1994 relating to a proceeding under Article 85 of the EC Treaty (IV/C/33.833 - Cartonboard) (OJ 1994 L 243, p. 1).
149 The defendant further observes that, even though it is under no obligation to take all the factors referred to by the applicant into account, it took certain of those factors into account in the decision, in particular the undertakings' position in the market and also the conduct of, and the role played by, each of them. The effect of the infringement on the market is not a decisive factor in the assessment of the fine. Factors relating to the intentional nature of the infringement may be more significant than those relating to its effects, particularly where they relate to infringements which are intrinsically serious, such as price-fixing and market-sharing. The same applies to the profits that undertakings may have gained from the infringement.
150 In any event, the Commission did not give excessive weight to total turnover. In calculating the fine to be imposed on the applicant, the decision did not take its total turnover into account, since the upward adjustment of the starting point of the fine is not based on the differences between the total turnover figures of the participants in the cartel. The correction factor is justified by the fact that, in order to ensure equivalent deterrence, different economic powers require different levels of fines. It is only if the fine has the appropriate deterrent effect that it reflects the gravity of the infringement.
- Findings of the Court
151 It should be observed, first of all, that in the present case the Commission considered that the present infringement constituted a very serious infringement for which the likely fine would be at least ECU 20 million (point 165 of the decision).
152 Then, in order to take account of the difference in size of the undertakings which took part in the infringement, the Commission divided the undertakings into four categories according to their relative importance in the market in the Community, subject to adjustment where appropriate to take account of the need to ensure effective deterrence (second to fourth paragraphs of point 166 of the decision). It follows from points 168 to 183 of the decision that the specific starting points for the calculation of the fines imposed on the four categories were, in order of size, ECU 20 million, ECU 10 million, ECU 5 million and ECU 1 million.
153 As regards the determination of the specific starting points for each category, the Commission stated, following a question put by the Court, that these amounts reflect the importance of each undertaking in the pre-insulated pipes sector, having regard to its size and weight compared with ABB and in the context of the cartel. For that purpose, the Commission took into account not only their turnover on the relevant market but also the relative importance which the members of the cartel ascribed to each of them, as evidenced by the quotas allocated within the cartel, set out in annex 60 to the statement of objections, and by the results obtained and forecast in 1995, set out in annexes 169 to 171 of the statement of objections.
154 In addition, in the applicant's case the Commission made a further upward adjustment of the starting point for the calculation of its fine, initially ECU 20 million, to take account of its position as one of Europe's largest industrial combines (point 168 of the decision). It will be recalled that the Commission identified as objectives of such upward adjustment, first, the need to set the fine at a level which would ensure by its deterrent effect that there would be no repetition and, second, the fact that such undertakings had legal and economic knowledge and infrastructures which enabled them more easily to recognise that their conduct constituted an infringement and be aware of the consequences stemming from it under competition law (see paragraph 57 above). According to the Commission, the requirement relating to the deterrent effect meant that, in the applicant's case, the minimum fine of ECU 20 million envisaged for a very serious infringement should be weighted by 2.5 to give a starting point of ECU 50 million (point 169 of the decision).
155 In those circumstances, the applicant cannot claim that the Commission calculated its fine on the basis of its total turnover. The Commission fixed a starting point on the basis of the amount of ECU 20 million, corresponding to the gravity of the infringement, which was then differentiated according to a series of criteria reflecting the significance of each undertaking in the pre-insulated pipes sector. In so far as the amount resulting from that operation was further multiplied by 2.5 in order to take into account the applicant's position as a European group, that weighting was not applied on the basis of the applicant's total turnover. As may be inferred from points 9, 176 and 179 of the decision, which contain indications of the total turnover figures of the applicant and the undertakings classified in the second category (Løgstør) and the third category (Tarco, Henss/Isoplus, Pan-Isovit and Dansk Rørindustri), the specific starting point for the undertakings in the second and third categories was in excess of 7% of total turnover for Løgstør and 10% of total turnover for the other undertakings, whereas the specific starting point of ECU 50 million in the applicant's case was less than 0.2% of its total turnover. It follows that the multiplier of 2.5 has no proportional link with the difference between the applicant's and the other undertakings' total turnover.
156 As the Commission did not calculate the applicant's fine on the basis of its total turnover, the applicant is also unable to rely on Parker Pen v Commission, cited above, where the Court of First Instance reduced the fine imposed on an undertaking pursuant to Article 15(2) of Regulation No 17 on the ground that the Commission had not taken into account the fact that the turnover accounted for by the relevant products was relatively low in comparison with the turnover resulting from Parker's sales (Parker Pen v Commission, cited above, paragraph 94).
157 It is apparent from the decision and from the explanation provided by the Commission following the written question put by the Court that when fixing the specific starting points for calculating the fines, the Commission took account of a series of factors reflecting the size of each undertaking in the pre-insulated pipes sector, including turnover in the relevant market. The Commission therefore complied with the settled case-law that the gravity of infringements has to be determined by reference to numerous factors, such as the particular circumstances of the case, its context and the dissuasive effect of fines, although no binding or exhaustive list of the criteria which must be applied has been drawn up (see the case-law cited in paragraph 125 above).
158 Nor, having regard to the fact that, when differentiating between the specific starting point to be used in ABB's case and those chosen for the other undertakings, the Commission took into consideration quotas agreed within the cartel and results obtained and envisaged for the year during which the European cartel reached its most developed form, can the applicant claim that the Commission did not balance the factor relating to its size with other factors such as the undertakings' position on the relevant market, the profits which they were able to derive from the infringement or the effects of the infringement on the market.
159 Since in the present case the Commission did not fix the specific starting points for the calculation of the fines solely on the turnover figures of the undertakings in the relevant market, the applicant cannot rely on SCA Holding v Commission, cited above, where the Court of First Instance held that, since the turnover of the undertakings implicated in the same infringement must be taken as a basis for determining the relationship between the fines to be imposed, the Commission rightly calculated the fines for each of those undertakings by applying a fixed percentage to an identical reference turnover for the undertakings concerned, so that the figures obtained would be as comparable as possible (SCA Holding v Commission, cited above, paragraph 185).
160 In that context, the mere fact that the Commission, in determining the specific starting point for the applicant, did not take the turnover in the relevant market of each of the undertakings as the sole basis, but took into consideration other factors reflecting their size in that market, cannot lead to the conclusion that the Commission imposed a disproportionate fine. It follows from the case-law that it is important not to confer on an undertaking's total turnover or to the turnover accounted for by the goods to which the infringement relates an importance which is disproportionate in relation to the other factors for assessment (see paragraph 130 above).
161 Having regard to all the relevant factors taken into consideration in fixing the specific starting points, the applicant cannot rely on the fact that its fine represents a higher percentage of its turnover in the relevant market than the fine imposed on Løgstør. It must be pointed out, on the basis of the figures used by the Commission when differentiating between the starting points, as indicated in paragraph 152 above, that the difference between the starting point chosen for the applicant and the starting point chosen for Løgstør is objectively justified. Furthermore, the Commission is not required to ensure that the final amounts of the fines to which its calculations lead reflect every difference between them in terms of turnover in the relevant market.
162 Nor, contrary to what the applicant claims, did the Commission commit an error of assessment or infringe the principle of proportionality by multiplying the amount of ECU 20 million by 2.5 in order to reflect the applicant's size in the pre-insulated pipes sector in order to take account of its position as one of the principle European groups.
163 First of all, although the applicant does not essentially dispute the fact that the infringement could be attributed to the ABB group, it none the less argues that the Commission should have calculated its fine solely on the turnover achieved by its district heating division. In that regard, as stated in points 165 and 166 of the decision, attribution of the infringement to the ABB group, rather than to the undertaking allegedly constituted by ABB's district heating division, is justified on the basis of a number of factors such as the fact that the district heating business groups together a whole array of 30 or more companies, the fact that there is no single ABB holding company in the district heating sector, the fact that the efforts to eliminate Powerpipe and/or secure the interests of the cartel were exerted through ABB companies outside the district heating sector, the fact that the group district heating sector reports directly to an executive vice-president of ABB and also the fact that both the cartel and the measures to deny and conceal its existence were conceived, directed and actively supported at a high level in group management (point 156 of the decision). In so far as the applicant disputes the reality of some of those factors, it was held in paragraphs 33 to 43 above that those factors are sufficiently supported by the evidence gathered by the Commission. Since the attribution of the infringement to the ABB group is properly established, the applicant cannot rely on the decentralised and autonomous position of its district heating division, or on the fact that the effects of the cartel could be attributed only to the activities of that division.
164 In any event, it is clear from the foregoing that even though the infringement was attributed to the ABB group the Commission did not apply to the starting point of its fine a weighting that precisely reflected the relationship between the ABB group and the other undertakings, whether in terms of total turnover or in terms of size or economic power. Because of the need to fix the fine at a sufficiently deterrent level, the Commission used a multiplier of 2.5.
165 The fact that, in fixing such a multiplier, the Commission took into account the deterrent effect that fines must have, is wholly consistent with the established principle that the gravity of infringements has to be determined by reference to numerous factors, such as the particular circumstances of the case, its context and the dissuasive effect of fines, although no binding or exhaustive list of the criteria which must be applied has been drawn up (see the case-law cited in paragraph 124 above).
166 In that regard, the Commission's power to impose fines on undertakings which, intentionally or negligently, commit an infringement of the provisions of Article 85(1) of the Treaty is one of the means conferred on the Commission in order to enable it to carry out the task of supervision conferred on it by Community law. That task certainly 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. It follows that, in assessing the gravity of an infringement for the purpose of fixing the amount of the fine, the Commission must take into consideration not only the particular circumstances of the case but also the context in which the infringement occurs and must ensure that its action has the necessary deterrent effect, especially as regards those types of infringement which are particularly harmful to the attainment of the objectives of the Community (Musique diffusion française and Others v Commission, cited above, paragraphs 105 and 106).
167 Since the deterrent effect of a fine is one of the factors which, according to the case-law, must be taken into account in determining the gravity of the infringement, the applicant cannot criticise the Commission for having taken the deterrent effect of the fines into account when fixing the specific starting point corresponding to the gravity of its infringement. The taking into account of the deterrent effect of the fines forms an integral part of weighting the fines to reflect the gravity of the infringement, since the purpose of doing so is to ensure that a calculation method does not lead to fines which, for certain undertakings, would not be sufficiently high to ensure that the fine had a sufficiently deterrent effect.
168 As regards the fact that the specific starting point was fixed at ECU 50 million in the applicant's case, it is irrelevant to claim, as the applicant does, that the Commission was not entitled to rely, in that context, on the applicant's ability to pay, since in the present case the Commission did not fix that starting point on criteria relating to the applicant's ability to pay the final fine.
169 Next, the Commission, in order to justify increasing the starting point of ECU 20 million when taking into consideration ABB's position as one of the main European groups, was entitled to refer to the fact that large undertakings have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law. Irrespective of whether in a particular case the management of a large undertaking is always aware of all the anti-competitive activities of its subsidiaries, or whether, in a specific case, the infringement is of such gravity that none of the undertakings participating in it could fail to be aware that it is illegal, the Commission did not commit an error of assessment in taking the view that large undertakings generally have resources which make them better able to be aware of the requirements and the consequences of competition law than do smaller undertakings.
170 Contrary to what the applicant claims, in so far as consideration of the resources of a large undertaking is a criterion for adjusting the fine to be imposed on an undertaking in respect of which the Commission has established an infringement of the Community competition rules, there is no need to examine whether the existence of such an infringement may be established irrespective of whether or not the undertakings concerned are aware that their conduct is illegal.
171 Last, since the Commission correctly attributed the infringement to the ABB group, the applicant cannot claim that the Commission should have taken the turnover of ABB's district heating division as the basis on which to determine the maximum amount of 10% of turnover provided for in Article 15(2) of Regulation No 17. As stated in paragraph 130 above, the turnover referred to in Article 15(2) of Regulation No 17 is to be taken as relating to the total turnover of the undertakings concerned, which alone gives an indication, albeit approximate and imperfect, of its size and influence in the market.
172 For all those reasons, the complaint alleging infringement of the principle of proportionality must be rejected.
Infringement of the principle of equal treatment
- Arguments of the parties
173 The applicant maintains that the Commission infringed the principle of equal treatment by using a different method to assess its fine from that used to assess the fines imposed on the other participants in the cartel. Furthermore, although the Commission claims to apply a single standard for imposing fines, the application of that standard gave rise to discrimination against the applicant, having regard to the particular circumstances of the cartel.
174 First of all, the applicant alleges that it suffered discrimination in so far as the Commission increased the starting point for its fine on the grounds that it was, first, a large multinational and, second, the only multinational undertaking involved in the cartel. It follows from the first ground that the Commission relied de facto on the applicant's total turnover. For all the other undertakings, however, the Commission took as the starting point only turnover in the relevant product. The second ground corresponds to discrimination in so far as other participants in the cartel, notably Pan-Isovit, Sigma and KWH, are all part of large groups and operate at international level. Even though the Commission did not take account of the geographical scope of the activities of all those international groups, but only of their economic size, the fact that the applicant's membership of such a group was taken into account constitutes discrimination. The Commission did not explain why it did not take account of group turnover in the case of those three undertakings. In so far as the Commission attaches importance to the purported involvement of the applicant's senior group management, the applicant observes that it is none the less apparent from the file that the senior management of Pan-Isovit's parent company, Walter Meier Holding, was aware of Pan-Isovit's participation in the cartel and approved it. The Commission should have investigated whether the considerations on which it relied in respect of the applicant were not also present in the case of the other parties to the cartel.
175 Next, the applicant is the only undertaking to which the new method for calculating fines was actually applied, which can only increase the discrimination against it. In the case of all the other participants in the cartel, the Commission used starting points below ECU 20 million, which none the less constitutes the minimum amount for very serious infringements under the guidelines. For the five other participants in the cartel, it was clear at the outset that the fines resulting from the application of the new calculation method could not actually be used, because they would exceed the maximum amount laid down in Article 15(2) of Regulation No 17. The formula chosen to calculate the individual fines was thus clearly constructed around the Commission's desire to impose a maximum fine on the applicant, while the fines imposed on other participants were more of an afterthought.
176 The defendant observes that the multinational nature of the applicant was mentioned only incidentally. Among the factors that gave rise to an increase in the initial amount in the applicant's case were the economic size of the undertaking, without specific reference to total turnover, and the need to ensure appropriate deterrence. The amount of the fine has no connection with the geographical scope of the ABB group's activities.
177 As regards the other undertakings referred to, the evidence available to the defendant did not indicate that the conduct of KWH and Sigma could be ascribed to a higher level in their corporate structures in such a way that their participation in the cartel could be attributed to the uppermost level of those structures. If the applicant maintains that the possible participation of Pan-Isovit's parent company is supported by evidence, it should have identified that evidence.
178 Furthermore, the applicant cannot complain that the fines imposed on the other participants in the cartel were close to the 10% maximum permitted under Article 15(1) of Regulation No 17. The difference in treatment invoked by the applicant is merely the logical consequence of the application of the limit laid down in Regulation No 17.
- Findings of the Court
179 The applicant's allegation in regard to unequal treatment in the calculation of the fine derives from a misreading of the decision and from an incorrect interpretation of Article 15(2) of Regulation No 17.
180 First, the applicant incorrectly maintains that the Commission took the applicant's total turnover as the basis for increasing the specific starting point for its fine, whereas in the case of the other undertakings their turnover in the relevant market served as the basis for the calculation. As stated in paragraphs 153 to 155 above, the Commission relied, in differentiating between the starting points of the fines, in regard to all the undertakings concerned, including the applicant, on a series of factors reflecting the importance of each undertaking in the pre-insulated pipes sector, including turnover in the relevant market, and then, in the applicant's case, in order to ensure that the fine would have a sufficiently deterrent effect, it increased the result of that differentiation by a multiplier of 2.5, which had no proportional link with the applicant's total turnover.
181 Nor can the applicant claim to have been subjected to unequal treatment on the ground that the Commission, when determining the maximum amount of the fine provided for in Article 15(2) of Regulation No 17, did not take account of the total turnover of the groups to which KWH, Pan-Isovit and Sigma belonged. Under Article 15(2) of Regulation No 17, the Commission may impose fines not exceeding 10% of the turnover in the preceding business year of each of the undertakings participating in the infringement. It follows that the maximum amount of the fine can be determined only on the basis of the turnover of the undertaking which the Commission holds responsible for the infringement. It is clear from the decision that, as regards the participation in the cartel of KWH, Pan-Isovit and Sigma, the Commission attributed the infringement to those undertakings and not to the different groups to which they belonged. As stated in paragraph 105 above, since the Commission did not find sufficient evidence to attribute the infringement to those groups, it was for the applicant, in so far as it considered that the involvement of those groups was evident from the file, to adduce evidence, which it did not do. Without evidence of the involvement of the groups to which KWH, Pan-Isovit and Sigma belonged, the Commission cannot be accused of discrimination by adopting, in the case of those undertakings, the maximum amount of 10% of turnover provided for in Article 15(2) of Regulation No 17.
182 Second, it follows from points 168 to 183 of the decision that the same calculation method was used in the applicant's case and in the case of the other undertakings concerned.
183 Nor, in that context, can there be any question of unequal treatment in so far as the Commission fixed such a high general starting point that in the case of some undertakings it had to apply the maximum amount of 10% of turnover laid down in Article 15(2) of Regulation No 17.
184 Article 15(2) of Regulation No 17 requires that the fine eventually imposed on an undertaking be reduced if it should exceed 10% of its turnover, independently of the intermediate stages in the calculation intended to take the gravity and duration of the infringement into account, irrespective of the calculations to reflect the duration and gravity of the infringement whereby the Commission arrived at the final amount of the fine. Consequently, Article 15(2) of Regulation No 17 does not prohibit the Commission from referring, during its calculation, to an intermediate amount exceeding 10% of the turnover of the undertaking concerned, provided that the amount of the fine eventually imposed on the undertaking does not exceed that maximum limit.
185 In that context, the fact that, for the undertakings in the second and third categories, the specific starting point led to amounts that had to be reduced in order to take into consideration the limit of 10% of turnover provided for in Article 15 of Regulation No 17, whereas in the applicant's case such a reduction was not necessary, cannot be regarded as discrimination. That difference in treatment is the direct consequence of the maximum limit placed on fines by Regulation No 17, the lawfulness of which has not been called into question and which clearly applies only where the fine envisaged exceeded 10% of the turnover of the undertaking concerned.
186 It follows that the complaint alleging infringement of the principle of equal treatment must be rejected.
Incorrect assessment of the duration of the infringement
- Arguments of the parties
187 The applicant claims that in assessing the fine the Commission misapplied the duration factor, in so far as it increased, by 10% for each complete year of the infringement, the starting point of ECU 50 million, which was based on the allegation that senior group management was responsible for the cartel. Even if the Court were to accept the merits of that allegation, it must recognise that the Commission misapplied the duration coefficient.
188 In that regard, the applicant points out that Mr V. did not join the group management team until January 1993 and that there is no evidence that before January 1993 any member of ABB's executive board was aware of the infringement. For the period between November 1990 and the end of December 1992, therefore, there is no justification for increasing the starting point on account of the involvement of the ABB group. The applicant denies suggesting that the Commission must prove that each member of the group senior management was directly involved in the infringement throughout the period in question. The Commission misapplied the duration factor because it adduced no evidence that any member of the senior group management was involved before January 1993.
189 The applicant further states that, contrary to what the defendant contends, the case-law does not establish that an undertaking may be held responsible for the conduct of a subsidiary without evidence of involvement at the highest level, solely because that highest level was involved subsequently.
190 The defendant replies that the applicant's argument concerning the duration of the involvement of the senior group management has nothing to do with the application of the duration factor. The applicant disputes the starting point of the fine in so far as it is based on the attribution of responsibility to the ABB group. If the decision correctly attributes responsibility for the infringement to the ABB group, that finding should not vary over the infringement period according to the level in the management structure occupied by the persons involved in the operation of the cartel at various times.
191 As regards the date on which Mr V. joined the executive board, the defendant observes that the consolidated annual report of the ABB group for 1992 gives the date of 12 November 1992. In any event, it is not the case that without Mr V. responsibility for the infringement could not be attributed to ABB as a group, since several other very senior managers in the group, including country managers, participated in one way or another in the activities of the cartel.
- Findings of the Court
192 The applicant does not challenge the assessment of the duration of the infringement in respect of which it is charged, but in reality maintains that the Commission was not entitled to find the same degree of gravity for the infringement throughout the period during which it was found to have participated in the cartel, on the ground that the involvement of its senior group management is not established for the entire period.
193 In that regard, it is sufficient to observe that, as stated in paragraphs 33 to 39 above, the Commission correctly established the involvement of senior ABB group management in the infringement on the basis of the activities of the successive executive vice-presidents of ABB IC Møller and also of the activities of Mr V., first as the person responsible for ABB's activities in Denmark and, following his appointment to the ABB group executive board, as an executive vice president. Since the applicant accepts that the managing director of ABB IC Møller participated in the contacts made with Pan-Isovit in December 1990, and since he also participated, with Mr V., in the first multilateral meeting on cooperation on the Danish market, in January 1991 (ABB's reply of 4 June 1996 to the request for information of 13 March 1996, pp. 9, 48 and 49), the Commission cannot be criticised for having attributed the infringement to the ABB group for the whole infringement period found in the applicant's case in the decision.
194 As the involvement of the senior group management was not limited to Mr V.'s activities, it is irrelevant whether Mr V. joined the executive board in November 1992 or in January 1993.
195 The complaint must therefore be rejected.
Misapplication of the aggravating circumstances
- Arguments of the parties
196 The applicant challenges each of the aggravating circumstances on which the Commission relied in order to justify increasing the basic fine by 50%.
197 First, it objects to the circumstance relating to its role as the ringleader and instigator of the cartel and its bringing pressure on other undertakings to persuade them to enter the cartel. Thus, the Commission is relying on the same factor as it used in order to increase the starting point from ECU 20 million to ECU 50 million, namely ABB's use of its economic power and resources to reinforce the effectiveness of the cartel and to ensure that other undertakings complied with its wishes. In both cases the Commission refers to the conduct of the instigator. To rely on the same factor as justification for increasing the starting point and, separately, as an aggravating circumstance amounts to double counting, contrary to a general principle of law based on the principles of sound administration and on the general requirement of fairness.
198 Second, there is no justification for taking into consideration as an aggravating circumstance the applicant's systematic orchestration of retaliatory measures against Powerpipe, aimed at its elimination from the market. There is no evidence that the applicant's role in organising retaliatory measures against Powerpipe was greater than that played by Løgstør, which is not regarded in the decision as being on a par with ABB. In addition, the fact that only ABB's and Løgstør's fines were increased because of their participation in the retaliatory measures against Powerpipe, while the fines imposed on the other undertakings which the Commission found to have participated in those measures were not, remains unexplained.
199 The applicant states that, contrary to what the Commission claims, it does not base its arguments on any allegation that the other participants were treated illegally. It states solely that the principle of equal treatment has been infringed in its case, since the Commission increased its fine on the basis of criteria which, although satisfied by the other participants, were not applied to them.
200 Third, there is no justification for increasing the applicant's fine because of its continuation of such a clear-cut and indisputable infringement after the investigations despite having been warned at high level by the Directorate-General for Competition of the consequences of such conduct. According to the applicant, such an increase in the level of the fine may be made where, before the undertaking was notified that its conduct was illegal, it did not know, or was not certain, that its conduct was unlawful and where it may be presumed, on the basis of the Commission's new method, that the starting point for the assessment of the fine will be relatively low. In such a case, the fact that an undertaking continues the infringement after notification of its illegality may have the effect that what was previously negligent conduct becomes intentional conduct. In the present case, however, the undertakings were already aware that their conduct was illegal, so that the on-the-spot investigations did not add to their awareness. Furthermore, the fact that the guidelines classify termination of the infringement as soon as the Commission intervenes as an attenuating factor implies that continuation of an infringement cannot be regarded as exceptional. If continuation of an infringement were to be regarded as an aggravating circumstance, there would be no room in the application of the guidelines for normal behaviour.
201 Last, the fact that continuation of the infringement until the end of March 1996 is taken into consideration also constitutes an infringement of the prohibition of double counting, since the undertakings have already been punished for continuing the cartel by an increase in the duration factor. Even if the decision sought to reply to the alleged overt challenge to the competition rules and the authority of the Commission, as the latter claims, it would also constitute double counting, since such a general consideration was already taken into account when the gravity of the infringement was determined, when the Commission took into consideration the fact that the producers combined to set up a secret and institutionalised system [w]ith full knowledge of the illegality of their actions.
202 The defendant contends that there is no question of any double counting as regards the taking into consideration of the applicant's role as ringleader and main instigator of the cartel. That role was assessed on the basis of behavioural considerations, whereas the assessment of the starting point for the fine is an objective question relating to the economic capacity of the offending party and the need to set the fine at a level at which it has a sufficiently deterrent effect.
203 As regards the retaliatory measures against Powerpipe, the defendant observes that in reality the applicant is disputing the fact that the Commission did not accept them as aggravating circumstances in the case of the other participants in the cartel. However, the applicant was not only the ringleader and organiser but also the main actor in the campaign against Powerpipe. In any event, even if other participants in the cartel deserved an identical increase in their fine, that would not help the applicant, since the principle of equal treatment must be balanced against the principle of legality, according to which no person may rely, in support of his claim, on an unlawful act committed in favour of another.
204 As regards the fact that the activities of the cartel continued after the investigations, it is illogical to claim, as the applicant does, that continuation of an infringement which is not known with certainty, or is not yet known, to be illegal deserves to be treated more severely than continuation of indisputable, very serious infringements. The defendant contends, rather, that the participants in a flagrant cartel deserve to be treated more severely for having continued their activities after being discovered than the participants in a less obvious infringement where the assessment of the illegality calls for a more complex economic analysis. The conduct to be regarded as normal and therefore neutral in terms of the fine is not the same in the case of indisputable infringements as in cases in which the precise boundaries of lawful conduct are open to debate. The fact that continuation of the infringement was taken into consideration as an aggravating circumstances does not constitute double counting, since the increase for continuation of the infringement has nothing to do with the additional months added to the duration of the infringement.
- Findings of the Court
205 The Commission did not commit an error of assessment vis-à-vis the applicant by increasing the basic amount of ECU 70 million taken to correspond with the gravity of the infringement by 50% on account of a number of circumstances, including, first, [the applicant's] role as the ringleader and instigator of the cartel and its bringing pressure on other undertakings to persuade them to enter the cartel, second, its systematic orchestration of retaliatory measures against Powerpipe, aimed at its elimination from the market and, third, its continuation of such a clear-cut and indisputable infringement after the investigations despite having been warned at high level by the Directorate-General for Competition of the consequences of such conduct (point 171 of the decision).
206 First, the pressure brought to bear by the applicant on the other undertakings was not taken into account twice as a factor leading to an increase in the fine.
207 As observed in paragraphs 58 to 60 above, it follows from the decision as a whole that, in so far as the Commission relied in point 169 of the decision on the applicant's systematic use of its economic power and resources as a major multinational company to reinforce the effectiveness of the cartel and to ensure that other undertakings complied with its wishes, it took that factor into account among those which led to the infringement being attributed to the ABB group rather than to one of its subdivisions. In that context, the Commission therefore did not use the existence of pressure from the applicant, as a major multinational undertaking, as a factor which in itself led to an increase in the fine to be imposed on it. Furthermore, it follows from point 156 of the decision that, in that context, the Commission was making particular reference to the fact that the applicant also used the resources of its undertakings outside the district heating sector.
208 In those circumstances, it was permissible for the Commission, when determining the aggravating circumstances, to take account of the pressure brought to bear by ABB on the other participants in the cartel when taking into consideration the role as ringleader and instigator of the cartel played by the applicant.
209 Next, as regards the applicant's role in the measures taken against Powerpipe, it follows from the facts set out in points 90 to 107 of the decision, which the applicant has not disputed, that the applicant played a fundamental role in orchestrating those measures. In that regard, it should be borne in mind that, as stated in points 90 and 91 of the decision, the action taken against Powerpipe formed part of a strategic plan designed to drive the latter out of the market. Furthermore, it follows from points 92 to 107 of the decision that the applicant was the instigator in luring away key employees of Powerpipe, that it formed part of the consortium to which the cartel had allocated the Leipzig-Lippendorf project and that, after Powerpipe had been awarded that project, the applicant played an active role in implementing the boycott of Powerpipe. Even though, unlike in Løgstør's case, the Commission has not adduced any evidence that the applicant was behind a refusal to deliver to one of Powerpipe's suppliers, it was the applicant that advised KWH not to make deliveries for the Leipzig-Lippendorf project and, as proved by the evidence referred to in points 105 and 106 of the decision, the applicant kept potential suppliers of Powerpipe under close watch. Similarly, as regards the events connected with the allocation of the Neubrandenburg project, even though the applicant is not named among the undertakings that issued warnings to Powerpipe, it is apparent from the minutes made by Powerpipe referred to in points 95 and 96 of the decision that the applicant was not only mentioned among the undertakings with which Powerpipe was invited to come to an agreement but was also named by other undertakings as the driving force behind the cartel, so that when Powerpipe sought to end the campaign against it, it only approached a member of the applicant's senior management.
210 In that context, the Commission was correct not only to regard the fact that the applicant had orchestrated the retaliatory measures against Powerpipe as an aggravating circumstance but also to find that its role in doing so had more serious consequences in terms of the increase of its fine than did the participation in those measures of Løgstør and the other undertakings concerned.
211 Last, as regards the fact that the applicant continued the infringement after the investigations and after being explicitly warned that evidence had been obtained during the investigation that it had participated in a very serious infringement, the
Commission was entitled to take account of the fact that the infringement had continued not only when it calculated the duration of the infringement, but also as a further aggravating circumstance, since such conduct showed that the parties to the cartel were particularly determined to continue their infringement in spite of the risk of fines.
212 Since the increase in the fine for having continued the infringement relates to the conduct of the undertakings after they must have been aware that the Commission was in the process of conducting an investigation, that increase does not prevent the Commission from also taking into account, when assessing the gravity of the infringement, the fact that the participants in the cartel were perfectly aware while the cartel continued that they were acting illegally.
213 Contrary to what the applicant claims, the fact that terminating an infringement after the Commission has first intervened may be regarded as a mitigating circumstance does not mean that continuing an infringement in such a situation cannot be regarded as an aggravating circumstance. An undertaking's reaction to the opening of an investigation into its activities can be assessed only by taking account of the particular context of the case. Since the Commission cannot therefore be required, as a general rule, either to regard a continuation of the infringement as an aggravating circumstance or to regard the termination of an infringement as a mitigating circumstance, the fact that it may classify such termination as a mitigating circumstance in one particular case cannot deprive it of its power to find that such continuation constitutes an aggravating circumstance in another case.
214 Nor can the applicant rely on the fact that that it was in any event aware that its infringement was unlawful. In that regard, it follows from the fact that the continuation of the infringement was taken into account when the fines to be imposed on the other participants in the cartel were being assessed that that continuation led to an increase in the fine when an undertaking had continued to participate in the collusive activities with the knowledge that the Commission had discovered them, independently of whether the undertaking in question had itself been investigated or given an explicit warning. The same increase of 20% of the fine was imposed on the undertakings in the third category for deliberately continuing such a manifest infringement after the investigation had been carried out (first paragraph of point 179 of the decision) as on the undertakings in the fourth category for their deliberate continuation, in common with the other participants, of this manifest infringement (first paragraph of point 182 of the decision), even though the undertakings in the fourth category, with the exception of KWH, were not investigated and did not receive an explicit warning. Since the Commission, when assessing the deliberate continuation of the infringement, did not base its conclusion on whether an undertaking was warned that its conduct was illegal, it is immaterial whether in the present case such a warning revealed to an undertaking that its conduct and the continuation thereof were illegal.
215 The complaint cannot therefore be upheld.
The absence of attenuating circumstances
- Arguments of the parties
216 The applicant criticises the Commission for not having taken into account, as a mitigating circumstance, the fact that it was developing an internal programme of compliance with Community law. The Commission's previous practice, on numerous occasions, has been to treat the fact that unlawful conduct occurred in spite of compliance efforts as a mitigating circumstance. None the less, the decision rejected the applicant's compliance programme with no justification other than the argument that the pre-existing efforts were insufficient. The Commission should have given the applicant credit for having strengthened its compliance programme after recognising the failure of its previous efforts in that regard in the district heating sector. The applicant has introduced an extensive programme including group-wide management instructions and instructions that are binding on all its employees; and, in particular, it has adopted the principle that managers are held personally accountable for any infringement of the competition rules. Nor can the deterrent effect of awareness programmes like that set up within the applicant's group be denied.
217 The applicant maintains that the Commission should also have taken into consideration the attenuating circumstance that the infringement was concealed from senior group management. It is unfair for the Commission to take account of the fact that ABB's district heating sector is part of a large group yet to ignore the fact that the unlawful conduct was concealed from the group's General Council, which was therefore unable to put an early stop to it.
218 The defendant replies that the fact that it has in the past taken the introduction of a compliance programme into account as a mitigating circumstance does not mean that it is bound to do so in the present case. The decision clearly stated that the alleged strengthening of the compliance programme had been ineffective in the present case, since it was shown that the infringement continued until March or April 1996. The mediocre results of a first compliance programme may be taken into consideration in assessing whether it is appropriate to reduce the fine on account of a new compliance programme.
219 The fact that the cartel was concealed from senior ABB group management cannot be taken into account as a mitigating circumstance, since there is an element of concealment in virtually every cartel case, owing to its necessarily secret nature, and since, in any event, senior ABB group managers up to the highest level were not only informed of the cartel but were directly involved in its activities.
- Findings of the Court
220 First of all, the Commission cannot be criticised for not having regarded the applicant's strengthening of its Community law compliance policy as a mitigating circumstance.
221 Although it is indeed important that the applicant took measures to prevent future infringements of Community competition law by its personnel, that fact does not alter the reality of the infringement found in the present case (Case T-7/89 Hercules Chemicals v Commission [1991] ECR II-1711, paragraph 357). Furthermore, it follows from the case-law that, although the implementation of a compliance programme demonstrates the intention of the undertaking in question to prevent future infringements and therefore constitutes a factor which better enables the Commission to accomplish its task of, inter alia, applying the principles laid down by the Treaty in competition matters and influencing undertakings in that direction, the mere fact that in certain of its previous decisions the Commission took the implementation of a compliance programme into consideration as a mitigating factor does not mean that it is obliged to act in the same manner in a specific case (Case T-319/94 Fiskeby Board v Commission [1998] ECR II-1331, paragraph 83, and Mo och Domsjö v Commission, cited above, paragraph 417). That is all the more so when, as here, the infringement in question constitutes a manifest violation of Article 85(1)(a) and (c) of the Treaty.
222 In that regard, it should be observed that, in the circumstances of the present case, the Commission was entitled not to take account of the strengthening of the applicant's compliance programme as a mitigating circumstance because of the failure of previous attempts to ensure that the activities of its district heating division complied with Community law.
223 As the Commission states in point 172 of the decision, the management of ABB IC Møller advocated at a meeting of the directors' club on 4 March 1996 the employment of a consultant to continue the cartel without the need for plenary meetings, although the ABB group's legal department had sent instructions to the chairman of ABB IC Møller in November 1995 stating that it was mandatory group policy to comply with the competition rules and even though, according to the applicant, the management of the district heating division had given oral instructions to all the undertakings to desist from any anti-competitive contact. Furthermore, the instructions given to its personnel to comply with the provisions of competition law on 4 April 1996, sent by the chairman of ABB IC Møller, had been drawn up in terms rejecting the allegations of misconduct subsequently recognised by the applicant as well founded.
224 As regards the fact that the infringement was concealed from senior group management, it is sufficient to observe that in the present case, in which the Commission has established that members of ABB senior group management were involved in the infringement, and in particular that an executive vice-president of the ABB group was involved, the Commission was certainly not required to consider as an attenuating circumstance the fact that other members of the senior management were not aware of all the anti-competitive activities of the applicant's personnel.
225 It follows that the complaint must be rejected.
Misapplication of the leniency notice
- Arguments of the parties
226 The applicant claims that the Commission should have applied the reduction of 50% to which it was entitled under the leniency notice, since it satisfied both conditions laid down in section D of that notice. As regards the condition that before a statement of objections is sent, an [undertaking] provides the Commission with information, documents or other evidence which materially contribute to establishing the existence of an infringement, the Commission itself acknowledges that the applicant assisted materially in establishing the relevant facts, including facts concerning the origins of the cartel in Denmark at the end of 1990, for which the Commission did not have any evidence. As regards the condition that after receiving the statement of objections, an [undertaking] informs the Commission that it does not substantially contest the facts on which the Commission bases its allegations, the applicant was in fact the only major participant in the cartel not to dispute the facts on which the Commission based its allegations.
227 According to the applicant, the two conditions in section D cannot be regarded as complementary, otherwise there would be no incentive for an undertaking that does not satisfy the conditions in sections B and C of the leniency notice to cooperate with the Commission before the statement of objections is sent. Because it satisfied both conditions set out in section D, the applicant should have obtained a reduction of at least 50%. It is difficult to imagine how the applicant could have been more candid and cooperative or how its candour and cooperation could have been more valuable to the Commission.
228 The applicant challenges the ground stated in the decision for awarding a reduction of only 30% of its fine, in particular the assertion that it began to cooperate only after receiving a request for information in March 1996, nine months after being informed that the Commission had commenced an investigation. First, as regards the point at which it began to cooperate, both conditions of section D of the notice were indeed satisfied. The first condition requires only that cooperation must have taken place before the statement of objections is sent, without reference to the scope of the letters sent pursuant to Article 11 of Regulation No 17. As regards the second condition, the point at which cooperation begins is irrelevant. Second, the decision is inconsistent with the application of the leniency notice in Commission Decision 98/247/ECSC of 21 January 1998 relating to a proceeding pursuant to Article 65 of the ECSC Treaty (Case IV/35.814 - Alloy surcharge) (OJ 1998 L 100, p. 55, the alloy surcharge decision). In that case, undertakings were given a reduction of 40% for their cooperation and their admission of unlawful conduct, although they only cooperated 21 months after learning that the Commission was to carry out an investigation and one year after the Commission had drafted the statement of objections in that case.
229 Last, the applicant observes that it suffered discrimination in so far as it was given a reduction of only 30% of its fine. The same reduction was granted to Løgstør and to Tarco, although those undertakings had disputed much of the evidence of decisive facts that the applicant had admitted. The unequal treatment of the applicant by the Commission is also evident from the fact that the Commission awarded Ke Kelit Kunststoffwerk GmbH a reduction of 20% solely for not having contested the essential facts in the statement of objections. In that regard, the Commission's argument that the applicant cannot rely, in support of its claim, on an unlawful act committed in favour of another is unfounded, since the applicant does not maintain that the participants whose fines were not increased were treated unlawfully.
230 The defendant contends that a reduction of 30% takes objective and due account of the applicant's cooperation in the investigation. It is not true that the decision states only one reason for not granting the maximum reduction, namely the fact that ABB had cooperated only nine months after the investigation. The extent of the reduction depends, however, on the extent to which the cooperation of an undertaking assisted the Commission's investigation. In point 174, the decision stated that the applicant's contribution in establishing the facts did not relate to all the aspects of the cartel and that the Commission also had other evidence of the existence of the cartel before 1994. As regards the fact that the applicant never disputed the facts, although it is not mentioned in point 174 of the decision, it is properly acknowledged in points 26, 119 and 169 of the decision.
231 As regards the applicant's cooperation, the defendant further observes that although the applicant was the first to express its intention to cooperate, it was not the first to provide evidence of the origin of the cartel in 1990. As regards that period, the decision states only that the Commission had not obtained sufficient evidence during its investigations at the premises of the participants. In any event, the Commission obtained a considerable amount of evidence of the cartel as a whole during its investigations. The applicant's attempt to split the infringement into two contradicts the uncontested fact that the cartel constituted a single continuous infringement. The defendant further states that the applicant never provided documentary evidence other than that found at its premises during the investigations.
232 Next, the defendant challenges the calculation method whereby the applicant arrives at a 50% reduction. The 30% reduction granted to the applicant correctly reflects its contribution to the investigation and also the fact that it did not dispute the facts. The defendant states that the two conditions in section D of the notice are largely complementary, since the second condition is in most cases implicit in the first. It is impossible to claim, therefore, that not contesting the facts could lead to a significant increase in the reduction granted to ABB for having helped the Commission to establish the facts. In any event, not contesting the facts justifies only a small reduction when there is little that an undertaking could reasonably contest without contradicting indisputable evidence or eliminating its own contribution to the investigation under the first part of section D of the notice.
233 As regards the alleged discrimination, last, the defendant again asserts that the applicant has not shown that the Commission's assessment of its cooperation in the investigation was manifestly incorrect. The assessment of the reductions to be granted to the other undertakings properly reflects the situation of each undertaking. Although Løgstør may have contested a part of the interpretation of the facts, such as the existence of a continuous cartel throughout the whole period covered by the investigations, it provided essential evidence relating to many important aspects of the case, including the continuation of the cartel after the investigation. Tarco was the first undertaking to provide documentary evidence of the origin of the cartel in 1990. In any event, even though the reduction granted to other participants in the cartel might be described as overgenerous, observance of the principle of equal treatment must be balanced against observance of the principle of legality, under which no person may rely, in support of his claim, on an unlawful act committed in favour of another.
- Findings of the Court
234 It should be observed at the outset that in the leniency notice the Commission defined the conditions in which undertakings which cooperate with it during the investigation into a cartel may be exempt from a fine or receive a reduction in the fine which they would otherwise have had to pay (see Section A 3 of the leniency notice).
235 It is not disputed that the applicant's case does not fall within the scope of Section B of that notice, which refers to cases where an undertaking has informed the Commission about a secret cartel before the Commission has undertaken an investigation (in which case the fine may be reduced by at least 75%), or within that of Section C of that notice, which concerns an undertaking which has disclosed the secret cartel after the Commission has undertaken an investigation which has failed to provide sufficient grounds for initiating the procedure leading to a decision (in which case the fine may be reduced by between 50% and 75%).
236 The applicant's case comes under section D of the leniency notice, which states that [w]here an enterprise cooperates without having met all the conditions set out in Sections B or C, it will benefit from a reduction of 10% to 50% of the fine that would had been imposed if it had not cooperated. The notice specifies that:
Such cases may include the following:
- before a statement of objections is sent, an enterprise provides the Commission with information, documents or other evidence which materially contribute to establishing the existence of the infringement;
- after receiving a statement of objections, an enterprise informs the Commission that it does not substantially contest the facts on which the Commission bases its allegations.
237 In that context, it should be observed, first, that the Commission cannot be criticised for having refused to grant the applicant the full 50% reduction available under section D of the leniency notice by relying, in particular, on the fact that it was necessary to wait until the requests for information had been sent out before the applicant cooperated (third and fourth paragraphs of point 174 of the decision).
238 It is settled case-law that a reduction in the fine for cooperation during the administrative procedure is justified only if the conduct of the undertaking concerned made it easier for the Commission to establish an infringement and, as the case may be, to put an end to it (Case C-297/98 P SCA Holding v Commission [2000] ECR I-10101, paragraph 36, Case T-13/89 ICI v Commission [1992] ECR II-1021, paragraph 393; Case T-310/94 Gruber + Weber v Commission [1998] ECR II-1043, paragraph 271, and Case T-311/94 BPB de Eendracht v Commission [1998] ECR II-1129, paragraph 325). Since, even outside the situations coming under section C of the notice, cooperation on the part of an undertaking before the Commission has issued a request for information may make the Commission's investigation easier, it was perfectly permissible for the Commission not to grant the maximum reduction envisaged by section D to the applicant, which did not declare its willingness to cooperate until after receiving a first request for information on 13 March 1996, although the investigations at ABB IC Møller's premises had commenced on 29 June 1995.
239 As regards a comparison between the present case and the Commission's previous practice, the mere fact that the Commission has in its previous decisions granted a certain rate of reduction for specific conduct does not imply that it is required to grant the same proportionate reduction when assessing similar conduct in a subsequent administrative procedure (Case T-347/94 Mayr-Melnhof v Commission [1998] ECR II-1751, paragraph 368).
240 However, it is appropriate to consider whether the Commission, in granting the applicant the same 30% reduction as the reduction granted to Løgstør and Tarco, observed the principle of equal treatment, which prevents comparable situations from being treated differently and different situations from being treated in the same way, unless such difference in treatment is objectively justified (Case 106/83 Sermide [1984] ECR 4209, paragraph 28, Case C-174/89 Hoche [1990] ECR I-2681, paragraph 25, and BPB de Eendracht v Commission, cited above, paragraph 309).
241 In that regard, the Commission cannot be criticised for having failed to differentiate the extent to which the applicant cooperated from that to which Løgstør and Tarco cooperated in submitting evidence to the Commission. Although it is true that the information provided by ABB did assist materially in the establishment of the relevant facts, in particular as regards the origins of the cartel in Denmark in late 1990, Tarco was the first to provide evidence (Tarco's reply of 26 April 1996 to the request for information of 13 March 1996). Otherwise, it is apparent from the case-file that the information provided by the applicant in its replies to the request for information was considerable but, as regards its contribution to establishing the infringement, no greater than that given by other undertakings, having regard to the evidence available to the Commission after the investigations. Thus, as regards the continuation of the cartel after the investigations, evidence was provided by Løgstør (Løgstør's reply of 25 April 1996 to the request for information of 13 March 1996), while the applicant, after acknowledging in its reply of 4 June 1996 that the infringement was continuing, did not provide more detailed information until its reply of 13 August 1996. As regards the measures against Powerpipe, the Commission was unable to rely on information provided by ABB, but had to rely on the information provided by Powerpipe and on other documents evidencing the approval and implementation of such an arrangement. It follows that the Commission was correct not to differentiate between the reductions for cooperation granted to the applicant, to Løgstør and to Tarco in so far as their communication of evidence to the Commission was concerned.
242 However, the Commission should have differentiated the reduction for cooperation to be granted to the applicant from the reductions granted to Løgstør and to Tarco on the ground that the applicant, after receiving the statement of objections, no longer disputed the findings of fact or their interpretation by the Commission. Having regard to the finding that, on the one hand, the applicant's cooperation in communicating evidence was not significantly different from that given by Løgstør or by Tarco and, on the other hand, the Commission made no further reference, when assessing the applicant's cooperation in point 174 of the decision, to the fact that the applicant did not contest the truth of the facts, the latter circumstance was not taken into account in calculating the reduction to be granted to the applicant for cooperation.
243 In that regard, the Commission expressly acknowledged, in point 26 of the decision, that on the basis of its observations on the statement of objections, the applicant distinguished itself from the other undertakings in so far as the majority of the undertakings minimised the duration of the infringement and the role they had played and denied having participated in any scheme to damage Powerpipe, with the exception of the applicant, which did not dispute the main facts described by the Commission or the conclusions which it drew. The Commission also stated that, in their observations on the statement of objections, Løgstør and Tarco claimed that there had been no cartel outside the Danish market before 1994 and that, in addition, there had been no continuous cartel, and they denied having participated in or implemented any action designed to eliminate Powerpipe (second paragraph of point 26 and fifth paragraph of point 27 of the decision).
244 Since the Commission did not observe the principle of equal treatment in so far as it should have taken into consideration, when assessing the applicant's cooperation, the fact that the applicant did not dispute the main facts, it must be held that the Commission incorrectly set at 30% the reduction to be granted to the applicant for its cooperation during the administrative procedure.
245 The plea must therefore be upheld in so far as it criticises the Commission for not having granted a reduction greater than 30% of the fine.
Fifth plea in law, alleging infringement of the obligation to state reasons when setting the fine
Arguments of the parties
246 The applicant submits that the Commission failed to fulfil its obligation to state reasons, in so far as it did not state its reasons for altering the method used in setting the fines. The decision does not even state that the Commission effectively applied a new method. That could only be ascertained by comparing the wording of the relevant part of the decision with the guidelines on setting fines or from the press release in which the Commission explains the decision.
247 The applicant maintains that the Commission is required to give reasons for changing its practice in setting fines when the change in its practice entails a sufficiently large increase in the general level of fines. It should also have given its reasons for deciding to apply its new method retroactively. A fortiori, it is required to state reasons in the present case, where the undertakings concerned had relied, before the change in the calculation method, on the leniency notice. The decision did not devote a single word to the need to apply the new method of setting fines in the present case, nor was that question addressed in the guidelines.
248 The defendant does not dispute that the decision followed the method published in its guidelines. However, like the applicant, it is unable to draw any consequence in law from the fact that the decision does not refer expressly to the guidelines. The guidelines are merely by way of information, and certainly do not provide the legal basis for decisions imposing fines, so that a formal reference to them does not need to be included.
249 The defendant states that, under the pretext of alleging defective reasoning, the applicant is actually challenging the substantive legality of the method followed by the Commission in calculating the fines, which is a completely different plea. Just as the Commission is not obliged to mention in the statement of objections the possibility of a change in its policy as regards the method for calculating fines, it is under no obligation to provide reasons for changes in the method in the decision itself.
250 Furthermore, the applicant does not state why the reasoning in the decision fails to enable the persons concerned to ascertain the reasons for the measure and the Community judicature to exercise its power of review. The Commission provided a full and detailed explanation in the decision of the calculation method used and thus fulfilled its obligation to state reasons. With or without reference to the guidelines, the decision thus allowed the applicant to understand the method used to calculate the fine. It cannot be argued that that there is a particular obligation to provide reasons for applying a new method to the case in question. It would be more understandable if the applicant had adopted the opposite approach and argued that the Commission was obliged to state reasons if it had not applied the policy which it had publicly announced.
Findings of the Court
251 It is settled case-law that the statement of reasons required by Article 190 of the EC Treaty (now Article 253 EC) must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community Court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations (Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, paragraph 63).
252 Where a decision imposes fines on a number of undertakings for an infringement of the Community competition rules, the scope of the obligation to state reasons must be determined, inter alia, in the light of the fact that the gravity of infringements must be determined by reference to numerous factors such as, in particular, the particular circumstances of the case, its context and the dissuasive element of fines; moreover, no binding or exhaustive list of the criteria which must be applied has been drawn up (order in SPO and Others v Commission, cited above, paragraph 54).
253 In the present case, the Commission first of all sets out in its decision its general findings concerning the gravity of the infringement in question and also the particular elements of the cartel on which it based its conclusion that the present case constituted a very grave infringement for which the fine would normally be at least ECU 20 million (points 164 and 165 of the decision). It then states that this amount must be adjusted to take account of the actual economic capacity of the offending undertakings to cause significant damage to competition and of the need to ensure that the fines were sufficiently deterrent (point 166 of the decision). The Commission then states that in determining the level of the fines, it took into account any aggravating or mitigating circumstances and also the position of each undertaking in relation to the leniency notice (point 167 of the decision).
254 As regards the fine to be imposed on the applicant, the Commission states that, in order to take account of the applicant's position as one of Europe's largest industrial combines, the starting point of the fine must be fixed at ECU 50 million (points 168 and 169 of the decision). The Commission then set out the factors it took into account in weighting the applicant's fine in accordance with the duration of the infringement (point 170 of the decision). Next, the Commission states that, with regard to the applicant, it took account, as aggravating circumstances, of its role as the ringleader and instigator of the cartel, of the fact that it orchestrated retaliatory measures against Powerpipe and also of the fact that it continued the infringement after the investigations and after having been explicitly warned of the consequences of such conduct (point 171 of the decision). The Commission then states that the only extenuating circumstance of which it can take account is the payment of substantial compensation to Powerpipe and its former owner (point 172 of the decision). Finally, the Commission sets out the reasons why the applicant must benefit from a reduction of 30% of its fine under the leniency notice (points 173 and 174 of the decision).
255 Interpreted in the light of the detailed statement in the decision of the allegations of fact against each of its addressees, points 164 to 167 and 168 to 174 contain a relevant and sufficient statement of the criteria taken into account in order to determine the gravity and duration of the infringement committed by the applicant (see, on that point, Case C-248/98 P KNP BT v Commission [2000] ECR I-9641, paragraph 43).
256 Even supposing that, as regards the level of the fine, the decision constitutes a significant increase compared with previous decisions, the Commission quite explicitly stated its reasons for fixing the amount of the applicant's fine at such a level (see Case 73/74 Groupement des fabricants de papiers peints de Belgique and Others v Commission [1975] ECR 1491, paragraph 31).
257 In those circumstance, the Commission cannot be criticised for not having explained the legal framework applying to the present case, in particular the application of the new guidelines. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons for a measure meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (Commission v Sytraval and Brink's France, cited above, paragraph 63).
258 In that regard, by stating in the introduction to the guidelines that [t]he new method of determining the amount of a fine [would] adhere to the ... rules set out in the guidelines, the Commission undertook to apply those guidelines when determining the amount of fines for infringements of the competition rules. Having regard to the undertaking given by the Commission when publishing the guidelines to adhere to them when calculating fines, it was not required to state whether, and on what grounds, it would apply them in the applicant's case.
259 Consequently, the plea alleging infringement of the obligation to state reasons must be rejected.
Conclusions
260 It follows from the foregoing considerations, in particular paragraphs 240 to 245 above, that the Commission erred in fixing the fine to be imposed on the applicant at ECU 70 000 000.
261 For that reason, the Court, in the exercise of its unlimited jurisdiction within the meaning of Article 172 of the EC Treaty (now Article 229 EC) and Article 17 of Regulation No 17, considers it proper to reduce the fine imposed by Article 3(a) of the decision, expressed in euro by application of Article 2(1) of Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro (OJ 1997 L 162, p. 1), to EUR 65 000 000.
Decision on costs
Costs
262 Under Article 87(3) of the Rules of Procedure of the Court of First Instance, the Court may order that the costs be shared or that each party bear its own costs where each party succeeds on some and fails on other heads. Since the action has been only marginally successful, the Court considers it fair, having regard to the circumstances of the case, to order the applicant to bear its own costs and to pay 90% of the costs incurred by the Commission and to order the Commission to bear 10% of its own costs.
Operative part
On those grounds,
THE COURT OF FIRST INSTANCE (Fourth Chamber)
hereby:
1. Orders that the fine imposed on the applicant by Article 3(a) of Commission Decision 1999/60/EC of 21 October 1998 relating to a proceeding under Article 85 of the EC Treaty (Case No IV/35.691/E-4: - Pre-Insulated Pipe Cartel) be reduced to EUR 65 000 000;
2. Dismisses the remainder of the application;
3. Orders the applicant to bear its own costs and to pay 90% of the costs incurred by the Commission;
4. Orders the Commission to pay 10% of its own costs.