On 14 May, Johan Ysewyn and Dirk Van Erps (DG COMP) gave a presentation on recent EU cartel enforcement at the annual Advanced EU Competition Law Conference in London. Their presentation covered developments in enforcement, policy, and court review between May 2018 and May 2019.
There was not much cartel enforcement by the European Commission (“EC”) during the time period covered by the review. The EC issued only one settlement decision in Occupant Safety Systems II, which was triggered by an immunity application. The decision covered two separate cartels, which lasted from 2007 to 2011 and from 2008 to 2011, respectively. Both cartels involved the exchange of commercially sensitive information and price coordination for the supply of seatbelts, airbags, and steering wheels to Volkswagen and BMW, respectively.
One of the most notable developments in recent years for the EC remains the drop in immunity applications. It remains to be seen whether this trend will continue and whether some of the envisaged detection measures will yield more investigations. In this regard, the EC recently introduced an anonymous whistle blower tool, which aims to encourage potential whistle blowers to come forward without risking adverse consequences from having revealed their identity. Further, the EC has set up its new eLeniency tool, which enables cooperating companies to make online submissions in the context of leniency applications, settlement procedures and other proceedings. Finally, deepening cooperation within the ECN may also lead to more cartel investigations by the competition authorities in the Member States. The ECN+ Directive is intended to “bring the enforcement of competition rules in line with the digital age and tackle illegal competition practices in the EU”. Having entered into force in January 2019, which Member States have to implement within two years.
Notwithstanding fewer EC decisions, there have been a considerable number of appeals to the Court of Justice of the European Union (“CJEU”), with both the General Court (“GC”) and the European Court of Justice (“ECJ”) continuing to scrutinise various technical points.
The GC addressed various issues in fifteen appeals relating to the Power Cables cartel. This included the permissibility of continued review of documents obtained during dawn raids at EC premises in Nexans France and Nexans v Commission and Prysmian and Prysmian cavi e sistemi v Commission. In The Goldman Sachs Group v Commission, the Court also confirmed parental liability of private equity firms for conduct of their portfolio companies, even where they have less than a 100% shareholding.
In Coveris Rigid France v Commission – an appeal in the Retail Food Packaging cartel – the GC examined the scope of successor liability in asset transfer scenarios. Certain assets of Coveris, which had been participants in the cartel, were subsequently sold to ONO Packaging SAS (“ONO”). The Court rejected the argument that ONO was consequently liable as Coveris’ economic successor, holding that liability for transferred assets follows only in limited circumstances: (i) if the transferring entity no longer exists, (ii) in case of inter-group transfers between one and the same entity, and (iii) where bad faith transactions between independent entities aimed to circumvent EU competition law.
On procedural issues, the ECJ addressed the scope of damages for lengthy proceedings in EU v Gascogne Sack, EU v ASPLA, and EU v Kendrion. Participants in the Industrial Bags cartel had claimed damages for lengthy proceedings before the GC. The applicants argued that the excessive length of the proceedings had led to losses because they resulted in additional payments for bank guarantees initially taken out to pay the cartel fines. This was initially upheld by the GC. On appeal, the ECJ overturned the GC’s ruling, holding hat it was the firms’ choice to obtain bank guarantees instead of paying the fine in full. As a result, the causal link between the breach of the GC’s obligation to adjudicate within a reasonable time and the prejudice resulting from the bank guarantee payments was insufficient.
In Pometon v Commission, the Court addressed the presumption of innocence in staggered hybrid settlement decisions. As the only non-settling party in the Steel Abrasives cartel, Pometon argued that references to its conduct in the settlement decision breached its rights of defence, since it infringed the EC’s duty of impartiality. Rejecting this argument, the GC held that the EC’s duty to impartiality does not preclude any reference to a non-settling party in settlement decisions. A mere description of events in settlement decisions did not amount to a legal characterisation or disguised rulings.
Looking forward, the speakers noted an increase in challenges to investigative acts and an increased scrutiny of the proof and motivation of EC decisions by the Courts. Notable also was the deepening cooperation within the ECN. An area to watch are cartels where the theory of harm revolves around restrictions of innovation, notably in the context of the Car Emissions investigation.
Covington Competition blog readers can access the slides of the presentation: Advanced EU Competition Law London (May 13-15) FV