Keywords

Summary



Keywords

1. Competition – Community rules – Undertaking – Concept – Dormant company – Not included

(Art. 81(1) EC)

2. Competition – Fines – Joint and several liability for payment – Conditions

(Art. 81(1) EC)

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

(Art. 81 EC; Commission Notice 98/C 9/03, Section 1A, fourth and fifth paras)

Summary

1. Community competition law refers to the activities of undertakings. The concept of an undertaking covers any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed. Any activity consisting in offering goods or services on a given market is an economic activity.

Since a dormant company within the meaning of English company law does not carry on any economic activity or have any turnover, it cannot be regarded as a direct participant in a cartel or be held liable for infringements committed in its name by other entities in the group of companies to which it belongs.

(see paras 46-49, 74, 86-87)

2. The Commission has the power to impute liability for unlawful conduct to the parent company, to the subsidiary, or to the parent company jointly and severally with its subsidiary.

Joint and several liability of two undertakings means that payment of the full amount of the fine by one undertaking cancels the obligation of the other undertaking to pay that fine.

Joint and several liability may be imputed to undertakings even if the legal entities constituting the undertaking during the infringement no longer belong to the same group. The fact that the ‘undertaking’ which carried out the unlawful activities was split up after the termination of the infringement, in that the legal entities which that undertaking comprised were separated, therefore has no bearing on their joint and several liability with regard to the infringement committed.

(see paras 100-101, 103, 106)

3. 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 provide that it is necessary to take account of the effective economic capacity of offenders to cause significant damage to other operators, in particular consumers, and to set the fine at a level which ensures that it has a sufficiently deterrent effect. Account may also be taken 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 relation to the first factor, the financial resources of the undertaking must be assessed on the date on which the fine is imposed. As regards the second factor, the turnover on the basis of which the Commission determines the size of the undertakings concerned must relate to their situation at the time of the infringement. Notwithstanding that those two factors are closely linked to the size of the undertaking, they constitute two separate grounds for an increase in the starting amount of the fine.

Of those two factors, the Commission is entitled to choose the one which it regards as being the most important for its assessment. However, to divide those two factors and apply them separately to two companies forming part of the same economic entity, one of which is the parent company of the other and for that reason alone is held liable for the infringement, is contrary to the concept of undertaking within the meaning of Article 81 EC. Admittedly, the Commission is permitted, when calculating the starting amount of the fine, to take into consideration the turnover in the year preceding the adoption of the decision finding that infringement (when applying the first criterion) or at the time of the infringement (when applying the second criterion). However, the Commission cannot proceed on the basis of a criterion applied only to one of the two entities that previously formed the economic entity which committed the infringement. Where a parent company and its subsidiary no longer form an economic entity for the purposes of Article 81 EC at the date of the decision imposing the fine on them for the infringement committed, the Commission cannot rely on the turnover of the former parent company in the year preceding the adoption of that decision in order to determine the deterrence aspect applicable to two companies which formed a single undertaking at the material time but which have since been separated. That turnover does not reflect the effective economic capacity of that undertaking to cause damage to other operators at the time of the infringement.

(see paras 123-125, 129, 132-133)