Case T‑68/04, SGL Carbon v Commission

>> Court confirms Commission’s decision carbon cartel (I)

This case concerned a Commission decision imposing fines a number of companies for infringement of Article 81(1) EC and Article 53(1) EEA by taking part in a series of agreements and concerted practices on the market in carbon and graphite-based products for electrical and mechanical applications.

According to the Commission, the six companies, among which where SGL Carbon and Schunk GmbH (see
this post) operated a secret cartel between October 1988 and December 1999.

The cartel consisted of fixing, directly or indirectly, sales prices and other trading conditions applicable to customers, sharing markets, in particular by allocating customers, and engaging in co-ordinated actions (quantity restrictions, price increases and boycotts) against competitors which were not members of the cartel.

During October 1988 and December 1999 the companies, which controlled 93% of the European market, held more than 140 meetings to decide price increases for a broad range of products as well as for large individual customers and to ward off outside competition by undercutting the few rivals left.

The top meetings, which they called “summits”, provided strategic direction and solved problems while the detailed price and other arrangements were worked out and agreed in “technical committee” meetings.

SGL Carbon brought the present action against the Commission, requesting the Court to annul the decision of the Commission or, in the alternative, reduce the amount of the fine imposed.

Deterrent effect of in fines
The Court inter alia held that the Commission’s practice in taking decisions did not serve as a legal framework for the fines imposed in competition matters, that framework being constituted solely by Regulation 17, and decisions in other cases could gave only an indication for the purpose of determining whether there might be discrimination, since the facts of those cases, such as markets, products, the undertakings and periods concerned, were not likely to be the same.

The fact that the Commission, in the past, imposed fines of a certain level for certain types of infringement did not mean that it was estopped from raising that level, at any time, to ensured the implementation of Community competition policy and to strengthen the deterrent effect of fines. (see inter alia
C‑169/04 P JCB Service v Commission [2006] and Case C‑76/06 P Britannia Alloys & Chemicals v Commission [2007]).

The Court held that the Commission had the power to decide the level of fines so as to reinforce their deterrent effect where infringements of a given type, although established as being unlawful at the outset of Community competition policy, were still relatively frequent on account of the profit that certain of the undertakings concerned were able to derive from them.

The deterrent effect of a fine imposed for infringement of the Community competition rules could not be assessed by reference solely to the particular situation of the undertaking sanctioned. (see, inter alia,
Joined Cases 100/80 to 103/80 Musique diffusion française and Others v Commission [1983]and Case T‑224/00 Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission [2003]).

The complaint of SGL Carbon alleging disproportionate and/or discriminatory treatment of the applicant in relation to the setting of the starting amount of the fine and in light of the Commission’s practice in taking decisions, was therefore rejected.

The Court held that it was open to the Commission to consider it necessary to set the amount of the fine at a sufficiently dissuasive level within the limits laid down in Regulation 17.

Division into categories
The Court also held that the Commission’s division of the undertakings concerned in three categories, namely large, medium and small operators, was not an unreasonable way of taking account of their relative importance on the market in order to set the starting amount, as long as it did not lead to a grossly inaccurate representation of the market concerned.

The Court however stressed that, to check whether a division of the members of a cartel into categories was consistent with the principles of equal treatment and proportionality, it could review whether that division was coherent and objectively justified (see also
Case T‑213/00 CMA CGM and Others v Commission [2003] and Joined Cases T‑236/01, T-239/01, T‑244/01 to T‑246/01, T-251/01 and T-252/01 Tokai Carbon and Others v Commission [2004]).

The Court furthermore held the complaint of SGL Carbon alleging disproportionate and/or discriminatory treatment of the applicant in relation to the setting of the starting amount of the fine, and in respect of the duration of the infringement and the Commission’s practice in taking decisions, must be rejected.

The Court stressed that respect for the principle of equal treatment must be reconciled with the principle of legality, according to which a person might not rely, in support of his claim, on an unlawful act committed in favour of a third party. (
see Case 134/84 Williams v Court of Auditors [1985])

Since all other complaints were also rejected, the action was dismissed in its entirety.

Text of Judgment