European Union: ECJ Upholds GC Ruling In Plastic Industrial Bags Cartel Case

On 19 June 2014, the Court of Justice of the European Union ("ECJ") handed down a ruling upholding a judgment by the General Court ("GC") issued on 6 March 2012 that reduced, from € 15.3 million to € 14.45 million, the amount of the fine for which FLS Plast had been held jointly and severally liable for the participation of its subsidiary Trioplast Wittenheim in a cartel in the plastic industrial bags sector.

The ECJ judgment arises from a November 2005 decision in which the Commission imposed fines totalling € 290.71 million on sixteen companies for infringing Article 101(1) TFEU by fixing prices, agreeing to sales quotas, sharing customers, exchanging confidential information and rigging bids (see VBB on Competition Law, Volume 2005, No. 12, available at www.vbb.com).

FLS Plast brought proceedings before the GC challenging, among other things, the fact that it was found liable in its capacity as the parent company of Trioplast Wittenheim in which it held 100% of the capital (see VBB on Competition Law, Volume 2012, No. 3, available at www.vbb.com). In its judgment, the GC found that the Commission had not established to the requisite legal standard that FLS Plast exercised actual control over Trioplast Wittenheim throughout the year of 1991 and could be held liable for its subsidiary's anti-competitive behavior during that period. This was because, during this period, FLS Plast only held a 60% shareholding in Trioplast Wittenheim and, thus, it could not be presumed that FLS Plast actually exercised control over its subsidiary. As a result, the GC annulled the decision in so far as it concerned the imputability of the infringement to FLS Plast throughout the year of 1991 and adjusted the amount of the fine imposed on it from € 15.3 million to € 14.45 million.

On appeal to the ECJ, FLS Plast sought the annulment of the decision claiming, among other things, that the GC breached the principle of equal treatment by wrongly holding that the benefit of a 30% reduction of the basic amount of the fine granted under the Leniency Notice to Trioplast Industrier – the successive parent of Trioplast Wittenheim – could not be extended to FLS Plast on the grounds that Trioplast Industrier was granted that reduction unlawfully. The ECJ rejected this argument and held that the GC was right in holding that FLS Plast was not entitled to the 30% reduction of the basic amount of the fine, but that the GC's determination was founded on legally incorrect grounds. The ECJ pointed out that a reduction of the fine granted under the Leniency Notice to an undertaking which has cooperated with the Commission cannot be extended to a company which, for part of the infringement, had formed part of the economic entity constituted by that undertaking, but no longer formed part of it at the time when that undertaking cooperated with the Commission. Therefore, the 30% reduction granted to Trioplast Industrier could, in any event, not be extended to FLS Plast given that Trioplast Wittenheim no longer formed an economic entity with FLS Plast when it cooperated with the Commission, and it was, thus, irrelevant whether or not such a reduction was rightly granted to Trioplast Industrier.

FLS Plast also argued that: (i) the duration of the proceedings before the GC had been excessive since six years elapsed between the lodging of the appeal and delivery of the GC's judgment; and (ii) the GC had remained inactive for a period of over four years between the end of the written procedure in 2007 and the initiation of the oral procedure in 2011. The ECJ held that the duration of the proceedings before the GC had indeed been excessive and in breach of Article 47 of the Charter since it could not be justified by any of the particular circumstances of the case. However, the ECJ pointed out that the sanction for such a breach must be an action for damages before the GC. As a result,the ECJ dismissed FLS Plast's appeal in its entirety.

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