The European Court of Justice has upheld a €30 million fine against cartel whistleblower Deltafina, which was imposed following the withdrawal of Deltafina's conditional immunity as a result of the breach of its duty to cooperate under the European Commission's leniency program. This ruling confirms the Commission's first ever decision to withdraw conditional immunity from fines from a company that was the first to bring evidence of a cartel. This serves as a serious warning to companies seeking to benefit from the EU immunity program that full cooperation with the Commission must be provided at all stages of its investigation.
However, the Court of Justice also held that the General Court's proceedings were excessively lengthy. Although the Court of Justice considered that this was not a sufficient ground to annul the General Court's ruling or to reduce the fine, it indicated that Deltafina could bring a separate action for damages before the General Court sitting in a different composition.
Withdrawal of immunity
Following the launch of the Commission's investigation of the Italian tobacco sector in 2001, Deltafina, an Italian tobacco company, received conditional immunity from fines as the first undertaking to reveal the presumed cartel between tobacco processors on the Italian market. However, Deltafina subsequently lost its immunity following the Commission's discovery that, prior to conducting its dawn raids in Italy, Deltafina had informed the National Association of Italian Tobacco Processors (APTI) of its cooperation with the Commission. The Commission went on to impose a €30 million fine on Deltafina, which represented a 50% reduction in the amount of the fine in view of Deltafina's effective cooperation, but no longer complete immunity.
The Court of Justice upheld the General Court's findings, emphasizing that under the 2002 Leniency Notice, a company seeking immunity from fines must cooperate with the Commission "fully, on a continuous basis and expeditiously throughout the Commission's administrative procedure." Deltafina's conduct had not reflected a spirit of genuine cooperation. In particular, the Court of Justice determined the following:
- No release from obligation of confidentiality. In a meeting between Deltafina and the Commission prior to the dawn raids in Italy, Deltafina raised the issue of the difficulty of maintaining the confidentiality of its cooperation, particularly in view of impending meetings with APTI. The Commission noted these difficulties and asked Deltafina to provide it, within a shorter timeframe, with information and evidence to enable the Commission to carry out the inspections.
On the basis of this meeting, Deltafina claimed that the Commission had released it from its obligation of confidentiality and therefore that the disclosure of its cooperation with the Commission did not breach its obligation to cooperate. Nevertheless, the Court of Justice upheld the findings of the General Court that there was no prior, express authorization to Deltafina disclose its cooperation. In particular, it noted that the Commission could not have given Deltafina such prior authorization, as Deltafina had not demonstrated that it had provided advance notice to the Commission of its intended disclosure to APTI. And once the disclosure occurred, Deltafina did not inform the Commission, which only subsequently learned of this incident from another company under investigation.
- Deltafina's disclosure was voluntary and unsolicited. The Court of Justice also noted the voluntary and unsolicited nature of Deltafina's disclosure of its cooperation with the Commission. The disclosure was not solicited and was not made as a result of any kind of threat. Therefore, it was not inevitable and was unlike the discovery, by other cartel participants, of cooperation due to the practical difficulties of keeping such cooperation confidential.
Deltafina's loss of immunity, at a high cost, is a reminder that it does not suffice to simply be the first in line as a whistleblower. Care must be taken in safeguarding the confidentiality of the investigation and in remaining cooperative and transparent with the Commission throughout the procedure.
Timely adjudication of the case
The Court of Justice then examined Deltafina's claim that, in view of the excessively long duration of the proceedings before the General Court, the Commission's decision should be annulled, or the fine should be annulled or significantly reduced. Deltafina contended that this would remedy the infringement of Deltafina's fundamental right to obtain a decision within a reasonable time, as guaranteed by the Charter of Fundamental Rights of the European Union.
Noting that the proceedings before the General Court lasted for five years and eight months, the Court of Justice held that the General Court had seriously breached its duty to adjudicate within a reasonable period. In this regard, the Court of Justice found that the duration of the proceedings could not be justified by either the degree of difficulty of the case or because six addressees of the Commission's decision had brought action to annul it.
Nevertheless, the Court of Justice found that Deltafina could not reopen the question of the validity or amount of a fine on the sole ground that there was a failure to adjudicate within a reasonable time. The Court noted that all of Deltafina's pleas on the substance had been rejected and that Deltafina had provided no evidence that the General Court's failure to adjudicate within a reasonable time could have affected the outcome of the dispute before it.
The Court of Justice indicated that the failure to timely adjudicate can give rise to an action for damages that should be brought separately before the General Court sitting in a different composition from that which heard the dispute giving rise to the procedure whose duration is challenged. Such damage claim may not be directly brought before the Court of Justice in the context of an appeal. The Court of Justice also noted that, in a damage claim for failure to timely adjudicate a case, the applicant should show both the actual existence of the harm alleged and the causal connection between that harm and the excessive length of the legal proceedings.
While Deltafina can therefore pursue an action in damages before the General Court, this is likely to raise difficulties in demonstrating the actual damages suffered. Indeed, as noted by the Court of Justice, the procedure's final outcome was not impacted by the lengthy proceedings before the General Court.
Such delays in proceedings can leave parties in legal uncertainty over the course of years. This was an important case for Deltafina not only because of the considerable €30 million fine imposed on Deltafina, but also because the case raised an issue of principle, i.e., whether a whistleblower can legitimately conclude an agreement with the Commission as to how to discharge its obligation to cooperate under the leniency regime.
The apparent difficulties facing the General Court in clearing its backlog of cases is illustrated in another recent judgment of the Court of Justice,FLS PLast v Commission. The Court of Justice determined that where the General Court proceedings lasted over six years, this infringed the right to obtain a decision within a reasonable time. Again, the Court of Justice indicated that such failure could give rise to a separate action for damages before the General Court.
These findings spotlight the ongoing dilemma within the General Court regarding its inability to keep pace with an influx of cases that has grown over the years. This heavier caseload followed, in particular, the EU's enlargements in 2004 and 2007, which resulted in 12 new Member States. Various efforts over recent years to bolster the General Court with additional judges have thus far failed to succeed.