Case T‑372/10
Bolloré
v
European Commission
(Competition — Agreements, decisions and concerted practices — Market for carbonless paper — Price-fixing — Decision finding an infringement of Article 101 TFEU — Decision adopted following annulment of a first decision — Imputation of the infringement to the parent company in its capacity as direct participant — Principle that offences and penalties must have a proper basis in law — Legal certainty — Principle that penalties must be applied only to the offender — Fair hearing — Equal treatment — Reasonable time — Rights of the defence — Fines — Limitation period — Attenuating circumstances — Cooperation)
Summary of the Judgment
1. Competition — Union rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — No infringement of the principle that offences and penalties must have a proper basis in law
(Art. 101 TFEU; EEA Agreement, Art. 53)
2. Competition — Union rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — Criteria for assessment – Liability of parent companies not unforeseeable — No breach of the principle of legal certainty
(Art. 101 TFEU; EEA Agreement, Art. 53)
3. Competition — Union rules — Infringements — Attribution — Parent company and subsidiaries — Economic unit — Liability of parent company not to be regarded as no-fault liability — Penalty imposed on parent company — No infringement of principle that penalties must be applied only to the offender
(Arts 101 TFEU and 102 TFEU)
4. Competition — Administrative procedure — Hearings — Hearing of an undertaking in the absence of Commissioners — No breach of the right to a fair legal process
(Arts 101 TFEU and 102 TFEU; Charter of Fundamental Rights of the European Union, Art. 47; Commission Regulation No 773/2004, Art. 14(1))
5. Competition — Administrative procedure — Right to a fair legal process — Commission having functions both of investigating and penalising infringements — No infringement of the requirement of impartiality
(Art. 101 TFEU; Charter of Fundamental Rights of the European Union, Art. 47)
6. Competition — Administrative procedure — Right to a fair legal process — Adoption, following annulment by the EU judicature, of a new measure on the basis of valid earlier preparatory measures — Assertion, by the Commission, of its determination not to allow undertakings to escape penalties for procedural reasons — No infringement of the requirement of impartiality
(Arts 101 TFEU and 102 TFEU)
7. Competition — Administrative procedure — Premature manifestation by the Commission of its belief that an infringement exists — No relevance to the reality of the evidence of infringement subsequently adduced
8. Competition — Fines — Assessment by reference to the individual conduct of the undertaking — Irrelevant that no sanction brought against another economic operator
(Art. 101(1) TFEU; Council Regulation No 1/2003, Art. 23)
9. Union law — Principles — Duty to act within a reasonable time — Administrative procedure — Criteria for assessment — Competition — Administrative and judicial procedures — Distinction for the purposes of assessing whether action taken within a reasonable time
(Charter of Fundamental Rights of the European Union, Art. 47(2); Council Regulations No 17 and No 1/2003)
10. Competition — Administrative procedure — Limitation period for fines — Exclusive application of Regulations No 2988/74 and No 1/2003 — Considerations concerning principle that action must be taken within a reasonable time not applicable
(Council Regulations No 2988/74 and No 1/2003)
11. Competition — Administrative procedure — Obligation on the part of the Commission — Duty to act within a reasonable time — Annulation of the decision finding an infringement for excessive duration of the procedure — Condition — Harm to the rights of defence of the undertakings concerned — Parent company unable to defend itself following transfer of its subsidiary and its archives — Circumstances imputable solely to that company
(Art. 101 TFEU; Council Regulation No 1/2003)
12. Competition — Administrative procedure — Observance of the rights of the defence — Duty to act within a reasonable time
(Art. 101 TFEU; Council Regulation No 1/2003)
13. Competition — Administrative procedure — Limitation period for fines — Limitation period expiring in favour of the subsidiary — Not relevant to the liability of the parent company
(Council Regulation No 1/2003, Art. 25)
14. Competition — Administrative procedure — Time-limit with regard to procedures — Interruption — Scope –Interruption of limitation period in relation to all participants in the infringement — Meaning of undertaking having participated in the infringement
(Council Regulation No 1/2003, Art. 25(3) and (4))
15. Competition — Fines — Amount — Determination — Discretion of the Commission — Judicial review — Unlimited jurisdiction of the EU judicature — Scope
(Art. 261 TFEU; Council Regulation No 1/2003, Art. 31)
16. Competition — Fines — Amount — Determination — Criteria — Gravity of the infringement — Mitigating circumstances — Poor financial state of the sector in question — Discretion of the Commission
(Council Regulation No 1/2003, Art. 23)
17. Competition — Fines — Amount — Determination — Criteria — Reduction of the amount of the fine in exchange for cooperation of the undertaking in question — Conditions — Need for conduct which facilitated the Commission’s finding of an infringement — Meaning
(Council Regulation No 1/2003, Art. 23; Commission Notice 96/C 207/04, Title D)
1. The principle that offences and penalties must have a proper basis in law requires that legislation must clearly define offences and the penalties applied to them. That condition is satisfied where the individual concerned is able, on the basis of the wording of the relevant provision and, if need be, with the help of the interpretative guidance given by the courts, to know which acts or omissions will make him criminally liable. In that regard, the concept of ‘law’ (‘droit’) for the purpose of Article 7(1) of the European Convention on Human Rights corresponds to ‘law’ (‘loi’) used in other provisions of that convention and encompasses both law of legislative origin and that deriving from case-law.
Thus, a Commission decision imposing a penalty on an undertaking for being the parent company of a cartel participant with which it formed an economic unit does not in any way offend the above principle, since the infringement found by the Commission is clearly defined in Article 101 TFEU and Article 53 of the Agreement on the European Economic Area and the imputation to the parent company of the infringement committed by the subsidiary, on the ground that those companies form a single undertaking for the purposes of EU competition law and, therefore, that the parent company is regarded as having participated in the infringement on the same basis as its subsidiary, is clearly apparent under EU law, according to the long-established case-law of the Court of Justice and the General Court.
(see paras 35-37, 42)
2. In competition matters, the conditions in which parent companies are held liable for the acts of their subsidiaries are not vitiated by absolute unforeseeability which in its view constitutes a breach of the principle of legal certainty.
The fact that the concept of an undertaking applies to potentially different ways of carrying out an economic activity, since, according to the case-law, an undertaking in EU competition law includes any entity carrying out an economic activity, irrespective of its legal status and the way in which it is funded, and that the concept of an undertaking, in that context, must be understood as designating an economic unit even if in law that economic unit consists of several persons, natural or legal, does not alter the fact that the concept of an undertaking, as an economic unit, is perfectly identified and foreseeable in the case of relations between parent companies and their wholly-owned subsidiaries.
Furthermore, the fact that the Commission may impose the fine solely on the subsidiary, or solely on the parent company, or on both, does not constitute a breach of the principle of legal certainty, which requires that legal rules be clear and precise and aims to ensure that situations and legal relationships remain foreseeable. The Commission’s power to impose the penalty on one or the other of the entities — parent company and subsidiary — that form an undertaking which has infringed Article 101 TFEU or Article 53 of the Agreement on the European Economic Area clearly follows from the joint and several nature of their liability.
(see paras 43, 48-50)
3. In competition matters, the basis of the liability of the parent company is not strict liability incurred on behalf of another but liability for its own misconduct and personal in nature.
EU competition law is based on the principle of the personal liability of the economic entity which has committed the infringement. If the parent company is part of that economic unit, it is regarded as jointly and severally liable with the other legal persons making up that unit for the infringements of competition law. Even if the parent company does not participate directly in the infringement, it exercises, in such a case, a decisive influence over the subsidiaries which have participated in it. It follows that, in that context, the liability of the parent company cannot be regarded as strict liability. In such a situation, the parent company is penalised for an infringement which it is deemed to have committed itself.
Therefore, the Commission’s imposition of a penalty on a parent company by reason of the participation of its subsidiary in a cartel does not disregard the principle that penalties must be applied only to the offender, whereby no one is to be punished except for his own act.
(see paras 51, 52)
4. In a procedure for infringement of EU competition rules, the right of an undertaking to a fair legal process is not infringed by the fact that no Commissioner takes part in the hearing of that undertaking.
The Commission is not a court or tribunal within the meaning of Article 6 of the European Convention on Human Rights and Article 47 of the Charter of Fundamental Rights of the European Union. The fact that no Commissioners took part in the hearing of the undertaking concerned is not such as to vitiate the administrative procedure before the Commission. In an administrative procedure in a competition matter, there is nothing to prevent Commissioners responsible for taking a decision imposing fines from being informed of the outcome of the hearing by such persons as the Commission has appointed to conduct it. That approach, based on the administrative — and not judicial — nature of the procedure before the Commission, applies in the context of Commission Regulation (EC) No 773/2004, relating to the conduct of procedures by the Commission pursuant to Articles 101 TFEU and 102 TFEU and, more precisely, Article 14(1) of that regulation.
(see paras 56-60)
5. The Commission is required, during the administrative procedure, to respect the general principles of EU law, which include the right to a fair hearing laid down in Article 6 of the European Convention on Human Rights and Article 47 of the Charter of Fundamental Rights of the European Union, and of which the requirement of impartiality constitutes an aspect. However, the fact that the Commission, as an administrative body, carries out the functions of investigating and imposing penalties for infringements of Article 101 TFEU does not constitute a breach of that requirement of impartiality, since its decisions are amenable to review by the EU Courts. The fact that the contested decision was adopted by the Commission after a first decision had been annulled by the EU Courts does not call that assessment into question.
(see paras 65-67)
6. In a procedure for infringement of EU competition rules, there is no bias in the Commission resuming the procedure at the point at which an illegality vitiating an earlier decision was found, as the procedure for replacing such a measure may, in principle, be resumed at the very point at which the illegality occurred.
Nor is there any manifestation of bias in an assertion by the Commission that it is determined that members of anti-competitive cartels should not, on procedural grounds, escape the penalties applicable under EU law, since that is merely the assertion of a clear intention, wholly consistent with the task entrusted to the Commission, of making good, on a case-by-case basis, the procedural irregularities found, in order not to undermine the effectiveness of EU competition law.
(see paras 73, 74)
7. See the text of the decision.
(see para. 78)
8. See the text of the decision.
(see para. 93)
9. See the text of the decision.
(see paras 103-105, 107, 111)
10. While the fact that a reasonable period is exceeded may, in certain circumstances, justify annulment of a decision finding an infringement of the competition rules, that does not apply where what is being disputed is the amount of the fines imposed by that decision, since the Commission’s power to impose fines is governed by rules which have established a limitation period for that purpose.
Regulation No 2988/74, concerning limitation periods in procedures and the enforcement of sanctions under the rules of the European Economic Community relating to transport and competition, and then Regulation No 1/2003, which succeeded it in the field of competition, established a complete system of rules covering in detail the periods within which the Commission is entitled, without undermining the fundamental requirement of legal certainty, to impose fines on undertakings which are the subject of procedures under the EU competition rules. In the light of those rules, there is no room for consideration of the Commission’s duty to exercise its power to impose fines within a reasonable period.
(see paras 115-117)
11. In the case of a decision finding infringements of Community competition law, where it has been established that the breach of that principle adversely affected the rights of defence of the undertakings concerned. Other than in that specific situation, failure to observe the duty to deal with the matter within a reasonable time has no effect on the validity of the administrative procedure under Regulation No 17 and Regulation No 1/2003.
In that regard, it is for a parent company to ensure, when selling a subsidiary, that it keeps in its own books or records or by any other means, such as a right of access to the transferred archives, the information that would enable it to retrace the activities of its subsidiary, in order to have the necessary evidence to be able to defend itself in the event of judicial or administrative actions. Thus, where an undertaking claims to be unable effectively to defend itself against its involvement in a second administrative procedure in its capacity as the parent company, by reason of the fact that it has transferred the subsidiary with its archives, that inability results not from the passage of time between the end of the infringement and the statement of objections in the second administrative procedure, or from errors on the Commission’s part, but solely from circumstances imputable to that parent company.
(see paras 119, 152, 153)
12. See the text of the decision.
(see paras 142-149)
13. The fact that the subsidiary may no longer be capable of being penalised for the infringement found, whether because the subsidiary has ceased to exist or because the limitation period has expired in favour of that subsidiary, has no effect on the question whether the parent company, which is itself deemed to have committed the infringement owing to the economic unity with its subsidiary, may be penalised. Admittedly, there would be no liability of the parent company if it were shown that there had been no infringement, but that liability cannot cease to exist because the penalty against the subsidiary is time-barred. The effect of the limitation period provided for in Article 25 of Regulation No 1/2003 is not to cause an infringement to cease to exist, but only to enable those that benefit from it to avoid penalties.
(see para. 194)
14. The purpose of Article 25(3) of Regulation No 1/2003 is therefore to define the specific actions taken by the Commission that interrupt the limitation period. That provision expressly limits that definition to action taken for the purpose of the investigation or procedures which are notified to (at least) one undertaking which has participated in the infringement, that is to say, in the final analysis, to an undertaking identified as such in the decision imposing sanctions in respect of the infringement.
As for Article 25(4) of Regulation No 1/2003, it provides that the interruption of the limitation period is to apply for ‘all’ the undertakings or associations of undertakings which have participated in the infringement. The purpose of that Article is therefore to define the specific undertakings affected by an interruption of the limitation period. The word ‘all’ used in that provision is designed to emphasise that what matters is the objective participation of the undertaking concerned in the infringement, independently, therefore, of the capacity in which that undertaking participated in the infringement, or whether that undertaking was known to the Commission before the statement of objections, or whether or not it was the addressee of an act interrupting the limitation period before that statement of objections, or whether in the past it had obtained the annulment of a first decision of the Commission imposing sanctions on it.
Thus, where an undertaking has participated in the infringement, that is to say, in the final analysis, where that undertaking is identified as such in the contested decision, the interruption of the limitation period as a result of the notification of an action taken for the purposes of the investigation or the procedures to at least one undertaking also identified as having participated in the infringement, (whether it be that undertaking or a different undertaking) takes effect as against that undertaking.
(see paras 198, 199, 201-203, 205)
15. See the text of the decision.
(see para. 220)
16. See the text of the decision.
(see paras 234, 235)
17. See the text of the decision.
(see paras 253, 254, 258-261)