Case T-190/06
Total SA and Elf Aquitaine SA
v
European Commission
(Competition – Agreements, decisions and concerted practices – Hydrogen peroxide and sodium perborate – Decision finding an infringement of Article 81 EC – Imputability of the unlawful conduct – Rights of the defence – Presumption of innocence – Duty to state reasons – Equal treatment – Principle that penalties should be specific to the offender and the offence – Principle that penalties must have a proper legal basis – Principle of sound administration – Legal certainty – Misuse of powers – Fines)
Summary of the Judgment
1. Competition – Community rules – Infringements – Imputation – Parent company and subsidiaries – Economic unit – Criteria for assessment
(Arts 81 EC and 82 EC)
2. Competition – Community rules – Infringements – Imputation – Parent company and subsidiaries – Economic unit – Criteria for assessment
(Arts 81 EC and 82 EC)
3. Competition – Administrative procedure – Statement of objections – Necessary content – Observance of the rights of the defence – Scope
(Arts 81 EC and 82 EC; Council Regulation No 1/2003, Art 27)
4. Acts of the institutions – Statement of reasons – Obligation – Scope – Decision to apply competition rules – Decision relating to several addressees
(Arts 81 EC, 82 EC and 253 EC)
5. Competition – Community rules – Infringements – Imputation – Parent company and subsidiaries – Economic unit – Criteria for assessment
(Arts 81 EC and 82 EC; Council Regulation No 1/2003, Art. 23(2))
6. Competition – Fines – Amount – Determination – Criteria – Mitigating circumstances – Imputation of the unlawful conduct of a subsidiary to the single undertaking formed by that subsidiary and its parent company – Parent company unaware of the unlawful conduct of its subsidiary – Not included
(Arts 81 EC and 82 EC; Council Regulation No 1/2003, Art. 23)
7. Competition – Fines – Amount – Determination – Mitigating circumstances – No obligation to take account of fines already imposed for other anti-competitive activities
(Art. 81(1) EC; Council Regulation No 1/2003, Art. 23(2))
1. The conduct of a subsidiary may be imputed to its parent company in particular where, although having a separate legal personality, that subsidiary does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities. That is the case because, in such a situation, the parent company and its subsidiary form a single economic unit and therefore form a single undertaking within the meaning of Article 81 EC, which enables the Commission to address a decision imposing fines to the parent company, without having to establish the personal involvement of the latter in the infringement.
In the specific case where a parent company has a 100% shareholding in a subsidiary which has infringed the competition rules of the European Union, first, the parent company can exercise a decisive influence over the conduct of the subsidiary and, second, there is a rebuttable presumption that the parent company does in fact exercise a decisive influence over the conduct of its subsidiary.
In those circumstances, it is sufficient for the Commission to prove that the subsidiary is wholly owned by the parent company in order to presume that the parent company exercises a decisive influence over the commercial policy of the subsidiary. The Commission will then be able to regard the parent company as jointly and severally liable for the payment of the fine imposed on its subsidiary, unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market.
The ownership structure of the capital of a subsidiary does provide sufficient grounds for such a presumption and the Commission is not required to adduce further evidence in relation to the parent company’s actual exercise of a decisive influence. That conclusion is not called into question by the fact that additional evidence of that kind was put forward in other cases. The application of the presumption at issue is not conditional upon the existence of such evidence. Similarly, the Commission is not required to prove, for this purpose, that the parent company was aware, at the material time, of the infringing conduct of its subsidiary.
Where the Commission has held, with regard to all the addressees of a decision imposing a fine for infringement of competition law, that control over all or almost all of the share capital of the subsidiary, in the absence of argument refuting the resulting presumption, provided sufficient grounds to impute liability to the parent company, additional indications of the exercise by certain parent companies of a decisive influence over their subsidiaries having been set out, where available, either to reinforce the conclusion that had already been validly drawn from the fact of control over the whole of the subsidiary’s share capital or to answer the arguments developed by the undertakings concerned, the fact that, in the case of certain addressees of the decision, the Commission relied, in addition to the presumption, upon certain other indications of the exercise by the parent companies of a decisive influence does not mean that the principles applied were not the same for all addressees, and that the principle of equal treatment was infringed.
(see paras 35-38, 49-50, 190, 196)
2. Where the Commission applies the presumption of the exercise of a decisive influence in order to impute to a parent company the unlawful activity of its subsidiary, it is necessary for the parent company to adduce sufficient evidence to demonstrate that its subsidiary acts independently on the market. In this connection, account must be taken of all the relevant factors relating to the economic, organisational and legal links which tie the subsidiary to the parent company, which may vary from case to case. It is not necessary to restrict that assessment to matters relating solely to the subsidiary’s commercial policy stricto sensu, such as the distribution or pricing strategy. In particular, the presumption in question cannot be rebutted merely by showing that it is the subsidiary that manages those specific aspects of its commercial policy, without receiving instructions. Similarly, whilst the overlapping of managers as between a parent company and its subsidiary is evidence of the exercise of a decisive influence, the absence of such overlapping cannot constitute sufficient evidence of the independence of the subsidiary.
The mere fact that the parent company is a non-operating holding company is insufficient to disprove that it exercised a decisive influence on its subsidiary, in particular by coordinating financial investments within the group. Indeed, in the context of a group of companies, a holding company is a company which seeks to regroup shareholdings in various companies and whose function is to ensure that they are run as one.
In addition, the division of tasks is a normal phenomenon within a group of companies and cannot rebut the presumption that parent companies and their subsidiaries constitute a single undertaking for the purposes of Article 81 EC. The same applies to the fact that a subsidiary operates on the market in its own name and for its own account, rather than as representative of its parent company. Nor can any conclusions be drawn from the fact that a parent company never had any customers in common with its subsidiary, that it did not operate on the markets on which its subsidiary was present, or on any related markets, that the activity relating to the products in question represents only a very small share of the parent company’s total turnover and that those products are only some of the very large number of products produced by the subsidiary.
Furthermore, given that the independence of the subsidiary is not to be assessed solely by reference to the operational management aspects of the undertaking, the fact that that subsidiary never implemented for the benefit of its parent company a specific information policy on a market concerned is not sufficient to show that it was independent. Similarly, the fact that an undertaking does not present itself as the sole interlocutor both during the administrative procedure and at the stage of contentious proceedings does not allow the conclusion to be drawn that the subsidiary in question is independent of its parent company or companies.
Moreover, it is not the parent company’s direct involvement in the infringement committed by its subsidiary but the fact that they constitute a single undertaking which enables the Commission to impute to the parent company an infringement of the competition rules committed by its subsidiary. Such an imputation cannot, therefore, be called into question by the fact that a parent company was not informed by its subsidiary and only learned about the existence of a cartel after the Commission had carried out its investigations at the premises of the subsidiary.
Lastly, third-party perceptions of a company cannot in themselves suffice to prove that a subsidiary is independent of its parent company or companies.
(see paras 55-57, 65, 68, 71-73, 75-76, 78)
3. Observance of the rights of the defence requires, in particular, that the statement of objections which the Commission sends to an undertaking on which it envisages imposing a penalty for an infringement of the competition rules contain the essential elements used against it, such as the facts, the characterisation of those facts and the evidence on which the Commission relies, so that the undertaking may submit its arguments effectively in the administrative procedure brought against it. In particular, the statement of objections must specify unequivocally the legal person on whom fines may be imposed, be addressed to that person and indicate in what capacity that person is called upon to answer the allegations. Thus, since the company against which the presumption in question is raised is able, in its reply to the statement of objections and at the hearing before the hearing officer, to put forward all the elements of fact and law it chooses in order to dispute the presumption, and since the Commission must take those elements into account and, where appropriate, withdraw any complaints which prove to be unfounded, the principle of the equality of arms is observed.
Furthermore, the Commission is not required to take measures of investigation with respect to an undertaking before issuing a statement of objections where it considers that it otherwise has information that justifies issuing such a statement of objections. The Best Practices code of the Commission also does not indicate that it is required to address investigative measures to all the legal entities constituting the undertaking concerned before adopting the statement of objections.
Lastly, when the Commission relies upon the presumption that a parent company exercises a decisive influence upon a subsidiary, where the parent company holds all or almost all of the subsidiary’s share capital, in order to hold that parent company jointly and severally liable for the payment of the fine imposed on the subsidiary, it cannot be held that the Commission holds that parent company a priori ‘culpable’, since that company has the opportunity of rebutting the abovementioned presumption, invoked in the statement of objections, by demonstrating the independence of its subsidiary. The adoption by the Commission of a statement of objections cannot possibly be considered as evidence of the culpability of the undertaking concerned. Otherwise, the opening of any proceedings in this area would potentially be liable to infringe the principle of the presumption of innocence.
(see paras 105-107, 118, 120, 125-127)
4. The statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question.
Where a decision taken in application of Article 81 EC relates to several addressees and raises a problem with regard to liability for the infringement, it must include an adequate statement of reasons with respect to each of its addressees, in particular those of them who, according to the decision, must bear the liability for the infringement. Thus, in regard to a parent company held jointly and severally liable for the infringement, such a decision must contain a detailed statement of reasons for attributing the infringement to that company.
In any event, the Commission has to give an account of its reasoning where, in the context of its decision-making practice, it adopts a decision which goes appreciably further than previous decisions. It is not sufficient, therefore, in such a case, for it to give a summary statement of reasons, for example, by reference to a well-established line of decisions.
Furthermore, where the Commission relies upon the presumption that a parent company exercises a decisive influence over the conduct of its subsidiary, and the companies concerned put forward arguments during the administrative procedure to rebut that presumption, the decision must contain a sufficient statement of the reasons to justify the Commission’s opinion that those arguments were not such as to rebut the presumption. Since the Commission is not obliged to adopt a position on all the arguments relied on by the parties concerned, it cannot be criticised for not replying specifically to each argument relied on by an undertaking. The succinct nature of a statement of reasons may, moreover, be justified by the fact that the arguments upon which the parent company concerned relies consist in mere assertions and are not supported by concrete evidence of the links between the parent companies and subsidiaries concerned during the period of the infringement.
(see paras 130-131, 137, 148-149, 153-154)
5. The concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. In particular, the concept of an undertaking, in that same context, must be understood as designating an economic unit even if in law that economic unit consists of several persons, natural or legal. When such an entity infringes the competition rules, it falls, according to the principle of personal responsibility, to that entity to answer for that infringement.
Nevertheless, the infringement of the competition law of the European Union must be imputed unequivocally to a legal person on whom fines may be imposed. Consequently, when such an infringement is found to have been committed, it is necessary to identify the natural or legal person who was responsible for the operation of the undertaking at the time when the infringement was committed, so that it can answer for it. Moreover, the Commission’s practice of holding a company jointly and severally liable for the payment of part of a fine imposed on another company where the anti-competitive conduct of the latter can be attributed to it is consistent with Article 23(2) of Regulation No 1/2003. In such a case, the company in question receives a fine for an infringement which it itself is deemed to have committed, by reason of that imputation.
Therefore, the fact that a Commission decision identifies various legal persons who must be held jointly and severally liable for the payment of the fine is not inconsistent with the concept of an undertaking. On the contrary, it is a precise application of that concept, given that it has been established that the undertaking in question, in law, consists of several persons, natural or legal.
Equally, no misinterpretation of the concept of an undertaking may be alleged solely because those different legal persons are liable for the payment of different amounts of the fine. Indeed, the finding that several legal persons constitute a single undertaking responsible for the commission of an infringement does not necessarily imply that all the relevant factors in the calculation of the fine may be ascribed to each of them in the same manner, especially where the composition, in law, of the undertaking in question has changed over time.
(see paras 162-166)
6. Where an infringement of the competition rules is imputed to a parent company because it constitutes a single undertaking with its subsidiary, not because it was directly involved in the infringement, the fact that that parent company was unaware of the cartel is irrelevant to that imputation.
In that regard, since such a parent company does not maintain that its subsidiary, which was directly involved in the infringement, was unaware of the overall scheme of the anti-competitive arrangements, the fact that the parent company was unaware of the cartel does not indicate that the severity of the infringement committed by the undertaking which it comprises together with its subsidiary is any the less and cannot, therefore, constitute grounds for a reduction in the amount of the fine.
(see paras 217-218)
7. Where the Commission finds that an undertaking has committed several separate infringements of Article 81(1) EC, that undertaking having participated in several different cartels over the same period, it is open to it to impose on that undertaking various fines, each within the limits set out in Article 23(2) of Regulation No 1/2003. Each of those fines must reflect the assessment of the duration and gravity of the infringement to which it is related. Since the imposition of a fine upon an undertaking for various anti-competitive activities relating to other products in no way alters the reality of a specific infringement found by the Commission, having regard to the objective of deterrence pursued by the fines, the mere fact that an undertaking has recently been ordered to pay other fines, for infringements that were partially simultaneous, cannot justify a reduction in the amount of the fine imposed by the Commission for the infringement concerned.
(see paras 246-247)