Case T-127/04
KME Germany AG and Others
v
Commission of the European Communities
Competition – Agreements, decisions and concerted practices – Market for copper industrial tubes – Decision finding an infringement of Article 81 EC – Price-fixing and market-sharing – Fines – Actual impact on the market – Size of the market concerned – Duration of the infringement – Attenuating circumstances – Cooperation)
Summary of the Judgment
1. Competition – Fines – Amount – Determination – Legal context – Guidelines adopted by the Commission
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03)
2. Competition – Fines – Amount – Determination – Criteria – Possibility of differentiating between the undertakings involved in the same infringement by reference to their market shares in the products in question – No obligation to demonstrate that the infringement actually had an impact on the market
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1 A)
3. Competition – Fines – Amount – Determination – Criteria – Actual impact on the market – No obligation to demonstrate actual impact in order to classify the infringement as very serious
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1 A, first para.)
4. Competition – Fines – Amount – Determination – Criteria – Actual impact on the market – Criteria for assessment
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1 A, first para.)
5. Competition – Fines – Amount – Determination – Criteria – Seriousness of the infringement – Size of the market for the products in question
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1 A)
6. Competition – Fines – Amount – Determination – Criteria – Duration of the infringement – Infringements of long duration – 10% increase of the starting amount per year
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 1 B)
7. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances
(Council Regulation No 17, Art. 15(2); Commission Notice 98/C 9/03, Section 3)
8. Competition – Fines – Amount – Determination – Non-imposition or reduction of the fine for cooperation of the undertaking concerned
(Council Regulation No 17, Art. 15(2); Commission Notices 96/C 207/04, Section D, and 98/C 9/03, Section 3, sixth indent)
9. Competition – Fines – Amount – Determination – Criteria – Account to be taken of the cooperation of the undertaking concerned with the Commission – Distinction between a situation giving rise to immunity from a fine and another giving rise to a reduction in its amount
(Council Regulation No 17, Art. 15(2); Commission Notice 96/C 207/04)
10. Competition – Fines – Amount – Determination – Criteria – Account to be taken of the cooperation of the undertaking concerned with the Commission – Respect for the principle of equal treatment
(Council Regulation No 17, Arts 11 and 15(2); Commission Notice 96/C 207/04, Section D)
1. When reviewing the legality of fines imposed for breach of the Community competition rules, it is for the Court of First Instance to verify whether the Commission exercised its discretion in accordance with the method set out in the 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 and, should it be found to have departed from that method, to verify whether that departure is justified and supported by sufficient legal reasoning.
The self-limitation on the Commission’s discretion arising from the adoption of the Guidelines is not incompatible with the Commission’s maintaining a substantial margin of discretion. The Guidelines display flexibility in a number of ways, enabling it to exercise its discretion in accordance with the provisions of Regulation No 17, as interpreted by the Court of Justice.
Moreover, in areas such as determination of the amount of a fine, where the Commission has a discretion, for example as regards the uplift for duration, review of the legality of those assessments is limited to determining the absence of manifest error of assessment.
Furthermore, the discretion enjoyed by the Commission and the limits which it has imposed in that regard do not, in principle, prejudge the exercise by the Community judicature of its unlimited jurisdiction, which empowers it to annul, increase or reduce the fine imposed by the Commission.
(see paras 34-37)
2. When the Commission determines the starting amounts of fines for infringement of the Community competition rules, it is entitled to take account of the specific weight of each undertaking which participated in the infringement, and thus the real impact of the offending conduct of each undertaking on competition. Even without proof of actual impact of the infringement on the market, the Commission is entitled to carry out differentiated treatment, by reference to the shares held in the market concerned. The market share of each of the undertakings concerned in the market which formed the subject-matter of a restrictive practice constitutes an objective factor which gives a fair measure of the responsibility of each of them as regards the potential harmfulness of that practice for the normal operation of competition.
(see paras 61-62)
3. In the context of the assessment of the seriousness of an infringement of the Community competition rules, for the purposes of determining the starting amount of the fine imposed on an undertaking, even if the Commission does not prove that a cartel has had an actual effect on the market, that is irrelevant to the classification of the infringement as ‘very serious’ and thus to the amount of the fine. In that regard, the Community system of penalties for infringement of the competition rules, as established by Regulation No 17 and interpreted by the case-law, shows that, by reason of their very nature, cartels merit the severest fines. Their possible concrete impact on the market, particularly the question to what extent the restriction of competition resulted in a market price higher than would have obtained without the cartel, is not a decisive factor for determining the level of fines.
Moreover, it follows from the 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 that agreements or concerted practices involving, in particular, price-fixing and customer-sharing may be classified as ‘very serious’ on the basis of their nature alone, without it being necessary for such conduct to have a particular impact or cover a particular geographic area. That conclusion is supported by the fact that, whilst the description of ‘serious’ infringements expressly mentions market impact and effects over extensive areas of the common market, the description of ‘very serious’ infringements makes no mention of a requirement that there be an impact or that there be effects in a particular geographic area.
(see paras 63-65)
4. The actual impact of a cartel on the market must be regarded as sufficiently demonstrated if the Commission is able to provide specific and credible evidence indicating with reasonable probability that the cartel had an impact on the market.
It is legitimate for the Commission to deduce that the infringement has had an actual effect on the market on the basis of such indicators as the fact that prices fell during periods when the collusive agreement was not strictly complied with and rose strongly in other periods, the implementation of a system for exchanging information concerning sales volumes and price levels, the major share of the market held by the cartel participants as a whole, and the relative stability of the market shares of the cartel participants throughout the duration of the infringement.
Moreover, the fact that cartel members did not always comply with the agreements is not sufficient to exclude their having had a market impact.
(see paras 68-71)
5. When assessing the seriousness of an infringement of the Community competition rules for the purposes of determining the starting amount of the fine imposed on an undertaking, the Commission may have regard to the size of the market affected but is not obliged to do so. For that purpose, it may take the turnover of the market concerned into consideration. There is no valid reason to require that that turnover be calculated excluding certain production costs. There are in all industries costs inherent in the final product which the manufacturer cannot control but which nevertheless constitute an essential element of its business as a whole and which, therefore, cannot be excluded from its turnover when fixing the starting amount of the fine. The fact that the price of a raw material constitutes an important part of the final price of the finished product or that the risk of price fluctuations is higher for one raw material than for others does not invalidate that conclusion.
(see paras 86, 91)
6. It is clear from the 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 that the Commission has not established any overlap or interdependence between assessment of the gravity and that of the duration of the infringement. The fact that it has reserved for itself the possibility of increasing the fine per year of infringement, going in the case of long-lasting infringements up to 10% of the amount adopted for the seriousness of the infringement, does not in any way oblige it to fix that uplift by reference to the intensity of the activities of the cartel or its effects, or of the seriousness of the infringement. It is for the Commission to choose, in the context of its discretion, the uplift which it intends to apply in respect of the duration of the infringement.
(see paras 101, 103)
7. The Commission must comply with the terms of its own Guidelines when determining the amount of fines. However, the 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 do not state that the Commission must always take account separately of each of the mitigating circumstances listed in Section 3 of the Guidelines and it is not obliged to grant an additional reduction on such grounds automatically; the appropriateness of any reduction of the fine in respect of mitigating circumstances must be examined comprehensively on the basis of all the relevant circumstances.
The adoption of those Guidelines has not rendered irrelevant the previous case-law under which the Commission enjoys a discretion as to whether or not to take account of certain matters when setting the amount of the fines it intends imposing, by reference in particular to the circumstances of the case. Thus, in the absence of any binding indication in the Guidelines regarding the mitigating circumstances that may be taken into account, the Commission has retained a degree of latitude in making an overall assessment of the extent to which a reduction of fines may be made in respect of mitigating circumstances.
(see paras 114-115)
8. There is a paradox inherent in the Commission notice of 1996 on the non-imposition or reduction of fines in cartel cases (‘the 1996 Leniency Notice’), in the sense that an undertaking falling under Section D of that notice which supplies new information to the Commission runs the risk of being fined more severely than in a case where it does not send that information to the Commission. The sixth indent of Section 3 of the 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, according to which effective cooperation by the undertaking in the proceedings, outside the scope of the 1996 Leniency Notice may constitute an attenuating circumstance, allows a remedy for that paradox. In application of the sixth indent of Section 3 of the Guidelines, the Commission may thus decide not to increase the amount of the fine imposed on an undertaking in relation to certain periods of the infringement for which that undertaking was the first to supply it with new information in the context of the 1996 Leniency Notice.
(see paras 126-127, 148)
9. It is inherent in the logic of immunity from fines that only one of the cartel members can have the benefit, given that the effect being sought is to create a climate of uncertainty within cartels by encouraging their denunciation to the Commission. That uncertainty results precisely from the fact that the cartel participants know that only one of them can benefit from immunity from being fined by denouncing the other participants in the infringement, thereby exposing them to the risk that they face more severe fines.
In a situation in which the Commission knows that a cartel exists but does not have certain essential information capable of establishing the total duration of that infringement, it is particularly desirable to have recourse to such a mechanism, particularly in order to prevent the offenders from coming to an agreement to hide that information.
Such a situation is distinct from that in which the Commission is already aware of evidence, but is seeking to complete it. In that latter case, the granting of a fine reduction to the offenders rather than immunity from fining to a single undertaking, is justified by the fact that the aim is no longer to reveal a fact likely to lead to an increase in the fine imposed, but to assemble as much evidence as possible in order to reinforce the Commission’s ability to establish the facts in question.
(see paras 130-132)
10. In the context of a leniency policy, it is permissible for the Commission to grant larger fine reductions to undertakings which cooperate with it spontaneously than to undertakings which do not.
For the purposes of applying Section D of the Commission notice of 1996 on the non-imposition or reduction of fines in cartel cases, the Commission may thus, without ignoring the equal treatment principle, take account of the fact that an undertaking started to cooperate with it only in reply to a request for information under Article 11 of Regulation No 17.
(see paras 142-143, 147)