European Commission v Siemens AG Österreich and Others and Siemens Transmission & Distribution Ltd and Others v European Commission.
Date: 2014-04-10
39. Pursuant to Article 23(2) of Regulation No 1/2003, the Commission may, by decision, impose fines on undertakings or associations of undertakings where, either intentionally or negligently, they infringe Article 81 EC or 82 EC.
40. In its first ground of appeal, the Commission takes issue with the General Court for finding, at paragraph 157 of the judgment under appeal, that is it exclusively for the Commission, in exercising its powers to impose fines under Article 23(2) of Regulation No 1/2003, ‘to determine the respective shares of the various companies of the fines imposed on them jointly and severally, in so far as they formed part of the same undertaking, and that task cannot be left to the national courts’.
41. It should be recalled in that regard that EU competition law refers to the activities of undertakings (see, inter alia, Case C‑508/11 P ENI  v C ommission [2013] ECR, paragraph 82, and Case C‑440/11 P Commission  v Stichting Administratiekantoor Portielje [2013] ECR, paragraph 36 and the case-law-cited).
42. The authors of the Treaties chose to use the concept of an undertaking to designate the perpetrator of an infringement of competition law, who is liable to be punished pursuant to Articles 81 EC and 82 EC, and not other concepts such as the concept of a company or firm or of a legal person, used, inter alia, in Article 48 EC (see, to that effect, Case C‑501/11 P Schindler Holding and Others  v Commission [2013] ECR, paragraph 102).
43. The Court of Justice has consistently held that the concept of an undertaking covers any entity engaged in an economic activity, regardless of the legal status of the entity or the way in which it is financed. That concept must be understood as covering an economic unit, even if, from a legal perspective, that unit is made up of a number of natural or legal persons (see, inter alia, Joined Cases C‑628/10 P and C‑141/11 P Alliance One International and Standard Commercial Tobacco  v Commission  [2012] ECR, paragraph 42 and the case-law cited).
44. When such an economic entity infringes the competition rules, it is for that entity, in accordance with the principle of personal responsibility, to answer for that infringement (see, inter alia, Alliance One International and Standard Commercial Tobacco  v Commission , paragraph 42, and Commission  v Stichting Administratiekantoor Portielje , paragraph 37 and the case-law cited).
45. It should be recalled in that connection that, in certain circumstances, a legal person who is not the perpetrator of an infringement of the competition rules may nevertheless be penalised for the unlawful conduct of another legal person, if both those persons form part of the same economic entity and thus constitute the undertaking that infringed Article 81 EC.
46. Accordingly, it is settled case-law that the conduct of a subsidiary may be imputed to the parent company in particular where, although having 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 (see, inter alia, Commission  v Stichting Administratiekantoor Portielje , paragraph 38 and the case-law cited).
47. Where, in a relationship entailing vertical capital links of that kind, the parent company in question is itself deemed to have infringed EU competition rules, its liability for the infringement is wholly derived from that of its subsidiary (see, to that effect, Case C‑286/11 P Commission v Tomkins  [2013] ECR, paragraphs 43 and 49, and Case C‑50/12 P Kendrion v Commission [2013] ECR, paragraph 55).
48. The Commission will thus be able to regard the parent company as jointly and severally liable for payment of the fine imposed on its subsidiary (see, inter alia, Joined Cases C‑201/09 P and C‑216/09 P ArcelorMittal Luxembourg  v Commission  and Commission  v ArcelorMittal Luxembourg and Others  [2011] ECR I‑2239, paragraph 98).
49. The General Court was therefore correct to state, at paragraph 150 of the judgment under appeal, that, according to case-law, where several persons may be held personally responsible for participation in an infringement committed by one and the same undertaking for the purposes of competition law, they must be regarded as jointly and severally liable for that infringement.
50. The Commission’s criticism of paragraph 150 of the judgment under appeal in its seventh ground of appeal must be rejected, since it does not follow from that paragraph, placed in context and in the light of the case-law cited there, that the Commission is in fact required to find all the persons who may be held personally responsible for participation in an infringement committed by one and the same undertaking jointly and severally liable for payment of a fine.
51. Where, in accordance with Article 23(2) of Regulation No 1/2003, the Commission has the possibility of holding jointly and severally liable for payment of a fine a number of legal persons forming part of one and the same undertaking that is responsible for the infringement, the Commission’s determination of the amount of that fine — in so far as it is based, in any particular case, on the concept of an undertaking, which is a concept of EU law — is subject to certain limitations, which require due account to be taken of the characteristics of the undertaking concerned, as constituted during the period in which the infringement was committed.
52. When determining how joint and several liability is to be imposed from an external perspective, the Commission is under an obligation, in particular, to adhere to the principle that the penalty must be specific to the offender and the offence, which requires, in accordance with Article 23(3) of Regulation No 1/2003, the amount of the fine imposed to be determined by reference to the gravity of the infringement for which the undertaking concerned is held individually responsible and the duration of the infringement.
53. It should be noted in that regard that the factors capable of affecting the assessment of the gravity of infringements and which may, for that purpose, be taken into account in ensuring that the penalty imposed is appropriate to the economic entity in question, include the conduct of each of the undertakings concerned, the role played by each of them in the establishment of the concerted agreements or practices, the profit which they were able to derive from those agreements or practices, their size, the value of the goods concerned and the threat that infringements of that type pose to the objectives of the European Union (Joined Cases C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P Dansk Rørindustri and Others v Commission  [2005] ECR I‑5425, paragraph 242).
54. In that connection, the General Court was also correct to find, first, at paragraph 153 of the judgment under appeal, that the Commission does not have complete freedom to determine the sums to be paid jointly and severally and, second, at paragraph 154 of the judgment, that, in the present case, the Commission had to take account of the findings which it made in recital 468 of the contested decision regarding the responsibility of the various undertakings for the infringement periods concerning them.
56. It follows from the foregoing that the rules governing EU competition law, including those relating to the Commission’s power to impose penalties, the EU law principle of personal liability for an infringement and the principle that the penalty must be specific to the offender and the offence, which must be complied with when the power to impose penalties is being exercised, relate only to the undertaking per se, not the natural or legal persons forming part of the undertaking.
57. In particular, in so far as it is merely the manifestation of an ipso jure legal effect of the concept of an ‘undertaking’, the EU law concept of joint and several liability for payment of a fine concerns only the undertaking itself and not the companies of which it is made up.
58. While it follows from Article 23(2) of Regulation No 1/2003 that the Commission is entitled to hold a number of companies jointly and severally liable for payment of a fine, since they formed part of the same undertaking, it is not possible to conclude on the basis of either the wording of that provision or the objective of the joint and several liability mechanism that that power to impose penalties extends, beyond the determination of joint and several liability from an external perspective, to the power to determine the shares to be paid by those held jointly and severally liable from the perspective of their internal relationship.
59. On the contrary, the objective of joint and several liability resides in the fact that it constitutes an additional legal device available to the Commission to strengthen the effectiveness of the action taken by it for the recovery of fines imposed for infringement of the competition rules, since that mechanism reduces for the Commission, as creditor of the debt represented by such fines, the risk of insolvency, which is part of the objective of deterrence pursued generally by competition law, as the General Court essentially observed, correctly, at paragraph 151 of the judgment under appeal (see also, by analogy, Case C‑78/10 Berel and Others  v Commission  [2011] ECR I‑717, paragraph 48).
60. The determination, in the context of the internal relationship of those held jointly and severally liable for payment of a fine, of the shares each of them is required to pay does not pursue that dual objective. That is a contentious issue, to be resolved at a later stage, and, in principle, the Commission no longer has any interest in the matter, where the fine has been paid in full by one or more of those held liable.
61. Moreover, neither Regulation No 1/2003 nor EU law in general contain rules for the resolution of such a dispute, which concerns the internal allocation of the debt for the payment of which the companies concerned are held jointly and severally liable (see, by analogy, Berel and Others  v Commission , paragraphs 42 and 43).
62. In those circumstances, where there is no contractual agreement as to the shares to be paid by those held jointly and severally liable for payment of the fine, it is for the national courts to determine those shares, in a manner consistent with EU law, by applying the national law applicable to the dispute.
63. In that context, the duty to cooperate in good faith with the judicial authorities of the Member States, by which the Commission is bound under Article 4 TEU, applies in actions for indemnity before the national courts and tribunals, notwithstanding the fact that such actions are, in principle, to be decided on the basis of the national law applicable. First, the Commission’s decision establishing joint and several liability for payment of a fine, in that it identifies the entities held so liable and determines the maximum amount that may be claimed from each of those entities by the Commission, lays down the legal framework within which a ruling must be given on those actions. Second, the Commission may have information that may be relevant for the purpose of determining the shares of those held jointly and severally liable.
64. It follows from the foregoing that the General Court erred in law by finding, at paragraph 157 of the judgment under appeal, that it is exclusively for the Commission, in exercising its power to impose fines under Article 23(2) of Regulation No 1/2003, ‘to determine the respective shares of the various companies of the fines imposed on them jointly and severally, in so far as they formed part of the same undertaking, and [that] that task cannot be left to the national courts’.
66. First of all, since, as already observed at paragraph 56 above, the principle that the penalty must be specific to the offender and the offence relates only to the undertaking per se, not the natural or legal persons forming part of the undertaking, the General Court vitiated the judgment under appeal by an error of law by finding, at paragraph 153 of that judgment, that it follows from that principle that each company must be able to discern from the decision imposing a fine on it to be paid jointly and severally with one or more other companies the amount which it is required to bear in relation to the other joint and several debtors, once payment has been made to the Commission.
67. Next, given that, as already stated at paragraph 62 above, it is for the national courts and tribunals to determine, in a manner consistent with EU law, the respective shares of the entities held jointly and severally liable for payment of a fine by applying the national law applicable to the dispute, the General Court erred in law by finding, at paragraph 155 of the judgment under appeal, first, that the concept of joint and several liability for the payment of fines is an autonomous concept which must be interpreted by reference to the objectives and system of competition law of which it forms part and, where necessary, to the general principles deriving from the national legal systems as a whole, and, second, that even though the nature of the payment obligation on the companies fined jointly and severally by the Commission as a result of an infringement of EU competition law differs from that of joint debtors of a private-law obligation, it is appropriate to seek guidance, in particular, in the rules on joint and several obligations.
69. Lastly, paragraphs 158 and 159 of the judgment under appeal are vitiated by an error of law in that, in those paragraphs, the General Court found, in essence, that in the absence of any finding in the Commission’s decision imposing on several companies joint and several liability for payment of a fine that, within the undertaking, certain companies have a greater share of responsibility than others for the undertaking’s participation in the cartel during a specific period, it must be presumed that they share equal responsibility and, accordingly, must pay an equal share of the fines for which they have been held jointly and severally liable.
70. EU law does not lay down such a rule imposing liability in equal shares that is applicable by default, since, as stated at paragraph 62 above, the shares to be paid by those held jointly and severally liable for payment of a fine must, subject to compliance with EU law, be determined in accordance with national law.
71. Accordingly, it should be noted that, in principle, EU law does not preclude the internal allocation of such a fine in accordance with a rule of national law which determines the individual shares of those held jointly and severally liable by taking account of their relative responsibility or culpability for the commission of the infringement for which the undertaking of which they formed part is responsible, as well as, where appropriate, a rule applicable by default, under which, if it cannot be shown by the companies claiming that there should not be equal shares that some companies have a greater degree of responsibility than others for the undertaking’s participation in the cartel during a specific period, the companies concerned must be considered to be equally liable.
75. Given that, according to settled case-law, the unlimited jurisdiction enjoyed by the General Court enables it to substitute its own assessment for that of the Commission (see, inter alia, Case C‑679/11 P Alliance One International  v Commission  [2013] ECR, paragraph 104 and the case-law cited), it follows that that jurisdiction cannot be said to extend to carrying out assessments falling outside the Commission’s power to impose penalties.
91. As already noted at paragraph 52 above, the principle that the penalty must be specific to the offender and the offence requires, for the purpose of the application of Article 23(3) of Regulation No 1/2003, the amount of the fine to be determined by reference to the gravity of the infringement for which the undertaking concerned is held individually responsible and the duration of the infringement. That principle is also applicable where, as in the present case, it is the General Court which determines the amount of the fine in the exercise of its unlimited jurisdiction.
102. Reyrolle is in fact entitled to lodge an appeal relying, before the Court of Justice, on pleas arising from the judgment under appeal itself which seek to criticise, in law, its merits (judgment of 29 November 2007 in Case C‑176/06 P Stadtwerke Schwäbisch Hall and Others  v Commission , paragraph 17).
104. Moreover, in so far as it relates to the calculation of the fine, as effected by the General Court in the exercise of its unlimited jurisdiction, the second ground of appeal cannot be rejected as inadmissible because, by its very nature, it could not have been raised at first instance (see, to that effect, Alliance One International  v Commission, paragraph 35 and the case-law cited).
105. As regards the substantive examination of the second ground of appeal, it is established case-law that the exercise of unlimited jurisdiction in respect of the determination of fines cannot result in discrimination between undertakings which have participated in an agreement contrary to Article 101(1) TFEU (see, inter alia, Case C‑70/12 P Quinn Barlo and Others  v Commission  [2013] ECR, paragraph 46 and the case-law cited).
106. It is also settled case-law that the principle of equal treatment is infringed only where comparable situations are treated differently or different situations are treated in the same way, unless such treatment is objectively justified (see, inter alia, Case C‑76/06 P Britannia Alloys & Chemicals  v Commission  [2007] ECR I‑4405, paragraph 40 and the case-law cited).
111. Finally, as regards the alleged infringement of the principle of proportionality, according to its settled case-law, it is not for the Court of Justice, when ruling on points of law in the context of an appeal, to substitute, on grounds of fairness, its own assessment for that of the General Court exercising its unlimited jurisdiction to rule on the amount of fines imposed on undertakings for infringements of EU law. Accordingly, only inasmuch as the Court of Justice considers that the level of the penalty is not merely inappropriate, but also excessive to the point of being disproportionate, would it have to find that the General Court erred in law, on account of the inappropriateness of the amount of a fine (see, inter alia, Quinn Barlo and Others  v Commission , paragraph 57 and the case-law cited).
126. As regards the substantive examination of the first two grounds of appeal, it should be recalled that the EU judicature is empowered to exercise its unlimited jurisdiction where the question of the amount of the fine is before it (see, inter alia, Alliance One International  v Commission , paragraph 105).