Case T-18/05

IMI plc and Others

v

European Commission

(Competition – Agreements, decisions and concerted practices – Copper plumbing tubes sector – Decision finding an infringement of Article 81 EC – Continuous and multiform infringement – Interruption of participation – Fines – Limited participation in the cartel)

Summary of the Judgment

1.      Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission

(Art. 81(1) EC)

2.      Competition – Administrative procedure – Statement of objections – Necessary content

3.      Competition – Fines – Guidelines on the method of setting fines – Method of calculation displaying flexibility in a number of ways

(Art. 229 EC; Council Regulations Nos 17, Art. 15(2), and 1/2003, Art. 23(2); Commission Notice 98/C 9/03)

4.      Competition – Fines – Amount – Determination – Non-imposition or reduction of the fine for cooperation of the undertaking concerned

(Commission Notice 96/C 207/04)

5.      Competition – Fines – Decision imposing fines – Obligation to state the reasons on which the decision is based – Scope

(Art. 253 EC; Council Regulations Nos 17, Art. 15(2), and 1/2003, Art. 23(2))

6.      Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement

(Council Regulations Nos 17, Art. 15(2), and 1/2003 Art. 23(3); Commission Notice 98/C 9/03, Section 1A)

7.      Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Size of the market for the products in question – Whether to be taken into consideration

(Council Regulations Nos 17, Art. 15(2), and 1/2003, Art. 23(2); Commission Notice 98/C 9/03, Section 1A)

1.      Article 81(1) EC does not apply unless there exists a concurrence of wills between at least two parties, the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention.

In the absence of evidence directly establishing the duration of an infringement, the Commission is required to produce evidence of facts sufficiently proximate in time for it to be reasonable to accept that that infringement continued uninterruptedly between two specific dates.

Although the period separating two manifestations of infringing conduct is a relevant criterion in order to establish the continuous nature of an infringement, the fact remains that the question whether or not that period is long enough to constitute an interruption of the infringement cannot be examined in the abstract. On the contrary, it needs to be assessed in the context of the functioning of the cartel in question.

It is an error of law for the Commission to hold that an undertaking participated uninterruptedly in a cartel in circumstances where there were no contacts or manifestations of collusion on the part of that undertaking during a period which exceeded by more than one year the intervals at which the undertakings which were members of the cartel habitually manifested their respective intentions to restrict competition.

(see paras 88-90, 96)

2.      The statement of objections must enable the parties concerned properly to identify the conduct complained of by the Commission. That obligation is satisfied if the final decision does not allege that the persons concerned have committed infringements other than those referred to in the statement of objections and takes into consideration only facts on which the persons concerned have had the opportunity of stating their views. However, the Commission’s final decision is not necessarily required to be a replica of the statement of objections. Defence rights are infringed by a discordance between the statement of objections and the final decision only if an objection relied upon in the latter was not sufficiently set out in the former to enable the addressees to defend themselves. The right to be heard extends to all the matters of fact and of law which form the basis for the decision-making act but not the final position which the administration intends to adopt.

(see paras 106, 108-109)

3.      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, whilst not capable of being regarded as rules of law, nevertheless form rules of practice from which the Commission may not depart in an individual case without giving reasons which are compatible with the principle of equal treatment. It is therefore for the General Court to verify, when reviewing the legality of the fines imposed by a Commission decision, whether the latter exercised its discretion in accordance with the method set out in the Guidelines 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 the Commission to exercise its discretion in accordance with the provisions of Regulation Nos 17 and 1/2003, as interpreted by the Court of Justice. Therefore, in areas where the Commission has maintained a discretion, review of the legality of those assessments is limited to determining the absence of manifest error of assessment. In principle, the discretion enjoyed by the Commission and the limits which it has imposed in that regard do not prejudge the exercise by the Community judicature of its unlimited jurisdiction, which empowers it to annul, reduce or increase the fine imposed by the Commission.

(see paras 117-121)

4.      If the Commission Notice of 1996 on the non-imposition or reduction of fines in cartel cases has given rise to legitimate expectations on which undertakings wishing to inform the Commission of the existence of a cartel may rely, those expectations can concern only the manner in which their contributions are taken into account by the Commission once they have shown their wish to cooperate. It is not in any way apparent from the wording of the said notice or from the logic inherent in the mechanism which it has established that the Commission is required, during the administrative procedure, to inform undertakings which have not shown their wish to cooperate of the measures which it has taken in the context of its investigation or the evolution thereof. All the participants in a cartel have the possibility of asking to benefit at any moment during the administrative procedure from the application of the said notice, whatever investigative measures have been taken by the Commission. It is for each participant in a cartel to decide whether, and at what point, it wishes to avail itself of the said notice.

(see paras 129-130)

5.      In the context of determining fines for breach of competition law, the obligation to state reasons is satisfied where the Commission indicates in its decision the factors which enabled it to determine the gravity of the infringement and its duration. Article 253 EC cannot be interpreted as requiring the Commission to explain in its decisions the reasons why, in relation to calculation of the amount of the fine, it did not adopt alternative approaches to the one in fact adopted in the final decision.

(see paras 152-153)

6.      An undertaking whose liability is established in relation to several branches of a cartel contributes more to the effectiveness and the seriousness of the cartel than an offender involved in only one branch of it. Thus, the first undertaking commits a more serious infringement than the second.

In accordance with the principle of individual liability and that penalties should fit the individual offender, the Commission is required to take into account, when assessing the relative seriousness of the participation of each offender in a cartel, the fact that certain offenders may not be held liable for all the branches of that cartel.

With regard to the application 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, that assessment necessarily has to be made at the stage when a specific starting amount is set, since the taking into account of attenuating circumstances only allows the basic amount of the fine to be adjusted by reference to the arrangements for the offender’s implementation of the cartel. An offender who is not held responsible for certain branches of that cartel cannot have been involved in the implementation of those aspects. The infringement of the rules of competition law is, owing to the limited scope of the infringement established in respect of that offender, less serious than that attributed to offenders who participated in all aspects of the infringement.

The Commission thus infringes the principle of equal treatment where it fails to take into consideration, when calculating the amount of the fines, the fact that an undertaking has participated in only one branch of a cartel, unlike other undertakings which are members of the same cartel, and thereby treats different situations in an identical manner, without such treatment being objectively justified.

(see paras 162-164, 166)

7.      When assessing the gravity 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 into consideration the turnover of the market in question. There is no valid reason to require that the turnover of a relevant market 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 180, 182-183)