The European Commission has lost a second battle concerning its EUR 15 million fine imposed upon interdealer broker ICAP, this time before the European Court of Justice. The Court upheld the previous judgment of the General Court on the basis of the Commission's failure to state reasons concerning its fining methodology of cartel facilitator ICAP. This may lead to more reasoned Commission decisions in the future - deterrence of cartel behaviour does not justify keeping the methodology for setting the fines as a 'black box'.

This judgment, handed down on 10 July 2019, is the most recent instalment in the Commission's YIRD investigation, which publicly began with a settlement decision fining several financial institutions for a series of bilateral cartels, whereby the traders of the banks aimed to influence the level of two financial benchmarks through mutual discussions. ICAP was fined for facilitating some of these cartels. Specifically, the Commission found that ICAP had disseminated misleading information and attempted to influence the panel of banks that set the Japanese Yen reference interest rates. The General Court quashed the Commission's decision, partly because it had not sufficiently motivated the methodology used to set ICAP's fine. The Commission appealed the General Court's judgment.

The Court of Justice agreed with the General Court, emphasising that when the Commission departs from the fining methodology established in its Guidelines due to the particularities of the case, the methodology must be disclosed to the parties to safeguard their rights of the defence. For ICAP, the particularity was its role as facilitator. The disclosure must allow the parties to make their views known regarding the factors on which the Commission intends to base its fine on.

Scrutiny of the Commission' s compliance with its duty to state reasons has been high this July. The General Court recently found that, in one of the decisions taken in the retail food packaging cartel, the amount of reduction of a fine for reasons of inability to pay was insufficiently explained. Together with the Court of Justice judgment in ICAP, this may encourage undertakings to bring forward cases where the Commission did not properly explain how it reached the imposed fine level. European courts have certainly shown that, up to the highest level, they are willing to take fining methodology points on board. It is up to companies involved in cartel investigations to appeal on such grounds when the Commission fails to properly explain its methodology when straying from its fining guidelines.

This article was published in the Competition Newsletter of August 2019.