Competition: Court of Justice of European Union dismisses two appeals against General Court’s ruling in industrial bags cartel case

On 22 May 2014, the Court of Justice of European Union (“CJEU”) handed down its judgments concerning two appeals brought by Plásticos Españoles SASA (“ASPLA”) and Armando Álvarez SA (“Álvarez”), ASPLA’s parent company, against the General Court’s (“GC”) ruling in the industrial bags cartel case. In November 2005, the Commission imposed fines totaling EUR 290 million on 16 firms for operating an illegal cartel in the plastic industrial bags market for over 20 years. ASPLA and Álvarez lodged appeals with the GC to challenge the Commission’s decision but the GC dismissed the actions after which the companies brought the case before the CJEU. In its judgments, the CJEU dismissed both appeals in their entirety. As for ASPLA’s appeal, ASPLA had claimed that the GC’s judgment contained errors relating to the legal characterization of the facts and the conclusions drawn thereof as the GC had relied on mere assumptions. The CJEU rejected these arguments and supported the GC’s appraisal of evidence. According to the CJEU, it is well established that the existence of unlawful conduct may be inferred from a number of coincidences and indications which, taken together, may in the absence of another plausible explanation constitute evidence of an infringement. Further, the CJEU concluded that the GC had not erred in reviewing the fine imposed. As for Álvarez’s appeal, Álvarez had claimed that the GC attributed liability on Álvarez for the infringement on the basis of grounds that were not included in the Commission’s decision. The CJEU dismissed this plea and confirmed the GC’s assessment on Álvarez’s parental liability. According to the CJEU, Álvarez had not been held liable on new grounds entailing direct participation in the cartel but the recitals of the Commission’s decision referred expressly to the presumption that a parent company exercises decisive influence over a subsidiary in which it owns all the shares and described Álvarez’s involvement in the operational management of ASPLA. Further, Álvarez had not been deprived of exercising its rights of defense as it was apparent from the application of Álvarez lodged before the GC that it accepted the existence of the presumption even though it challenged its legality in the light of the presumption of innocence. Source: Judgment of the Court of Justice of European Union, C-36/12 P Armando Álvarez SA v European Commission, 22/05/2014 Judgment of the Court of Justice of the European Union, C-35/12 P Plásticos Españoles SA v European Commission, 22/05/2014

Competition: General Court dismisses Toshiba’s appeal in the power transformers cartel case On 21 May 2014, the General Court (“GC”) handed down its judgment dismissing the appeal by Toshiba Corp. (“Toshiba”) against the Commission’s decision in the power transformer cartel case. In October 2009, the Commission imposed a fine totaling approximately EUR 13 million on Toshiba for breaching EU competition rules by participating in a ‘Gentlemen’s Agreement’, an unlawful cartel covering the entire European Economic Area (“EEA”), consisting of an oral agreement between European and Japanese producers of power transformers to respect each other’s home markets and to refrain from selling to those markets. Pursuant to its 2002 Notice on immunity from fines and reduction of fines in cartel cases, the Commission granted Siemens AG and Siemens Aktiengesellschaft Österreich (together as “Siemens”) immunity from fines, and Fuji Electronics Holdings Co., Ltd (“Fuji”) a 40% reduction in the fine. The GC rejected Toshiba’s assertion that the value of statements from Siemens and Fuji was significantly reduced because they were made with the objective of benefiting from the Commission’s leniency programme. The GC also held that the Commission was right to take into account the whole body of evidence in its assessment and that each item of evidence did not have to establish the infringement by itself. The GC did not agree with Toshiba that the evidence was contradictory or failed to corroborate the cartel. The GC also rejected claims based on the probative value of incomplete or internal documents and affirmed the Commission’s findings on the duration of Toshiba’s participation in the cartel. Source: Judgment of the General Court, T-519/09 – Toshiba Corp v European Commission, 21/05/2014

State aid: Commission exempts more aid measures from prior notification The Commission has revised the General Block Exemption Regulation (“GBER”), significantly extending the scope of state aid measures granted by Member States to companies, which are exempted from the general requirement of prior notification to the Commission. In accordance with the State Aid Modernization initiative (“SAM”), the GBER promotes aid that drives economic growth without distorting competition, whilst reducing the administrative burden on Member States. The key improvements of the revised GBER include, inter alia, a raise of already existing exemption thresholds and for some categories of aid, the scope has also been increased through more flexible eligibility conditions and more favorable maximum aid intensities. Moreover, in line with the revised Enabling Regulation (733/2013), the Commission has also extended the scope of exempted state aid measures to include new categories such as aid for innovation clusters and pilot projects. Most importantly, however, the new GBER has clarified and simplified the conditions that state aid must meet in order to qualify for the exemption from prior notification, thus allowing the Commission to focus on aid measures more likely to distort competition. The Commission also intends to improve ex-post competition safeguards through, for example, Member State led impact evaluations of larger aid schemes and increased transparency generated by publishing details regarding state aid recipients. The new GBER will enter into force on 1 July 2014. Source: Commission Press Release 21/05/2014 &Council Regulation 733/2013

State aid: Commission adopts new rules facilitating public support for research, development and innovation The Commission has adopted new rules to facilitate the provision of state aid in support of research, development and innovation (“R&D&I”). As an integral part of the State Aid Modernization initiative, the rules aim to support sustainable growth and public funding with added-value. The new R&D&I state aid Framework (“Framework”) establishes criteria for Member State funding of the R&D&I activities of companies, unless the aid measures are exempted from prior notification to the Commission under the revised General Block Exemption Regulation. Under the new Framework, the threshold of permitted aid has been increased to 70% and 90% of eligible costs for large and small companies respectively. The Commission determines the eligibility of companies based on the Framework criteria and their financing gap in order to avoid distorting competition. Furthermore, the Framework clarifies conditions for differentiating economic activities from non-economic ones, since public financing of the latter is not considered state aid. Specifically, the Framework outlines that, in order to simplify the assessment of large aid amounts for projects that are clearly in the common interest of the EU, R&D projects that are co-funded by the EU will now be presumed to constitute necessary and appropriate state aid. The new Framework will enter into force on 1 July 2014. Source: Commission Press Release 21/05/2014 

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves acquisition of Alpha International by ALSO
  • Commission approves acquisition of Nuova Castelli by Charterhouse
  • Commission approves acquisition by DLG and Lantmännen of Hage Polska
  • Commission approves acquisition of Armajaro Trading by Ecom