On 5 March 2015, the Court of Justice dismissed all appeal grounds in two cases regarding the Chloroprene Rubber ("Rubber") cartel (Joined cases Commission v Versalis SpA and Eni SpA C-93/13 P and Versalis SpA and Eni SpA v Commission C-123/13 P). The judgment provides clarification on the application of the concepts of economic succession and recidivism, at the core of which is the concept of "economic unit" or "undertaking".

Economic Succession

Through economic succession, the authorities are empowered to hold an entity liable for a competition law infringement if it has acquired the business related to the infringement from another entity. In their appeal, Eni and Versalis claimed that the concept of economic succession can only be applied in exceptional cases "where the infringing entity has ceased to exist, either in law or economically". In the present case, EniChem transferred its Rubber business to Versalis, both companies belonging to the same Eni Group. Given that EniChem still exists, the parties claimed an error on the application of economic succession. 

The Court of Justice dismissed these arguments and ruled that the Commission is not precluded from imposing penalties on the acquiring entity, even if the transferring entity still exists, when both entities constitute one economic entity. The Court further elaborated that in particular, this application of economic succession is permissible where both entities have been subject to control by the same person and have carried out the same commercial instructions, given their close economic and organizational links.

Recidivism

On appeal, the Commission claimed that the GC erred in law by ruling that, in order to take into account a previous infringement for which a legal entity from the Eni group was penalized and apply an increase in the fine on account of recidivism, the parent company, Eni, should have been an addressee of the statement of objections and the decision of the previous infringement.

The Court of Justice sided with the Commission and ruled that in order to establish a repeated infringement on the part of a parent company, it is "not necessary for that company to have been subject to previous legal proceedings" that gave rise to a statement of objections or the decision, or to have been able to dispute atthat time, that it formed a single economic unit with other entities against which proceedings were brought. The Court of Justice emphasized that what matters is that the parent company is able to defend itself "at the time when the repeated infringement is alleged against it". At that moment, the Commission should issue a statement of objections that contains information demonstrating that the conditions for a finding of repeated infringement are satisfied. In particular, this information should show that the legal person formed, at the time of the first infringement, a single undertaking with the company found to have committed the first infringement. The Court of Justice concluded that that was not the case here as the decision at issue neither contained sufficient reasoning enabling Eni to defend itself nor the EU judicature to carry out its review. It thus ultimately dismissed the Commission's appeal.

From this judgment it follows that undertakings should be aware of the potential repercussions that can arise, at any point in time, due to previous infringements of their subsidiaries or the businesses that they acquire. This is particularly worrisome if one considers that the Court confirmed that the time elapsed between infringements is irrelevant and would only be taken into account when assessing the undertakings' disposition to infringe competition rules and the possible difficulties to exercise their rights of defense.