The Competition Appeal Tribunal (CAT) has dismissed an appeal by Double Quick Supplyline Limited (DQS) against an OFT fine of £180,000. The judgement confirms the wide scope of liability of a parent company for the infringements of its subsidiary under EU law and serves as a useful reminder that anticompetitive agreements, no matter of how short their duration, will be severely punished.
DQS is a distributor of aluminium spacer bars to double glazing suppliers and manufacturers and, on 29 June 2006, OFT announced an overall fine of £1.38m against DQS and three other double glazing materials distributors for price-fixing and market-sharing.
As well as addressing its infringement decision to DQS, the OFT addressed the decision to Precision Concepts Limited (PCL) – DQS's parent company, finding them to be part of the same economic undertaking as DQS and therefore jointly and severally liable to the infringement.
DQS did not seek to contest the actual infringement finding itself. In it's first leg DQS's argument it focussed on the level of the fine imposed, claiming that the fine was excessive and unjustified. In particular, DQS argued that the fine was completely disproportionate to its involvement in the price-fixing cartel.
The CAT could not accept this argument, pointing out that the duration of an undertaking's involvement in a cartel is not a decisive factor even where the company was involved in the cartel for only 15 days.
The CAT held that deterrence is an important part of the OFT's work and that only imposing significant fines would provide a real disincentive to would-be cartelists from infringing the competition rules. The CAT notes that DQS's infringement came to an end after 15 days because the OFT issued notice of its intention to take action on that date and not for any other reason. Hence, the CAT said that but for the intervention by the OFT, DQS would most likely have continued with its infringement and so it deserved no reduction in its fine on this ground.
The second leg of DQS's appeal was based on the argument that the OFT was wrong to regard PCL and DQS as being jointly and severally liable. However, the CAT rejected this argument, noting that one particular director sat simultaneously on the boards of PCL and DQS. This seems to have been a particularly persuasive factor in the CAT's decision to reject this part of DQS's appeal and suggests some scope for rejecting joint and several liability where the companies are entirely separately managed.
DQS and PCL were ordered to pay the OFT's costs. On this issue, once again, the CAT found itself rejecting DQS's arguments, noting that the appeal against the level of the fine had been completely unsuccessful and, if anything, DQS had elongated the whole process by putting forward various points that were entirely unmerited.