On 17 May 2013, the General Court (“GC”) partially annulled a Commission decision finding that 11 companies participated in a cartel on the marine hoses market consisting of price- and quota-fixing, the fixing of sales conditions, the allocation of tenders, geographic market sharing as well as illegal information exchanges on price, sales volumes and procurement tenders.
The Commission concluded that the cartel lasted from April 1986 until May 2007. However, between 13 May 1997 and 21 June 1999 the cartel’s activity was almost non-existent due to friction between its members (“the intermediate period”). After June 1999 the cartel was reinforced by the same participants according to the same procedures. Therefore, the Commission concluded that the undertakings concerned participated in a single and continuous infringement (or, at least, a single repeated infringement). In any event, the Commission did not fine the undertakings for the intermediate period due to lack of evidence. Several undertakings appealed that decision. This article briefly discusses two cases in which the GC partially annulled the decision.
Trelleborg Industries and Trelleborg AB
In this judgment (T-147/09 and T-148/09) the main question was whether Trelleborg Industries and Trelleborg AB (“Trelleborg”) had participated in a single and continuous infringement. Trelleborg argued that the Commission had in general failed to prove the continuation of the cartel during the intermediate period, and in any event had no evidence of Trelleborg’s participation in that same period.
The Court agrees with Trelleborg that the Commission erred in law in finding that the infringement was continuous. Indeed, it was clear that during the intermediate period the cartel was almost non-existent. Even though some persons made efforts to restart the illegal cooperation there were, however, no elements indicating that Trelleborg had illegal contacts during the intermediate period, that they initiated a restart of the cartel, or were even aware of it. Accordingly, the interruption of their participation was sufficiently proven to rebut the Commission’s presumption of continued participation (even passively) to the cartel.
In addition, given that there were no indicia that Trelleborg was in contact with other cartel participants during the intermediate period, the Commission also wrongfully held that Trelleborg was liable for a single and continuous infringement because they did not publicly and unequivocally distance themselves from the cartel.
However, the Court found that the infringement of Trelleborg could still be qualified as a single, repeated infringement given that it participated to the cartel before and after the intermediate period and taking into account the identical nature (as well as parties, geographic scope, goods), as well as the single objective of the cartel before and after that period of interruption. Only when such common objective cannot be established, there would be separate infringements. Consequently, a fine for the whole infringement period can be imposed, as long as the Commission leaves out the interruption period (which it did). Accordingly, the infringement before the intermediate period was also not time-barred.
Finally, the Court believes that the re-categorisation of the infringement should not lead to a reduction of the fine. Indeed, the Commission’s categorisation error does not affect the duration of the infringement, especially because the Commission did not impose a fine for the intermediate period. Hence, taking into account the seriousness of the infringement and the particularly long period it lasted, the GC confirms the fines imposed.
Parker ITR SRL and Parker-Hannifin Corp
The main issue dealt with in the judgment of the GC (T-146/09) concerning the appeal launched by Parker ITR and Parker-Hannifin (together hereinafter “Parker”) is that of the principles of personal liability for competition law infringements and economic continuity.
The facts of the case are as follows. The rubber hose business, which was involved in the cartel and is now owned by Parker ITR (100% subsidiary of Parker-Hannifin), was established by Pirelli Treg. The rubber hose assets were taken over by ITR in 1990, which was later on (1993) acquired by Saiag. After starting discussions with Parker-Hannifin, ITR created the subsidiary ITR Rubber to which it transferred the assets of the rubber hose business on 1 January 2002. Parker-Hannifin acquired the ITR Rubber entity on 31 January 2002 and transformed it into Parker ITR. The Commission claimed that the principle of personal liability could only be applied to the transfer of the rubber hose assets from ITR to its subsidiary ITR Rubber. On the other hand, the principle of economic continuity dictated that with the transfer of ITR Rubber to Parker-Hannifin, which was a transfer of a legal entity and not solely a transfer of assets, the liability for the conduct of ITR (and ITR Rubber) prior to this transfer, was, together with the legal entity, transferred to Parker-Hannifin. Therefore the Commission has held Parker ITR Srl liable for the infringement from 1 April 1986 until 2 May 2007. Parker instead claimed that Parker ITR could not be held liable for the infringement before 1 January 2002 (date on which ITR transferred its rubber hose business to ITR Rubber) and that Parker-Hannifin could only be liable for the infringement after 31 January 2002 (date on which Parker-Hannifin acquired ITR Rubber).
The GC has now decided that the Commission was wrong to hold ITR Parker liable for the conduct of ITR prior to 1 January 2002. The GC confirms that the principle of economic continuity can only prevail on the principle of personal liability when 1) the legal entity which was responsible for the conduct has ceased (economically or legally) to exist, 2) when the transfer of the economic activities is done between two companies that on the moment of the transfer had strong structural links which link them economically and organisationally, or 3) when the transfer to a third party is abusive (i.e. not against prevailing market conditions) with the intention of avoiding antitrust penalties. As none of these circumstances is present in the case at hand (ITR still exists, ITR and Parker-Hannifin had no structural links and the transfer was not abusive), Parker ITR could not be held liable for the activities of ITR before the assets of ITR were transferred to ITR Rubber. The fact that ITR Rubber was transferred as a legal entity (instead of a transfer of assets) to Parker-Hannifin has no impact on this analysis.
As a consequence the Court also confirmed that the fine on Parker could not be increased because of the role of leader of the cartel of ITR between June 1999 to September 2001, as Parker cannot be held liable for the conduct of ITR during this period.