LG Electronics, Inc. and Koninklijke Philips Electronics NV v European Commission.
Date: 2017-09-14
28


LGE complains that the General Court found that the Commission has an absolute discretionary power to decide whether the statement of objections had to be sent to the parent company or to the subsidiary, although, in certain circumstances, such as those in this instance, the exercise of that discretion is restricted by respect for the rights of defence. LGE argues that it is apparent from the judgment of 22 January 2013, Commission v Tomkins (C‑286/11 P, EU:C:2013:29, paragraph 39), that, if a subsidiary submits exculpatory evidence from its records or from interviewing staff, that evidence will automatically benefit the parent company. Consequently, according to LGE, the ability of a parent company to exercise its rights of defence depends on its subsidiary being involved in the procedure.
29


LGE submits, relying on the judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686, paragraph 62), that it cannot be ruled out that, if the Commission had sent the statement of objections to the LPD group, the latter could have produced evidence that could have been of use for LGE’s defence.
33


Philips, for its part, does not dispute the ability of the Commission to attribute liability for the infringement to a parent company that exercised decisive influence over the conduct of a subsidiary. However, Philips claims that its liability is ‘purely derivative’ of that of its subsidiary and, without the LPD group being held directly liable, its liability as a parent company ‘exceeds’ the liability of the subsidiary in question. In the judgment of 17 September 2015, Total v Commission (C‑597/13 P, EU:C:2015:613, paragraphs 35 and 38), the Court of Justice found, however, that, in a situation where the liability of a parent company is purely derivative of that of its subsidiary and in which no other factor individually reflects the conduct for which the parent company is held liable, the liability of that parent company cannot exceed that of its subsidiary.
38


The Commission argues that the judgment of 22 January 2013, Commission v Tomkins (C‑286/11 P, EU:C:2013:29) was correctly interpreted by the General Court. In this regard, it submits that, in accordance with the case-law of the Court of Justice (judgment of 11 July 2013, Team Relocations and Others v Commission, C‑444/11 P, not published, EU:C:2013:464, paragraph 159 and the case-law cited), in order to impute, to an entity forming part of an undertaking, liability for an infringement committed by that undertaking, the Commission is not obliged either to hold liable the other entities of that same undertaking or to contact those other entities.
43


According to the Court’s settled case-law, observance of the rights of the defence in a proceeding before the Commission, the aim of which is to impose a fine on an undertaking for infringement of competition rules, requires that the undertaking concerned must have been afforded the opportunity to make known its views on the truth and relevance of the facts and circumstances alleged as well as on the documents used by the Commission to support its claim that there has been an infringement. Those rights are referred to in Article 41(2)(a) and (b) of the Charter of Fundamental Rights of the European Union (judgment of 25 October 2011, Solvay v Commission, C‑110/10 P, EU:C:2011:687, paragraph 48 and the case-law cited).
56


The appellants criticise the General Court for having ignored the findings made in the judgment of 26 September 2013, EI du Pont de Nemours v Commission (C‑172/12 P, not published, EU:C:2013:601, paragraph 47). The appellants conclude from that case-law that the finding that a joint venture and its controlling shareholders form a single undertaking has the sole purpose of attributing joint and several liability to those shareholders for the joint venture’s infringing conduct. Consequently, it is their submission that LGE, Philips and the LPD group should each have been treated as a separate undertaking for purposes other than parent company liability. They maintain that such an approach is, moreover, in accordance with the judgment of 9 July 2015, InnoLux v Commission (C‑231/14 P, EU:C:2015:451, paragraphs 56 and 57). The appellants submit that an analysis on the basis of that case-law should have led the General Court to conclude that LGE, Philips and the LPD group did not constitute a vertically integrated undertaking, and that sales between them were consequently not capable of being found to have been carried out within the same group.
61


In this respect, LGE repeats the arguments which it put forward in support of its second ground of appeal and adds that, in its submission, the General Court infringed the principle that the penalty must be specific to the offender and the offence, as recognised by the Court of Justice in its judgment of 10 April 2014, Commission and Others v Siemens Österreich and Others (C‑231/11 P to C‑233/11 P, EU:C:2014:256, paragraph 91). LGE claims that direct EEA sales through transformed products were taken into account in order to reflect the overall gravity of the infringement. However, LGE submits that it is not liable for the gravity reflected by such sales made by Philips. Thus, LGE claims that it has had a fine imposed upon it that does not correctly reflect the gravity of the infringement imputed to it. In that context, LGE provides detailed figures on the volume of the LPD group’s direct EEA sales through transformed products made with LGE and Philips as intermediary respectively in order to demonstrate that the volume of sales with Philips as intermediary was 26 times greater.
67


Next, it is apparent from the case-law of the Court of Justice that, although Article 23(2) of Regulation No 1/2003 leaves the Commission a certain discretion in determining the amount of the fine, it nevertheless limits the exercise of that discretion by establishing objective criteria to which the Commission must adhere. Thus, first, the amount of the fine that may be imposed on an undertaking is subject to a quantifiable and absolute ceiling, such that the maximum amount of the fine that may be imposed on a given undertaking can be determined in advance. Second, the exercise of that discretion is also limited by rules of conduct which the Commission imposed on itself, in particular in the Guidelines on the method of setting fines (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 48 and the case-law cited).
69


Although the concept of the ‘value of sales’ referred to in point 13 of the Guidelines on the method of setting fines cannot extend to encompass sales made by the undertaking in question that in no way come within the scope of the alleged cartel, it would be contrary to the objective pursued by Article 23(2) of Regulation No 1/2003 if vertically integrated participants in a cartel could, solely because they incorporated the goods forming the subject matter of the infringement into products finished outside the EEA, expect to have excluded from the calculation of the fine the proportion of the value of their sales of those finished products within the EEA that are capable of being regarded as corresponding to the value of the goods forming the subject matter of the infringement (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 55 and the case-law cited).
70


Vertically integrated undertakings may benefit from a horizontal price-fixing agreement concluded in breach of Article 101 TFEU not only when sales are made to independent third parties on the market for the goods that are the subject of the infringement, but also on the downstream market for transformed goods into which those goods are incorporated, in two different ways. Either the price increases of the inputs which result from the infringement are passed on by those undertakings in the price of the transformed goods, or those undertakings do not pass those increases on, which thus effectively confers on them a cost advantage in relation to their competitors which obtain those same inputs on the market for the goods which are the subject of the infringement (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 56 and the case-law cited).
72


Given that the LPD group intervened in the product market affected by the infringement, while LGE and Philips were active in the market for the transformed goods in which those products were incorporated, it should be noted that, contrary to what Philips argues, the LPD group and its parent companies did form a vertically integrated undertaking within the meaning of the judgment of 9 July 2015, InnoLux v Commission (C‑231/14 P, EU:C:2015:451, paragraphs 56 and 57).
74


That finding cannot be brought into question by the appellants’ arguments based on the judgment of 26 September 2013, EI du Pont de Nemours v Commission (C‑172/12 P, not published, EU:C:2013:601, paragraph 47), according to which, where two parent companies each have a 50% shareholding in the joint venture which committed an infringement of the rules of competition law, it is only for the purposes of establishing liability for participation in an infringement of that law and only in so far as the Commission has demonstrated, on the basis of factual evidence, that both parent companies did in fact exercise decisive influence over the joint venture, that those three entities can be considered to constitute a single economic unit and therefore form a single undertaking.
88


It should be noted as a preliminary point that, since, by their fourth and third grounds of appeal respectively, LGE and Philips criticise the General Court for having erred in law, infringed the principle of equal treatment and failed to adjudicate, those grounds cannot be rejected from the outset as being inadmissible, contrary to what is claimed by the Commission.
91


The principle of equal treatment, relied on by the appellants, must be reconciled with the principle of legality, according to which a person may not rely, to his benefit, on an unlawful act committed in favour of a third party (judgment of 16 June 2016, Evonik Degussa and AlzChem v Commission, C‑155/14 P, EU:C:2016:446, paragraph 58).
93


Admittedly, according to the settled case-law of the Court of Justice, when the amount of the fine is determined, there cannot, by the application of different methods of calculation, be any discrimination between the undertakings which have participated in the same infringement of Article 101 TFEU (judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 62 and the case-law cited).
95


The instant cases can therefore be distinguished from the case that gave rise to the judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission (C‑580/12 P, EU:C:2014:2363). By that judgment the Court reduced the amount of the fine imposed on a participant in an infringement in order to take into account the fact that, by erroneously applying the method that it had chosen to determine the amount of the fine, the Commission had imposed on another participant in the same cartel a fine that reduced the relative weight in the infringement of that other participant (judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraphs 70 to 80).