Keywords

Summary



Keywords

1. Competition – Community 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 subsidiaries

(Art. 81 EC)

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

(Council Regulations No 17, Art. 15(2), and No 1/2003, Art. 23(2))

3. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Observance by the Commission of the principle of equal treatment

(Art. 81 EC)

4. Competition – Community rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Independence of the subsidiary

(Art. 81 EC)

5. Actions for annulment – Pleas in law – Lack of or inadequate statement of reasons

(Arts 230 EC and 253 EC)

6. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances

(Council Regulations No 17, Art. 15(2), and No 1/2003, Art. 23(2); Commission Notice 98/C 9/03, Section 3, third indent)

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

(Council Regulations No 17, Art. 15(2), and No 1/2003, Art. 23(2); Commission Notice 98/C 9/03)

Summary

1. In competition matters, the conduct of a subsidiary may be attributed to the parent company in particular where that subsidiary, despite having a separate legal personality, 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, regard being had in particular to the economic, organisational and legal links between those two legal entities.

In such a situation, the parent company and its subsidiary form a single economic unit and therefore form a single undertaking. Consequently, it is not because of a relationship between the parent company and its subsidiary in instigating the infringement or, a fortiori , because the parent company is involved in the infringement, but because they constitute a single undertaking for the purposes of Article 81 EC that the Commission is able to address a decision imposing fines to the parent company.

The Commission cannot merely find that the parent company is in a position to exercise decisive influence over the conduct of its subsidiary, but must also check whether that influence was actually exercised.

In the specific case where a parent company has a 100% shareholding in a subsidiary which has infringed the competition rules, 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 avail itself of the presumption that the parent exercises 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 presumption arising from 100% ownership of the capital can apply not only in cases where there is a direct relationship between the parent company and its subsidiary, but also in cases where that relationship is indirect, through an intermediate subsidiary.

(see paras 92-96, 98)

2. According to Article 23(2) of Regulation No 1/2003, the Commission may by decision impose on undertakings which have infringed Article 81(1) EC fines which may not exceed 10% of the turnover in the preceding business year of each of the undertakings participating in the infringement. The same provision was to be found in Article 15(2) of Regulation No 17.

The turnover referred to in those provisions concerns the overall turnover of the undertaking concerned. That undertaking is the undertaking to which the infringement was attributed and which was therefore declared responsible.

The concept of ‘preceding business year’ set out in Article 23(2) of Regulation No 1/2003 must be understood as referring to the business year preceding the adoption of the Commission decision, except in specific situations where the turnover of that last business year 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 that undertaking.

Thus, where the Commission concludes that a parent company and its subsidiary are a single economic unit and, accordingly, holds the parent company jointly and severally liable for the infringement and for payment of the fine, and includes it amongst the addressees of its decision, the Commission is also entitled to rely on the parent company’s consolidated turnover during the year preceding that of the adoption of its decision, in order to calculate the upper limit of 10% laid down in Article 23(2) of Regulation No 1/2003.

(see paras 99-101, 165-166)

3. Where, in a case concerning an infringement of the EU competition rules involving several different undertakings, the Commission adopts, within the framework laid down by the case-law, a certain method for determining whether it is appropriate to attribute liability both to the subsidiaries which materially committed that infringement and to their parent companies, it must – save in specific circumstances – rely for such determination on the same criteria in the case of all those undertakings. The Commission is bound by the principle of equal treatment, which requires that comparable situations must not be treated differently, and different situations must not be treated in the same way, unless such treatment is objectively justified.

(see para. 123)

4. In competition matters, the independence of a subsidiary in relation to its parent company must not be assessed solely by reference to the subsidiary’s activity in the area of the products concerned by the infringement. In order to determine whether a subsidiary decides independently upon its own conduct on the market, account must be taken of all the relevant factors relating to the economic, organisational and legal links between the subsidiary and the parent company, which may vary from case to case and which cannot, therefore, be exhaustively listed.

Thus, the fact that the parent company never put in place any machinery for controlling its subsidiary’s activities in the area concerned by the infringement cannot suffice to establish that the subsidiary acted independently on the market. The same is true where the parent company does not give any orders or instructions to its subsidiary in connection with the subsidiary’s purchasing policy or meetings with other cartel members.

(see paras 158, 160)

5. In an action for annulment a plea alleging failure to state or failure sufficiently to state the reasons on which an act is based is a matter of public policy which may, or even must, be raised by the Courts of the European Union of their own motion and which, in consequence, may be invoked by the parties at any stage of the proceedings.

(see para. 170)

6. In the context of an infringement of the EU competition rules, termination of an infringement as soon as the Commission intervenes can, logically, constitute an attenuating circumstance only if there are reasons to suppose that the undertakings concerned were encouraged to cease their anti-competitive conduct by the interventions in question, the situation in which the infringement has already come to an end before the date on which the Commission first intervenes not being covered by the third 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.

Even if the Commission takes the view that the infringement ceased on the same day that it carried out its initial investigations, it is entirely justified in not applying such termination as an attenuating circumstance. A reduction of the fine by reason of the termination of an infringement as soon as the Commission intervenes cannot be automatic but depends on an appraisal of the circumstances of the case by the Commission, in the exercise of its discretion. In that regard, the application of the third indent of Section 3 of the Guidelines in favour of an undertaking will be particularly appropriate where the conduct in question is not manifestly anti-competitive. Conversely, its application will be less appropriate, as a general rule, where the conduct is clearly anti-competitive, on the assumption that it is proven.

(see paras 192, 194)

7. In the context of an infringement of the EU competition rules, where a parent company and its subsidiary together form a single entity during the year preceding that of the adoption of the Commission decision imposing a fine, the Commission is entitled to apply a deterrent multiplier based on the size and global resources of the undertaking concerned during that year.

The fact that the size and global resources of the undertaking concerned are taken into consideration in order to ensure that the fine has sufficient deterrent effect is explained by the impact sought on that undertaking, and the sanction must not be negligible in the light, especially, of its financial capacity. In order to be able to measure the deterrent nature of a fine with respect to an undertaking which has been found liable for an infringement, account cannot therefore be taken of the situation as it stood at the beginning of the infringement. That may result in a fine which is far too low to be sufficiently deterrent, in the case where the turnover of the undertaking concerned has increased in the meantime, or in a fine which is higher than necessary to be deterrent, in the case where the turnover of the undertaking concerned has decreased in the meantime.

(see paras 210-211)