On 19 July 2012, the European Court of Justice ("ECJ") dismissed the appeals (joined cases C-628/10 P and C-14/11 P) from Alliance One International Inc ("Alliance One"), Standard Commercial Tobacco Co, Inc ("Commercial Tobacco") and the European Commission (the "Commission") against a judgment of the General Court (Case T-24/05) relating to the Spanish raw tobacco cartel. In its decision of 2004, the Commission attributed liability to Alliance One, Commercial Tobacco as well as the intermediate parent company, Trans-Continental Leaf Tobacco Corp. Ltd ("Leaf Tobacco"), for the participation of World Wide Tobacco España, SA ("Tobacco España") in the Spanish raw tobacco cartel.
The ECJ agreed with the General Court's judgment which on the one hand confirmed the Commission's decision in relation to the liability of Alliance One and Commercial Tobacco and, on the other hand, annulled the Commission's cartel decision in so far as it related to the intermediate company Leaf Tobacco.
The main legal question in this case was whether the Commission had applied different standards in holding the parent companies of various participants liable in one and the same cartel, and if so whether it was lawful to do this.
The ECJ held that the General Court had been correct in finding that there had been a difference of treatment between Leaf Tobacco and the parent companies of other cartel participants with regard to the attribution of liability. This justified a partial annulment of the Commission's decision.
Where a parent company has a 100% shareholding in a subsidiary, that parent company is able to exercise decisive influence over the conduct of its subsidiary, and there is a rebuttable presumption that it does in fact exercise such influence. Nonetheless, there is nothing to prevent the Commission from establishing that a parent company did in fact exercise decisive influence over its subsidiary by other means, or in combination with the rebuttable presumption.
However, where the Commission adopts a particular method in order to determine whether liability should be attributed to parent companies whose subsidiaries have taken part in the same cartel, the principle of equal treatment requires the Commission to apply the same criteria for all those parent companies.
The General Court subsequently concluded that none of the evidence relied on by the Commission supported the presumption that Leaf Tobacco did in fact exercise decisive influence over Tobacco España. The lack of such evidence led the Commission to decide not to attribute liability to the parent companies of other cartel participants. Therefore, the Commission could not hold that Leaf Tobacco was jointly and severally liable for the fine on the sole basis of the parental liability presumption without discriminating against it vis-à-vis the parent companies of other participants in the cartel.
With regard to the appeal by Alliance One and Commercial Tobacco, the ECJ concluded that none of the claims raised by the appellants showed that the General Court had erred in its application of the law relating to the attribution of liability to parent companies or the principle of equal treatment.