General Court judgement from May 21st, 2014, Toshiba/Commission (T-519/09)
11/08/14
Now that the press discusses fines imposed by the Spanish competition authority CNMC, let us have a look at one fine imposed in Brussels. As do many companies when appealing a fine Toshiba Corporation raised a wealth of objections against the European Commission’s decision in the Power Transformers case. One of the grounds of the unfavourable judgment rejects Toshiba’s criticism of how its contribution to the infringement within the European Economic Area (EEA) was measured for the purposes of establishing the basic amount of its fine, 13.2 million euros.
Normally, the Commission does this based on the relevant turnover within the EEA (point 13 of its Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation (EC) No. 1/2003; the ‘Guidelines’). Point 18 of the Guidelines sets out the method that applies ‘[w]here the geographic scope of an infringement extends beyond the EEA (e.g. worldwide cartels).’
In this kind of cases, in order to reflect the relative weight within the EEA of each party to the infringement, the Commission (i) calculates the turnover in the goods and services affected by such infringement within its geographic scope; (ii) establishes the share thereof of each participant; and (iii) applies such share to the sum of all participants’ total relevant EEA sales.
Now Toshiba argued that (i) the Commission did not correctly apply the Guidelines, the cartel having affected the EEA and Japan only; and (ii) the proxy method infringes the principle of proportionality. In fairness it is rather disputable, both from a legal and from a systemic viewpoint, whether it is appropriate to substitute market share thresholds for an assessment of a company’s real economic impact. The Commission has done so across the board after its timid start with the so-called De minimis Notice. Similar doubts arise as to how best ascertain a company’s real contribution to a given infringement, which point 29 of the Guidelines allows for, albeit to a certain degree.
Be that as it may, as to the first argument, the General Court (GC) confirms that the Commission correctly read the gentlemen’s agreement at issue in that it did not merely cover power transformers sales in the EEA and in Japan. In other words, the Commission was right in looking at the participants’ world-wide sales, since the aim was to calculate the fictitious share of a market – the EEA – from which the cartel had kept the company apart (at paragraph 276 of the judgment).
As to the second ground of appeal, Toshiba argued that that the Commission should have taken into account the real impact of the infringement and of Toshiba’s contribution thereto within the EEA. This is precisely what the Commission claimed that it had done, which the GC confirms. The judgment goes on to state that a method which looks at the participants’ world-wide market shares is best suited to measure the impact of an agreement designed to share the world market. Only these market shares, the GC holds, allow the Commission to ponder each participant’s contribution and the cartel’s impact, also within the EEA. Surprisingly, the GC even credits this approach with taking into account ‘even if only in aggregated form, the possible barriers to entry that may exist in the various geographic segments of the worldwide market’ (at paragraph 288).
As it had already done in Tokai Carbon and Ors v. Commission the GC thus sustains point 18 of the Guidelines, which it deems to be compatible with Article 49(3) of the Charter of Fundamental Rights of the European Union (i.e., the principles of legality and proportionality of criminal offences and penalties). Doubts are in order as to whether this is really what is at stake.
Judgment of the Court of Justice of January 20th 2016, Toshiba/Commission (C-373/14 P) confirms Judgment of the General Court of May 21rst 2014, Toshiba/Commission, (T-519/09)
On January 20th 2016 the Court of Justice of the European Union issued a ruling, rejecting Toshiba’s appeal against the General Court’s Judgment of May 21rst 2014. It thereby confirms the 13.2 million euros fine imposed to Toshiba in 2009 by the European Commission.
This is the second fine imposed to Toshiba that European courts confirm in 2016. Indeed, the day before, on 19th January 2016, the General Court rejected the appeal brought by Toshiba in case T-404/12, thereby confirming the 56.79 million fine imposed by the Commission in 2012 for another case of market sharing.
As regards fines for Competition law infringement, it does not seem to be the best beginning of the year for Toshiba…
