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Not Really a Single View on Single and Continuous Infringements

October 28, 2013

The concept of “single and continuous infringement” constitutes one of the cornerstones of EU anti-cartel enforcement.  According to settled case-law, it enables the European Commission (EC) to lump individual infringements together on the basis that they are committed by the same companies in furtherance of an identical anticompetitive goal.  In essence, the concept allows the EC to prove and prosecute complex cartels that extended over long time-spans; and to a certain extent (as criticized by many) circumvent the 5-year limitation period for prosecution that Article 25(1)(b) of Regulation 1/2003 imposes on it.

It is not surprising that companies found to have participated in a single and continuous infringement often challenge such findings before the European Courts.  After all, a finding of single and continuous infringement may have serious consequences for them – both in terms of fines and follow-on actions in civil courts.  What is rather surprising is that it is still unclear whether the EC decision should be annulled entirely or only partially, in case the European Courts find that a company did not participate in all aspects of the infringement.

Two recent judgments, both rendered by the EU Court of Justice (CoJ) within a few months of each other, have come to opposite conclusions on this issue.

The Coppens ruling

Coppens arose in the context of the cartel on international removal services, which resulted in fines being imposed by the EC in 2008.  In its decision, the EC found that a number of companies – including Verhuizingen Coppens NV (Coppens) – participated in a single and continuous infringement from 1984 to 2003, by, inter alia, issuing false quotes to customers (cover quotes) and compensating each other for rejected offers through a financial compensation mechanism (commissions).  Coppens brought an action before the General Court (GC), contesting its participation in a single and continuous infringement.

The GC ruled that, indeed, the EC erred in finding that Coppens had participated in a single and continuous infringement, as: (i) its participation in the cartel was limited to the agreement on cover quotes and did not extent to the agreement on commissions; and (ii) there was no proof that it was aware of the other participants’ anti-competitive conduct regarding commissions, or that it could reasonably have foreseen such conduct.  On that basis, the GC proceeded to annul the EC’s decision in its entirety (i.e. in so far as both cover quotes and commissions were concerned) in respect to Coppens – even though the GC found that Coppens’ participation in the agreement on cover quotes could in itself constitute a punishable infringement of Article 101 TFEU.  The EC appealed that point by asserting that since the GC found that only the part of the infringement relating to commissions was not proven, the GC should have partially (and not entirely) annulled the decision in respect of Coppens.

In its ruling, the CoJ noted that partial annulment of the EC decision would only be possible if the element sought to be annulled could be severed from the remainder of the decision, without altering the latter’s substance.  The CoJ further specified that an EC decision categorizing a cartel as a single and continuous infringement could be severable only if: (i) during the administrative procedure, the undertaking in question was put in the position to understand that it was alleged to have engaged in each of the forms of conduct comprising the infringement; and (ii) the EC decision is sufficiently clear in that regard.  In the case at issue, the CoJ took the view that the partial annulment of the EC’s decision in respect of Coppens was indeed possible: during the EC proceedings, Coppens should have been able to understand that it would be attributed liability for the single and continuous infringement and accused of participating in the agreement on cover quotes as such.  In addition, the EC decision was deemed sufficiently clear on this point.  The CoJ then proceeded to give itself final judgment and, using its unlimited jurisdiction on fines, imposed a reduced fine on Coppens for its participation in the agreement on cover quotes.

The Aalberts ruling

Only a few months after rendering its judgment in Coppens, the CoJ rendered its judgment in Aalberts.  Aalberts arose in the context of the cartel on fittings that resulted in fines being imposed by the EC in 2006.  In its decision, the EC found that Aalberts Industries NV (Aalberts) and its subsidiaries, Aquatis France SAS (Aquatis) and Simplex Armaturen + Fittings GmbH & Co. KG. (Simplex), participated in a single and continuous infringement in the market for copper and copper alloy fittings, by, inter alia, fixing prices, agreeing on price lists, discounts and rebates, and allocating national markets and customers.  The cartel activities were divided into two periods: (i) from 1988 to 2001, when the EC conducted surprise inspections; and (ii) from 2001 to 2004, following the EC’s inspections.  The EC found that Aquatis and Simplex participated in the infringement from (i) from 1991 to 2001 (before their acquisition by Aalberts), and (ii) from 2003 to 2004 (as members of the Aalberts group).  Aalberts, Aquatis, and Simplex brought an action before the GC, contesting, inter alia, their participation in a single and continuous infringement that continued after the 2001 EC inspections.

The GC sided with the applicants and overturned the EC’s decision.  While the conduct constituting the alleged infringement after the 2001 EC inspections was considered as a continuation of the single and continuous infringement arising before the inspections, the GC found that the evidence in the EC’s file failed to prove to the requisite legal standard that Simplex had engaged in any infringement from 2003 to 2004.  It also ruled that the EC erred in concluding that Aquatis participated in the single and continuous infringement during the same period, as Aquatis only participated in only one out of three parts of the alleged conduct.  In addition, the GC found that the EC failed to demonstrate that Aquatis was aware of the other participants’ additional anti-competitive activities, or that it could reasonably have foreseen such activities.   On that basis, the GC annulled the EC decision in its entirety in respect of Aquatis and Simplex, as well as of Aalberts (to whom the contested decision had imputed the liability for its subsidiaries), for the period 2003 to 2004.  The EC lodged an appeal against the decision of the GC, arguing, inter alia, that the latter wrongfully annulled the EC decision in full, despite confirming the participation of Aquatis in one part of the cartel activities.

On appeal, the CoJ upheld the GC annulment.  It noted that a partial annulment was not possible, as the elements sought to be annulled could not be separated from the remainder of the decision.  In particular, the CoJ found that the EC’s decision did not qualify Aquatis’ participation in one of the cartel activities as an infringement of Article 101 TFEU.  Furthermore, the CoJ noted that the EC itself stated in its decision that it would be “artificial to split up the continuous conduct by the undertakings concerned characterized by a single purpose, by treating it as consisting of several separate infringements, when what was involved was a single infringement.”

Where to Now?

Despite the fact that the GC ruled in both Coppens andAalberts that an annulment of the EC decision in its entirety was appropriate, the CoJ reached opposite conclusions: in one case it ruled that the GC was wrong to annul the EC decision in its entirety with regard to the respondents, while in the other case it ruled that an annulment in full was appropriate.  One cannot but wonder if it all boils down to the EC making sure that its decision, despite construing a single and continuous infringement theory, also (as a Plan B) qualifies each strand of conduct, which forms part of the single and continuous infringement, as in and of itself an infringement of Article 101 TFEU.

As for companies, the stakes involved in this debate are high.  A choice of entirely or partially annulling the EC’s findings on a single and continuous infringement may have a significant impact on the fines eventually imposed on them: indicatively, Aalberts, which saw the CoJ annulling the relevant EC decision in its entirety, escaped cartel fines of more than €100 million – arguably, the largest cartel fine annulment based on merits at the EU level.