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On 16 November 2011, the General Court (the "Court") ruled on nine appeals against the Commission decision to impose a total of EUR 290 million in fines on 16 firms for their alleged participation in a cartel in the plastic industrial bags sector. The Court reduced the fine on Low & Bonar and its subsidiary Bonar Technical Fabrics (together "Low & Bonar") from EUR 12.24 million to EUR 9.18 million and dismissed the other seven appeals. Stempher B.V. and Koninklijke Verpakkingsindustrie Stempher C.V. (together "Stempher") was the only one to see not only its fine annulled by the Court, but also the entire Commission decision in regard of it.
The Court annulled the fine of EUR 2.37 million imposed on Stempher for its alleged participation in the cartel in the Netherlands and, occasionally, in Belgium because the Commission failed to prove Stempher's involvement in the cartel within the five-year limitation period for the Commission to impose a fine (case T- 68/07, Stempher and Koninklijke Verpakkingsindustrie Stempher v European Commission). The fine imposed on Low & Bonar was reduced due to lack of evidence proving that it had known of the extent of the cartel (case T-59/06, Low & Bonar and Bonar Technical Fabrics v European Commission). Interesting to briefly note is furthermore that the appeal by Kendrion disputing the parental liability presumption was dismissed. At the time, the imposition of a fine on a company which merely acted as an investment company for conduct of its former subsidiary was a shock to the business community. According to the Court, the fact that parent company Kendrion was an investment company with no involvement in the cartel was no reason for the Commission to not fine Kendrion as parent company and hold its former 100% subsidiary Fardhem Packaging, which had been a cartel participant, liable for part of its payment (case T-54/06, Kendrion v European Commission).
These rulings confirm that the Commission needs to gather sufficiently precise and consistent evidence to give grounds for a firm conviction of the alleged infringement, as well as evidence sufficiently proximate in time for it to establish the exact duration. In addition, it is once again underlined that a 100% shareholding of a parent company in a subsidiary creates a rebuttable presumption that the parent company exercises decisive influence over the subsidiary and thus is liable for the subsidiary's anti-competitive behaviour, irrespective of whether the parent company is a company with a mere financial interest in the (former) subsidiary.
Background
The European Commission conducted dawn raids at the offices of various industrial bag producers in June 2002, following a leniency application by one of the members of the alleged cartel, British Polythene Industries ("BPI"). In November 2005, the Commission imposed a total of EUR 290 million in fines. BPI enjoyed full immunity for being the first to provide the Commission with the decisive evidence of the cartel's existence. The infringement found by the Commission consisted of the fixing of prices and the establishment of common price calculation models, the sharing of markets and the allocation of sales quotas, the assignment of customers, deals and orders, the submission of concerted bids in response to certain invitations to tender and the exchange of individualised information. The conduct constituting the infringement was organised at two levels: (i) the overall level of the Valveplast trade association and the functional subgroups emanating from it and (ii) the level of the regional subgroups linked to or independent of Valveplast.
Stempher appealed the Commission's decision on the grounds of inadequate evidence that it had acted in breach of the competition rules, as well as that the alleged breach had become time-barred. Low & Bonar in its appeal argued, amongst other things, that it was not a member of the alleged cartel at the overall level just because it regularly attended two specific subgroups and one (overall) Valveplast meeting of 21 November 1997.
The Court's rulings
The Court, in its judgment of 16 November 2011, ruled that the Commission did not produce sufficiently precise and consistent evidence to establish that Stempher continued to participate in the cartel after 20 June 1997. The Commission had fined Stempher for its alleged participation in the cartel from 25 October 1993 until 31 October 1997. The sole evidence on which the Commission based Stempher's participation in the alleged cartel in 1997 was two tables including sales data of the cartel members for July and October 1997. However, Stempher denied ever having received the October 1997 table. This, in combination with the fact that the Commission had failed to adduce any evidence proving that Stempher had contributed to the drafting or specification of either table, led the Court to conclude that it could not be established that Stempher had continued to participate in the cartel after 20 June 1997. As a result, the rule concerning the five-year limitation period precluded the Commission from imposing a fine (the action that could have interrupted the limitation period was taken in June 2002 by the dawn raids conducted at the offices of, inter alia, Stempher and was thus, too late). The Court thereupon not only annulled the fine but the entire decision in regard of Stempher because the Commission had failed to show a legitimate interest in a finding being made that Stempher committed an infringement before 20 June 1997. As a result, the Court did not have to rule on the other objections lodged by Stempher that the Commission had failed to establish its involvement in the cartel altogether.
In its ruling of the same date regarding Low & Bonar, the Court found that the Commission did not prove that Low & Bonar knew or should have reasonably known that, by participating in two regional subgroups, it had subscribed to an overall collusive plan. It was only as a result of its attending the Valveplast meeting of 21 November 1997 that it knew about the existence of a cartel implemented within the framework of Valveplast. The Court thus partially annulled the decision in relation to Low & Bonar and reduced its fine to EUR 9.18 million. The fines imposed on seven other cartel members were confirmed by the Court.
De Brauw Blackstone Westbroek represented Stempher in this matter.