Keywords

Summary



Keywords

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

(Arts 81 EC and 82 EC)

2. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Margin of discretion of the Commission

(Arts 81 EC and 82 EC)

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

(Arts 81 EC and 82 EC)

4. Competition – Community rules – Infringements – Attribution

(Arts 81 EC and 82 EC)

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

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

6. 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)

7. 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)

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

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

Summary

1. In case of infringement of the competition rules, the conduct of a subsidiary may be imputed to the parent company in particular where, although having a separate legal personality, that subsidiary does not decide independently on its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities. That is the case because, in such a situation, the parent company and its subsidiary form a single economic unit and therefore form a single undertaking. Thus, the fact that a parent company and its subsidiary constitute a single undertaking enables the Commission to address a decision imposing fines to the parent company, without having to establish the personal involvement of the parent company in the infringement.

In the specific case where a parent company has a 100% shareholding in a subsidiary which has infringed the Community competition rules, the parent company can exercise a decisive influence over the conduct of the subsidiary and, moreover, there is a rebuttable presumption that the parent company does in fact exercise a 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 a decisive influence over the commercial policy of the subsidiary. The Commission will subsequently be able to regard the parent company as jointly and severally liable for the 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.

(see paras 61-62)

2. The imputation of the infringement to the parent company is a power that is left to the Commission’s discretion. The mere fact that the Commission has considered, in its previous practice in taking decisions, that the circumstances of the case did not justify imputing the conduct of a subsidiary to its parent company does not mean that it is required to make the same assessment in a subsequent decision.

(see para. 64)

3. The Commission is entitled to presume that, owing to the fact that a parent company directly or indirectly holds 100% of the capital of its subsidiaries, it exercises a decisive influence over their conduct. Consequently, it is for the parent company to rebut that presumption by demonstrating that those subsidiaries determined their commercial policy autonomously in such a way that they and their parent company did not constitute a single economic entity and, therefore, a single undertaking for the purposes of Article 81 EC.

Specifically, it is for the parent company to adduce any evidence relating to the organisational, economic and legal links between its subsidiaries and itself which in its view were apt to demonstrate that they did not constitute a single economic entity. When making its assessment, the Court must take into account all the evidence adduced, the nature and importance of which may vary according to the specific features of each case.

In that respect, it is not because of a parent-subsidiary relationship in which the parent company instigates the infringement or, a fortiori, because of the parent company’s involvement in the infringement but because they constitute a single undertaking in the sense described above that the Commission is able to address the decision imposing fines to the parent company of a group of companies. Thus, attribution to the parent company of the unlawful conduct of a subsidiary does not require proof that the parent company influences its subsidiary’s policy in the specific area in which the infringement occurred. In particular, the fact that the parent company is merely a technical and financial coordinator, and that it provides its subsidiaries with the necessary financial assistance, is not sufficient to rule out the possibility that it exercises decisive influence over the conduct of those subsidiaries by coordinating, inter alia, financial investments within the group. In the context of a group of companies, a company that coordinates, inter alia, financial investments within the group is in a position to regroup shareholdings in various companies and has the function of ensuring that they are run as one, including by means of such budgetary control.

Moreover, the argument that the business concerned by the cartel is of relative importance in the group’s industrial policy cannot prove that the parent company allowed its subsidiaries complete independence in defining their conduct on the market.

The fact that the parent company does not directly – but indirectly – hold 100% of the capital of the undertakings active in the sector concerned by the cartel also does not, in itself, show that that parent company and its subsidiaries do not form a single economic entity.

(see paras 93-95, 97-98, 102)

4. Where two entities constitute a single economic entity, the fact that the entity which committed the infringement still exists does not, in itself, preclude the application of penalties to the entity to which it transferred its economic activities. In particular, applying penalties in this way is permissible 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. In those circumstances, the principle of personal liability does not preclude the penalty for the infringement committed, first by a first entity and subsequently by the entity to which the business activities concerned were transferred, being imposed wholly on the latter.

(see para. 117)

5. 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, first, the need to ensure that the fine is effective and, second, 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 punishing the same infringement committed by an undertaking without such resources. In particular, the overall turnover of each undertaking participating in a cartel is a relevant factor 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.

Thus, as regards the application of a multiplier for deterrence, the link between, on the one hand, the size and total resources of the undertakings and, on the other, the need to ensure that the fine has a deterrent effect cannot be contested. 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.

(see paras 133-136, 146)

6. 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 cartels are amongst the most serious infringements of competition law and may thus, by their vary nature, be classified as very serious.

(see para. 140)

7. Section 2 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. Repeated infringement, as understood in a number of national legal systems, implies that a person has committed fresh infringements after having been penalised 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 takes account of the concept of undertaking within the meaning of Article 81 EC for the purpose of applying the aggravating circumstance of repeated infringement, and considers that the same undertaking had repeated an offending line of conduct, even if the legal persons involved in the infringements in question were 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 161-163, 166-167, 170)

8. The fact that several companies are held jointly and severally liable for a fine on the ground that they form a single 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 para. 177)