Case T-68/04
SGL Carbon AG
v
Commission of the European Communities
(Competition – Agreements, decisions and concerted practices – Market for carbon and graphite based products for electrical and mechanical applications – Guidelines for calculating the amount of fines – Gravity and duration of the infringement – Principle of proportionality – Principle of equal treatment – Upper limit of 10% of turnover – Default interest)
Summary of the Judgment
1. Competition – Fines – Decision imposing fines – Obligation to state the reasons on which the decision is based
(Art. 253 EC; Council Regulation No 17, Art. 15(2); Commission Notice No 98/C 9/03)
2. Competition – Fines – Amount – Determination – Deterrent character – Discretion of the Commission
(Arts 81(1) EC and 82 EC; Council Regulation No 17, Art. 15(2); Commission Notice No 98/C 9/03)
3. Competition – Fines – Amount – Determination – Division of undertakings concerned into categories having a specific starting point
(Council Regulation No 17, Art. 15(2); Commission Notice No 98/C 9/03, point 1 A)
4. Competition – Fines – Amount – Determination – Determination of an absolute starting amount by reference to the nature of the infringement subsequently adjusted for each undertaking
(Council Regulation No 17, Art. 15(2); Commission Notice No 98/C 9/03)
5. Competition – Fines – Amount – Determination – Criteria – Turnover taken into consideration
(Council Regulation No 17, Art. 15(2); Commission Notice No 98/C 9/03)
6. Competition – Fines – Amount – Determination – Criteria – Duration of the infringement – Long-term infringements
(Council Regulation No 17, Art. 15(2); Commission Notice No 98/C 9/03, point 1 B)
7. Competition – Fines – Amount – Limit fixed by Article 15(2) of Regulation No 17
(Art. 81(1) EC; Council Regulation No 17, Art. 15(2))
8. Competition – Fines – Discretion of the Commission – Scope – Power to fix the detailed rules for payment of fines
(Council Regulation No 17, Art. 15(2); Commission Regulation No 2342/2002, Art. 86)
1. As regards the determination of fines for infringements of competition law, the Commission fulfils its obligation to state reasons where it indicates, in its decision, the factors on the basis of which the gravity and duration of the infringement were assessed, and is not required to include in it a more detailed account or the figures relating to the method of calculating the fines. Statements of figures relating to the calculation of fines, however useful and desirable such figures may be, are not essential to compliance with the duty to state reasons.
As regards the reasoning behind the starting amounts in absolute terms, it should be pointed out that fines constitute an instrument of the Commission’s competition policy and the Commission must be allowed a margin of discretion when fixing their amount, in order that it may channel the conduct of undertakings towards observance of the competition rules. Moreover, it is important to ensure that fines are not easily foreseeable by economic operators. The Commission cannot therefore be required to set out reasons in that connection other than those relating to the gravity of the infringement.
(see paras 31-32)
2. The Commission’s power to impose fines on undertakings which intentionally or negligently commit an infringement of Articles 81(1) EC or 82 EC is one of the means conferred on the Commission with which to carry out the task of supervision conferred on it by Community law. That task certainly includes the duty to investigate and punish individual infringements, but it also encompasses the duty to pursue a general policy designed to apply, in competition matters, the principles laid down by the Treaty and to guide the conduct of undertakings in the light of those principles. It follows that the Commission has the power to decide the level of fines so as to reinforce their deterrent effect where infringements of a given type, although established as being unlawful at the outset of Community competition policy, are still relatively frequent on account of the profit that certain of the undertakings concerned are able to derive from them.
In a situation in which an undertaking has participated concomitantly in several distinct infringements of the provisions of Article 81(1) EC, corresponding to a classic type of infringement of competition law and conduct which the Commission has found to be unlawful time and time again, it is open to the Commission to consider it necessary to set the amount of the fine at a sufficiently deterrent level within the limits laid down in Regulation No 17.
(see paras 52-54, 56)
3. The method of dividing the members of a cartel into categories for the purposes of treating them differently when setting the starting amounts of the fines, the principle of which has been validated by the Court of First Instance even though it has the effect of ignoring the differences in size between undertakings in the same category, results in a flat-rate starting amount for all undertakings in the same category.
The Commission may, for example, divide the undertakings concerned into several categories in divisions of 5% of the market shares, although that is not the only method of reflecting the proportionality of the different market shares without erroneous assessment in proceedings by which the Commission imposes penalties on cartels. In exercising its broad discretion, the Commission may also create categories using divisions of 10% of the market share.
Such a division must, however, respect the principle of equal treatment, and the amount of the fines must at least be proportionate in relation to the factors taken into account in the assessment of the gravity of the infringement. The role of the Community judicature is limited to reviewing whether that division is coherent and objectively justified.
In that regard, a division of the undertakings concerned into three categories, namely large, medium and small operators, is not an unreasonable way of taking account of their relative importance on the market in order to set the starting amount, as long as it does not lead to a grossly inaccurate representation of the market concerned. In addition, the Commission’s method of setting the thresholds of the categories at 10 and 20% cannot, a priori, be regarded as internally incoherent.
In any event, in the context of the division of the members of the cartel into categories, there is nothing which obliges the Commission to determine the relationship between the starting amounts of the fines determined by reference to the relationship which exists between the market share of the ‘largest’ undertaking in the highest category and that of the ‘smallest’ undertaking in the lowest category.
Finally, even if the effect of the division into categories is that certain undertakings are allocated the same starting amount even though they differ in size, that difference in treatment is objectively justified by the greater importance attached to the nature of the infringement than to the size of the undertakings in the assessment of the gravity of the infringement.
(see paras 62, 65-66, 68-70, 79, 92)
4. As regards infringements which have to be classified as ‘very serious’, the Guidelines for the calculation of fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty merely state that the likely fines are ‘above [EUR] 20 million’. The only limits referred to in the Guidelines which apply in the case of such infringements are the general limit of 10% of overall turnover set by Article 15(2) of Regulation No 17 and the limits on the additional amount which may be imposed in respect of the duration of the infringement. There is therefore nothing in the Guidelines to preclude a large increase in the starting amount of the fine in absolute terms in the case of a ‘very serious’ infringement.
(see para. 73)
5. When determining the amount of the fines imposed for breach of Community competition law, the proportion of the turnover accounted for by the goods in respect of which the infringement was committed gives a proper indication of the scale of the infringement on the relevant market. In particular, the turnover in the products which were the subject of a restrictive practice constitutes an objective criterion giving a proper measure of the harm which that practice does to normal competition.
Concerning the determination of the size of an infringement on the market and the share of the responsibility which belongs to each participant in a cartel, the Commission is thus right to take into consideration the turnover in respect of the goods at issue and the market share of each of the undertakings present on the market concerned during the last full calendar year of the infringement, and not the situation of those undertakings on the day the decision was adopted.
(see paras 99-100 )
6. Even supposing that price fixing agreements are essentially created to last, the Commission cannot be prevented from taking account of their actual duration in each individual case. Certain cartels, in spite of their planned longevity, are detected by the Commission or reported by one of the participants shortly after entering into operation. Their harmful effect is necessarily less than in a situation where they have been in operation for a long period. Consequently, a distinction must always be drawn, pursuant to Article 15(2) of Regulation No 17, between the actual duration of the infringements and their gravity as resulting from their particular nature.
In addition, point 1.B, first paragraph, third indent, of the Guidelines for the calculation of fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty does not provide for an automatic increase of 10% per year for long‑term infringements but grants the Commission a discretion in that regard. The latter may therefore decide to increase the starting amounts of the fines by 10% for each full year of a long infringement and an additional 5% for each additional period above six months but less than a year, and do so in view of the length of the period of infringement. The fact that the Commission adopts the principle of a 10% per annum increase for all the undertakings involved in an infringement that has rightly been classified as long‑term does not therefore contradict the Guidelines in any way. Moreover, it has not been demonstrated that Community law contains a ‘principle of decreasing fines’ in the case of long‑term infringements.
Nor is it apparent from point 1.B of the Guidelines that the first year of an infringement should not be taken into account. The provision merely states that, in the case of short-term infringements, in general less than one year, there should be no increase. On the other hand, there will be an increase for infringements of above one year. That increase may be set at 10% of the starting amount for ‘each year’ where, as in the present case, the infringement lasted for more than five years.
(see paras 109, 111-112, 120)
7. Although the Commission has discretion, subject to review by the Court, as regards reducing fines under the Commission Notice on the non-imposition or reduction of fines in cartel cases in the light of the circumstances of each case, it must, on the other hand, comply with the 10% upper limit laid down in Article 15(2) of Regulation No 17. The Commission does not have discretion in the application of that upper limit, which is linked solely to the level of turnover referred to in the abovementioned provision.
In interpreting the express reference to the turnover of the undertaking, the upper limit of 10% aims to prevent fines from being disproportionate in relation to the size of the undertaking and, since only the total turnover can effectively give an approximate indication of that size, the aforementioned percentage must be understood as referring to the total turnover. The objective of the ceiling of 10%, as so defined, cannot be considered separately from the wording and scope of Article 15(2) of Regulation No 17, since that objective cannot justify an interpretation of the abovementioned article which is contrary to its wording.
It is permissible for the Commission to impose on the applicant four separate fines, each respecting the limits laid down in Article 15(2) of Regulation No 17, on the condition that it had committed four separate infringements of Article 81(1) EC. For that purpose, the Commission may initiate only one set of proceedings leading to the adoption of a single decision finding the existence of several distinct infringements and imposing on the undertaking separate fines, or several sets of proceedings, that not constituting an ‘unlawful circumvention’ of the ceiling laid down in Article 15(2) of Regulation No 17. It is irrelevant, for the application of that ceiling, whether fines are imposed for the various infringements of the competition rules in a single set of proceedings or in separate proceedings at different points in time, since the maximum limit of 10% applies separately to each infringement of Article 81 EC penalised by the Commission.
(see paras 124, 127, 131-132)
8. The powers conferred on the Commission by Article 15(2) of Regulation No 17 include the power to determine the date on which the fines are payable and that on which default interest begins to accrue, the power to set the rate of such interest and to determine the detailed arrangements for implementing its decision by requiring, where appropriate, the provision of a bank guarantee covering the principal amount of the fines imposed plus interest. If the Commission had no such power, the advantage which undertakings might be able to derive from late payment of fines would weaken the effect of penalties imposed by the Commission when carrying out its task of ensuring that the rules on competition are applied. Thus, the charging of default interest on fines is justified by the need to ensure that the Treaty is not rendered ineffective by practices applied unilaterally by undertakings which delay paying fines imposed on them and to ensure that those undertakings do not enjoy an advantage over those which pay their fines within the period laid down.
The Commission has the right to set interest for late payment at the market rate plus 3.5 percentage points and, where a bank guarantee is provided, at the market rate plus 1.5 percentage points.
It is entitled to adopt a point of reference higher than the applicable market rate offered to the average borrower, to an extent necessary to discourage dilatory behaviour, without disregarding the right to effective judicial protection which constitutes a general principle of Community law.
In that regard, in order to prevent the uncertain duration of those proceedings having an impact on the amount of interest, an undertaking may request suspension of the enforcement of the Commission’s decision imposing a fine on it or provide a bank guarantee enabling it to reduce the interest rate from 5.5 to 3.5%.
Moreover, by awarding interest of 0.1% above the minimum interest rate offered for refinancing operations of the European Central Bank on provisional payments made by undertakings to discharge their fines, the Commission is granting the undertaking concerned a privilege not provided for by the Treaty, Regulation No 17, or Regulation No 2342/2002 laying down detailed rules for the implementation of Council Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities. The interest rate applied by the Commission to fines in respect of which it ultimately becomes apparent that they were wrongly paid pursues a totally different aim to that applied for late payment interest. The former interest rate aims to prevent the unjust enrichment of the Communities to the detriment of an undertaking whose action for annulment of its fine is successful, whereas the latter interest rate seeks to prevent abusive delays in the payment of a fine.
(see paras 143-144, 146, 148-149, 152)