On 15 April 2021, the European Court of Justice ("ECJ") handed down its ruling on Italmobiliare's appeal against European Commission decision AT.39563, finding a cartel in the retail food packaging sector. The ECJ rejected Italmobiliare's argument that it should benefit from immunity as regards infringements in one geographic market and a greater fine reduction with respect to infringements in two others.
Key takeaways
- Whilst the Leniency Notice uses a rankings system to determine eligibility for benefits under that notice in cartel proceedings, positions in those rankings are fixed post-decision.
- A leniency applicant's position in the rankings is definitively set by the European Commission at the end of the administrative phase of cartel proceedings.
- The fact that one successful leniency applicant subsequently ceases to be eligible for benefits does not affect the level of fine reduction available to other leniency applicants or their eligibility for total immunity.
Background
In order to qualify for total immunity under the Leniency Notice, a leniency applicant must be the first to provide information and evidence which in the European Commission's view will enable it to:
- carry out a targeted inspection in connection with the alleged cartel; or
- find an infringement of Article 101 TFEU in connection with the alleged cartel.
Undertakings which do not qualify for immunity may, however, have their fine reduced if they are able to provide information which adds significant value to the information already in the European Commission's possession. The level of fine reduction depends on time at which such evidence is submitted:
- the first undertaking to provide significant added value can benefit from a reduction of 30-50%;
- the second undertaking to provide significant added value can benefit from a reduction of 20-30%; and
- subsequent undertakings providing significant added value can benefit from a reduction of up to 20%.
The Leniency Notice also sets out additional eligibility conditions which "must be met in any case to qualify for any immunity from a fine" or fine reduction. The latter include a requirement for the leniency applicant to have ended its involvement in the alleged cartel immediately after its application, unless continued participation was reasonably necessary to preserve the integrity of the European Commission's inspections.
Judgment of the ECJ
In Italmobiliare (C-694/19 P), the ECJ was asked to determine whether undertakings can advance in the rankings established under the Leniency Notice in the event that a leniency applicant ceased to be eligible for immunity or fine reduction after the European Commission's decision had been delivered.
On the facts of the case, Linpac was the first undertaking to approach the European Commission with information relating to a food packaging cartel implemented in Italy, South-West Europe ("SWE"), North-West Europe ("NWE"), France and Central-East Europe ("CEE"). The information and evidence provided by Linpac was considered sufficient to enable the European Commission to carry out a series of dawn raids. A second undertaking, Vitembal, subsequently submitted an application for immunity or a fine reduction, followed shortly thereafter by Italmobiliare.
In light of the nature of the information provided and the order in which it was received:
- Linpac was granted total immunity with respect to all geographic markets;
- Vitembal was granted a 'first place' 30-50% fine reduction with respect to the cartel in Italy, SWE, NWE and France; and
- Italmobiliare was granted a 'first place' 30-50% fine reduction with respect to the cartel in CEE and 'second place' 20-30% fine reduction with respect to the cartel in Italy and France.
On appeal, Italmobiliare argued that Linpac had ceased to be eligible for full immunity under the terms of the Leniency Notice, as it had engaged in unjustified anticompetitive contacts with other cartel participants subsequent to its leniency application. By consequence, it was argued that Italmobiliare and Vitembal should be moved up in the leniency rankings; Italmobiliare gaining full immunity for CEE and a 'first place' fine reduction for Italy and France.
The ECJ rejected this argument as based on the false premise that the Leniency Notice had created a 'queue' for immunity and fine reductions, with applicants moving forward in the queue as others move out. The ECJ determined that a leniency applicant's position in the rankings is definitively set by the European Commission at the end of the administrative phase of cartel proceedings.
Comment
This case provides useful guidance on the workings of the leniency process post-decision, effectively preserving the sanctity of the European Commission's determination at the end of the administrative process and posing a serious challenge to potential appeals based on other leniency applicants' ineligibility for benefits under the Leniency Notice.
With thanks to Zac Davies of Ashurst for his contribution.
