On Sept. 4, 2014, the Court of Justice of the European Union (CJEU) rejected an appeal by the YKK Group (YKK) against the judgment of the General Court that the European Commission (Commission) had been correct in its decision relating to the fasteners cartel, in which YKK was found to have participated. In September 2007, the Commission announced fines totaling €329 million (US$412 million) on the members of the cartel, which was found to have committed serious breaches of EU competition law, including fixing prices, coordinating price increases, sharing markets, allocating customers, and exchanging commercially sensitive market information in the zipper and other fasteners markets.
YKK appealed on four grounds: 1) that the Commission and General Court had incorrectly applied the 1996 Leniency Notice rather than the 2002 Leniency Notice; 2) that the General Court had given inadequate reasons for supporting the Commission's decision to set the starting amount of the fine at €50 million (US$62 million); 3) that the Commission and General Court had imposed fines that exceeded the upper limit of 10 percent of worldwide group turnover; and 4) that the Commission and the General Court had incorrectly applied a deterrence multiplier to the size of the fine in recognition of YKK's economic power.
The CJEU dismissed the first ground because YKK had made its leniency application before the 2002 Leniency Notice came into force, and although the information that it provided had enabled the Commission to determine that the infringement had continued for longer than previously believed, it did not allow the Commission to establish the existence of the infringement. The CJEU noted that the Commission has wide discretion in determining the quality and usefulness of cooperation. The CJEU dismissed the second ground and found that the General Court had given adequate reasons for its decision to support the Commission in setting the starting point of the fine at €50 million. The CJEU also dismissed the fourth ground, stating that the deterrence multiplier is designed to discourage future anticompetitive conduct and is therefore based on the financial resources of the entity in question at the time at which the fine is imposed rather than the time at which the infringement took place.
The CJEU did, however, uphold YKK's argument that the Commission and General Court had failed to apply the upper limit of 10 percent of world group turnover to part of the fine. The Commission had found that "YKK Stocko," a subsidiary of YKK, was solely responsible for the fine imposed for the competition infringements in the period prior to its acquisition by YKK, because YKK had no control over its behavior during this time. However, in determining the amount of the fine, the Commission had used the turnover of the whole YKK group of companies. The CJEU concluded that the Commission should have used only the turnover of YKK Stocko to determine the maximum amount of this part of the fine because they were solely responsible for it. The fine was therefore reduced substantially from €19.25 million (US$24 million) to €2.79 million (US$3.49 million).
The full CJEU judgment is available here.
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