Keywords

Summary



Keywords

1. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Presumption of decisive influence exercised by the parent company over its wholly‑owned subsidiaries

(Art. 81 EC)

2. Competition – Fines – Amount – Determination – Maximum amount – Calculation – Turnover to be taken into consideration

(Council Regulations No 17, Art. 15(2), and No 1/2003, Art. 23(2))

3. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Observance by the Commission of the principle of equal treatment

(Art. 81 EC)

4. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Independence of the subsidiary

(Art. 81 EC)

5. Actions for annulment – Pleas in law – Lack of or inadequate statement of reasons

(Arts 230 EC and 253 EC)

6. Competition – Fines – Amount – Determination – Criteria – Deterrent effect of the fine

(Council Regulations No 17, Art. 15(2), and No 1/2003, Art. 23(2); Commission Notice 98/C 9/03)

7. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances – Termination of the infringement after the Commission’s intervention

(Council Regulations No 17, Art. 15(2), and No 1/2003, Art. 23(2); Commission Notice 98/C 9/03, Section 3, third indent)

8. Competition – Fines – Amount – Determination – Criteria – Reduction of the fine for cooperation of the fined undertaking

(Council Regulations No 17 and No 1/2003; Commission Notice 96/C 207/04)

Summary

1. In competition matters, the conduct of a subsidiary may be imputed to the parent company in particular where that subsidiary, despite having a separate legal personality, does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, regard being had in particular to the economic, organisational and legal links between those two legal entities.

In such a situation, the parent company and its subsidiary form a single economic unit and therefore form a single undertaking. As a consequence, it is not because of a relationship between the parent company and its subsidiary in instigating the infringement or, a fortiori, because the parent company is involved in the infringement, but because they constitute a single undertaking for the purposes of Article 81 EC that the Commission is able to address a decision imposing fines to the parent company.

The Commission cannot merely find that the parent company is in a position to exercise decisive influence over the conduct of its subsidiary, but must also check whether that influence was actually exercised.

In the specific case where a parent company has a 100% shareholding in a subsidiary which has infringed the competition rules, the parent company is able to exercise decisive influence over the conduct of the subsidiary and there is a rebuttable presumption that the parent company does in fact exercise decisive influence over the conduct of its subsidiary.

In those circumstances, it is sufficient for the Commission to prove that the subsidiary is wholly owned by the parent company in order to presume that the parent company exercises decisive influence over the commercial policy of the subsidiary. The Commission will then be able to regard the parent company as jointly and severally liable for payment of the fine imposed on its subsidiary, unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market.

The presumption arising from 100% ownership of the capital can apply not only in cases where there is a direct relationship between the parent company and its subsidiary, but also in cases such as the present one, where that relationship is indirect, through an intermediary subsidiary.

(see paras 102-106, 108)

2. According to Article 23(2) of Regulation No 1/2003, the Commission may by decision impose on undertakings which have infringed Article 81(1) EC fines which may not exceed 10% of the turnover in the preceding business year of each of the undertakings participating in the infringement. The same provision could be found in Article 15(2) of Regulation No 17.

The turnover referred to in those provisions concerns the overall turnover of the undertaking concerned, that undertaking is the undertaking to which the infringement was attributed and which was therefore declared liable.

As for the concept of ‘preceding business year’ in Article 23(2) of Regulation No 1/2003, it must be understood as referring to the business year preceding the adoption of the Commission’s decision, except in special situations where the turnover for that business year does not provide any useful indication as to the actual economic situation of the undertaking concerned and the appropriate level of the fine to impose on it.

Thus, where the Commission concludes that a parent company and its subsidiary constitute a single economic unit and, accordingly, holds that parent company jointly and severally liable for the infringement and for payment of the fine and includes it among the addressees of its decision, the Commission may rely on the parent company’s consolidated turnover in the year preceding that of the adoption of the contested decision, in order to calculate the upper limit of 10% laid down in Article 23(2) of Regulation No 1/2003. In that respect, it is wholly irrelevant that the parent company cannot be held jointly and severally liable for the infringement in respect of the period before it acquired the subsidiary.

(see paras 109-111, 174-175, 195)

3. Where, in a case concerning an infringement involving several different undertakings, the Commission adopts, within the framework laid down by the case-law, a certain method for determining whether it is appropriate to attribute liability both to the subsidiaries which materially committed that infringement and to their parent companies, it must – save in specific circumstances – rely for such determination on the same criteria in the case of all those undertakings. The Commission is bound by the principle of equal treatment, which, according to settled case-law, requires that comparable situations must not be treated differently, and different situations must not be treated in the same way, unless such treatment is objectively justified.

(see para. 133)

4. In competition matters, the independence of a subsidiary in relation to its parent company must not be assessed solely by reference to the subsidiary’s activity in the area of the products concerned by the infringement. In order to determine whether a subsidiary decides independently upon its own conduct on the market, account must be taken of all the relevant factors relating to the economic, organisational and legal links between the subsidiary and the parent company, which may vary from case to case and cannot therefore be exhaustively listed.

Thus, the fact that no company in the group exercises control over the activities of the subsidiary concerned by the infringement cannot suffice to establish that that subsidiary acts autonomously on the market. The same applies to absence of consultation by the subsidiary of its parent or another group company concerning its purchasing policy of the products concerned by the infringement.

(see paras 164, 168)

5. In an action for annulment, a plea alleging failure to state or failure sufficiently to state the reasons on which a measure is based is a matter of public policy which may, and indeed must, be raised by the Union Court of its own motion and which, in consequence, may be invoked by the parties at any stage of the proceedings.

(see para. 182)

6. Where an infringement of EU competition rules takes place, the size and economic power of the undertaking concerned are factors that can be taken into account for the purposes of calculating the fine and, accordingly, of setting the multiplier designed to ensure that it has a deterrent effect. The fact that the size and global resources of the undertaking concerned are taken into consideration in order to ensure that the fine has sufficient deterrent effect is explained by the impact sought on that undertaking, and the sanction must not be negligible in the light, especially, of its financial capacity.

In that regard, where the Commission uses, as criteria for the purpose of deciding to apply a multiplier for deterrent, the size and global resources of the undertaking concerned, the latter undertaking can encompass the parent company of the company that committed the infringement of the competition rules only where it actually exercised decisive influence over the conduct of the company that committed the infringement.

The undertaking whose size and global resources are thus taken into account is necessarily the same as the undertaking within the meaning of Article 81 EC as defined in the case-law. The fact that those elements are taken into consideration in order to ensure that the fine has a sufficiently deterrent effect is to be explained by the impact sought on the undertaking on which the fine is imposed. The objective pursued is to ensure the effectiveness of the fine by adjusting the amount of the fine according to the global resources of that undertaking and its capacity to raise the funds necessary to pay it. Where the company that committed the infringement behaves autonomously on the market and therefore constitutes an undertaking on its own, that objective can logically, in the light of that autonomy, relate only to that company and not also to other companies in the group to which it belongs. If, in such a situation, the Commission were to take account of the size and economic strength of the group when deciding to apply a multiplier for deterrence, not only would the deterrent effect sought be applied in fact to an entity other than the undertaking responsible for the infringement, but, in addition, the fine might be rendered excessive, notably in the light of the financial capacity of that undertaking, which would result in a breach of the principle of proportionality.

(see paras 207-208, 214-215)

7. Where an infringement of EU competition rules takes place, the termination of the infringement can, logically, constitute an attenuating circumstance only if there are reasons to suppose that the undertakings concerned were encouraged to cease their anti-competitive conduct by the interventions in question, the situation in which the infringement has already come to an end before the date on which the Commission first intervenes not being covered by Section 3, third indent, of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty.

Even if the Commission takes the view that the infringement ceased on the very day on which it carried out its initial investigations, it is entirely justified in not allowing such termination as an attenuating circumstance. A reduction of the fine by reason of the termination of an infringement as soon as the Commission intervenes cannot be automatic but depends on an appraisal of the circumstances of the case by the Commission, in the context of its discretion. In that regard, the application of the third indent of Section 3 of the Guidelines in favour of an undertaking will be particularly appropriate where the conduct in question is not manifestly anti-competitive. Conversely, its application will be less appropriate, as a general rule, where the conduct is clearly anti-competitive, on the assumption that it is proven.

(see paras 229, 231)

8. Where an infringement of EU competition rules takes place, the Commission has a broad discretion as regards the method of calculating fines and that it may, in that regard, take account of numerous factors, including the cooperation provided by the undertakings concerned during the investigation conducted by its departments. In that regard, the Commission enjoys a wide discretion in assessing the quality and usefulness of the cooperation provided by an undertaking, in particular by reference to the contributions made by other undertakings.

In order to justify the reduction of a fine for cooperation, the conduct of an undertaking must facilitate the Commission’s task of finding and bringing to an end infringements of the competition rules and show a true spirit of cooperation.

In that regard, documents supplied to the Commission in response to a request for information under Article 11 of Regulation No 17 are supplied under a legal obligation and cannot be taken into account under the Leniency Notice even if they may serve to establish, as against the undertaking which supplies them or as against a different undertaking, the existence of anti-competitive conduct.

(see paras 252-253, 268)