Keywords

Summary



Keywords

1. Competition – Agreements, decisions and concerted practices – Agreements, decisions and concerted practices falling with the scope of the ECSC Treaty ratione materiae and ratione temporis – Expiry of the ECSC Treaty

(Art. 65(1) CS; Art. 81 EC; Council Regulation No 1/2003, Arts 7(1) and 23(2))

2. Acts of the institutions – Temporal application – Procedural rules – Substantive rules – Distinction – Retroactive effect of a substantive rule – Conditions

(Art. 65(1) CS; Art. 305 EC; Council Regulation No 1/2003, Arts 7(1) and 23(2))

3. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment

(Arts 81 EC and 82 EC)

4. ECSC – Agreements, decisions and concerted practices – Prohibition – Infringement – Attribution – Rules applicable to infringements identical in Article 81 EC and Article 65 CS

(Art. 65(1) CS; Art. 81(1) EC)

5. Competition – Community rules – Infringements – Attribution – ‘Economic continuity’ test

(Art. 65(1) CS; Art. 81(1) EC)

6. Competition – Administrative procedure – Limitation periods in proceedings – Interruption – Scope

(Council Regulation No 1/2003, Art 25(3) and (4); General Decision No 715/78, Art. 2(1) and (2))

7. Competition – Administrative procedure – Limitation periods in proceedings – Interruption – Request for information

8. Competition – Administrative procedure – Limitation periods in proceedings – Suspension – Initiation of an action before the Community judicature

(Council Regulation No 1/2003; General Decision No 715/78)

9. Competition – Administrative procedure – Observance of the rights of the defence – Excessive duration of the administrative procedure

Summary

1. Although the succession of the legal framework of the EC Treaty to that of the ECSC Treaty has led, since 24 July 2002, to a change of legal bases, procedures and applicable substantive rules, that succession is part of the unity and continuity of the Community legal order and its objectives. In that regard, the introduction and maintenance of a system of free competition, within which the normal conditions of competition are safeguarded and which is at the origin of the rules on collusive conduct between undertakings, is one of the essential objectives of both the EC Treaty and the ECSC Treaty. In that context, although the rules of the ECSC and the EC Treaties governing the sphere of collusive conduct between undertakings diverge to a certain extent, the concepts of agreements and concerted practices within the meaning of Article 65(1) CS correspond with those on collusive conduct and concerted practices within the meaning of Article 81 EC and both provisions have been interpreted in the same way by the Community judicature. Thus, the pursuit of the aim of undistorted competition in the sectors which initially fell within the common market in coal and steel is not suspended by the fact that the ECSC Treaty has expired, since that objective is also pursued in the context of the EC Treaty, by the same institution, namely the Commission, the administrative authority responsible for implementing and developing competition policy in the general interest of the Community.

Furthermore, in accordance with a principle common to the legal systems of the Member States, when legislation is amended, unless the legislature expresses a contrary intention, continuity of the legal system must be ensured. The continuity of the Community legal order and of the objectives which govern its function thus requires that, in so far as it succeeds the European Coal and Steel Community and in its own procedural framework, the European Community ensures, in respect of situations which came into being under the ECSC Treaty, compliance with the rights and obligations which applied eo tempore to both Member States and individuals under the ECSC Treaty and the rules adopted for its application. That requirement applies all the more in so far as the distortion of competition resulting from non-compliance with the rules on agreements and collusive conduct between undertakings is liable to extend its effects to a time after the expiry of the ECSC Treaty when the EC Treaty applies.

It follows from this that Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty and, more particularly, Article 7(1) and Article 23(2) thereof, must be interpreted as enabling the Commission to find and penalise, after 23 July 2002, agreements between undertakings arrived at in the sectors falling within the scope of the ECSC Treaty ratione materiae and ratione temporis , even though those provisions of Regulation No 1/2003 do not expressly refer to Article 65 CS.

(see paras 59-64)

2. Although procedural rules are generally held to apply to all proceedings pending at the time when they enter into force, that is not the case with substantive rules. The latter must, in order to ensure observance of the principles of legal certainty and the protection of legitimate expectations, be interpreted as applying to situations existing before their entry into force only in so far as it clearly follows from their terms, objectives or general scheme that such an effect must be given to them.

From that point of view, the continuity of the Community legal order and the requirements relating to the principles of legal certainty and the protection of legitimate expectations require the application of substantive provisions drawn from the ECSC Treaty to the facts which fall within their scope of application ratione materiae and ratione temporis . The fact that, by reason of the expiry of the ECSC Treaty, the regulatory framework in question is no longer in force at the time when the assessment of the factual situation is carried out is irrelevant since that assessment concerns a legal situation which was definitively established at a time when substantive provisions adopted under the ECSC Treaty were applicable.

In the case of a Commission decision adopted, after the expiry of the ECSC Treaty, on the basis of Article 7(1) and Article 23(2) of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, following a procedure carried out in accordance with that regulation, since the provisions concerning the legal basis and the procedure followed until the adoption of the decision fall within the scope of procedural rules, the applicable rules are those contained in Regulation No 1/2003. Moreover, as regards the substantive rules, since that decision relates to a legal situation which had definitively come into being before the expiry of the ECSC Treaty, in the absence of any retroactive effect of material competition law applicable since 24 July 2002, Article 65(1) CS is the substantive rule applicable, since it follows precisely from the nature of lex generalis of the EC Treaty by comparison with the ECSC Treaty, laid down in Article 305 EC, that the specific regime of the ECSC Treaty and of the rules adopted for its application is alone, under the principle lex specialis derogat legi generali , applicable to situations which came into being before 24 July 2002.

(see paras 65-68)

3. The Commission is able to address a decision imposing a fine for breach of the competition rules by a subsidiary to the parent company of a group of companies not because of a relationship between the parent and its subsidiary in instigating the infringement or, a fortiori , because the parent company is involved in the infringement, but because those companies constitute an economic entity and therefore a single undertaking within the meaning of Articles 81 EC and 82 EC if they do not independently determine their own conduct on the market.

In the specific case of a parent company holding 100% of the capital of a subsidiary which has committed an infringement, there is a rebuttable presumption that the parent company actually exercises decisive influence over the conduct of its subsidiary and therefore constitutes with the subsidiary a single undertaking within the meaning of Article 81 EC. It is therefore for the parent company which is challenging before the Community judicature a Commission decision imposing a fine on it for the conduct of its subsidiary to rebut that presumption by adducing evidence to establish that its subsidiary was independent.

In other words, it is sufficient for the Commission to prove that the entire capital of a subsidiary is held by its parent company for the presumption that the parent company exercises decisive influence over the conduct of the subsidiary on the market to be established. The Commission will then be able to hold the parent company jointly and severally liable for payment of the fine imposed on its subsidiary, even where it is found that the parent company did not participate directly in the agreements, unless the parent company proves that its subsidiary acts independently on the market.

(see paras 88-89, 91)

4. Like the prohibition in Article 81(1) EC, the prohibition in Article 65(1) CS is addressed, in particular, to ‘undertakings’. The concept of undertaking has the same meaning in both of those provisions. Consequently, the rules on the imputation of liability for infringements of Article 81(1) EC also apply in the case of infringements of Article 65(1) CS.

(see para. 92)

5. A company which has been formed as a wholly‑owned subsidiary in order to carry out one of the economic activities of the parent company may have imputed to it, as the economic successor, liability for the unlawful conduct of the parent company and therefore, indirectly, liability for the unlawful conduct of another subsidiary of that company.

That imputation of liability appears to be justified in light of the economic continuity test developed particularly in cases of restructuring or other changes within a group of undertakings. Where all or part of the economic activities are transferred from one legal entity to another, liability for the infringement committed by the initial operator, in the context of the activities in question, may be imputed to the new operator if it constitutes with the initial operator the same economic entity for the purpose of the application of the competition rules, even if the initial operator still exists as a legal entity. 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. That concerns quite specifically the cases of restructuring within a group of undertakings, where the initial operator does not necessarily cease to have a legal existence, but where it no longer carries out a significant economic activity on the relevant market. If this were not the case, the existence of a structural link between the original operator of the undertaking which participated in the cartel and the new one might allow the persons concerned to escape their responsibility under antitrust law, whether intentionally or unintentionally, by means of the structural possibilities available to them.

Moreover, in the light of the fundamental concept of an economic unit, there is no need for the Commission to bring proceedings against either the company active at the time of the infringement, or its economic successor in that sector. By referring to the activities of undertakings, Community competition law is aimed at economic units made up of a combination of personal and physical elements which can contribute to the commission of an infringement of the kind referred to by Article 81(1) EC and Article 65(1) CS. An undertaking can therefore include several subjects of the law. A company may be declared jointly and severally liable with another company for payment of a fine imposed on the latter company, which has committed an infringement intentionally or negligently, provided that the Commission demonstrates, in the same decision, that the infringement could also have been found to have been committed by the company held jointly and severally liable. Joint and several liability is thus a normal consequence of the imputation of liability for the conduct of one company to another company, in particular where the two companies constitute the same undertaking.

(see paras 107-115, 117)

6. In accordance with Article 2(1) and (2) of General Decision No 715/78 concerning limitation periods in proceedings and the enforcement of sanctions under the Treaty establishing the European Coal and Steel Community and Article 25(3) and (4) of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, the limitation period is to be interrupted by any action taken by the Commission for the purpose of the preliminary investigation or proceedings, notified to at least one undertaking which has participated in the infringement, and the interruption of the limitation period is to apply for all undertakings which have participated in the infringement in question.

The expression ‘undertaking which has participated in the infringement’ must be understood to mean any undertaking identified as such in a Commission decision imposing sanctions in respect of an infringement. In that regard, the fact that an undertaking was not identified as ‘having participated in the infringement’ in the initial statement of objections or, more generally, in the administrative procedure during which the action interrupting the limitation period was taken is irrelevant if that undertaking is subsequently identified as having done so.

It follows from those provisions that the limitation period is interrupted not only with respect to the undertakings which were the subject of an action taken for the purpose of the preliminary investigation or proceedings, but also with respect to those which, having participated in the infringement, are still unknown to the Commission and, accordingly, have not been the subject of any measure of investigation or are not the addressees of any procedural act.

Furthermore, a company to which the unlawful conduct of another may be imputed, in such a way that it is deemed to have committed the infringement itself, ‘participates in the infringement’ for the purposes of those provisions.

(see paras 143-146)

7. A written request for information from the Commission seeking turnover figures for undertakings which are the subject of a proceeding applying the Community competition rules is a necessary step in the infringement proceedings, which constitutes an interruption of the limitation period, since it enables the Commission to check that the fines it intends to impose on those undertakings do not exceed the maximum amount permitted for infringements of the Community competition rules.

(see para. 147)

8. Although, in the light of the interruption of the limitation period in proceedings, Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, and General Decision No 715/78 concerning limitation periods in proceedings and the enforcement of sanctions under the Treaty establishing the European Coal and Steel Community provide expressly for the erga omnes effect of such an interruption, as regards the suspension of the limitation period, that legislation does not settle the question of whether the effect of the initiation of an action relates to a specific person, in which case the suspension of the limitation period throughout the proceedings applies only with respect to the applicant undertaking, or erga omnes , in which case the suspension of the limitation period during the procedure applies with respect to all the undertakings which participated in the infringement, whether or not they brought an action.

Like the interruption of the limitation period, the suspension of the limitation period, which constitutes an exception to the principle of a five-year limitation period, must be interpreted restrictively. That principle does not permit silence on the part of the legislature to be interpreted in the sense of erga omnes effect. That applies a fortiori since, unlike the interruption of the limitation period, which is intended to enable the Commission to take proceedings and impose effective sanctions in respect of infringements of the competition rules, suspension of the limitation period concerns, by definition, a situation in which the Commission has already adopted a decision. Normally, there is no longer any need, at that stage, to attach erga omnes effect to the initiation, by one of the undertakings on which sanctions have been imposed, of proceedings before the Community judicature. In that situation, on the contrary, the inter partes effect of the judicial proceedings and the consequences attached to that effect by the Community judicature preclude in principle an action brought by one undertaking to which the contested decision was addressed from having any effect whatsoever on the situation of the other addressees of that decision.

Furthermore, while it is true that the competition rules in the Treaty are addressed to undertakings, the fact none the less remains that, for the purposes of the application and implementation of Commission decisions in such matters, it is necessary to identify, as the addressee, an entity having legal personality, and that the statement of objections must specify unequivocally the legal person on whom fines may be imposed and be addressed to that person. That legal person alone is able to initiate an action against the decision adopted at the close of the administrative procedure and, accordingly, is the only person in respect of whom the limitation period may be suspended. The suspension of the limitation period resulting from the initiation by an undertaking of proceedings before the Community judicature thus applies to the legal entity which is a party to the proceedings, to the exclusion of the other legal entities forming part of the same economic unit.

(see paras 151, 153-158)

9. Since respect for the rights of the defence is of crucial importance in administrative procedures relating to competition policy, it is essential to prevent those rights from being irremediably compromised on account of the excessive duration of the investigation phase and to ensure that the duration of that phase does not impede the establishment of evidence designed to refute the existence of conduct susceptible of rendering the undertakings concerned liable. For that reason, examination of any interference with the exercise of the rights of the defence must not be confined to the actual phase in which those rights are fully effective, that is to say, the second phase of the administrative procedure. The assessment of the source of any undermining of the effectiveness of the rights of the defence must extend to the entire procedure and be carried out by reference to its total duration. Furthermore, the burden of proving a breach of the rights of the defence by virtue of the fact that an undertaking experienced difficulties in defending itself against the Commission’s allegations as a consequence of the excessive duration of the administrative procedure is borne by that undertaking.

(see paras 166-167)