Keywords

Summary



Keywords

1. Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission – Extent of the burden of proof

(Arts 81(1) EC and 82 EC)

2. Competition – Administrative procedure – Statement of objections – Legal nature – Preparatory nature

(Art. 81 EC)

3. Competition – Administrative procedure – Powers of the Commission – Power to join two separate proceedings

(Art. 81 EC)

4. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Criteria for assessment – Anti-competitive purpose – Sufficient

(Art. 81(1) EC)

5. Competition – Community rules – Infringements – Attribution

(Arts 81 EC and 82 EC)

6. Procedure – Application initiating proceedings – Formal requirements – Brief summary of the pleas in law on which the application is based – Similar requirements for submissions made in support of a plea

(Statute of the Court of Justice, Art. 21; Rules of Procedure of the General Court, Art. 44(1)(c))

7. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Criteria for assessment – Anti-competitive purpose – Sufficient

(Art. 81(1) EC)

8. Competition – Agreements, decisions and concerted practices – Agreements between undertakings – Burden of proving the infringement borne by the Commission – Limits

(Art. 81(1) EC)

9. Competition – Agreements, decisions and concerted practices – Burden of proof – Undertaking’s response to the request for information from the Commission

(Arts 81 EC and 82 EC)

10. Competition – Agreements, decisions and concerted practices – Agreements and concerted practices constituting a single infringement

(Art. 81(1) EC)

11. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Assessment according to the nature of the infringement – Very serious infringements

(Art. 81 EC; Commission Notice 98/C 9/03)

12. Competition – Fines – Amount – Determination – Criteria – Discretion of the Commission – No obligation to ensure a proportion between the amount of the fines and the overall volume of the relevant product market

(Arts 81 EC and 82 EC; Council Regulation No 1/2003, Art. 23(3))

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

(Art. 81 EC; Commission Notice 98/C 9/03)

14. Competition – Fines – Amount – Determination – Criteria – Turnover taken into consideration

(Art. 81 EC; Council Regulation No 1/2003, Art. 23(2))

15. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Aggravating circumstances – Repeated infringement – Concept

(Art. 81 EC; Commission Notice 98/C 9/03, Section 2)

16. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Mitigating circumstances – Agreement not implemented in practice – Assessment

(Art. 81 EC; Commission Notice 98/C 9/03, Section 3, second indent)

Summary

1. As regards proof of an infringement of Article 81(1) EC, the Commission must prove the infringements which it has found and adduce evidence capable of demonstrating to the requisite legal standard the existence of circumstances constituting an infringement. It is accordingly necessary for the Commission to produce precise and consistent evidence to support the firm conviction that the infringement took place.

Furthermore, it is normal for the activities entailed by anti-competitive practices and agreements to take place clandestinely, for meetings to be held in secret and for the associated documentation to be reduced to a minimum. It follows that, even if the Commission discovers evidence explicitly showing unlawful contact between traders, it will normally be only fragmentary and sparse, so that it is often necessary to reconstitute certain details by deduction. Accordingly, in most cases, the existence of an anti-competitive practice or agreement must be inferred from a number of coincidences and indicia which, taken together, may, in the absence of another plausible explanation, constitute evidence of an infringement of the competition rules.

In that connection, no general principle of Community law prohibits the Commission from relying, as against an undertaking, on statements made by other incriminated undertakings. If that were not the case, the burden of proving conduct contrary to Article 81 EC and Article 82 EC, which is borne by the Commission, would be unsustainable and incompatible with the task of supervising the proper application of those provisions which is entrusted to it by the EC Treaty.

Concerning, in particular, statements made under the Leniency Notice, no provision prohibits the Commission from using such statements for the purpose of demonstrating the existence of an infringement of the competition rules. Such statements cannot be regarded as devoid of probative value, since statements which run counter to the interests of the declarant must in principle be regarded as particularly reliable evidence. Even though some caution as to evidence provided voluntarily by the main participants in an unlawful agreement is generally called for, in view of the fact that it is possible that they might tend to play down the importance of their contribution to the infringement and maximise that of others, the fact of seeking to benefit from the application of the Leniency Notice in order to obtain a reduction of the fine does not necessarily create an incentive to submit evidence which distorts the truth regarding the conduct of the other participants in the cartel. Any attempt to mislead the Commission could call into question the sincerity and the completeness of the cooperation of the person seeking to benefit, and thereby jeopardise his chances of benefiting fully under the Leniency Notice. In particular, where a person admits that he has committed an infringement and thus admits the existence of facts going beyond those whose existence could be directly inferred from the documents in question, that implies, a priori, in the absence of special circumstances indicating otherwise, that that person has resolved to tell the truth.

(see paras 50-52, 58)

2. The statement of objections is a procedural and preparatory document which, in order to ensure that the rights of the defence may be exercised effectively, delimits the scope of the administrative procedure initiated by the Commission, thereby preventing the latter from relying on other objections in its decision terminating the procedure in question. Moreover, the Commission’s drawing–up of a statement of objections cannot possibly be considered to be evidence of a presumption of the culpability of the undertaking concerned. Otherwise, the opening of any proceedings in this area would potentially be liable to infringe the principle of the presumption of innocence.

In those circumstances, the drawing-up of a second statement of objections cannot, in itself, result in a finding of any irregularity.

As regards claims that a second statement of objections contains amendments in relation to the first, that procedural document is inherently provisional and subject to amendments to be made by the Commission in its further assessment on the basis of the observations submitted to it by the parties and subsequent findings of fact. The Commission must take into account the factors emerging from the whole of the administrative procedure, in order either to abandon such objections as have been shown to be unfounded or to amend and supplement its arguments, both in fact and in law, in support of the objections which it maintains. Consequently, if the Commission is entitled to amend, both in fact and in law, its arguments between the statement of objections and its final decision, it is a fortiori entitled to do so between two statements of objections.

(see paras 68-70, 73)

3. In competition matters, the Commission is entitled both to disjoin and to join proceedings for objective reasons. It may thus join two proceedings, each concerning a particular product, where those products belong to the same business sector having regard, inter alia, to their physical characteristics and uses, and where certain unlawful meetings between undertakings concern both products. Even if the infringement in question can be regarded as in fact covering two distinct infringements, whether those infringements are established in a number of decisions or in a single decision is of no account, where it is established that the infringements in question are not time-barred.

Moreover, an infringement of Article 81(1) EC may result not only from an isolated act but also from a series of acts or from continuous conduct. That interpretation cannot be challenged on the ground that one or more elements of that series of acts or continuous conduct could also constitute, in themselves and in isolation, an infringement of that provision. When the different actions form part of an overall plan, because their identical object distorts competition within the common market, the Commission is entitled to impute responsibility for those actions on the basis of participation in the infringement considered as a whole. When the Commission is legally entitled to conclude that the various manifestations were part of a single infringement in that they were elements of an overall plan designed to distort competition, the fact that the number and intensity of the collusive practices varied according to the market concerned does not mean that the infringement did not concern the markets on which the practices were less intense and less numerous. It would be artificial to split up continuous conduct, characterised by a single purpose, into a number of separate infringements on the ground that the collusive practices varied according to the market concerned.

(see paras 100, 272)

4. For the purposes of applying Article 81(1) EC, there is no need to take account of the actual effects of an agreement once it appears that its object is to restrict, prevent or distort competition. As regards, in particular, agreements of an anti-competitive nature which, as in the present case, are reached at meetings of competing undertakings, Article 81(1) EC is infringed where those meetings have as their object the restriction, prevention or distortion of competition and are thus intended to organise artificially the operation of the market. In such a case, it is sufficient for the Commission to establish that the undertaking concerned participated in meetings during which agreements of an anti-competitive nature were concluded in order to prove that the undertaking participated in the cartel. Where participation in such meetings has been established, it is for the undertaking concerned to put forward indicia to establish that its participation in those meetings was without any anti-competitive intention by demonstrating that it had indicated to its competitors that it was participating in those meetings in a spirit that was different from theirs.

Thus, where proof of concerted action between several undertakings is based not on a mere finding of parallel market conduct but on documents which show that the practices in question were the result of concerted action, an alternative explanation as regards the prices charged, to the effect that an alleged coordination of prices in reality constitutes the reaction of producers faced with raw material costs and evolution of the market, is not such as to call into question the Commission’s finding of the existence of a cartel between the undertakings concerned.

(see paras 103, 108-109)

5. When an entity engaged in an economic activity infringes the competition rules, it falls, according to the principle of personal responsibility, to that entity to answer for that infringement. However, where two entities constitute the same economic unit, the fact that the entity which committed the infringement still exists does not in itself preclude the entity to which it transferred its economic activities from being subject to a penalty. Applying penalties in this way is permissible in particular where those entities have been subject to control by the same person and have therefore, given the close economic and organisational links between them, carried out, in all material respects, the same commercial instructions.

Where, therefore, at the time of their offending conduct, two companies are wholly owned, directly or indirectly, by the same company, the principle of personal responsibility does not preclude the penalty for the infringement initially committed by the first company and subsequently continued the second from being imposed in its entirety on the latter.

In any event, a penalty imposed on an undertaking that continues to exist in law, but has ceased economic activity, risks having no deterrent effect. Moreover, if no possibility of imposing a penalty on an entity other than the one which committed the infringement were available, undertakings could escape penalties by simply changing their identity through restructurings, transfers or other legal or organisational changes.

(see paras 123-126, 129)

6. Under Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the General Court, each application is required to state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based. For an action to be admissible, that the basic matters of law and fact relied on must be indicated, at least in summary form, coherently and intelligibly in the application itself. Whilst the body of the application may be supported and supplemented on specific points by references to extracts from documents annexed thereto, a general reference to other documents, even those annexed to the application, cannot make up for the absence of the essential arguments in law which, in accordance with the abovementioned provisions, must appear in the application.

Furthermore, 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 function.

Similar requirements are called for where a submission is made in support of a plea in law. A submission does not satisfy the above requirements if its essential elements are set out only in the annexes to the application.

An undertaking cannot compensate for that deficiency by introducing, at the reply stage, certain factual or legal data and by referring to annexes to the application or by providing new annexes to the reply. In reviewing the compliance of the application with the requirements of Article 44(1) of the Rules of Procedure, the content of the reply is, by definition, not relevant. In particular, the admissibility of pleas and arguments put forward in the reply as amplifications of pleas in the application cannot be raised with the aim of compensating for a failure, arising during the initiation of the action, to comply with the requirements of Article 44(1) of the Rules of Procedure, without rendering the latter provision devoid of purpose.

(see paras 161-162, 168-169)

7. In the case of agreements reached at meetings of competing undertakings, the competition rules are infringed where those meetings have an anti-competitive object and are thus intended to organise artificially the operation of the market. In such a case, the liability of a particular undertaking in respect of the infringement is properly established where it participated in those meetings with knowledge of their object, even if it did not proceed to implement any of the measures agreed at those meetings. The greater or lesser degree of regular participation by the undertaking in the meetings and of completeness of its implementation of the measures agreed is relevant not to the establishment of its liability but rather to the extent of that liability and thus to the severity of the penalty.

(see para. 173)

8. In practice, the Commission is often obliged to prove the existence of an infringement under conditions which are hardly conducive to that task, in that several years may have elapsed since the time of the events constituting the infringement and a number of the undertakings covered by the investigation have not actively cooperated therein. In that context, it would be too easy for an undertaking guilty of an infringement to escape any penalty if it were entitled to base its argument on the vagueness of the information produced regarding the operation of an illegal agreement in circumstances in which the existence and anti-competitive purpose of the agreement had nevertheless been sufficiently established. Undertakings are able properly to defend themselves in such circumstances provided that they have an opportunity to comment on all the evidence relied on against them by the Commission.

(see para. 177)

9. In administrative proceedings for breach of the competition rules, statements made on behalf of undertakings have significant probative value, since they entail considerable legal and economic risks. That probative value is particularly high when the statements of the undertakings support other statements of the same nature.

Moreover, answers given on behalf of an undertaking as such carry more weight than that of an employee of the undertaking, whatever his individual experience or opinion.

(see paras 179, 183, 267, 270)

10. An undertaking may be held liable for an overall cartel even though it is shown to have participated directly only in one or some of its constituent elements, if it knew, or must have known, that the collusion in which it participated, especially by means of regular meetings organised over several years, was part of an overall plan intended to distort competition and if that overall plan included all the constituent elements of the cartel. Similarly, the fact that different undertakings have played different roles in the pursuit of a common objective does not mean that there was no identity of anti-competitive object and, therefore, of infringement, provided that each undertaking has contributed, at its own level, to the pursuit of the common object.

(see para. 193)

11. It follows from the description of very serious infringements in the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty, that agreements or concerted practices aimed in particular at setting target prices or the allocation of market shares may entail, solely on the basis of their very nature, the characterisation as ‘very serious’, without the Commission being required to demonstrate an actual impact of the infringement on the market. Similarly, horizontal price agreements are particularly injurious under Community competition law and may, by reason of that fact alone, be classified as very serious.

(see para. 225)

12. When fixing the amount of each fine, the Commission has a discretion. Under Article 23(3) of Regulation No 1/2003, the amount of the fine is to be determined on the basis of the gravity of the infringement and its duration. Furthermore, that amount is the result of a series of arithmetical calculations performed by the Commission in accordance with the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty. That amount is set, inter alia, on the basis of various factors linked to the individual conduct of the undertaking in question, such as the existence of aggravating or attenuating circumstances.

It cannot be inferred from that legal framework that the Commission must ensure a proportion between the amount of the fine, as thus calculated, and the overall volume of the relevant product market, for a given year of the infringement, when the infringement in question lasted several years and the amount of the fine also depends on other factors linked to the individual conduct of the undertaking.

(see para. 232)

13. The Commission’s power to impose fines on undertakings which, intentionally or negligently, commit an infringement of Article 81 EC is one of the means given to it with which to carry out the task of supervision conferred on it by Community law. That task 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 setting the amount of the fine, the Commission 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.

That requires that the amount of the fine be adjusted in order to take account of the desired impact on the undertaking on which it is imposed. This is so that the fine is not rendered negligible or excessive, notably by reference to the financial capacity of the undertaking in question, in accordance with the requirements resulting from, firstly, the need to ensure that the fine is effective and, secondly, respect for the principle of proportionality. A large undertaking, owing to its considerable financial resources by comparison with those of the other members of a cartel, can more readily raise the necessary funds to pay its fine, which, if the fine is to have a sufficiently deterrent effect, justifies the imposition, in particular by the application of a multiplier, of a fine proportionately higher than that imposed in respect of the same infringement committed by an undertaking without such resources. In particular, the overall turnover of each undertaking participating in a cartel is relevant in setting the amount of the fine.

The objective of deterrence which the Commission is entitled to pursue when setting fines is intended to ensure that undertakings comply with the competition rules laid down by the Treaty in respect of the conduct of their activities within the Community or the European Economic Area. It follows that the deterrence factor which may be included in the calculation of the fine is assessed by taking into account a large number of factors and not merely the particular situation of the undertaking concerned. That principle applies, in particular, where the Commission has determined a ‘deterrence multiplier’ with which the fine imposed on an undertaking is adjusted.

(see paras 243-246)

14. The fact that several companies are held jointly and severally liable for a fine on the ground that they form an undertaking for the purposes of Article 81 EC does not mean, as regards the application of the maximum amount laid down by Article 23(2) of Regulation No 1/2003, that the obligation of each of them is limited to 10% of the turnover which it achieved during the last business year. The maximum amount of 10% of turnover within the meaning of that provision must be calculated on the basis of the total turnover of all the companies constituting the single economic entity acting as an undertaking for the purposes of Article 81 EC, since only the total turnover of the component companies can constitute an indication of the size and economic power of the undertaking in question.

(see paras 253, 313)

15. Section 2 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 refers as an example of aggravating circumstances, to repeated infringement of the same type by the same undertakings. The concept of repeated infringement, as understood in a number of national legal orders, implies that a person has committed new infringements after being punished for similar infringements. Any repeated infringement is among the factors to be taken into consideration in the analysis of the gravity of the infringement in question.

In that regard, where the Commission seeks to invoke the concept of an undertaking within the meaning of Article 81 EC for the purpose of applying the aggravating circumstance of repeated infringement, even if the legal persons involved in the infringements in question are not the same, it must adduce detailed and specific evidence to support its assertion.

Thus, where the development of the structure and control of the companies concerned is particularly complex, it is for the Commission to be particularly precise and to adduce all the detailed evidence necessary for it to be considered that the companies addressed by its decision and those addressed by earlier decisions formed the same ‘undertaking’ within the meaning of Article 81 EC.

(see paras 293-295, 298-299, 302)

16. According to the second indent of Section 3 of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty, non-implementation in practice of the offending agreements or practices may also amount to a mitigating circumstance. However, the fact that an undertaking whose participation in a concerted practice with its competitors is established did not conduct itself on the market in the manner agreed with its competitors does not necessarily have to be taken into account, as a mitigating circumstance, when the amount of the fine to be imposed is determined.

An undertaking which despite colluding with its competitors follows a more or less independent policy on the market may simply be trying to exploit the cartel for its own benefit and an undertaking which does not distance itself from the results of a meeting in which it was present in principle retains full responsibility for the fact of its participation in the cartel. Therefore, the Commission is not required to recognise the existence of a mitigating circumstance consisting of non-implementation of a cartel unless the undertaking relying on that circumstance is able to show that it clearly and substantially opposed the implementation of the cartel, to the point of disrupting the very functioning of it, and that it did not give the appearance of adhering to the agreement and thereby incite other undertakings to implement the cartel in question. It would be too easy for undertakings to reduce the risk of being required to pay a heavy fine if they were able to take advantage of an unlawful cartel and then benefit from a reduction in the fine on the ground that they had played only a limited role in implementing the infringement, when their attitude encouraged other undertakings to act in a way that was more harmful to competition.

(see paras 306-307)