Broken seal leads to a fine of € 38 million for E.ON Energie AG, C-89/11 P

The European Commission suspecting E.ON Energie AG in an anti-competitive agreement sent them an inspection in Munchen, which sealed a door at the end of the day in order to continue in the morning. The seal was measuring 90 mm by 60 mm. In the morning, the white adhesive, by means of which the seal had been fixed to the substrate, remained on the latter in the form of “VOID” message about 5 mm high, distributed over the whole surface of the adhesive label. The seal became transparent, so that the “VOID” message was visible on the seal (§ 8). Thus, the European Commission presumed that the company people broke the seal in order to enter the room and destroy proofs.

However the shelf life of the seal itself had been expired, and there was no damage to the very letters of the seal. Therefore, E.ON Energie asked for a measure of inquiry to that matter, but the EU General Court denied the motion (§§ 109-110). The EU Court of Justice replies that this denial is not a subject to appeal (§ 115).

The ECJ held that the fine of € 38 million representing 0.14 % of E.ON Energie’s annual turnover could not be considered as disproportional due to the need to ensure deterrent effect. The maximum fine in the case of broking the seal could go up to 1 % of annual turnover. 

As I already wrote in previous posts, it is sad that the deterrent effect principle is never applied when the European Commission of the European Parliament themselves breach EU law and fundamental human rights.

ECJ: in the absence of “complementary elements”, controlling 98 % of shares does not presume liability of the mother company, Elf Aquitaine, C-521/09 P

The ECJ annulled the decision of the European Commission ordering mother company Elf Aquitaine SA to pay the fine of € 45 million jointly with its daughter company Arkema SA for a participation in cartel AMCA at the monochloroacetic acid market. The EU General Court held the mother company liable due to the fact that it controls 98 % of the daughter’s shares (§ 158). The ECJ set aside this judgment and dismissed the conclusions of its own Attorney General.

Elf Aquitaine argued that she is a “pure holding” without operational functions, the daughter company never got any instructions from the mother company, the daughter company did not inform the mother company, the daughter company was financially autonomous and could act without any authorization, and the daughter company was perceived as autonomous by the third parties (§ 160).

The ECJ adjudicated that the right to motivation required the European Commission to bring “complementary elements” showing an interference of the mother company into the commercial behavior of the daughter company.

Transfer of responsibility from mother to daughter company, Koninklijke Grolsch, T-234/07

The EU General Court annulled the anti-competitive agreement fine of € 31 658 000 imposed on Koninklijke Grolsch NV, since it was not directly involved in the agreement with other major Dutch beer producers Heineken, InBev, and Bavaria. It was its filial Grolsche Bierbrouwerij Nederland.

Contrary to the reply of Koninklijke Grolsch to the European Commission’s communication (§ 45), individuals P.P.S., R.S., H.O.B., P.M., K.H., L.S. were not employed by Koninklijke Grolsch, but by Grolsche Bierbrouwerij Nederland (§ 47). Thus, the judges say that they did not act on behalf of Koninklijke Grolsch.

According to the EU General Court, the notes of Mr. J.T., President of Administrative Council of Koninklijke Grolsch, on the invitation to a meeting with coordination of prices agenda dated 08/01/1999, and his 2 telephone conversations with directors of Heineken around 05/07/1999, do not prove the participation of Koninklijke Grolsch in the cartel agreement (§§ 61, 63). Previously Mr. J.T. had participated in the agreement only as a Director General of Grolsche Bierbrouwerij Nederland.

Documents of InBev company mention the participation of the “group Grolsch” in the cartel but do not indicate Koninklijke Grolsch as such (§ 56).

At the level of legal strategy, this case shows the way for transferring liability to a filial.

ECJ gives access to internal litigation debates of the European Commission, Sweden v Commission, C-506/08 P

The ECJ annulled the judgment of the EU General Court, and de facto gave MyTravel Group plc access to the European Commission’s internal litigation documents on accusing this company of a cartel agreement with its competitor First Choice plc. It is remarkable that it was the Government of Sweden who attacked the judgment refusing the access before the ECJ. MyTravel was also supported by Denmark and Netherlands, and opposed by France, Germany and the UK.

The EU General Court, the Commission and the 3 States tried to protect the internal litigation documents in saying that a disclosure of a conflict between the Commission’s Legal Service and its DG Competition would put the Commission in a difficult position (§ 36), that it was an administrative procedure and not legislative (§ 62), that there is a need to preserve a “space for reflection” within the institution as it follows from the preparatory papers for Regulation No 1049/2001 (§ 63), that there would be a risk of facing divergent previous internal opinions raised against the EU institution in its future administrative or court proceedings (§ 65).

The ECJ replied that the right to access is an expression of Article 1(2) of the EU Treaty providing that decisions must be as open as possible, and as close as possible to the citizens (which includes companies) (§ 72). The right of access to documents covers all possible documents held by an institution in all areas of Union activity (§ 88). It is even more so after the end of proceedings (§§ 82 and 89).

“Detailed position” standard for motivation in competition law

The EU General Court annulled the decision of the European Commission condemning Air liquid SA for the participation of its 100 % controlled Chemoxal SA in a cartel at the peroxide of hydrogen and perborate of sodium market, since the motivation of the Commission did not met the “detailed position” (“position circonstanciée”) on the proofs standard in case T-185/06. The main question was whether the two companies were the same economic entity. I would like to make a photo of this adjudication, since the application of this standard always appeared to me chaotic (or what I call “judicial shamanism” elsewhere).

The Commission stated in its decision that Chemoxal SA is the same economic entity with Air liquid SA, since

1. the latter owns 100 % of shares of the former, and the former uses commercial name “Air Liquid Chimie”.
2. Air liquid had the power to appoint the members of the Chemoxal’s Administrative Council.
3. The perception of third persons was that they are the same economic entity.

According to the EU General Court these are “supplementary indications” (§ 70), and not a “detailed position” on the proofs of Air liquid (§ 79). In § 67 the General Court names the arguments of Air liquid:

1. No director of Chemoxal was a member of the Air liquid Management Committee or another internal body at the same time. According to the European Commission an administrator of Chemoxal after ending his office there became a manager of Air liquid, § 49.
2. It follows from the minutes of the Chemoxal Administration Council that its President Director General had unlimited decision freedom. According to the European Commission this is quite normal from the formal point of view (§ 50).
3. Chemoxal had its own independent departments: commercial, marketing, human resources, IT, accounting. According to the European Commission it is quite normal. In addition, Chemoxal used other departments of Air liquid, and the two companies had their seat in the same building (§ 51).
4. Chemoxal autonomously managed its participation in Oxysynthèse Deutschland GmbH. Although one representative of Air liquid was a member of Oxysynthèse Administration Council, only one representative of Chemoxal sitted in the Management Committee of Oxysynthèse. This according to Air liquid proved that there was no common management of other companies.
5. Chemoxal SA autonomously managed the participation in Chemoxal Chemie GmbH.
6. Internal mails show that Chemoxal took the decisions on prices without interference of Air liquid.
7. All great strategic commercial projected were launched by the very staff of Chemoxal.
8. It follows from the circulaire of the Chemoxal Director General that Chemoxal independently prepared its budget.
9. Chemoxal directly contacted with all its clients.
10. Chemoxal was considered as an autonomous company by European Chemical Industry Council.
11. The fact of using the commercial name of “Air Liquid Chimie” by Chemoxal does not prove economic unity, since Chemoxal simply wanted to take advantage from a well-known brand.
12. No one among participants of the cartel meeting was an employee of Air liquid.

Offering shares at stock exchange is a method to reduce an anti-competition fine from € 219 to 113 million

Arkema SA (France) got a substantial reduction of the fine for participation in a cartel at the methacrylates market for 5 years and 7 months: from € 219 131 250 to 113 343 750 (judgment T-217/06). The most exciting is the legal method of the reduction.

One of the criteria for determining the amount of the fine is the turnover of the enterprise. Elf Aquitaine SA controlled from 97,6 to 96,48 % of Arkema SA shares, and 99,43 % of Elf Aquitaine shares were owned by Total SA (§ 2). While calculating the fine, the Commission took into account the turnover of the Total group, and not that of Arkema alone.

However 11 working days before imposition of the fine by the Commission the Arkema shares were put at stock exchange (§ 240). Thus, according to the EU General Court, the economic unity of Arkema and Total broke, and the turnover of Total could not be used in the calculation of the fine (§ 272).

Case Degussa v Commission, T 279/02, §§ 289 and 290, where it was decided that the turnover at the infringement moment must be taken into account, was declared inapplicable, since, contrary to that case, in Arkema case the European Commission didn’t mention that the Deguissa style application would be necessary having regard to the fact that Total was better placed than Arkema to evaluate the dangers of the anticompetitive behavior.

Thus, the judges conclude, the European Commission's fine was stronger than what was required by the sufficient deterrent effect principle.