The EU General Court’s judgments in Hydrogen Peroxide, Netherlands Beer and International Removals Services
There is a growing debate as to the standard of review that the EU courts apply when reviewing European Commission (‘Commission’) decisions in competition law cases. It has been argued that many recent judgments of the EU Courts have essentially done no more than verify whether the Commission had acted within its ascribed competence, and that this deferential intensity of judicial review is constitutionally inadequate.
However, a series of judgments handed down by the General Court of the European Union (‘GC’) on 16 June 2011 suggests that EU judges may now be rising to the challenge and showing themselves willing to exercise the level of judicial scrutiny arguably required of them, following the entry into force of the Treaty of Lisbon, by the European Convention on Human Rights and the Charter of Fundamental Rights of the European Union.
Not only did the GC reduce the fines on a number of companies, but for the first time ever, the Commission was held not to be entitled to rely on the presumption that a parent company was liable for the anticompetitive conduct of a wholly-owned subsidiary.
Hydrogen Peroxide (and Perborate)
By its decision of 3 May 2006, the Commission imposed fines totalling over EUR 388 million on a number of companies for their participation in a cartel on the market for hydrogen peroxide and sodium perborate (bleaching agents) between 31 January 1994 and 31 December 2000. Among the companies penalised were Edison and Solvay.
Edison’s parent company, Air Liquide, was included among the addressees of the decision, although it was not fined because its participation in the cartel had ended more than five years prior to the Commission’s first investigative measures.
In its judgments, the GC annulled the decision with respect to Air Liquide and Edison, on the grounds that the Commission had failed to take a detailed position on the evidence which those companies adduced in order to rebut the presumption that they exercised a decisive influence over the conduct of the subsidiaries, which were wholly owned by them. This is the first time that a parent company has ever successfully escaped liability for the anticompetitive conduct of a wholly-owned subsidiary.
Moreover, as regards Solvay, the GC considered that the Commission had erred when concluding that it had participated in the infringement between 31 January 1994 and May 1995, as the evidence at the Commission’s disposal was insufficient to warrant such a finding. The GC also stated that the Commission was wrong to have rewarded Solvay’s cooperation during the investigation with only a 10% reduction in its fine. The GC considered that the information provided by Solvay was widely used in the Commission’s decision, and that Solvay was the first to submit evidence with respect to certain unlawful conduct which enabled the Commission to establish certain key aspects of the cartel in question.
In light of both of these findings, the GC reduced Solvay’s fine from EUR 167.06 million to EUR 139.50 million.
By its decision of 18 April 2007, the Commission imposed fines totalling approximately EUR 270 million on several Dutch brewers, including Heineken NV and its subsidiary Heineken Nederland BV, and Bavaria NV, for their participation in a cartel on the Dutch beer market between 27 February 1996 and 3 November 1999. In particular, the Commission imposed a fine of EUR 219.28 million on Heineken NV jointly and severally with its subsidiary, and a fine of EUR 22.85 million on Bavaria NV.
The Commission found that the infringement had consisted of the coordination of prices and price increases for beer and the allocation of customers, both in the on-trade segment and in the off-trade segment in the Netherlands, and the occasional coordination of other commercial conditions offered to individual on-trade customers in the Netherlands.
However, in its judgments, the GC held that the Commission had not proved that the infringement by Heineken and Bavaria concerned the occasional coordination of commercial conditions, other than prices, offered to individual customers in the on-trade segment. Consequently, the GC annulled the decision on this point and reduced the fines on Heineken NV and its subsidiary to EUR 198 million and on Bavaria NV to EUR 20.71 million.
International Removals Services
By its decision of 11 March 2008, the Commission imposed fines totalling over EUR 32 million on ten companies for their participation in a cartel on the international removal services market in Belgium between October 1984 and September 2003. In particular, the Commission imposed fines of EUR 3.28 million on the Gosselin Group and of EUR 104 000 on Verhuizingen Coppens.
The Commission found that the infringement had consisted of the direct or indirect fixing of prices, market sharing and the manipulation of the procedures for the submission of tenders, in particular by issuing false quotes to customers and through a compensation system for rejected offers.
In its judgments, the GC considered that the Commission had erred in concluding that the Gosselin Group had participated in the infringement for 10 years and 7 months and that the Commission’s evidence only warranted a finding of 7 years and 6 months. In light of this, the GC reduced the Gosselin Group’s fine to EUR 2.32 million.
Moreover, as regards Verhuizingen Coppens, the Court found that it had only participated in the agreement on the manipulation of the procedures for the submission of tenders and that it was not aware of the subsequent anticompetitive conduct by the other undertakings. It therefore annulled the decision and the fine with regard to Verhuizingen Coppens.
The judgments handed down by the GC suggest a less deferential intensity of review of Commission competition decisions than has recently prevailed in Luxembourg. This is to be welcomed as more vigorous judicial review is arguably now a constitutional necessity following the entry into force of the Treaty of Lisbon.
It, however, remains to be seen whether these judgments remain an isolated incident, or whether they herald the dawn of a new, more vigorous, era of scrutiny of Commission competition decisions.