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Cartel facilitators can face hefty EU fines – what are the implications for consultancies, market research organisations, brokers and other intermediaries?
Factual and procedural background
In 2009, the European Commission (the "Commission") found a Swiss consultancy firm, AC-Treuhand, liable for having participated, together with a number of heat stabiliser producers, in a cartel in the PVC additives (chemical heat stabilisers) sector. The cartel involved price-fixing, market-sharing and customer-allocation and the exchange of commercially sensitive information. AC-Treuhand had organised a number of meetings, had collected and supplied to the producers concerned data on sales on the relevant markets, had offered to act as a moderator in the event of tensions between those producers and to foster compromises between them. It had received remuneration for all these services. AC-Treuhand was fined €348,000.
In 2014, AC-Treuhand's application to annul the Commission decision or to obtain a reduction of its fines was dismissed by the General Court. AC-Treuhand appealed that judgment to the ECJ.
In his Opinion of May 21, 2015, Advocate General Wahl sided with AC-Treuhand and proposed that the ECJ should set aside the General Court judgment. Advocate General Wahl considered that, irrespective of whether the firm in question operates on the same market, it is necessary to determine the extent to which competition on the market for the products concerned has potentially been restricted or eliminated as a result of that firm's participation. In this case, he considered that the conduct of AC-Treuhand could not be caught by Article 101 TFEU because it did not represent a competitive constraint for the producers involved in the cartel. The ECJ did not follow the Advocate General's Opinion and on 22 October 2015 confirmed the General Court ruling and dismissed the appeal in its entirety.
A cartel facilitator is liable even if the services provided are not on the cartelized market
The ECJ held that AC-Treuhand could be held liable for infringement of Article 101 TFEU because it had knowingly played a role in the infringement at issue and its conduct was directly linked to the anti-competitive objects of the cartel.
The consultancy firm argued that it was not active on the cartelized market (nor on any neighbouring, upstream or downstream markets), and it had not restricted its own conduct. Rejecting this argument, the ECJ stated that there is nothing in the wording of Article 101 indicating that the prohibition is directed only at parties who are active on the markets affected by the anti-competitive agreements or concerted practices.
Nor did the ECJ accept the argument that the service contracts of the consultancy firm were unconnected to the obligations assumed by the producers and the ensuing restrictions of competition. The ECJ ruled that the "very purpose" of the services provided by AC-Treuhand was the attainment, in full knowledge of the facts, of the anti-competitive objectives in question. In order to be effective in ensuring that competition remains undistorted within the common market, Article 101 must also apply even where a company's active contribution to a restriction of competition is not through an activity on the same market as that on which the restriction comes about.
AC-Treuhand also argued that it could not be found liable on the ground that the Commission's position, namely that a consultancy firm offering assistance to a cartel can be subject to Article 101, was not reasonably foreseeable at the time that its conduct took place (in accordance with the principle that offences must be defined by law). The ECJ found that the consultancy firm "should have expected, if necessary after taking appropriate legal advice, its conduct to be declared incompatible with the EU competition rules". AC-Treuhand was carrying out a professional activity and could be expected to take special care in evaluating the risk that such an activity entails, especially in the light of the broad scope of the terms ‘agreement’ and ‘concerted practice’ under Article 101.
A cartel facilitator can face hefty fines
AC-Treuhand's fine of €348,000 was set as a lump sum which was then reduced as a result of the application of the legal maximum: 10 per cent of the total global turnover of the consultancy firm in the preceding business year.
The ECJ confirmed that the Commission was entitled to set the fine as a lump sum and dismissed AC-Treuhand's argument that, under the Commission's Fining Guidelines, the fine should have been based on the fees that AC-Treuhand charged for the services provided to the producers in question. The ECJ found that the Commission was entitled to depart from its Fining Guidelines to ensure that the fine was proportionate in the circumstances and to deter others. In this instance, because AC-Treuhand was not active on the cartelized market, the value of its sales of services linked to the infringement was zero. Further, the amount of the fees charged by AC-Treuhand would not reflect the importance of its participation in the cartel or the extent of its participation. The Commission was entitled to use other means to assess the fine.
Implications for consultancies, market research organisations, brokers and other intermediaries
The AC-Treuhand ruling has implications for all types of intermediary that have active involvement in assisting other companies in the attainment of anti-competitive objectives. This supports the Commission's recent approach to "facilitators of cartels". In its decision of 4 February 2015, the Commission fined a UK-based broker almost €15 million for facilitating certain cartels affecting Yen interest rate derivatives including by serving as a communications channel and disseminating misleading information to non-cartelists. Accordingly, consultancies, market research organisations, trade associations, online platforms as well as brokers, dealers, and other trading intermediaries should carefully consider the implications of these decisions in the formulation of their competition law compliance programmes, as they may be found liable if they actively contribute to the commission of an infringement in the full knowledge of the relevant facts.
In recent years, competition authorities have devoted increased attention to indirect cartel arrangements. Such arrangements do not operate by means of direct contacts between horizontal competitors but through indirect interaction via a common trading partner who is active on another (generally upstream) market. Hence suppliers and retailers, for example, need to consider carefully how they deal with their trading partners to avoid the risk of being found liable as the "hub" of cartel activities involving their distributors or suppliers.
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