In recent months there have been several appeals by companies against the fines imposed by the European Commission for involvement in illegal cartels. Companies, including SGL Carbon and Showa Denko (part of a graphite electrodes cartel) and Hoek Loos (a member of a Dutch industrial gas cartel) have argued that the level of fines imposed have been excessively high and that the European Commission misapplied several factors in determining their fines. Here we briefly consider some of the arguments put forward in these appeals.
- "Non Bis in Idem" for global cartels
Global cartels, like the one involving Showa Denko and SGL Carbon, have raised an issue of potential double jeopardy. The Court of First Instance (CFI) and European Court of Justice (ECJ) have both held that the principle of non bis in idem does not apply in such circumstances because the Commission has a distinct objective of ensuring compliance with the competition rules within the common market, separate from that of other countries out with the EU. It was also held that the Commission could take previous fines into account but were not required to do so.
Questions have been raised over exactly which measure of turnover a deterrence factor should be based upon. The ECJ stated that the point of a deterrence factor was to punish unlawful behaviour and the Commission could look at the size and economic power of the undertaking, including the worldwide turnover, when assessing the deterrence factor to be applied.
- Warning Others as an Aggravating Factor
The Commission has taken a stance against warning others of an investigation, increasing SGL Carbon's fine by 25%. The ECJ backed this, stating that it was consistent with the Commission’s objective of safeguarding free competition in the EU.
- Ability to Pay
In SGL Carbon’s appeal, the ECJ held that the Commission did not need to consider the poor financial situation of a member of a cartel when determining a fine.
- Wide Discretion
The ECJ reiterated the fact that the Commission enjoys a wide discretion when calculating fines and, in this particular case, they had been within their discretion in determining the quantitative thresholds used to separate the three categories of undertakings.
- Voluntary Cooperation and the Leniency Notice
The term “voluntary cooperation” required under the Leniency Notice caused a disagreement between the Commission and the Court of First Instance (CFI). The ECJ clarified the point, declaring that no undertaking can evade requests for information on the grounds that it would be self-incriminating. The privilege against self-incrimination only applies to actual admissions of misconduct. In order to benefit from the Leniency Notice companies must demonstrate a genuine spirit of cooperation. In this case the CFI had been correct in holding SGL was not required to answer all questions asked by the Commission but had erred in holding they should benefit from a further reduction in their fine since SGL had not shown a genuine spirit of cooperation.
- Equal Treatment and Disproportionate Fines
The fact that a fine is high - in the Hoek Loos case 50% of the total fines imposed - is irrelevant when assessing disproportion because fines are calculated using a number of factors linked to the way an individual undertaking has acted, rather than market share. The important part in determining disproportion is the starting fine, which in this case had been justified. Equal treatment is breached when comparable situations are treated differently or different situations are treated in the same way, unless it can be objectively justified. In the Hoek Loos case, there was no discrimination because the Commission has no discretion over the use of the 10% upper limit which AGA (a fellow cartel member) had benefited from. In any case, the two undertakings were not comparable anyway since the fine imposed on Hoek Loos was under the 10% limit while the fine for AGA was over this limit.