Keywords

Summary



Keywords

1. Competition – EU rules – Undertaking – Concept – Economic unit

(Art. 81 EC)

2. Competition – EU rules – Undertaking – Concept – Pursuit of an economic activity

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

3. Competition – Agreements, decisions and concerted practices – Definition of the market –Purpose – Determination of the effect on trade between Member States – Appreciable effect

(Art. 81 EC; Commission Notice 2004/C 101/07, Section 53)

4. Acts of the institutions – Guidelines on the effect on trade concept – Binding measure

(Commission Notice 2004/C 101/07)

5. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Assessment according to the nature of the infringement

(Commission Notice 2006/C 210/02, Sections 19 and 21 to 23)

6. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Principle of the individualisation of sanctions

(Council Regulation No 1/2003; Commission Notice 2006/C 210/02)

7. Competition – Agreements, decisions and concerted practices – Agreements between undertakings – Onus on the Commission to prove the duration of the infringement

(Art. 81(1) EC; Commission Notice 2006/C 210/02)

8. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances – Assessment

(Commission Notice 2006/C 210/02, Section 29)

9. Competition – Fines – Amount – Determination – Mitigating circumstances – Anti‑competitive conduct authorised or encouraged by the public authorities

(Commission Notice 2006/C 210/02, Section 29, last indent)

Summary

1. The concept of an economic unit, which may include several separate legal personalities, was introduced in order to make it possible to attribute the behaviour of one legal entity (the subsidiary) to another (the parent company), and not to provide grounds for classifying the parent company as an undertaking. The concept of economic unity cannot therefore compensate for the fact that the parent company is not an undertaking.

(see para. 41)

2. In the context of competition law, the concept of an undertaking encompasses every entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed.

An entity which, owning controlling shareholdings in a company, actually exercises that control by involving itself directly or indirectly in the management thereof must be regarded as taking part in the economic activity carried on by the controlled undertaking and must therefore itself, in that respect, be regarded as an undertaking within the meaning of competition law.

However, the mere fact of holding shares, even controlling shareholdings, is insufficient to characterise as economic an activity of the entity holding those shares, when it gives rise only to the exercise of the rights attached to the status of shareholder or member, as well as, if appropriate, the receipt of dividends, which are merely the fruits of the ownership of an asset.

The burden of proving ‘involvement’ lies with the Commission.

(see paras 44, 47-48)

3. For the purposes of applying Article 81(1) EC, the Commission is not required to show the actual anti-competitive effects of agreements or practices which have as their object the prevention, restriction or distortion of competition. Nevertheless, Article 81(1) EC is not applicable if the effect of a restrictive practice on intra-Community trade or on competition is not ‘appreciable’. An agreement escapes the prohibition laid down in Article 81(1) EC if it restricts competition or affects trade between Member States only insignificantly.

There is an obligation on the Commission to define the market in a decision applying Article 81 EC where it is impossible, without such a definition, to determine whether the agreement or concerted practice at issue is liable to affect trade between Member States and has as its object or effect the prevention, restriction or distortion of competition.

If every cross-border transaction were automatically capable of appreciably affecting trade between Member States, the concept of appreciability, which is a condition for the application of Article 81(1) EC would be devoid of meaning. Even in the case of an infringement by subject-matter, the infringement must be capable of affecting intra-Community trade appreciably. That is apparent from the Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, since the positive presumption, laid down in Section 53 thereof, applies only to agreements or practices that by their very nature are capable of affecting trade between Member States.

Where the Commission provides a sufficiently detailed description of the sector concerned, including supply, demand and geographic scope, it identifies the relevant services and market precisely and such a description of the sector can be sufficient, in so far as it is sufficiently detailed, to enable the Court to verify the Commission’s basic assertions and in so far as, on that basis, it is clear that the combined market share far exceeds the 5% threshold. When those conditions are met, the Commission can base its decision on the second alternative condition of Section 53 of those guidelines without expressly determining the market within the meaning of Section 55 of those guidelines. In the context of the positive presumption laid down in Section 53 of those guidelines, it is sufficient if only one of the two alternative conditions is met in order to prove that the effect on trade between Member States is appreciable.

(see paras 89-91, 98, 112, 116-117)

4. In adopting the rules of conduct that are the Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty and announcing by publishing them that they will henceforth apply to the cases to which they relate, the Commission imposes a limit on the exercise of its discretion and cannot depart from those rules without running the risk of suffering the consequences of being in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations.

(see para. 109)

5. The gravity of the infringement must assessed by taking into account, inter alia, the nature of the restrictions on competition. The gravity of the infringement could be established by reference to the nature and the object of the abusive conduct. The factors relating to the object of a course of conduct may be more significant for the purpose of setting the amount of the fine than those relating to its effects.

An infringement consisting in price fixing and market sharing is, by its nature, particularly serious.

In addition, the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 state, in Section 20, that ‘[t]he assessment of gravity will be made on a case-by-case basis for all types of infringement, taking account of all the relevant circumstances of the case’. Those guidelines have brought about a fundamental change in the methodology for calculating fines. In particular, the threefold categorisation of infringements (‘minor’, ‘serious’ and ‘very serious’) has been abolished, and a scale from 0% to 30% introduced in order to enable finer distinctions to be made. Under Section 19 of those guidelines, the basic amount of the fine must be ‘related to a proportion of the value of sales, depending on the degree of gravity of the infringement’. As a general rule, according to Section 21 of those guidelines, ‘the proportion of the value of sales taken into account will be set at a level of up to 30% of the value of sales’.

Therefore, the Commission cannot use its margin of assessment in the imposition of fines, and thereby determine the precise level from 0% to 30%, without also taking into account the particular circumstances of the case. Section 22 of those guidelines provides that, ‘[i]n order to decide whether the proportion of the value of sales to be considered in a given case should be at the lower end or at the higher end of that scale, the Commission will have regard to a number of factors, such as the nature of the infringement, the combined market share of all the undertakings concerned, the geographic scope of the infringement and whether or not the infringement has been implemented’.

That difficulty in determining an exact percentage is reduced to a certain extent in the case of secret horizontal price-fixing and market-sharing agreements in which, under Section 23 of those Guidelines, the proportion of the value of sales taken into account will generally be set ‘at the higher end of the scale’. It is clear from that point that, for the most harmful restrictions, the rate should, at the very least, be above 15%.

There is therefore no cause to annul the Commission’s decision fixing the rate at 17% on the basis of the inherently serious nature of the infringement. Where the Commission simply applies a rate equal or almost equal to the minimum rate laid down for the most serious restrictions, it is not necessary to take into account additional factors or circumstances. That would be required only if a higher rate had to be established.

(see paras 126-127, 129-132)

6. Where an infringement has been committed by several undertakings, the relative gravity of the participation of each of them must be examined. That conclusion follows logically from the principle that penalties must be specific to the offender and to the offence, so that an undertaking may be penalised only for acts imputed to it individually, a principle applying in any administrative procedure that may lead to the imposition of sanctions under Community competition law. The gravity of the infringement is to be assessed on an individual basis by taking into account numerous factors, such as the particular circumstances of the case, its context and the deterrent effect of fines. Thus, the fact that an undertaking has not taken part in all aspects of a cartel or that it played only a minor role in the aspects in which it had participated must be taken into consideration when the gravity of the infringement is assessed and, as appropriate, when the fine is determined.

However, the General Court’s practice is usually to assess individual circumstances not in the context of the assessment of the gravity of the infringement, that is, when the basic amount of the fine is set, but in the context of the adjustment to the basic amount to reflect mitigating or aggravating circumstances.

(see paras 137-139)

7. The burden of proof concerning infringements of Article 81(1) EC lies with the Commission which must adduce precise and coherent evidence to justify the firm belief that the alleged infringement has been committed. This is especially so for evidence concerning the duration of the infringement, a criterion the weight of which was considerably increased in the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003. If there is no evidence directly establishing the duration of an infringement, the Commission is required to adduce evidence of facts sufficiently proximate in time for it to be reasonable to accept that that infringement continued uninterruptedly between two specific dates.

However, where participation in multilateral 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.

That concerns cartels in which multilateral meetings took place, and during which anti-competitive objectives were mentioned. The reason underlying that principle of law is that, having participated in such meetings without publicly distancing itself from what was discussed, the undertaking has given the other participants to believe that it subscribed to what was decided there and would comply with it. As the undertaking did not participate in such meetings, it is for the Commission to adduce evidence of the duration of its participation, without being able to benefit from the easing of the burden of proof resulting from the case-law according to which, in order to put an end to its liability, must dissociate itself openly and unambiguously from the cartel, so that the other participants are aware of the fact that it no longer supports the general aims of the cartel.

(see paras 153-154, 157-159)

8. Under the third indent of Section 29 of the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, in order to benefit from a reduction of the fine on account of mitigating circumstances, the undertaking concerned must ‘[provide] evidence that its involvement in the infringement is substantially limited’ and ‘thus [demonstrate] that, during the period in which it was party to the offending agreement, it actually avoided applying it by adopting competitive conduct in the market’.

However, the use of the expression ‘such as’ shows that the list of circumstances set out in Section 29 of those Guidelines is not exhaustive. The specific circumstances of the case, in particular whether the undertaking participated in all the aspects of the infringement, must be taken into account, if not in assessing the gravity of the infringement, at least in the course of adjusting the basic amount of the fine for mitigating or aggravating circumstances. That obligation was one of the reasons why the Court of Justice stated that the concept of a single and continuous infringement is not contrary to the principle that responsibility for infringements of competition law is personal in nature. The criteria laid down in the third indent of Section 29 are not capable on their own of ensuring this.

(see paras 182-183)

9. The last indent of Section 29 of the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 provides that ‘[t]he basic amount [of the fine] may be reduced … where the anti-competitive conduct of the undertaking has been authorised or encouraged by public authorities or by legislation’ In that regard, mere knowledge of anti-competitive conduct does not imply that that conduct was implicitly ‘authorised or encouraged’ by the institution within the meaning of the last indent of Section 29 of those Guidelines. Alleged inaction cannot be treated in the same way as a positive act such as authorisation or encouragement.

(see paras 189, 192)