Can You Be a ‘Little Bit’ of a Global Cartelist?

Case C-441/11 Commission v Verhuzingen Coppens NV [2012] ECR I-0000

The Court of Justice, on 6 December 2012, delivered an interesting judgment examining the legal liability for a ‘bit player’ in a large cartel. The question whether a peripheral member of a cartel can be held liable for the whole infringement raises a number of questions of fairness, but there is no doubt that the Commission finds the ‘single continuing infringement’ concept important in making its investigations into on-going cartel activity much easier. It also reminds me of the well know aphorism, ‘you can’t be a little bit pregnant’.

Coppens were involved in significant International Removals Services cartel centred in Belgium from 1984 to 2003 which covered 50% of the overall market. The Removals cartel was characterised by a number of practices: agreements on prices; an agreement on sharing the market by a means of a system of false quotes, known as ‘cover quotes’; and, an agreement on financial compensation, known as ‘commissions’, for rejected offers or for not quoting. Coppens had been held liable in a Commission Decision of 2008 for its part in the Removals cartel which had been seen as a ‘single continuing infringement’ by the Commission. Coppens challenged that Decision on the basis that the evidence presented by the Commission did not show that it had any involvement in the ‘commissions’ cartel, and that while there was, undisputed, evidence that it was involved in the ‘cover quotes’ process 1992 & 1993 and from 1996 to 2003, there was no evidence of any implementation of that agreement in either 1994 or 1995. On the basis of its limited engagement in the cartel, through its partial involvement and its low market share of 0.04%, it challenged the fact liability had been imputed to it for the whole ‘agreement’ from 1992 to 2003.

The General Court, in Case T-210/08, found in favour of Coppens and annulled the Decision in relation to the whole finding against them. The nature of the ‘single continuing infringement’ was central to the GCs findings. At para [29] the GC stressed that liability could only be attributed for all the activities of the cartel if the undertaking in question was ‘aware of the unlawful conduct of the other participants, or could reasonably foresee such conduct, and was prepared to accept the risk’. Also at [30] it stressed:

‘the mere fact that there is identity of object between an agreement in which an undertaking participated and a global cartel does not suffice to render that undertaking responsible for the global cartel. It is only if the undertaking knew or should have known when it participated in the agreement that in doing so it was joining in the global cartel that its participation in the agreement concerned can constitute the expression of its accession to that global cartel.’

The GC found that the Commission has not proved that, when it participated on the ‘cover quotes’ agreement that it was aware of the other undertakings activities in the ‘global’ cartel, or that it could have foreseen that conduct. On the basis if that finding it annulled the Commission Decision.

The Commission appealed against the annulment in Case C-441/11. It argued that the GC had erred in annulling the whole of the Decision in relation to Coppens; rather than only in part. The Court of Justice therefore has a useful opportunity to consider a case which was clearly at the edge of the single continuing infringement concept.  The Court, unsurprisingly, reiterated its support for the doctrine as a whole. It stressed those actions which form part of an ‘overall plan’ which have a common object to distort competition can have responsibility imputed as a whole [41]. It also confirmed the criteria for imputation used by the GC: where an undertaking intends, through its own conduct, to contribute to the common objective and it was aware of the offending conduct planned by others, or that it could have reasonably foreseen it and was prepared to take the risk [42]. But in a situation where an undertaking was not so aware the Commission could only impute liability only for the conduct in which it had participated directly, or for conduct of others in pursuit of ‘the same objectives as those pursued by the undertaking itself, where it has been shown that the undertaking was aware of that conduct or was reasonably able to foresee it and prepared to take the risk’ [44]. In Coppens case this would mean that it could only have liability attributed to it  for the conduct of the nature of which it was aware or could have reasonable foreseen; not therefore the whole of the ‘global’ cartel, but only the ‘cover quotes’ element. On that basis the Commission’s imputation of liability for the single continuous infringement was unfounded [47].

The Court then had to address whether a single continuing infringement could then be divided; could Coppens be held liable for those parts the continuing infringement of which is was aware? Before such a split could be considered the Court stressed a procedural safeguard:

‘a Commission decision categorising a global cartel as a single and continuous infringement can be divided in that manner only if the undertaking in question has been put in a position, during the administrative procedure, to understand that it is also alleged to have engaged in each of the forms of conduct comprising that infringement, hence to defend itself on that point, and only if the decision is sufficiently clear in that regard’ [46].

From an examination of the file it was apparent that Coppens had been given such an opportunity, and that it had been specifically accused of participating in the agreement on cover quotes [49]. The Court therefore found that by annulling the Decision in it entirety, even though it had not called in to question the finding that Coppens has participated in an agreement which constituted an infringement of Art 81 EC, the GC had made an error of law.

The Court also considered the ‘gap’ in Coppens’ implementation of the cover price agreement in 1994 & 1995. The Court was of the view that the absence of implementation for shorter or longer periods during an infringement has no effect on the ‘existence’ of the agreement provided it continues to form part of a single continuous infringement [72]. In order to escape liability the undertaking would have to go much further and undo its tacit approval of the agreement by publicly distancing itself from it [73].

This was an importantly victory for the Commission. The Single Continuing Infringement (SCI) concept is vital for its work against cartels. The GCs finding in Coppens was the second case in which a SCI finding had been overturned recently (the other being Cases T-101 & 111/05 BASF & UCB v Commission). What Coppens does show is the Commission needs to be more careful in its investigations and decision-making. Its successful record in supporting finding of cartel infringements should not be jeopardised by sloppiness and attempts to take the path of investigative least resistance in wrapping up a range of disparate conduct into a SCI where there is no clear evidential basis for doing so. In cases such as this, where there are peripheral undertakings who are partial members of the cartel, or who have more limited engagement with it, it would be wise for the Commission to ensure that they clearly challenge their individual conduct during the investigation and in the Decision to ensure that can be held liable for that conduct should it not be possible to impute liability for the ‘global’ cartel. The procedural safeguard the Court stressed gives some protection to assuage the fears of smaller cartel members that they should not be railroaded by the Commission and have significant liabilities placed upon them through the overextension of the idea of a SCI. It will mean more work for the Commission to deal with some cartelists in slightly different way from the main players, who are central to the global cartel, but it is still important that the bit players are also held to account.

The judgment in Coppens obviously has similarities to the series of UK’s construction cover pricing cases which went before the CAT (discussed by Andreas Stephan in a CCP Blog). In those cases the CAT confirmed the OFT finding that cover pricing was an ‘object’ infringement, but that it was less serious than traditional cartel conduct and the fines were significantly reduced. That was the also approach taken by the Court of justice in Coppens. AG Kokott explained in detail how she would approach the fine reductions; reducing the fine to one-third of the basic amount [69-75]. The Court of Justice came to the same conclusion.

It is now clear that in cartel terms it may be possible to be a ‘little bit’ pregnant.

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