Case T-217/06

Arkema France and Others

v

European Commission

‛Competition — Agreements, decisions and concerted practices — Market for methacrylates — Decision finding an infringement of Article 81 EC and Article 53 of the EEA Agreement — Imputability of the unlawful conduct — Obligation to state reasons — Principle of equal treatment — Principle of sound administration — Fines — Gravity of the infringement — Actual impact on the market — Deterrent effect of the fine — Repeat infringement — Ne bis in idem principle — Principle of proportionality — Mitigating circumstances — Non-implementation in practice of the agreements — Attribution of liability for payment within a group of companies — Unlimited jurisdiction’

Judgment of the General Court (Fourth Chamber), 7 June 2011 II - 2606

Summary of the Judgment

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 upon 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. This is because in such a situation the parent company and its subsidiary are part of the same economic unit and therefore constitute a single undertaking, which enables the Commission to address a decision imposing fines to the parent company, without having to establish the personal involvement of the latter in the infringement. In the specific case where a parent company has a 100 % shareholding in a subsidiary which has infringed the competition rules of the European Union, 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 a 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 implementation of that presumption is not conditional on the existence of additional indicia. In the case of a parent company which holds almost all the capital of its subsidiary, the parent company is, as a general rule, in a similar situation to that of a sole owner as regards its power to exercise a decisive influence over the conduct of its subsidiary, having regard to the economic, organisational and legal links which join it to that subsidiary. Consequently, the Commission is entitled to apply to that situation the same evidential regime, namely to rely on the presumption that that parent company makes effective use of its power to exercise a decisive influence over the conduct of its subsidiary. (see paras 43-46, 50, 53)

Where the Commission applies the presumption of exercise of a decisive influence in order to impute to a parent company an infringement of competition law by the subsidiary, it is able to regard the parent company as jointly and severally liable for the payment of the fine imposed on its subsidiary. In order to shift the burden of proof, the onus is on the company concerned to adduce ‘sufficient evidence’ to show that the subsidiary acts independently on the market. The Commission has the responsibility of examining that evidence, not of producing positive evidence to establish the exercise of such an influence. Moreover, if it were enough for the interested party to contest that presumption merely by making unsubstantiated assertions, the presumption would be deprived of all its effectiveness. (see paras 101, 110)

The fact that a company is a holding company does not suffice to rule out a parent company exercising a decisive influence on the subsidiaries by coordinating inter alia financial investments within the group. In the context of a group of companies, a holding company is a company which seeks to regroup shareholdings in various companies and whose function is to ensure that they are run as one. The division of the group into divisions, which also ignores the shareholding links between the companies in the group, is a strong indication that the coordination of the activities of those divisions is a matter for the parent company of the group. That function of the parent company is such as to preclude the independent action of the subsidiary on the market. The fact that the parent company has to authorise the large investments made by its subsidiary is an indication that the subsidiary acts on the market taking into account the interests of the parent company. (see paras 107, 113-114)

The statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted it in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the nature of the reasons given and the interest which the addressees of the measure, or other persons to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. Where a decision taken in application of Article 81 EC relates to several addressees and raises a problem with regard to liability for the infringement, it must include an adequate statement of reasons with respect to each of the addressees, in particular those of them who, according to the decision, must bear the liability for the infringement. Consequently, in order to contain an adequate statement of reasons in regard to the applicants’ parent companies, the contested decision has to contain inter alia a detailed statement of reasons for attributing the infringement to those companies. Moreover, inasmuch as that attribution has an impact on the undertakings’ situation, they have contested that attribution during the administrative procedure and they therefore have an interest in challenging the contested decision adopted in regard to them, they must be put in a position, just as their parent companies, to know the reasons for the Commission’s position. It follows that where the Commission bases the attribution of the infringement on the presumption of exercise of a decisive influence and where the companies concerned have, during the administrative procedure, adduced evidence designed to rebut that presumption, the decision must contain an adequate statement of reasons justifying the view that the presumption cannot be rebutted on that evidence. However, although, under Article 253 EC, the Commission is obliged to state the reasons on which its decisions are based, mentioning the factual and legal elements which provide the legal basis for the measure and the considerations which have led it to adopt its decision, it is not required to discuss all the issues of fact and law raised by every party during the administrative proceedings. Therefore, although the Commission must reveal, in its decision, the reasons why it considers that the evidence adduced is insufficient to rebut the presumption of exercise of a decisive influence, it does not follow that it is required, in each case, to discuss specifically each of the pieces of evidence put forward by the undertakings concerned. A general reply, may, depending on the circumstances of the case, suffice for the undertaking concerned properly to defend its rights and for the Court to exercise its review. (see paras 133-135, 141)

The gravity of infringements must be assessed in the light of numerous factors, such as the particular circumstances of the case, its context and the dissuasive effect of fines, although no binding or exhaustive list of criteria to be applied has been drawn up. The factors capable of affecting the assessment of the gravity of the infringements include the conduct of each of the undertakings, the role played by each of them in the establishment of the concerted practices, the profit which they were able to derive from those practices, their size, the value of the goods concerned and the threat that infringements of that type pose to the objectives of the Union. It follows from this that the effect of an anti-competitive practice is not, in itself, a conclusive criterion for assessing the proper amount of a fine. In particular, factors relating to intention may be more significant than those relating to that effect, particularly where the infringements are intrinsically serious. By reason of their very nature, cartels merit the severest fines. Their possible actual impact on the market, particularly the question to what extent the restriction of competition resulted in a market price higher than would have obtained without the cartel, is not a decisive factor for determining the level of fines. In that case, the actual impact of the infringement is only one among a number of factors which, if it can be measured, may allow the Commission to increase the starting amount of the fine beyond the minimum likely amount. Furthermore, the fact that, 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, the Commission set out its approach to assessment of the gravity of an infringement does not prevent it from assessing infringements as a whole by reference to all the relevant circumstances of the case, including factors that are not expressly mentioned in the Guidelines. (see paras 178-182)

Deterrence is one of the aspects to be taken into account in the calculation of the amount of the fine. It is settled case-law that the fines imposed for infringements of Article 81 EC, as laid down in Article 23(2) of Regulation No 1/2003, are designed to penalise the unlawful acts of the undertakings concerned and to deter both the undertakings in question and other economic operators from infringing, in future, the rules of EU competition law. Accordingly, when the Commission calculates the amount of the fine it may take into consideration, inter alia, the size and the economic power of the undertaking concerned. Moreover, the total turnover of the undertaking gives an indication, albeit approximate and imperfect, of the size of the undertaking and of its economic power. Thus, the Commission, in order to determine the amount of the fine at a level which ensures that it has a sufficiently deterrent effect, is entitled to have regard to the total turnover of the undertaking concerned. The need to ensure that the fine has a sufficient deterrent effect, where it is not found to justify raising the general level of fines in the implementation of competition policy, 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, so that the fine is not rendered negligible, or on the other hand excessive, in particular in the light of the financial capacity of the undertaking in question, in accordance with the requirements arising from, on the one hand, the need to ensure effectiveness of the fine and, on the other, the need to comply with the principle of proportionality. Consequently, it is inter alia the possibility that the undertaking concerned may find it easier to mobilise the funds necessary to pay its fine, which, in order to ensure that the fine has a sufficient deterrent effect, may justify the application of a multiplier. It follows that the Commission cannot be required to establish an additional link between the use of the undertaking’s resources and the infringement committed by it in order for those resources to be taken into account in determining the sufficient deterrent level of the fine, since what is important, in that context, is the size and economic power of the infringing undertaking as such. (see paras 210-211, 213-214)

The need to ensure a deterrent effect is a general requirement which must be a reference point for the Commission throughout the calculation of the fine. It does not necessarily require that there be a specific step in that calculation in which an overall assessment is made of all relevant circumstances for the purposes of attaining that objective. The increase in the starting amount of the fine in order to ensure sufficient deterrent effect, having regard to the size and economic power of each undertaking, is a stage in the calculation of the fine which is the result of the need to adjust the starting amount so that the fine is sufficiently deterrent in the light of the undertaking’s overall resources and of its ability to mobilise the funds needed to pay the fine. As regards the question whether, in a decision fining an undertaking, the Commission must, in relation to deterrence, take account of fines previously imposed on the same undertaking for matters contemporaneous with the cartel at issue in that decision, on the ground that an additional increase, as a deterrent, of the fine imposed for the new infringement would be inappropriate because the previous fines were a sufficient deterrent, such an approach is contrary to the objective of deterrence pursued by the Commission in its fining policy. That approach would lead to a paradoxical situation, in which an undertaking participating in several cartels would see the marginal cost of each sanction gradually reduced. Moreover, such an approach is based on the premise that the Commission should have set the amount of the fine according to the likelihood of the undertaking committing further infringements in the future, a likelihood which it should have assessed in the light of the total amount of the fines imposed on that undertaking during a certain period of time. Such a premise is incompatible with the concept of deterrence in competition law. In that regard, the Commission’s power to impose fines on undertakings which intentionally or negligently commit an infringement of Articles 81(1) EC or 82 EC is one of the means conferred on the Commission with which to carry out the task of supervision conferred on it by EU law. That task certainly includes the duty to investigate and punish individual infringements, but it also 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. Accordingly, the fines imposed for infringements of Article 81 EC, as laid down in Article 23(2) of Regulation No 1/2003, are designed to sanction the unlawful acts of the undertakings concerned and to deter both the undertakings in question and other economic operators from infringing, in future, the rules of European Union competition law. Therefore, deterrence is assessed by taking into account a large number of factors and not merely the particular situation of the undertaking concerned. Thus, when assessing the need to increase the amount of fines in order to ensure that they have deterrent effect, the Commission is in no way required to evaluate the likelihood that the undertakings in question will re-offend. Consequently, that step in the calculation of the fine consists in raising the starting amount of the fine in the light of objective elements, such as the size and economic power of the undertaking concerned, and not subjective elements relating to the assessment of the likelihood of committing a further infringement in the future. (see paras 224-225, 228, 231-235)

As regards the review by the European Union judicature of Commission decisions in competition matters, the unlimited jurisdiction conferred, pursuant to Article 229 EC, on the General Court under Article 31 of Regulation No 1/2003 authorises the Court to vary the contested measure, even without annulling it, by taking into account all of the factual circumstances, so as to amend, for example, the amount of the fine. The provisions of Article 48 of the Rules of Procedure cannot preclude the Court taking into consideration, in the exercise of its unlimited jurisdiction, the arguments raised by an applicant at the hearing, in order to consider whether the increase as a deterrent was justified in the light of the matter invoked by it, given that the Commission has had the opportunity to present its comments on that matter. (see paras 252-253)

The objective of deterrence which the Commission is entitled to pursue when setting the amount of a fine can be properly achieved only if regard is had to the situation of the undertaking at the time when the fine is imposed. Accordingly, an undertaking’s overall resources, which may vary, decreasing or increasing significantly within a relatively short space of time, in particular between the end of the infringement and the adoption of the decision imposing the fine, must therefore be valued, so as properly to achieve the objective of deterrence, in accordance with the principle of proportionality, at the time when the fine is imposed. The Commission may take account, in determining the amount of the fine, of the fact that large undertakings usually have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and be aware of the consequences stemming from it under competition law. In that case, the turnover on the basis of which the Commission determines the size of the undertakings in question, and therefore their capacity to determine the character and consequences of their conduct, must relate to their situation at the time of the infringement, not at the time of the adoption of the decision. However, the need to take account of the fact that large undertakings have legal and economic infrastructures enabling a large undertaking to be aware of the unlawfulness of its conduct constitutes, in the context of the increase of the fine, a different consideration from the need to ensure that the fine has a sufficient deterrent effect, which pursues different objectives. Inasmuch as the reason for applying a multiplier when determining the fine is based on the desired impact of the fine on the undertaking concerned and not on considerations of legal and economic infrastructures, and inasmuch as the economic unity which links the undertaking sanctioned to its parent company is broken before the date of adoption of the decision imposing the fine, the parent company’s resources can no longer be taken into account for determining the multiplier applicable to that undertaking. It follows that the size and economic power of such an undertaking have to be assessed, for the purposes of applying the multiplier, at the date of the decision imposing the fine. (see paras 260, 263-265, 270-272)

Even if an error in determining the fine to be imposed on it is attributable to the undertaking, that circumstance cannot justify maintaining the amount of the fine imposed on it, inasmuch as it is the result of taking into account a factually incorrect matter. (see para. 274)

The ne bis in idem principle, which is a fundamental principle of Community law also enshrined in Article 50 of the Charter of Fundamental Rights of the European Union, precludes, in competition matters, an undertaking from being found guilty or proceedings from being brought against it a second time on the grounds of anti-competitive conduct in respect of which it has been penalised or declared not liable by a previous unappealable decision. The application of that principle is subject to the threefold condition of identity of the facts, unity of offender and unity of the legal interest protected. That principle is by no means infringed by the fact that a Commission decision imposing a fine on an undertaking is based on previous findings of infringement which had already justified the application of an increase in that undertaking’s fine for repeat infringement in several earlier decisions. The fact that the Commission, in several decisions, based the finding of repeat infringement on the same previous findings by no means indicates that the Commission found against an undertaking several times for the same infringement. The taking into account of a repeat infringement as an aggravating factor when analysing the gravity of each of the infringements by an undertaking necessarily relates to the analysis of the gravity of each of those infringements, each of which constitutes, independently, a repetition of the conduct which infringed the competition rules, showing a tendency of that undertaking not to draw the appropriate conclusions from those findings of infringement. Therefore the taking into account of repeat infringement is justified in such a case by the need to ensure a higher level of deterrence, as demonstrated by the fact that previous findings of infringement have not been sufficient to prevent the commission of a new infringement. (see paras 292-293, 295-296, 299)

The fact that an undertaking admits partially implementing certain anti-competitive agreements is not in itself enough to justify the refusal to grant them the benefit of mitigating circumstances. What matters for the purposes of granting the benefit of mitigating circumstances on the basis of the non-implementation in practice of offending agreements, pursuant 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, is to determine whether, during the period in which the applicant was party to those agreements, it actually avoided implementing them by adopting competitive conduct on the market or, at the very least, whether it clearly and substantially breached the obligations relating to the implementation of the cartel to the point of disrupting its very operation. (see paras 308-309)