On 10 April 2014, the European Court of Justice (ECJ) handed down two judgments partially upholding appeals brought by the European Commission, Siemens Transmission & Distribution Ltd (Reyrolle), Siemens Transmission & Distribution SA (SEHV), Nova Magrini Galileo SpA (Magrini) and others, on the one hand, and by Areva SA (Areva) and Alstom SA (Alstom), on the other hand. The appeals had been brought against the General Court's (GC) judgments of 3 March 2011 which had partially annulled the European Commission's decision in the gas insulated switchgear cartel case.
On 24 January 2007, the Commission imposed fines totalling € 750.7 million on eleven producers of gas insulated switchgear for their participation in a cartel consisting of, among others, bid-rigging, price-fixing and market-allocation during two consecutive infringement periods (1988-1999 and 2002-2004) (see VBB on Competition Law, Volume 2007, No. 2, available at www.vbb.com).
In the judgments under appeal, the GC found that the Commission had infringed the principle that penalties must be specific to the offender by holding Reyrolle, SEHV and Magrini jointly and severally liable for payment of a fine which exceeded their joint liability (see VBB on Competition Law, Volume 2011, No. 3, available at www.vbb.com). The GC therefore annulled the Commission's decision in so far as concerned the calculation of the fine imposed on SEHV and Magrini jointly and severally with Schneider, and increased the fine from € 4.6 million to € 8.1 million. The GC also set the share of the fine to be paid by each of the companies held jointly and severally liable, as a reflection of their internal relationship. Finally, the GC reduced the increase in the basic amount of the fines imposed on the Areva and Alstom group companies, and ordered Alstom to pay € 48.19 million jointly and severally with Areva.
In the appeals brought by the Commission, Reyrolle, SEHV and Magrini, the ECJ considered, among others, allegations that the GC had erred in law by finding that the Commission has the power or the obligation to determine the respective shares to be paid by the various entities held jointly and severally liable for payment of the fine, and by incorporating the amount of the fine imposed on Schneider alone in the fine for which Schneider, SEHV and Magrini are jointly and severally liable, in spite of the fact that Schneider did not bring proceedings before the GC.
In addressing these arguments the ECJ held that, while the Commission is entitled to hold a number of companies jointly and severally liable for payment of a fine, it is not possible to conclude that the Commission's power to impose penalties extends, beyond the determination of joint and several liability from an external perspective, to the power to determine the shares to be paid by those held jointly and severally liable from the perspective of their internal relationship. According to the ECJ, the latter is a contentious issue to be resolved at a later stage, and it is for the national courts to determine those shares by applying national law. The GC thus erred in law by finding that the Commission had to determine the shares to be paid by the companies in view of their internal relationship. The GC also erred in law by finding that EU law imposes liability in equal shares in the absence of any finding in the Commission's decision that certain of the companies held jointly and severally liable for payment of a fine have a greater share of responsibility than others. The ECJ furthermore restored the fines imposed by the Commission on SEHV, Magrini and Schneider, as it found that the GC had not been entitled to make a variation of the fine imposed jointly and severally on the three parties since the fine imposed on Schneider individually had not been the subject of an appeal before the GC and the variation could be to SEHV's and Magrini's disadvantage.
In the appeals brought by Areva and Alstom, the parties argued, among others, that the GC had failed to censure the Commission for concluding that Areva and Alstom were de facto jointly and severally liable, although the two companies had never formed part of a single economic unit.
The ECJ first noted that, in the present case, the Commission and the GC did not establish, as such, a formal link of joint and several liability between the successive parent companies Alstom and Areva. However, the ECJ found that the method chosen by the Commission and confirmed by the GC to establish joint and several liability between those parent companies and the subsidiary, consisting in the incorporation of the amount of the fine for which the Areva group and that subsidiary was jointly and severally held liable in the fine for which Alstom and the subsidiary were jointly and severally liable, is likely in reality to produce the same effects as those arising under such a link. According to the ECJ, such a definition of joint and several liability is at odds with the principle that the penalty must be specific to the offender and the offence. This principle requires that the Commission fixes separately, for each of the undertakings involved, the amount of the fine for which the companies forming part of the undertaking are jointly and severally liable. With regard to the external determination of joint and several liability, each successive parent company must thus be in a position to infer from the Commission's decision its share of liability for payment of the fine, corresponding to the part of the fine imposed on the subsidiary which may be imputed to the parent concerned. The ECJ thus altered the allocation of the fines for which Areva and Alstom were held liable, without amending the amount of the fines.
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