On 5 September 2019, the European Court of Justice ("ECJ") quashed the General Court ("GC") ruling awarding glass maker Guardian Europe ("Guardian") damages for the failure to adjudicate, within a reasonable time, its challenge to a glass price-fixing cartel decision.
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- The damages claim was brought in 2015, following the European Commission ("Commission") decision to fine four glass-product makers a total of €487 million for coordinating price increases for deliveries of flat glass. Guardian's fine was initially set at €148 million and subsequently reduced to €103.6 million on the basis that the Commission had discriminated against the company in calculating the fines.
- In 2017, the GC agreed that it had failed to adjudicate the case in reasonable time and awarded the company €0.65 million to compensate for the material damages resulting from the payment of additional bank guarantee costs.
- The ECJ quashed the GC ruling awarding damages on the basis that the loss resulting from the payment of additional guarantee costs did not result from the infringement of the obligation to adjudicate within a reasonable time in Case T-82/08, but from Guardian's own choice to maintain the bank guarantee according to its financial interest.
- Where a fine is imposed on an alleged cartelist, the latter has the choice between paying the fine immediately or providing a bank guarantee. The ECJ reaffirmed that in cases of unreasonable delay in appeal proceedings against a cartel fine, where the fine is annulled, the EU will not be responsible for additional expenses relating to a bank guarantee provided by the claimant.
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Background
In November 2007, the Commission fined Asahi Glass, Guardian, Pilkington and Saint-Gobain a total of €487 million for coordinating price increases for deliveries of flat glass. Guardian challenged the decision before the GC. In the meantime, Guardian chose not to pay the fine but rather to lodge a bank guarantee for the amount.
By judgment delivered in 2012, the GC upheld the fine imposed on Guardian. On appeal before the ECJ, the fine was reduced by 30%, on the grounds of breach of the principle of equal treatment.
Damages claim
In November 2015, Guardian brought a damages claim based on alleged infringements, by the GC, of the principle of equal treatment and of the obligation to adjudicate its initial challenge to the EU fine within a reasonable time. According to Guardian, that delay caused:
- damage to its reputation;
- material damages resulting from the payment of additional bank guarantee fees; and
- loss of profits.
In June 2017, the GC held that the appeal had not been adjudicated within a reasonable time and that there was a causal link between that delay and the fact that Guardian paid excess bank guarantee fees. The GC awarded Guardian €0.65 million in compensation for the material damages resulting from the payment of additional fees. Both Guardian Europe and the Commission appealed the GC ruling. The other grounds were rejected by the GC.
On 5 September 2019, the ECJ quashed the GC ruling, finding that the causal link between the delay in proceedings and the damage sustained by Guardian was not established. Thus, the ECJ considered that the alleged damage was the result of Guardian's own decision to provide a bank guarantee instead of paying the fine immediately. At the latest by 12 February 2010 Guardian should have realised there was a delay in the proceedings and was free at that moment to pay the fine, thus avoiding any extra bank guarantee fees.
Comment
The ECJ's judgment confirms that, where an undertaking chooses to provide a bank guarantee, it must bear the negative financial consequences of any delay in appeal proceedings.
The judgment must be read in light of parallel case law relating to situations where an undertaking chooses to pay the fine upfront (rather than provide a bank guarantee). Where the fine is paid upfront and then subsequently annulled, the Commission is obliged to pay back the principal with interest. So any delay in appeal proceedings should lead to higher interest payments to the undertaking, effectively to the detriment of the Commission. However, in recent years the Commission has been refusing to pay any (or very little) interest when it reimburses fines, on the grounds that current interest rates are low or even negative. That would again mean that the undertaking must effectively bear the negative consequences of any delay in appeal proceedings.
The Commission's approach was successfully challenged before the GC (Case T-201/17, Printeos and Others v Commission) and is now on appeal before the ECJ (Case C-301/19 P, Commission v Printeos). At least one other appeal is also pending (Case T-610/19, Deutsche Telekom v Commission). Read together, the Guardian and Printeos lines of case law are key for any undertaking facing a fine and having to decide between paying upfront and providing a bank guarantee.
With thanks to Camille Ammeloot of Ashurst for her contribution.
