Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Kendrion NV v European Commission [2013] EUECJ C-50/12 (30 May 2013)
URL: http://www.bailii.org/eu/cases/EUECJ/2013/C5012_O.html
[New search] [Help]
OPINION OF ADVOCATE GENERAL
SHARPSTON
delivered on 30 May 2013 (1)
Case C-50/12 P
Kendrion NV
v
European Commission
(Appeal – Competition – Cartel – Industrial plastic bags sector – Fines – Breach of fundamental right to a fair hearing within a reasonable time by the General Court)
Preface
1. On 16 November 2011 the General Court delivered three separate judgments (2) in which it dismissed separate applications seeking annulment of the Commission’s decision in Case COMP/38354 – Industrial Bags. (3) In that decision, the Commission found that there had been a serious, long-lasting infringement of what was at the time Article 81 EC (now Article 101 TFEU); and it imposed heavy fines on a number of subsidiary companies and their respective parents. This is one of the appeals from those judgments of the General Court. (4)
2. As well as raising novel questions of competition law, these appeals contain complaints that the General Court failed to adjudicate within a reasonable time on the applications brought before it. For that reason, it is clearly incumbent upon this Court to try to deal with the appeals expeditiously. In order to accommodate that requirement whilst respecting the need to allow appropriate time for translation, I have divided the issues that I am covering between the three Opinions in the following way.
3. The key legislative provisions, together with a description of the cartel, the procedure leading to the Commission’s decision and the fines imposed, are to be found at points 6 to 34 of my Opinion in Gascogne Sack Deutschland. (5) Because slightly different points are raised in each appeal as to the circumstances in which parent companies are, or are not, responsible for the actions of their wholly-owned subsidiaries, this question is discussed in all three Opinions. My analysis of the issues arising out of the claim that the General Court failed to adjudicate within a reasonable time (in particular, the criteria for determining whether there has been excessive delay and the possible remedies that can be given if that has happened) is contained in my Opinion in Groupe Gascogne, at points 70 to 150. (6) An examination of the detailed arguments advanced by each appellant in relation to (for example) adequacy of reasoning in the General Court’s judgments is, of course, to be found in the respective Opinions dealing with each appeal. (7)
Introduction
4. Kendrion NV (‘Kendrion’) and its former subsidiary Fardem Packaging BV (‘Fardem’) are 2 of the 25 undertakings to whom the decision was addressed. Kendrion (then known as Schuttersveld) purchased Fardem on 8 June 1995, acquiring 100% of Fardem’s share capital. In 2003 Fardem left the Kendrion group when it was bought out by the Fardem employees.
5. Fardem admitted participation in the cartel. Kendrion denied exercising decisive influence or control over Fardem’s conduct. The Commission did not accept Kendrion’s arguments. The Commission found Kendrion to be jointly and severally liable, from 8 June 1995 to 26 June 2002, for the activities of its subsidiary.
6. The issue raised in the present appeal concerns the concept of ‘undertaking’ for the purposes of the competition rules and specifically the principle that parent companies are liable for infringements committed by their wholly-owned subsidiaries. (8) The identity of the undertaking has important consequences for the determination of the amount of any fines imposed, in particular with regard to the application of the ceiling of 10% of turnover (‘the 10% ceiling’) laid down in Article 23(2) of Regulation No 1/2003. (9) The operation of that provision gives rise to difficult issues where the undertaking that committed the infringement does not exist in the same form at the moment when the upper limit of the fine is calculated.
7. The issue of whether there was undue delay in the adjudication of the proceedings before the General Court has also been raised.
The decision
Introduction
8. It is necessary to define the undertaking held accountable for a breach of Article 101 TFEU by identifying one or more legal persons that represent the undertaking in question. It is settled law that the conduct of a subsidiary may be imputed to its parent company, in particular where the subsidiary does not decide independently its own commercial policy. In such circumstances a parent and a subsidiary form a single undertaking for the purposes of Article 101 TFEU. The Commission may address a decision imposing fines on the parent without having to establish its individual involvement in the infringement. Where a parent company owns 100% of the share capital there is a presumption that it is able to exercise a decisive influence over its subsidiary and there is a rebuttable presumption that it does in fact exercise such influence (‘the presumption of decisive influence’).
Identifying the undertaking
9. In recitals 577 to 583 in the preamble to the decision the Commission set out the principles it applied in identifying the addressees of the decision. After recalling the presumptions that I have just described, the Commission explained in recital 582 that when an undertaking is in breach of Article 101 TFEU and subsequently disposes of the subsidiary that actually engaged in the anti-competitive practices and itself withdraws from the market concerned, the former parent nevertheless continues to be answerable for the infringement in question. (10)
10. Recital 584 stated that the Commission applied that approach on a case-by-case basis to each undertaking concerned in the cartel. In doing so it distinguished between parent companies whose participation in the infringement was clear and parent companies who were addressees of the decision because they were considered to be jointly and severally liable for the anti-competitive behaviour of their subsidiaries.
The fines
11. The decision set the starting amount of Fardem’s fine at EUR 20 million. (11) The Commission then applied a percentage increase of 200% to that amount, reflecting the extended period of 20 years and 5 months from (6 January 1982 to 26 June 2002) during which Fardem participated in the cartel, generating a figure of EUR 40million. When added to the initial EUR 20 million, that resulted in a total of EUR 60 million. (12)
12. Recital 782 then states:
‘For several companies held liable in their capacity as parent company, account has to be taken of the reduced duration of their liability …:
– Kendrion NV (with regard to Fardem Packaging): from 8 June 1995 until 26 June 2002, namely a period of 7 years;
…’
13. The decision does not state expressly what the starting amount of Kendrion’s fine was. However, it is implicit that it was EUR 20 million (the starting amount of Fardem’s fine) and that that starting amount was attributed to Kendrion on the basis of its joint and several liability for Fardem’s fine. (13) The Commission then applied a percentage increase of 70% to EUR 20 million, reflecting the seven years during which Kendrion owned Fardem, generating a figure of EUR 14 million.(14) When added to the initial EUR 20 million, that gives rise to EUR 34 million, the fine that was imposed upon Kendrion. (15)
14. The following recitals in the preamble to the decision then explained how the 10% ceiling laid down in Article 23(2) of Regulation No 1/2003 was applied: (16)
‘814 As regards the 10% ceiling, if “several addressees constitute the ‘undertaking’, that is the economic entity responsible for the infringement penalised, again at the date when the decision is adopted, (…) the ceiling can be calculated on the basis of the overall turnover of that undertaking, that is to say of all its constituent parts taken together. By contrast, if that economic unit has subsequently broken up, each addressee of the decision is entitled to have the ceiling in question applied individually to it.”
820 Fardem Packaging BV left the Kendrion group, which formed the economic entity responsible for the infringement, in 2003. The worldwide turnover of Fardem Packaging BV should therefore be taken as the basis for calculating the limit of the fine to be imposed on Fardem Packaging BV. The worldwide turnover of Fardem Packaging BV in 2004, the last full year preceding this decision was EUR 22 036 136. The fine imposed on Fardem Packaging BV must therefore not exceed EUR 2.20 million.’
Because Kendrion’s worldwide turnover was in excess of a figure that would have required its fine to be capped, there was no reduction in its fine, which therefore remained at EUR 34 million.
15. Recital 879 in the preamble to the decision states:
‘In conclusion, the fines to be imposed pursuant to Article 15(2) of Regulation No 17 and Article 23(2) of Regulation (EC) No 1/2003 should be as follows:
…
Kendrion NV: EUR 34 million. Of this amount, Fardem Packaging BV is held jointly and severally liable for the sum of EUR 2.20 million;
…’
16. In Article 2(d) of the decision the fines imposed are: ‘Kendrion NV: EUR 34 million. Of this amount Fardem BV Packaging shall be jointly and severally liable for the sum of EUR 2.20 million’.
Summary of the judgment under appeal
17. At first instance (17) Kendrion asked the General Court to:
– set aside in whole or in part the decision addressed to it;
– set aside or reduce the fine imposed on it;
– order the Commission to pay the costs of the proceedings.
18. At the hearing before the General Court, Kendrion raised the argument that the length of the proceedings had been excessive. The General Court rejected that argument as inoperative. It considered that its jurisdiction only covered the decision, which must be considered in the light of the facts and circumstances at the disposal of the Commission at the date of adoption. It held that the duration of the proceedings before the General Court had no implication for the legality of the decision.
19. In its first plea before the General Court, Kendrion contended that the operative part of the decision was inconsistent with its grounds, in breach of Articles 101 and 296 TFEU (18) and Article 23(2) of Regulation No 1/2003. By its second plea, Kendrion submitted that the Commission had erred in identifying it and Fardem as one economic entity. In its third plea, Kendrion submitted that the Commission had breached certain general principles of law, such as the principle of equal treatment and the obligation to provide adequate reasoning in its decision, by holding Kendrion responsible for an infringement that was committed by its wholly-owned subsidiary, Fardem.
20. The fourth to the eighth pleas concerned the fine. By its fourth plea, Kendrion contended that the fine imposed on it under the decision should not be higher than that imposed on Fardem. In its fifth plea, Kendrion submitted that it was treated differently to other parent companies that were held to be jointly and severally liable for the infringements committed by their subsidiaries and that the Commission had therefore breached the principle of equal treatment.
21. With regard to the sixth plea, Kendrion made two submissions. First, it argued that imposing a fine of EUR 60 million on Fardem was inconsistent with the general principles of law: inter alia such a fine was disproportionate given that Fardem’s annual turnover was EUR 20 million and the decision contained insufficient reasoning. Second, if the fine imposed on Fardem were to be reduced as a result of the proceedings in Case T-51/06 (19) (by which that company had challenged the decision), it followed that the starting amount of Kendrion’s fine should also be reduced.
22. By its seventh plea Kendrion raised a number of arguments claiming that it was without precedent to impose such a fine on a parent company that was not itself involved in the infringement. In its eighth plea Kendrion submitted that the Commission had breached its own 1998 Guidelines on fines. (20)
23. The General Court dismissed Kendrion’s application in its entirety.
Grounds of appeal
24. Kendrion has put forward four grounds of appeal, which may be summarised as follows.
25. First, the General Court erred in law in finding that the Commission had provided sufficient reasons justifying its decision imposing a fine on Kendrion that is higher than the fine imposed upon Kendrion’s former subsidiary, Fardem.
26. Second, in determining whether Kendrion should be held jointly and severally liable for the fine imposed on Fardem, the General Court (i) erred in law by failing to examine the principal elements of evidence, (ii) committed procedural errors, in particular in regard to the distribution of the burden of proof and (iii) manifestly misconstrued the facts and incorrectly assessed the evidence. Moreover, the General Court failed to provide sufficient grounds for its findings and did not address sufficiently the arguments that Kendrion had put forward.
27. Kendrion’s third ground of appeal is in three parts. First, it submits that the General Court erred in law in holding that Kendrion, although it was not itself involved in the infringement, should be subject to a fine higher than that imposed upon its former subsidiary. Second, by making such a finding, the General Court infringed the principle of equal treatment, since Kendrion is the only parent company to which the decision is addressed that is subject to a fine higher than that imposed on its subsidiary. Third, the General Court’s reasoning is contradictory and inadequate insofar as it found Kendrion to be jointly and severally liable for the fine imposed on Fardem. That fine corresponds to EUR 2.2 million. Yet, the Commission imposed a fine of EUR 34 million on Kendrion.
28. By its fourth ground of appeal, Kendrion submits that the General Court was wrong to hold its argument regarding the excessive duration of the proceedings in the General Court to be inoperative. In so ruling, the General Court appears to take the view that it has no jurisdiction to adjudicate on procedural irregularities in its own proceedings. Moreover, even if the General Court does not itself have the power to reduce fines where it has taken an excessive time to rule in proceedings before it, the Court of Justice is in any event obliged to rule on this point, which is one that is essential for legal certainty, and to draw the appropriate conclusions from it.
29. By its second ground of appeal Kendrion essentially complains that the General Court erred in law in finding that it and Fardem constituted an undertaking for the purposes of Article 101 TFEU. If Kendrion’s appeal is upheld on this ground then it follows that the points put forward in support of its first and third grounds of appeal (concerning the fine imposed) would also necessarily succeed. I shall therefore examine Kendrion’s second ground of appeal first.
Second ground of appeal: the identity of the undertaking for the purposes of Article 101 TFEU
Summary of the submissions
Kendrion’s appeal
30. Kendrion makes five main points in support of its general argument that together with Fardem it did not comprise an undertaking.
31. First, the General Court committed procedural errors and erred in law in finding that Kendrion was jointly and severally liable for payment of the fine imposed on Fardem, since it failed to examine all of the evidence. In particular, the General Court manifestly misconstrued the facts, and where the evidence was examined it was incorrectly assessed. Moreover, the General Court provided insufficient reasons for its findings and it did not examine Kendrion’s arguments sufficiently.
32. Second, in paragraph 53 of the judgment under appeal the General Court erred in law in stating that the onus of proof was on Kendrion to refute the additional factors indicating that it had exercised decisive influence over Fardem’s commercial policy. Rather, it was for the Commission to demonstrate that (i) the additional factors actually existed and (ii) they showed that Kendrion exercised a decisive influence.
33. Third, the General Court erred in stating that Kendrion had failed to refute any of the four additional factors relied on by the Commission to show that Kendrion effectively exercised a decisive influence over Fardem’s commercial policy.
34. Fourth, the present matter is unique, insofar as a parent company that was not involved in the anti-competitive practices has been made subject to a higher fine than that imposed on its subsidiary which committed the infringement. In such circumstances, the reasoning in the decision should be subjected to particularly stringent scrutiny. The General Court failed to apply such rigorous standards in its assessment of the decision. It therefore erred in law and in any event it failed to provide sufficient reasoning in its judgment.
35. Fifth, in the alternative, if the Court considers the additional factors invoked by the Commission to be sufficient, the question arises whether the General Court correctly assessed the evidence to the contrary placed before it. The General Court ignored the evidence adduced and failed properly to examine the elements of proof Kendrion offered at first instance. In the light of that evidence the General Court could not properly find that the Commission had established that Kendrion and Fardem constituted an economic entity. In any event, the General Court was wrong to impute responsibility for Fardem’s infringement to Kendrion.
The Commission’s response
36. The Commission considers that the second ground of appeal is in part inadmissible and in part unfounded.
37. In attributing liability to Kendrion for an infringement committed by Fardem, the Commission relied solely on the fact that Fardem was a wholly-owned subsidiary of Kendrion at the material time and on the presumption of decisive influence. Whilst four additional factors were mentioned in the decision, those factors were not treated as determinative.
38. Kendrion’s submission as to where the burden of proof lies is inoperative. Only the General Court is competent to assess the facts. Kendrion’s contention that the General Court erred in its assessment of the four additional factors is therefore inadmissible.
Assessment
39. This ground of appeal turns on the concept of the undertaking in competition law and the elements of proof required to establish that entity where a parent company wholly owns a subsidiary.
40. Article 101 TFEU prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market. The word ‘undertaking’ is not defined in the Treaty but it is central to whether EU competition rules apply and the manner in which liability for an infringement is determined. The question raised in the present matter concerns the latter point. What constitutes the undertaking liable for the infringement of the competition rules and how is any fine due to be determined?
41. The Court has examined the concept of the undertaking responsible on a number of occasions. The case-law has developed since Kendrion’s application for annulment in the present matter was lodged before the General Court. (21) The Court’s interpretation of the word ‘undertaking’ is controversial. (22) None the less, it is settled law that the concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. That concept must be understood as designating an economic unit even if in law that unit consists of several natural or legal persons. When such an economic entity infringes the competition rules, it is for that entity, according to the principle of personal responsibility, to answer for that infringement. Specifically, the conduct of a subsidiary may be imputed to the parent company where, although having a separate legal personality, that subsidiary does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities. In such a situation, since the parent company and its subsidiary form a single economic unit and therefore form a single undertaking for the purposes of Article 101 TFEU, the Commission may issue a decision imposing a fine on the parent company without having to establish the personal involvement of the latter in the infringement. (23)
42. Where a parent company wholly owns a subsidiary that infringes the competition rules, the Court considers that such a parent company is in principle able to exercise decisive influence over the conduct of its subsidiary, and there is a rebuttable presumption that the parent company does in fact exercise such influence. In those circumstances, it is sufficient for the Commission to prove that the entire share capital of a subsidiary is held by its parent in order for it to be presumed that the parent exercises decisive influence over the commercial policy of that subsidiary. The Commission will then be entitled to treat the parent company as jointly and severally liable for payment of the fine imposed on its subsidiary, unless the parent company adduces sufficient evidence to show that its subsidiary in fact acted independently on the market. It should be emphasised that the presumption is considered to be rebuttable (24) and that the burden of proof for doing so lies with the parent company.
43. The Commission is not obliged to rely exclusively on the presumption of decisive influence. It may, alternatively, choose to rely upon other factors to demonstrate that a parent company has actually exercised a decisive influence over the commercial policy of its wholly-owned subsidiary (the ‘dual basis’ method).
44. Where the Commission opts for the dual basis method, it subjects itself by definition to a more onerous standard of proof. (25) The General Court’s task in conducting its review is then to examine whether the Commission has established its case according to that standard. Thus, the onus is first on the Commission to adduce the necessary evidence to a standard that establishes the elements on which it seeks to rely to demonstrate decisive influence. If the company concerned then disputes those elements, the burden of proof shifts to it to refute them.
The General Court’s assessment
45. In paragraph 53 of the judgment under appeal, the General Court found that the Commission had relied on the dual basis in the decision.
46. The General Court went on, in paragraph 53, to identify the four additional factors put forward by the Commission and stated that Kendrion bore the onus of proof in demonstrating that those factors did not show that it had exercised a decisive influence over Fardem:
‘53 In the present case, the Commission did not limit itself to relying on the fact that the applicant held 100% of the capital of Fardem Packaging. The […] decision also refers to four other additional factors, namely the internal email of 9 January 2002 from Mr L. (recital 595), the email internal to Fardem Packaging of 14 December 1999 concerning an insurance question (recital 596), a handwritten note taken at a meeting of the “Teppema” sub-group, in which reference is made to a representative of Fardem Packaging at the applicant (recital 597) and the report submitted by Fardem Packaging to the applicant concerning current management issues (recitals 106 and 590). It is therefore necessary to consider, in the first place, whether the applicant has succeeded in rebutting those four additional factors.’ (26)
47. In paragraphs 54 to 60 of the judgment under appeal the General Court examined the evidence in relation to those four additional factors. It is clear from paragraph 61 that the General Court considered that Kendrion had succeeded in rebutting only one of the four additional factors. The General Court therefore found that Kendrion had failed to refute the other three additional factors put forward by the Commission which demonstrated that it had effectively exercised a decisive influence over Fardem.
48. Next, the General Court examined the additional evidence put forward by Kendrion with a view to rebutting the presumption that it exercised a decisive influence over Fardem (paragraphs 63 to 68 of the judgment under appeal). The General Court found that there was no connection at an operational level between Kendrion and Fardem; they did not have the same suppliers and customers or use the same manufacturing processes. However, in paragraph 64 of the judgment under appeal the General Court stated:
‘That finding on its own, however, is not sufficient to establish that Fardem Packaging acted autonomously in relation to the applicant.’
49. Furthermore, the General Court found in paragraphs 65 and 67 of the judgment under appeal:
‘65 … It is thus not possible to infer from the annual reports or from the relative size of Fardem Packaging that that company acted autonomously.
…
67 … It should be said in that regard that the absence of instructions on the applicant’s part in relation to day-to-day management (dagelijks beheer) of Fardem Packaging does not mean that the latter could conduct itself autonomously.’ (27)
Analysis
50. It is settled law that the duty incumbent upon the General Court (under Article 36 and the first paragraph of Article 53 of the Statute of the Court of Justice of the European Union) does not require it to provide an account that follows exhaustively and one by one all the arguments articulated by the parties to the case. The General Court’s reasoning may therefore be implicit, on condition that it enables the persons concerned to know the grounds on which the judgment under appeal is based and provides the Court of Justice with sufficient material for it to exercise its powers of review on appeal. (28)
51. The General Court found as a fact that the Commission had proceeded on a dual basis. That finding of fact cannot be challenged on appeal. Given that finding of fact and that the Commission had adduced evidence in support of each of the four additional factors, the burden of proof then shifted to Kendrion to disprove them. I understand the General Court’s statement in paragraph 53 of the judgment under appeal (‘It is therefore necessary to consider, in the first place, whether the applicant has succeeded in rebutting those four additional factors’) to reflect that position.
52. Accordingly, I do not consider that the General Court erred in law in attributing the burden of proof to Kendrion to demonstrate that the additional factors did not show that it had in effect exercised a decisive influence over Fardem’s commercial policy. Having examined Kendrion’s evidence in relation to each of those additional factors, the General Court found as a fact that three out of the four had not been disproved.
53. In relation to the additional evidence adduced by Kendrion to rebut the presumption that it exercised a decisive influence over Fardem, in particular Kendrion’s submission that Fardem was purchased for investment purposes, the General Court found in paragraph 66 of the judgment under appeal that:
‘… the purchase by an investment company with a view to sale can also argue in favour of the existence of an economic entity between the investment company and the subsidiary in question. The fact that the investment company seeks to improve the subsidiary’s results over the short term implies, as a rule, that the parent company must involve itself in the subsidiary’s activities. An effective and strict system of monitoring may offer better guarantees for increased profitability than a policy of non-intervention’. (29)
54. I agree with the General Court. It cannot follow from the fact that a wholly-owned subsidiary is acquired as a financial investment and that its activities are outside the sphere of the parent company’s normal operations that the two companies do not comprise the same undertaking. On the contrary: on the assumption that the purpose of an investment is to yield a return, it seems to me that, in order to ensure greater profitability from that investment, any parent company would have a strong incentive to exercise a decisive influence over its subsidiary’s commercial policy.
55. Insofar as Kendrion challenges the General Court’s findings of fact concerning the evidence that it put forward, it raises matters that are beyond the scope of the Court’s jurisdiction on appeal. (30) I add that I do not think that the clear sense of the evidence was distorted in a way that means the Court should review the legal characterisation of those facts. (31)
56. Further, since those paragraphs of the judgment under appeal enable Kendrion to know the grounds on which it is based and this Court to have sufficient material to exercise its powers of review on appeal, the judgment under appeal is not vitiated by any failure to state reasons.
57. In summary: I find no error vitiating the General Court’s finding that Fardem was not an independent economic entity and that therefore Fardem and Kendrion constituted the same undertaking.
58. I therefore consider that the second ground of appeal should be rejected as unfounded. It follows that it is necessary to consider Kendrion’s first and third grounds of appeal.
First ground of appeal: the fine imposed on Kendrion is higher than that imposed on its subsidiary
59. In its first ground of appeal Kendrion complains that the General Court made an error of law and that the reasoning in the judgment under appeal is contradictory and insufficient insofar as it accepted that the Commission had demonstrated to the requisite legal standard the reasons for imposing a higher fine on Kendrion than that imposed on Fardem.
Summary of the submissions
Kendrion’s appeal
60. Kendrion points out that the General Court itself recognised (in paragraphs 28 and 29 of the judgment under appeal) that the decision raises questions and that it is ambiguous in certain respects. In essence, Kendrion submits that the operative part of the decision (Article 2(d)) is inconsistent with the reasoning set out in the recitals. According to the recitals, Kendrion as the parent company is jointly and severally liable for payment of the fine imposed on its subsidiary, Fardem. However, the operative part states that Fardem is jointly and severally liable for (a portion of) the fine imposed on Kendrion. It follows that if the General Court had correctly applied the standard principle of interpretation that the decision should be construed as a whole in the light of its recitals, the General Court would have found that the operative part was inconsistent with the reasons set out therein.
61. Kendrion considers that it follows from paragraphs 23 to 28 of the judgment under appeal (and recitals 584, 779 and 782 of the decision) that the Commission did not fine Kendrion because it had participated in the infringement itself; rather, a penalty was imposed because Kendrion was jointly and severally liable in its capacity as a parent company. In that respect Kendrion refers to recital 784 of the decision. It disputes the finding in paragraph 24 of the judgment under appeal that it ‘follows’, and even more so that ‘it clearly follows’, from recital 784 that the Commission intended to sanction Kendrion individually rather than merely holding it to be jointly and severally liable for Fardem’s fine.
62. Kendrion submits that there is no basis in competition law for holding a subsidiary jointly and severally liable for payment of a fine imposed on its parent company. Moreover, the decision gives rise to an absurd result in that Fardem is jointly and severally liable for payment of a fine imposed on Kendrion based upon the latter’s joint and several liability for payment of a fine imposed on Fardem. The operative part of the decision constitutes ‘a legal monstrosity’ and is inconsistent with its recitals.
63. It follows that, contrary to the General Court’s findings in paragraph 29 of the judgment under appeal, the scope and content of Article 2(d) of the decision are not intelligible. Moreover, that provision is simply contrary to its recitals, in particular, recitals 577 to 584, 587 to 599, 779, 782, 784, 814 and 820. The reasoning in the judgment under appeal is therefore insufficient and contradictory and the decision should be annulled.
The Commission’s response
64. The Commission considers that Kendrion’s claim that the operative part of the decision is inconsistent with the reasoning contained in the recitals is unfounded. Recital 879 corresponds word for word with Article 2(d) of the operative part.
65. There is no difference between the joint and several liability of a parent company and the individual responsibility of a subsidiary. Both companies are jointly and severally liable because they form part of an undertaking which has infringed the competition rules.
66. Fardem and Kendrion were part of the same undertaking from 8 June 1995 to 26 June 2002 and they are both responsible for the infringement that occurred during that period. Fardem’s fine was determined at EUR 60 million; Kendrion’s fine was EUR 34 million. However, the fine imposed on Fardem was then capped at EUR 2.2 million by applying the 10% ceiling. The fine imposed on Kendrion remained at EUR 34 million for which Fardem is jointly and severally liable for EUR 2.2 million, as set out in recital 879 in the preamble to the decision. The General Court rightly observed, in paragraph 28 of the judgment under appeal, that the difference between the fines of the two companies arises from applying the 10% ceiling. The fine imposed on Fardem would otherwise have been EUR 60 million and Kendrion would have been jointly and severally liable for EUR 34 million of that amount. In paragraph 29 of the judgment under appeal, the General Court rightly found the operative part of the decision to be consistent and intelligible when read in the light of the reasoning set out therein.
Assessment
67. Two points arise. First, on what precise grounds was a fine imposed on Kendrion? Second, how should the 10% ceiling laid down in Article 23(2) of Regulation No 1/2003, applicable to any fine imposed, be determined?
68. In my review of the judgment under appeal, I have borne the following principles in mind.
69. First, the question whether the grounds of a judgment of the General Court are contradictory or inadequate is a question of law which is amenable, as such, to review on appeal. (32)
70. Second, in interpreting the Commission’s decision the General Court had to bear in mind that the Commission must state the reasons on which its decisions are based, setting out the facts forming the legal basis and the considerations which led it to adopt the measure. (33)
71. Third, with regard to decisions imposing a fine, the statement of reasons is to be considered sufficient if it indicates clearly and coherently the considerations of fact and of law on the basis of which the fine has been imposed on the parties concerned, in such a way as to acquaint both the latter and the Court with the essential factors of the Commission’s reasoning. (34)
72. Fourth, the question whether the obligation to provide a statement of reasons has been satisfied must be assessed with reference not only to the wording of the contested measure but also to its context and the whole body of legal rules governing the matter in question. (35)
The grounds for Kendrion’s fine
73. In paragraphs 22 to 25 of the judgment under appeal, the General Court refers inter alia to recitals 577 to 584, 779 and 782 in the preamble to the decision. (36) The General Court makes the following findings:
‘26 The […] decision shows that the Commission imposed a fine on the applicant by reason of the fact that it constituted a single economic entity with Fardem Packaging between 1995 and 2003. Since Fardem Packaging’s anti-competitive conduct could be attributed to the applicant because each was a member of the same economic entity – a matter which remains to be established in the light of the analysis of the pleas in law set out below – the applicant was deemed to have committed the infringement itself as a result of that attribution of liability (see, to that effect Case C-294/98 P Metsä-Serla and Others v Commission [2000] ECR I-10065, paragraph 28).
…
28 Next, while it is true that the fine of EUR 34 million imposed on the applicant, when compared with the fine of EUR 2.20 million imposed on Fardem Packaging, may, at first sight, seem questionable, it remains the case that recitals 814 and [820] [(37)] to the […] decision state that the reason for that discrepancy is the application of the 10% ceiling laid down by Article 23(2) of [Regulation No 1/2003] to Fardem Packaging.
29 Notwithstanding its ambiguous wording, the scope and content of Article 2(d) of the […] decision are thus fully capable of being understood on reading the recitals referred to in paragraphs 23 to 28 above. There is therefore no question of the grounds of the […] decision and its operative part contradicting one another.’ (38)
74. The judgment under appeal is based directly on the wording of the decision. I shall therefore refer to that decision in my review of the General Court’s reasoning. The reasoning in recitals 577 to 584 of the decision indicates that a fine should be imposed on Fardem for which Kendrion bears joint and several liability. It is true that not all the steps in the reasoning of the decision have been expressly set out. Thus, insofar as the General Court has simply followed the reasoning in that decision, the judgment under appeal is not as transparent as it might be. However, it does not follow that that judgment is rendered incoherent or unintelligible as a result.
75. To recapitulate the calculation: the starting amount of Fardem’s fine was set at EUR 20 million. The Commission then applied a percentage increase of 200% to that amount, to reflect the fact that the infringement had subsisted for over 20 years, generating a figure of EUR 40 million. When added to the initial EUR 20 million, that resulted in a total of EUR 60 million. Finally, the Commission applied the 10% ceiling (Article 23(2) of Regulation No 1/2003) derived from Fardem’s turnover (EUR 22 million) to that total. In consequence, the actual fine payable was capped at EUR 2.2 million. (39)
76. It follows from the finding that Kendrion was jointly and severally liable for Fardem’s conduct that the Commission was entitled to impose liability for the latter’s fine on its (former) parent company for the period when the two companies constituted one undertaking. (40) It is implicit in the judgment under appeal (and the decision) that the starting amount of Fardem’s fine (EUR 20 million) was attributed to Kendrion. The Commission then applied a percentage increase of 70% to that amount (rather than, as in Fardem’s case, a percentage of 200%). That reflected the fact that Kendrion owned Fardem for seven years, rather than for the entire period of Fardem’s infringement. The EUR 14 million thus derived was added to the initial EUR 20 million, resulting in a total of EUR 34 million. Finally, Article 23(2) of Regulation No 1/2003 was applied to determine whether Kendrion’s fine should be capped. Since Kendrion’s worldwide turnover was in excess of a figure that would have required the amount actually payable to be reduced, Kendrion’s fine remained at EUR 34 million.
77. When so analysed, stage by stage, it is plain that the determination of Kendrion’s fine was consistent with the rules concerning joint and several liability and the application of Article 23(2) of Regulation No 1/2003.
78. Admittedly, the wording holding Fardem jointly and severally liable for EUR 2.2 million of Kendrion’s EUR 34 million fine appears strange. I am unaware of any case in which a subsidiary has been held to be responsible for the conduct of its parent. Indeed such a result would be odd, because it is inconsistent both with the concept of personal responsibility for the infringement in question and with the presumption of decisive influence. Parents are held responsible for infringements committed by their wholly-owned subsidiaries because they are considered to control their subsidiary’s commercial policy. (41) The balance of power is (self-evidently) not the same when we look at the relationship of a wholly-owned subsidiary with its parent. Such a subsidiary cannot be presumed to exercise a decisive influence over its parent, because it would not have control through its shareholding. The subsidiary is the tail, it cannot wag the dog.
79. But this is Kendrion’s appeal, not Fardem’s.
80. Was Kendrion’s liability correctly established? Whether Fardem is described as being jointly and severally liable for Kendrion’s fine or whether Kendrion is declared to be jointly and severally liable for Fardem’s fine has no effect whatsoever on the principles governing the attribution of liability to a parent company (Kendrion) for infringements committed by its wholly-owned subsidiary (Fardem) where the presumption of decisive influence has not been successfully rebutted. Gains generated by infringements of the competition rules accrue to shareholders. It is therefore only reasonable that those who have the power to supervise should be held accountable for illegal practices committed by their subsidiaries, unless they can demonstrate that they did not wield that power. That – put at its simplest – is the basis for Kendrion’s liability.
81. I therefore consider that there is no error of law vitiating the judgment under appeal in relation to its finding attributing liability to Kendrion for the infringement committed by Fardem.
The amount of the fine
82. Kendrion’s and Fardem’s fines are inextricably linked. The amount of Kendrion’s fine is necessarily dependent on the fine calculated in respect of Fardem. (42)
83. In paragraph 28 of the judgment under appeal, the General Court stated that the reason for the apparent discrepancy between the reasoning and the operative part of the decision was the application of the 10% ceiling. Precisely how that ceiling is applied determines the amount of the fine that is to be paid.
84. At the point when the 10% ceiling was calculated, the undertaking that committed the infringement did not exist in the same form as Fardem was no longer part of the Kendrion group. Thus, the question arises: what constitutes the ‘undertaking’ for the purposes of Article 23(2) of Regulation No 1/2003? Should the 10% ceiling be calculated by reference to the parent company’s worldwide turnover; or is it solely the subsidiary’s turnover that is relevant?
85. The Commission refers to Tokai Carbon and Others v Commission (43) in recital 814 in the preamble to the decision. In that case, as here, the wholly-owned subsidiary that committed the infringement was no longer owned by the parent company at the date when the 10% ceiling was calculated. The subsidiary and the parent company did not therefore constitute the same undertaking at that time. Accordingly, the General Court annulled the decision in that case insofar as the Commission had imposed a fine on the (former) subsidiary that exceeded the 10% ceiling calculated by reference to its sole turnover. (44)
86. In the present case, the General Court did not explain expressly how, for the purposes of Article 23(2) of Regulation No 1/2003, the 10% ceiling applied to Kendrion’s fine. However, it is implicit that the General Court took into account that at the time the 10% ceiling was applied, Kendrion and Fardem were separate entities. (45)
87. It seems to me that the General Court considered that Kendrion’s liability for a EUR 34 million fine fell below the 10% ceiling as applied to that company. Given that Fardem’s turnover was approximately EUR 20 million at the relevant point, the General Court considered that the Commission had (i) distinguished between Kendrion’s and Fardem’s respective turnover figures and (ii) applied the 10% ceiling to Fardem as a separate entity (46) and therefore limited its liability to EUR 2.2 million. (47)
88. I therefore consider the first ground of appeal to be unfounded.
Further matters
89. The Commission has expressed the concern that, if the 10% ceiling is applied to each company separately where they no longer form the same undertaking at the point when the fine is calculated, that creates opportunities for avoidance. It submits that, where the parent company and the subsidiary are not part of the same undertaking at the point where the 10% ceiling is applied, the upper limit should be calculated by reference to the parent’s turnover alone and the subsidiary’s turnover should not be taken into account.
90. Thus, if the Commission had derived the 10% ceiling from Fardem’s turnover alone, any fine for which Kendrion as parent was jointly and severally liable would have been capped at EUR 2.2 million. That could encourage undertakings in similar circumstances to dispose of their subsidiaries before the Commission imposes a fine, so as to avoid having the 10% ceiling calculated by reference to the worldwide turnover of the companies comprising the holding parent company’s group.
91. Although that point is raised specifically in response to Kendrion’s third ground of appeal, it is equally relevant here. I shall therefore deal with it now.
92. It seems to me that the Commission’s concern is not justified. Where a parent company is jointly and severally liable for its wholly-owned subsidiary, any cap to the fine imposed is set by reference to the parent’s turnover if both companies are part of the same undertaking at that point in time. In such circumstances, there is no need to calculate the overall fine by reference to the subsidiary’s turnover. The subsidiary is simply jointly and severally liable for a portion of the fine borne by its parent company.
93. However, where the companies do not comprise the same entity at the point when the 10% ceiling is applied, it seems to me that it is necessary to distinguish between them and to apply the 10% ceiling to each company separately. It seems that this is precisely what the Commission did in the present matter (although it may possibly not be what it had intended, in view of the submission it now makes).
94. The amount of the parent company’s fine is not determined by reference to the amount that its subsidiary is liable to pay following application of the 10% ceiling to the subsidiary’s fine. Rather, the determination of those two amounts involves two separate exercises as demonstrated here. Kendrion’s fine was calculated by taking as a starting point the basic amount of Fardem’s fine for which Kendrion was jointly and severally liable. (48) The EUR 2.2 million for which Fardem is liable simply represents the portion of its own fine which is payable after application of the 10% ceiling.
95. For the sake of good order, I shall examine the third ground of appeal.
Third ground of appeal: the fine imposed is based upon contradictory and insufficient reasons
96. Kendrion puts forward three points in support of its third ground of appeal.
Summary of the submissions
Kendrion’s appeal
97. Kendrion submits, first, that joint and several liability means that a parent company is only liable for payment of the fine imposed on the subsidiary. Second, Kendrion asserts that the General Court disregarded the fact that the Commission had failed to apply the principle of equal treatment when setting the fines. Third, Kendrion claims that the General Court’s reasoning in reviewing the fine was contradictory and insufficient.
98. The first and third points overlap with the pleas made in relation to Kendrion’s first ground of appeal. I have already examined those issues in paragraphs 82 to 88 of this Opinion. I shall therefore not consider them further here. It is, however, necessary to examine Kendrion’s allegation that the Commission breached the principle of equal treatment and that the General Court failed to take that into account.
99. Kendrion submits that, amongst the addressees of the decision, it is the only parent that was subjected to a higher fine than that of its subsidiary in circumstances where the subsidiary committed an infringement in which it, as parent, was not involved. The only other parent company that was subjected to a higher fine than its subsidiary was Nordenia, but that company was actually involved in the infringement. (49) The principle of equal treatment requires the Commission to adopt the same method for determining fines for all undertakings in the same infringement. Kendrion submits that the General Court erred in law in referring to the 10% ceiling in Article 23(2) of Regulation No 1/2003 as explaining the difference in treatment. The 10% ceiling explains the difference in the amount of the fine but not the difference in principle that the Commission introduces between Kendrion and other parent companies. In the alternative, if the Commission is entitled to determine Kendrion’s fine as set out in the decision, the General Court’s reasoning is contradictory and insufficient.
The Commission’s response
100. In the Commission’s view the General Court rightly found, in paragraph 109 of the judgment under appeal, that the Commission applied the same method in determining the fine for all the addressees of the decision.
Assessment
101. The general principle of equal treatment requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified. (50)
102. The General Court states in the judgment under appeal that:
‘107 In the setting of fines, compliance with the principle of equal treatment requires that the Commission should normally use the same method of calculation of the amount of the fines imposed on the undertakings penalised for having participated in the same infringement (Case T-308/94 Cascades v Commission [2002] ECR II-813, paragraph 65) …
108 The applicant’s claim that the Commission infringed those principles cannot be accepted for the following reasons.
109 … it is clear from the […] decision that the Commission applied one and the same method for determining the amount of the fines applicable to all the addressees of the […] decision, including the applicant, which were held responsible as parent companies of a subsidiary implicated in the cartel …’(51)
103. Kendrion argues that it is comparable to other parent companies that did not actively participate in the infringement themselves but bear liability for the infringements committed by their wholly-owned subsidiaries. Those companies are only responsible for a portion of their subsidiaries’ fine. If the Commission had applied the same methodology in determining the fines of all parent companies within the cartel, Kendrion’s fine would have been lower than Fardem’s, as it would have been jointly and severally liable for a portion only of Fardem’s fine.
104. It seems to me, however, that Kendrion’s circumstances were particular insofar as the 10% ceiling was calculated after Fardem had been sold. The two companies did not therefore constitute one undertaking at that point. That is not the position in relation to the other parent companies and their respective subsidiaries. (52)
105. It follows from what I have said at points 82 to 88 above concerning the application of the 10% ceiling that I consider that the Commission was entitled to apply Article 23(2) of Regulation No 1/2003 to the two companies separately. Kendrion is not comparable to the other parent companies to which the decision is addressed. In Kendrion’s case the 10% ceiling had to be determined twice, by reference to Kendrion’s turnover and to Fardem’s turnover separately. For the other parent companies and their subsidiaries, however, the 10% ceiling was determined once, by reference to the worldwide turnover of the parent company group.
106. In paragraphs 107 to 109 of the judgment under appeal the General Court interprets the decision and finds that the Commission had applied the same method for determining the fines applicable to all the addressees. That approach is consistent with the principle of equal treatment. However, it is precisely because Kendrion’s position differs from that of other parent companies that the Commission was not obliged to calculate the 10% ceiling for Kendrion and Fardem using the same method that it applied to other addressees. The Commission had to treat the two companies as distinct entities at the point when it applied the 10% ceiling because Fardem was then not part of the Kendrion group.
107. I therefore consider that the General Court was correct in concluding that the decision was compatible with the principle of equal treatment.
Fourth ground of appeal: failure to adjudicate within a reasonable time
The judgment under appeal
108. During the hearing at first instance, Kendrion raised the argument that the procedure before the General Court had been excessively lengthy. In paragraph 18 of the judgment under appeal, the General Court held that argument to be inoperative, on the ground that only the decision fell within its jurisdiction. Thus, even if Kendrion were right that there had been excessive delay, that would not per se affect the outcome of the proceedings.
Summary of the submissions
Kendrion’s appeal
109. Kendrion submits that the General Court erred in law by not examining the plea concerning that Court’s alleged failure to hear Kendrion’s case within a reasonable time. Accordingly, the judgment under appeal should be quashed.
110. In the alternative, Kendrion submits that this Court should reduce the amount of the fine imposed. Kendrion points out that the present appeal is of real importance to it, given that it is challenging a fine of EUR 34 million. The questions before the General Court were complex, but the time taken by the General Court to deliver judgment (which Kendrion calculates to be six years and nine months) was excessive. (53) Kendrion submits that this Court should therefore reduce the fine imposed by at least 5% in order to take account of the unduly lengthy proceedings before the General Court. (54)
The Commission’s response
111. The Commission submits first, that the judgment under appeal should not be quashed on this ground. Second, the Commission considers that it would have been inappropriate for the General Court to determine in the context of proceedings for annulment whether it had infringed Article 47 of the Charter, as that Court would necessarily have had to examine its own conduct. It would be better for such a matter to be considered, if necessary, by a different Chamber of the General Court in separate proceedings. Therefore, the General Court correctly found Kendrion’s plea to be inoperative.
112. The Commission disputes Kendrion’s assessment of the length of the proceedings before the General Court, which it calculates to have taken five years and nine months. The Commission submits that, should this Court decide that the proceedings before the General Court were unduly long, a judgment making such a finding would constitute just satisfaction. A separate claim for damages would be the appropriate remedy for any material loss that might have arisen from a breach of Article 47 of the Charter. In response to Kendrion’s argument that in the interests of procedural economy the fine imposed should be reduced by 5%, the Commission argues that the present matter is distinguishable from Dutch Beer, (55) because, unlike that case, there was no delay in conducting the administrative phase of the procedure in the present matter.
Assessment
113. The General Court declared that Kendrion’s plea concerning its failure to deal with the proceedings within a reasonable time was inoperative. (56) Such a finding did not affect the admissibility of Kendrion’s plea. It meant simply that Kendrion’s application for annulment of the decision could not succeed on that ground at first instance. (57)
114. I agree with the General Court’s approach for the following reasons.
115. First, the application for annulment of the decision is a matter distinct and separate from the question whether Kendrion’s fundamental rights guaranteed by Article 47 of the Charter have been infringed. In my view, if the General Court had found an infringement of that right, in circumstances where that decision was found to be otherwise legitimate, it would not have been open to it to annul the decision solely on the ground of that procedural irregularity. (58)
116. Second, Kendrion does not allege that the length of the proceedings before the General Court made effective judicial review of the decision impossible – for example, because evidence had been lost or witnesses could no longer be traced due to the passage of time. Kendrion’s position is thus different from that of a claimant who argues that his rights of defence have been infringed because the proceedings in issue have been unduly protracted.
117. Third, examining the alleged procedural irregularity of failure to hear a case within a reasonable time is a separate exercise from reviewing any fine imposed by the decision. Therefore, examination of the procedural irregularity alone falls outwith the scope of the Court’s unlimited jurisdiction to review Commission decisions imposing a fine. (59)
118. I therefore do not consider that the General Court erred in law in deciding that Kendrion’s plea was inoperative. Even if upheld, Kendrion’s plea would not have undermined the validity of the decision challenged. (60)
119. Kendrion is not, of course, precluded from raising this issue in its appeal.
120. Kendrion lodged its application for annulment on 22 February 2006. The written procedure ended on 20 February 2007. On 3 December 2010, Kendrion was informed that the case had been set down for hearing. On 12 January 2011 Kendrion replied to questions put by the General Court pursuant to Article 64 of the General Court’s Rules of Procedure concerning this Court’s judgment in Akzo. The case was heard by the General Court on 9 March 2011 and judgment was delivered on 16 November of that year. The overall length of the proceedings at first instance was approximately five years and nine months, and there was a period of approximately four years between the end of the written procedure and the hearing.
121. Kendrion’s case was linked closely to that of its former subsidiary, Fardem. However, there is nothing to suggest that Fardem’s case hindered Kendrion’s proceedings before the General Court.
122. Applying the four Baustahlgewebe criteria, it is plain that, since Kendrion is subject to a fine of EUR 34 million under the decision, the case is of importance to the undertaking. It is also clear that the case raises complex issues. I do not consider that the duration of the proceedings can be attributed to Kendrion’s conduct.
123. So far as I can tell, no active case management took place during the apparent period of inactivity (approximately four years) between the end of the written procedure and the hearing. The Court has not been provided with any information that explains or justifies the period of inactivity. In the absence of such evidence, it is clear to me that this case did not proceed within a reasonable time. As I have indicated in my Opinion in Groupe Gascogne (61) I consider that (broadly speaking) this stage of the procedure might have taken up to two years without that being characterised as ‘excessive’ delay in handling the case. It follows that – in round figures – this case took about two years longer at first instance at the General Court than it should have done.
124. I therefore conclude that Kendrion’s fundamental right to have its case heard by the General Court within a reasonable time has been infringed.
125. I have stated in my Opinion in Groupe Gascogne (62) that, where an infringement of Article 47 of the Charter is established, such a finding should not, on its own, lead to the judgment under appeal being set aside.
126. Furthermore, Kendrion has not claimed that its rights of defence were infringed as a result of that procedural irregularity.
127. Therefore, I do not consider that the judgment under appeal should be set aside.
128. Kendrion’s alternative plea seeking a reduction in the fine is based upon the Court’s approach in Baustahlgewebe, (63) rather than presented as a separate claim for material loss and/or non-pecuniary damages.
129. In the light of that plea, it seems to me that, in the absence of any claim for material loss and/or non-pecuniary damage, a finding in the judgment itself to the effect that the General Court has infringed Article 47 of the Charter should constitute just satisfaction. (64)
130. Kendrion asks the Court to reduce the fine imposed by the judgment under appeal by 5%. It derives that figure from the General Court’s decision in Dutch Beer. (65) In that case the Commission accepted that it was responsible for the excessive length of the administrative procedure. The claimant argued that the length of that procedure had affected its rights of defence and led to the imposition of a disproportionate fine, since the Commission’s policy on fines had become stricter during the administrative procedure. Accordingly, it claimed that the reduction in the fine already afforded to it by the Commission on account of the excessive length of the proceedings was too low.
131. The present matter is distinguishable from Dutch Beer. First, Kendrion’s claim does not concern the administrative phase of the procedure conducted by the Commission, nor does it allege that the fine imposed by the Commission increased as a result of that institution’s conduct. Second, Kendrion is here asking the Court to review a procedural irregularity at the judicial stage of the proceedings. Third, Kendrion has not alleged that the length of the proceedings before the General Court has had an effect on the fine imposed by virtue of the judgment under appeal (nor could it have done so, since the judgment under appeal merely confirms the decision in that respect).
132. Accordingly, it seems to me that there is no legal basis upon which the Court could found a decision reducing Kendrion’s fine by 5%. Furthermore, in the absence of any evidence indicating that Kendrion has suffered material and/or non-pecuniary loss (such as might be adduced in a separate damages claim), it seems to me purely arbitrary to select 5% (or indeed any other figure). (66)
133. It follows that in my view the Court should not reduce Kendrion’s fine.
134. I thus conclude that, to the extent that Kendrion considers that it has suffered loss as a result of the General Court’s failure to dispose of its case within a reasonable time, an action for damages in the General Court constitutes a more appropriate and effective remedy for the purposes of Article 47 of the Charter, as interpreted in the light of Articles 6(1) and 13 ECHR, than some reduction in the level of fine. (67) I therefore suggest that the Court should make a declaration that there was excessive delay in the disposal of Kendrion’s appeal before the General Court; and that the Court should make it clear that it is open to Kendrion to bring a separate action for damages should it wish to do so.
Costs
135. If the Court agrees with my assessment of the appeal, then, in accordance with Articles 137, 138, 140 and 184 of the Rules of Procedure, read together, Kendrion, the unsuccessful party on all grounds of appeal should be ordered to pay the costs of the proceedings.
Conclusion
136. I therefore consider that the Court should:
– dismiss the appeal;
– declare that the General Court failed to adjudicate within a reasonable time in Case T-54/06 Kendrion v Commission; and
– order Kendrion to pay the costs of the proceedings.
1 – Original language: English.
2 – Judgments of 16 November 2011 in Case T-54/06 Kendrion v Commission, Case T-72/06 GroupeGascogne v Commission and Case T-79/06 SachsaVerpackung v Commission. A summary is published in English of the three judgments under appeal. The full texts are available in French for all three cases on the Court’s website. For Kendrion, a full version in Dutch is also available.
3 – Decision C(2005) 4634 final of the Commission of 30 November 2005 relating to a proceeding pursuant to Article 81 of the EC Treaty (Case COMP/38354 – Industrial bags) (‘the decision’). A summary is published in OJ 2007 L 282, p. 41.
4 – Case C-40/12 P GascogneSackDeutschland v Commission, Case C-50/12 P Kendrion v Commission (the present matter) and Case C-58/12 P GroupeGascogne v Commission. For the full picture in relation to applications challenging the decision before the General Court and subsequent appeals before this Court, see point 102 in my Opinion in Groupe Gascogne.
5 – Case C-40/12 P.
6 – Cited in footnote 4 above.
7 – The Opinions in all three appeals are delivered on 30 May 2013.
8 – See points 40 to 44 below.
9 – Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ 2003 L 1, p. 1) which repealed Regulation No 17 First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87). Regulation No 17 was repealed by virtue of Article 43(1) of Regulation No 1/2003. The Commission has cited both regulations in part 6 of the decision as the legal basis for the fines imposed. The relevant provisions of Regulation No 17 are Article 15(2) and Article 17. They are mirrored in Article 23(2) and (3) and Article 31 of Regulation No 1/2003. In this Opinion I shall refer to the provisions of Regulation No 1/2003 which should be read as covering Articles 15(2) and 17 of Regulation No 17, since they were not materially changed insofar as is relevant to the issues raised this appeal.
10 – See points 73 to 81 below.
11 – Recital 777 in the preamble to the decision.
12 – Recitals 779 and 781 in the preamble to the decision.
13 – Recital 781 in the preamble to the decision.
14 – Recital 783 in the preamble to the decision.
15 – Recital 784 in the preamble to the decision.
16 – Case C-413/08 P Lafarge v Commission [2010] ECR 1-5361, paragraph 102. The Commission’s 1998 Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty (OJ 1998 (C 9, p. 3) also mention worldwide turnover when referring to the 10% ceiling in Article 23(2) of Regulation No 1/2003.
17 – Case T-54/06 Kendrion, cited in footnote 2 above (‘the judgment under appeal’).
18 – Formerly Article 253 EC.
19 – Judgment of 16 November 2011 in Case T-51/06 Fardem Packaging v Commission.
20 – Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty (OJ 1998 C 9, p. 3) (‘the Commission’s 1998 Guidelines’). See point 21 of my Opinion in GascogneSackDeutschland, cited in footnote 4 above.
21 – 22 February 2006.
22 – See, Wouter P.J. Wils, ‘Antitrust compliance programmes and optimal antitrust enforcement’, Journal of Anti-Trust Enforcement, 2013, p. 12. Compare and contrast with Stefan Thomas, ‘Guilty of a fault that one has not committed’, Journal of European Competition Law and Practice, 2012, p. 11.
23 – Joined Cases C-628/10 P and C-14/11 P AllianceOne International and standard Commercial Tobacco v Commission (‘Alliance One’) [2012] ECR I-0000, paragraphs 42 to 44 and the case-law cited.
24 – AllianceOne, cited in footnote 23 above, paragraphs 46 to 48 and the case-law cited.
25 – AllianceOne, cited in footnote 23 above, paragraphs 49, 50 and 53.
26 – My translation.
27 – My translation.
28 – AllianceOne, cited in footnote 23 above, paragraph 64.
29 – My translation.
30 – AllianceOne, cited in footnote 23 above, paragraph 84 and the case-law cited.
31 – AllianceOne, cited in footnote 23 above, paragraph 85 and the case-law cited.
32 – Case C-47/07 P Masdar (UK) v Commission [2008] ECR I-9761, paragraph 76.
33 – See Article 296 TFEU, see also Case 41/69 ACFChemiefarma v Commission [1970] ECR 661, paragraph 76, and Case 42/84 Remia and Others v Commission [1985] ECR 2545, paragraph 26.
34 – AllianceOne, cited in footnote 23 above, paragraph 64.
35 – Case C-403/99 Italy v Commission [2001] ECR I-6883, paragraph 41.
36 – See points 8 to 10 above.
37 – I am assuming that the reference to recital 815 in the preamble to the decision should be to recital 820, since it is the latter which concerns the fine imposed on Fardem.
38 – My translation.
39 – See points 11 to 16 above.
40 – See points 40 to 44 above.
41 – Case C-97/08 P Akzo Nobel and Others v Commission (‘Akzo’) [2009] ECR I-8237, paragraphs 58 to 61.
42 – See point 13 above.
43 – Judgment of 15 June 2005 in Joined Cases T-71/03, T-74/03, T-87/03 and T-91/03 (‘Tokai’). A summary in English of the judgment is published. Full versions are available in German, English and French on the Court’s website.
44 – Tokai, cited in footnote 43 above, paragraphs 391 and 392.
45 – See recital 820 in the preamble to the decision and paragraph 28 of the judgment under appeal.
46 – If this were Fardem’s appeal, it would be necessary, in determining Fardem’s fine, to consider the period of the infringement for which Fardem alone was responsible (from 6 January 1982 to 8 June 1995), before Kendrion acquired the company. However, as this is Kendrion’s appeal and that company is jointly and severally liable for Fardem’s fine, there is no need to do so. See points 81 to 88 of my Opinion in GascogneSackDeutschland, where I examine the application of the 10% ceiling to a parent and a wholly-owned subsidiary which together constituted the undertaking at the point when the determination was made, but where the period when the infringement took place began before the parent acquired the subsidiary and continued after that acquisition.
47 – See paragraphs 28 and 29 of the judgment under appeal, cited in point 73 above.
48 – See points 11 to 13 above.
49 – Recital 637 in the preamble to the decision.
50 – Case C-127/07 ArcelorAtlantic et Lorraine and Others [2008] ECR I-9895, paragraph 23 and the case-law cited.
51 – My translation.
52 – Bischof + Klein France SAS; FLS Smidth & Co A/s and FLS Plast AS and Groupe Gascogne.
53 – Kendrion cites Case C-185/95 P Baustahlgewebe v Commission (‘Baustahlgewebe’) [1998] ECR I-8417.
54 – Kendrion cites Case T-235/07 Bavaria v Commission (‘Dutch Beer’) [2011] ECR II-3229.
55 – Cited in footnote 54 above.
56 – Paragraph 18 of the judgment under appeal.
57 – Case C-520/09 P Arkema v Commission [2011] ECR I-0000, paragraph 31.
58 – See point 117 below.
59 – See Article 261 TFEU and Article 31 of Regulation No 1/2003. See also points 131 and 132 of my Opinion in GroupeGascogne.
60 – See point 113 above.
61 See points 91 to 94 of my Opinion in that case.
62 – Cited in footnote 4 above.
63 – In Baustahlgewebe, cited in footnote 53 above, the Court, for reasons of economy of procedure and in order to ensure that an immediate and effective remedy was available, quashed the judgment under appeal in relation to the amount of the fine that was set, whilst confirming that judgment in all other respects.
64 – See point 148 in my Opinion in GroupeGascogne.
65 – Cited above in footnote 54 above.
66 – See points 133 to 138 of my Opinion in GroupeGascogne.
67 – Kendrion’s present plea seeking a reduction in the fine seems to me to be based squarely upon Baustahlgewebe: it was not presented as a separate claim for material loss and/or non-pecuniary damages, nor would this Court have jurisdiction to entertain such a claim.
© European Union
The source of this judgment is the Europa web site. The information on this site is subject to a Disclaimer and a Copyright notice and rules related to Personal data protection. This electronic version is not authentic and is subject to amendment.