Power cables saga continues: ECJ annuls parts of NKT decision
This article is part of the May/June 2020 edition of our competition law newsletter, focusing on some recent key developments.
On 14 May 2020, the European Court of Justice (the "ECJ") partially quashed the General Court's (the "GC") judgment upholding the European Commission's ("Commission") power cables cartel decision with respect to NKT and its wholly owned subsidiary NKT Verwaltungs (together "NKT" or the "appellants"). I doing so, the ECJ reduced NKT's fine by EUR 200 000.
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Background
In April 2014, the Commission imposed fines totalling EUR 302 million on eleven producers of high voltage underground and submarine power cables (and their parent companies) for their participation in a global market-sharing cartel. It found that German cable maker, NKT, had directly participated in the cartel as a 'fringe player' between 2002 and 2006 and imposed on them a EUR 3.9 million fine. The GC dismissed NKT's appeal against the Commission's decision in 2018 (Case T-447/14), together with 14 other appeals (see our August 2018 newsletter).
Rights of defence
The ECJ recalled that:
- the Commission is required to base its decisions "only on objections on which the parties concerned have been able to comment"; and
- where a party was not able to defend itself properly with regard to a particular objection, "an infringement of the rights of the defence capable of leading to the judgment under appeal being set aside must be found". In this case, the party is not required to show that without such irregularity, the outcome of the procedure might have been different.
On this basis, it found that the GC was wrong to have upheld the Commission's final conclusion that the infringement covered conduct related to sales in countries outside of the EEA while the Commission did not include this in the SO sent to NKT or inform NKT of this objection later on. In so doing, the Commission breached the appellants' rights of defence.
In contrast, the ECJ ruled that there is no right to full and automatic access to SO replies by other cartel participants. These are not comparable to replies to requests for information, the content of which has been taken into account in the SO. Here, a breach of the rights of defence by the Commission could not be established as the applicants did not "adduce prima facie evidence that the undisclosed [SO replies] would be useful to their defence".
Participation and awareness
The ECJ dismissed most of NKT's arguments that the GC erred in finding that it had participated in various aspects of the cartel and in a single and continuous infringement ("SCI") or that it had the requisite level of awareness. Notably, the GC was right to uphold the finding that NKT engaged in a SCI covering both underground and submarine power cable projects.
However, the ECJ upheld two of NKT's claims.
- First, the GC was wrong to find that the Commission was not obliged to prove that NKT had been aware of the collective refusal to supply accessories and technical assistance to competitors not participating in the cartel or could reasonably have foreseen it, on the ground that the practice was only a non-essential characteristic of the cartel. In this respect, the ECJ:
- recalled the strict requirement for the Commission to show awareness as regards the various elements of the infringement to hold a company liable for the conduct of another company; and
- clarified that the "case-law does not distinguish between practices which are 'essential' and those which are not". In any event, the practice in question was among the "principal activities" of the cartel.
- Second, the GC could not conclude that NKT had participated in one aspect of the cartel (i.e. the allocation of projects in the EEA) prior to November 2002 "without breaching the presumption of innocence" and the correlative principle that the "benefit of the doubt must be given to the undertaking to which the decision finding an infringement is addressed". The only piece of evidence in this regard related to the allocation of projects outside the EEA and the GC did not rule out that the two aspects of the cartel could exist independently from each other.
Accordingly, the ECJ annulled parts of the Commission's decision and in the exercise of its unlimited jurisdiction, reduced the fine imposed on NKT by EUR 200 000. NKT is the second appeal (after ABB's appeal) against the power cables GC judgments which has not been fully dismissed by the ECJ (see our December 2019 newsletter articles here and here). The outcomes in Cases C-595/18, C-601/18, C-611/18, C-606/18 are still awaited.
With thanks to Jessica Bracker of Ashurst for her contribution.
Contents
- Power cables saga continues: ECJ annuls parts of NKT decision
- New Competition Tool and ex ante regulation of digital platforms - EU to widen its regulatory net
- EU Commission proposals to regulate foreign subsidies
- French public consultation on Fintechs
- First French fine for obstructing raid confirmed
- Round 3 to FCO: Landmark German Facebook data collection ban reinstated
- German banking industry attempts to stifle FinTech rivals thwarted
- Competition Tribunal adopts four-step approach to penalties
- First Italian approval decisions under temporary COVID-19 cooperation rules
- Legitimacy of ex-post remedies in Sky Italia and R2 (MP) merger reconfirmed
- Fines for Singapore Zoo and Bird Park building and maintenance bid rigging
- Spanish cartel diverging damages claims developments
- Shoppers would be "worse off" - CMA prohibits JD Sports/ Footasylum merger at Phase II
- Court of Appeal judgment on costs in Pfizer/Flynn excessive pricing case
- Continued rise of UK consumer law: Fake online reviews and COVID-19 pricing and cancelations
- CMA accepts unusual behavioural undertakings in relation to Bauer Media radio acquisitions
- UK Supreme Court: Interchange fees restricted competition
- Online RPM strikes again - further fines for online restrictions
- UK merger control expanded: public health intervention and technology mergers
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