Cases T‑413/10 and T‑414/10

(publication by extracts)

Socitrel — Sociedade Industrial de Trefilaria, SA

and

Companhia Previdente — Sociedade de Controle de Participações Financeiras, SA

v

European Commission

‛Competition — Agreements, decisions and concerted practices — European market for prestressing steel — Price-fixing, market-sharing and exchange of commercially sensitive information — Decision finding an infringement of Article 101 TFEU — Cooperation during the administrative procedure — 2006 Guidelines on the method of setting fines — Reasonable time’

Summary — Judgment of the General Court (Sixth Chamber), 15 July 2015

Competition — Fines — Amount — Determination — Adjustment of the basic amount — Maximum amount — Calculation — Companies forming an undertaking during the infringement period and company having acquired a participant after the infringement — Application of different rules for calculating the ceiling — No breach of the principle of equal treatment

Competition — Fines — Amount — Determination — Determination of the base amount — Gravity of the infringement — Determination of rates of gravity graded in relation to the various categories of undertaking which committed a single infringement — Reduced disparity between the rates applied to the undertakings which committed the infringement — Respect for the principle of equal treatment — Assessment

Competition — Fines — Amount — Determination — Determination of the base amount — Gravity of the infringement — Criteria for assessment — Gravity of the participation of each undertaking — Distinction — Cartel comprising several branches — Compliance with the principle of proportionality and the principle that penalties must fit the offender

Competition — Fines — Amount — Determination — Adjustment of the basic amount — Maximum amount — Calculation — Turnover to be taken into consideration — Turnover for the business year immediately preceding the date on which the fine was imposed — Use of the turnover figure for a previous business year — Lawfulness — Conditions

Competition — Fines — Amount — Determination — Adjustment of the basic amount — Maximum amount — Calculation — Turnover to be taken into consideration — Cumulative turnover of all the companies constituting the economic entity acting as an undertaking at the time the decision imposing the fine was adopted

Competition — EU rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — Criteria for assessment — Presumption of decisive influence exercised by the parent company over its wholly-owned or almost wholly-owned subsidiaries — Rebuttable — Account to be taken of the principles of the presumption of innocence, that the penalty should fit the offender, legal certainty and equality of arms

Competition — EU rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — Criteria for assessment — Presumption of decisive influence exercised by the parent company over its wholly-owned or almost wholly-owned subsidiaries, including in the case of a holding company — Evidential obligations of the company seeking to rebut that presumption — Factors insufficient to rebut the presumption

EU law — Principles — Protection of legitimate expectations — Infringement — Conditions — Adoption by the Commission of an amending decision after the bringing of an action against the initial decision — Compliance with the duty of care and defence rights — No infringement of the principle of the protection of legitimate expectations

Competition — Administrative procedure — Obligations of the Commission — Duty to act within a reasonable time — Infringement — Consequences — Annulment of the decision finding an infringement by reason of excessive duration of the procedure — Condition — Harm to the rights of defence of the undertakings concerned — Factors capable of explaining the duration of the administrative procedure

Competition — Fines — Amount — Determination — Adjustment of the basic amount — Deterrent effect — Application of a multiplier to the starting amount — Reference to considerations set out by way of assessment of the gravity of the infringement — Sufficient statement of reasons

Acts of the institutions — Statement of reasons — Obligation — Scope — Assessment of the duty to state reasons by reference to the circumstances of the case — No need to specify all the relevant factual and legal elements

See the text of the decision. (see para. 106)

See the text of the decision. (see paras 135-137)

In competition matters, breach of the reasonable time principle in the conduct of administrative procedures may have two types of consequences. First, where the failure to comply with the reasonable time requirement has affected the outcome of the proceedings, such a breach may entail annulment of the contested decision. For the purposes of applying the competition rules, a failure to act within a reasonable time can constitute a ground for annulment only in the case of a decision finding infringements, where it has been proved that the breach of that principle has adversely affected the rights of defence of the undertakings concerned. Except in that specific circumstance, failure to comply with the obligation to adopt a decision within a reasonable time cannot affect the validity of the administrative procedure under Regulation No 17. However, as respect for the rights of the defence is of crucial importance in administrative procedures in competition matters, 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, which extends from the statement of objections to the adoption of the final decision. 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. Second, where the breach of the reasonable time requirement does not affect the outcome of the procedure, such a breach may lead the EU judicature, in the exercise of its unlimited jurisdiction, to provide an appropriate remedy for the breach resulting from failure to observe the reasonable time requirement by reducing, where appropriate, the amount of the fine imposed. In that regard, in order to explain the duration of an administrative procedure in cartel matters, it is appropriate to have regard, in particular, to the duration of the cartel, to its wide geographic scope, to the organisation of the cartel at geographic level and over time, to the number of meetings held within the framework of the cartel, to the number of undertakings involved, to the number of leniency applications and to the volume of documents, supplied in that connection or obtained in the course of the inspections and in various languages, which have to be examined by the Commission, to the requests for information, to the number of addressees of the statement of objections, to the number of languages of the case and also to the various applications relating to ability to pay. (see paras 151-155, 168, 169)

The principle of the protection of legitimate expectations is among the fundamental principles of the European Union. The right to rely on that principle assumes that three conditions are satisfied. First, precise, unconditional and consistent assurances originating from authorised and reliable sources must have been given to the person concerned by the administration. Second, those assurances must be such as to give rise to a legitimate expectation on the part of the person to whom they are addressed. Third, the assurances given must comply with the applicable rules. Moreover, the duty of diligence entails the obligation for the Commission to examine carefully and impartially all the relevant aspects of the individual case. Furthermore, it is lawful and in the interest of sound administrative management that an institution should correct the errors and omissions affecting a decision. The Commission cannot leave to subsist in the legal order a decision which it knows to be vitiated by errors and omissions, and, to that extent, it is lawful and in the interest of sound administrative management that an institution should correct the errors and omissions affecting the initial decision. Thus, where the Commission has, for that purpose, adopted an amending decision after the bringing of legal actions against the initial decision and the authors of the action have been invited to adapt their pleas and forms of order sought following the adoption of the amending decision, the latter cannot claim that their defence rights have been infringed by the Commission. Moreover, in so far as the Commission is entitled, in the interest of sound administration, to correct an initial decision which is vitiated by errors and omissions, no precise, unconditional and consistent assurance, originating from authorised and reliable sources, can be provided by the administration that such a decision will be maintained until such time as it is annulled by the EU judicature. Nor can the Commission be criticised for acting unfairly or in bad faith on the sole ground that it amended a decision which, on its own admission, was vitiated by various errors and omissions. (see paras 174-176, 179, 182, 185, 187-189)

See the text of the decision. (see paras 197-208, 220, 228, 238)

In the matter of infringement of the competition rules, where a parent company holds all or nearly all the capital of its subsidiary during the infringement period found against it, the Commission is entitled to presume the actual exercise of decisive influence. That presumption cannot be rebutted merely by showing that it is the subsidiary that manages those specific aspects of its commercial policy, without receiving instructions. It follows that the independence of the subsidiary cannot be established merely by showing that it manages the specific aspects of its policy relating to the marketing of the products concerned by the infringement. Moreover, given that the independence of the subsidiary is not to be assessed solely by reference to the operational management aspects of the undertaking, the fact that the subsidiary never implemented for the benefit of its parent company a specific information policy on the market concerned is not sufficient to show that it was independent. Similarly, the fact that it is not apparent from the documents in the file that the parent company gave instructions to its subsidiary cannot prove that such instructions did not exist. In that regard, the fact that the parent company is represented in the management bodies of its subsidiary is relevant evidence that it exercises actual control over the subsidiary’s commercial policy. Furthermore, a parent company may be held liable for an infringement committed by a subsidiary even where there is a large number of operating companies in a group. Thus, the fact that the parent company is a holding company, even non-operational, does not suffice to preclude the presumption of actual exercise of decisive influence and does not entail any reversal of the burden of proof. In that regard, the fact that the parent company confines itself to managing its shareholdings, owing to the type of company it is and to the objectives set out in its statutes, is not in itself sufficient to call the presumption applied by the Commission into question. Moreover, the fact that the parent company and its subsidiary are companies with different legal personalities and have different shareholders and different registered offices is irrelevant, where they are part of the same undertaking. Also irrelevant is the existence of national legislation according to which the managers of a parent company do not represent that company when they sit on the board of directors of its subsidiary. A company cannot rely on national rules to avoid the EU rules, as the terms used in EU law must in principle be uniformly interpreted and implemented throughout the European Union. Moreover, the fact that the parent company has not itself been active in the sector concerned by the infringement is also insufficient to rebut the presumption of actual exercise of decisive influence. Furthermore, autonomy of the subsidiary cannot be inferred from the fact that the management previously in place remained in charge after acquisition of the subsidiary by the parent company. Finally, since, in order for an infringement of Article 101 TFEU to be imputed to an undertaking, it is not necessary for there to have been action by, or even knowledge on the part of, the partners or principal managers of the undertaking concerned, but action by a person who is authorised to act on behalf of the undertaking is sufficient, the fact that the parent company was not aware of the unlawful conduct of its subsidiary has no impact on the possibility that it will be held jointly and severally liable for the subsidiary’s conduct. (see paras 210-214, 240-253)

See the text of the decision. (see paras 235-237)

See the text of the decision. (see paras 258-264)

As regards the determination of the ‘preceding business year’, within the meaning of Article 23(2) of Regulation No 1/2003, in situations where there is no indication that an undertaking has ceased its commercial activities or has diverted its turnover in order to avoid the imposition of a heavy fine, it must be considered that the Commission is obliged to fix the maximum the limit of the fine by reference to the most recent turnover corresponding to a complete year of economic activity. In that regard, the Commission has no arbitrary power to apply the 10% upper limit to business years prior to the business year preceding the date of adoption of the decision. The Commission may use such an earlier business year only in exceptional circumstances, where, for example, the undertaking achieved no turnover in the business year preceding the adoption of the Commission’s decision. Moreover, even in such cases, it does not enjoy any great latitude regarding the choice of business year to use in fixing the upper limit of the fine. It is obliged to refer to the last full business year corresponding to a full year of normal economic activity. Thus, whilst, for the purposes of calculating the upper limit of the fine provided for in Article 23(2) of Regulation No 1/2003, the Commission must, in principle, take into account the turnover achieved by the undertaking concerned in the last full business year at the date of adoption of the decision imposing the fine, it is apparent from the context and the objectives pursued by the legislation of which that provision forms part that, where the turnover in the business year preceding the adoption of the Commission’s decision does not represent a full year of normal economic activity over a period of 12 months and, thus, does not provide any useful indication as to the actual economic situation of the undertaking concerned and the appropriate level of fine to impose on it, that turnover cannot be taken into account in fixing the upper limit of the fine. In the latter situation, which will arise only in exceptional circumstances, the Commission is obliged, for the purposes of calculating the upper limit of the fine, to refer to the last full business year corresponding to a full year of normal economic activity. In that regard, the reference to a ‘full year of normal economic activity’ is intended to ensure that a year in which the undertaking concerned was in the process of winding down its business, although economic activity had not yet entirely come to an end, is precluded from being taken into account, as, more generally, is a year in which the market conduct of the undertaking concerned did not correspond to that of an undertaking carrying on an economic activity on the usual terms. On the other hand, the mere fact that turnover or the profits generated in a particular year are significantly lower, or higher, than in previous years does not mean that the year in question does not constitute a full year of normal economic activity. (see paras 265-268)

In determining the amounts of fines imposed for breach of the competition rules, regard must be had to the duration of the infringement and to all the factors capable of affecting the assessment of its gravity. In that regard, the gravity of infringements of EU competition law must be determined by reference to numerous factors such as, in particular, the specific circumstances and the context of the case and the deterrent effect of fines, although no binding or exhaustive list of the 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 cartel, the profit which they were able to derive from it, their size, the value of the goods concerned and the threat that infringements of that type pose to the objectives of the European Union. In that regard, whilst the fact that an undertaking has not taken part in all aspects of a cartel or that it has played only a minor role in the aspects in which it did participate is not material to the establishment of the existence of an infringement on its part, the limited extent to which the undertaking concerned participated may none the less affect the assessment of the extent and the gravity of the infringement and, accordingly, the determination of the level of the penalty. Thus the Commission is required to take into account, when assessing the relative gravity of the participation of each offender in a cartel, the fact that certain offenders may not be held liable for all the aspects of that cartel. Moreover, with regard to the principle of proportionality, that principle requires that the measures adopted by the institutions do not exceed what is appropriate and necessary to achieve the intended purpose. In relation to the calculation of fines, the gravity of infringements has to be determined by reference to numerous factors and it is important not to confer on one or other of those factors an importance which is disproportionate in relation to other factors. The principle of proportionality requires in that context that the Commission set the fine proportionately to the factors taken into account for the purpose of assessing the gravity of the infringement and apply those factors in a way which is consistent and objectively justified. (see paras 277-282)

See the text of the decision. (see paras 283, 288, 290-293)

In the context of the determination of the amount of fines imposed for breach of the competition rules, the fact that the small size of an incriminated undertaking and its belonging to a family group have affected its legal and economic knowledge and prevented it from gauging the precise extent of the infringement in which it was participating cannot be taken into consideration for the purposes of assessing the gravity of the infringement. As a matter of principle, undertakings themselves bear the risk of any incorrect assessment of their legal situation, in accordance with the general maxim that ignorance of the law is no defence. (see paras 301, 304)

See the text of the decision. (see para. 307)

In the matter of fines imposed for breach of the competition rules, where an infringement has been committed by several undertakings, the relative gravity of the participation of each of them must be examined, so that it may be established whether any aggravating or mitigating circumstances are applicable to them. In order to determine whether a mitigating circumstance is applicable to an undertaking on the ground that it did not actually implement unlawful agreements, it is necessary to determine whether the undertaking put forward arguments capable of showing that, during the period in which it was party to the offending 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. Where it has been shown that the offending undertaking was able to take the collusive arrangements into account in order to determine its conduct on the relevant market, the fact that it did not participate in one or other of those arrangements, on the assumption that it is established, cannot in itself suffice to satisfy the proof required by the case-law that, in order to benefit from the mitigating circumstance referred to in the 2006 Guidelines, the offenders must demonstrate that they adopted anti-competitive conduct or, at least, that they clearly and substantially breached the obligations relating to the implementation of the cartel, to the point of disrupting its very operation. Proof of not having participated in only some of the collusive cartel arrangements cannot in itself mean that the other arrangements did not harm competition on the relevant market. In that regard, 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 provided that an exclusively passive or follow-my-leader role played by an undertaking in the infringement constituted a mitigating circumstance. The list of mitigating circumstances in point 29 of the 2006 Guidelines, however, no longer refers, under the mitigating circumstances that may be taken into account, to such a circumstance. However, in so far as the list set out in point 29 of the 2006 Guidelines is not exhaustive, an exclusively passive or follow-my-leader role cannot, in principle, be excluded from the circumstances that might lead to a reduction of the basic amount of the fine. (see paras 313-318)

In the matter of fines imposed for breach of the competition rules, the fourth indent of point 29 of the 2006 Guidelines provides that the basic amount may be reduced where the Commission finds that mitigating circumstances exist, such as: where the undertaking concerned has effectively cooperated with the Commission outside the scope of the Leniency Notice and beyond its legal obligation to do so. In that regard, for an incriminated undertaking to be able to claim the benefit of that provision, it must establish that its cooperation, having gone beyond its legal obligation to cooperate but without entitling it to a reduction of the fine under the Leniency Notice, was objectively useful to the Commission, in that the latter was able to rely in its final decision on evidence supplied to it by the undertaking in the context of that cooperation, and without which the Commission would not have been in a position to penalise the infringement in question, in whole or in part. Thus, where an undertaking, first, has not challenged the facts and has replied in a timely manner to the requests for information sent to it, which does not go beyond its legal obligation to cooperate, and, second, fails to show that the Commission was able to rely in its final decision on evidence supplied to it by the undertaking in the context of its cooperation, and without which the Commission would not have been in a position to penalise the infringement, in whole or in part, the undertaking concerned cannot claim the reduction under point 29 of the 2006 Guidelines. (see paras 327-330)