EU General Court annuls for the first time a Commission decision based on an antitrust settlement procedure

The General Court of the European Union (“Court”), in case T-95/15, Printeos and Others v Commission, by judgement of 13 December 2016¹ (“Judgement”), ruled on the validity of a decision adopted by the Commission in a settlement procedure related to a single and continuous infringement of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement concerning stock and catalogue envelopes and special printed (transactional and/or bespoke) envelopes of all shapes, colours and sizes².

Moreover the Commission found that, through a series of collusive contacts, the participating undertakings: (a) allocated customers and agreed on sales volumes; (b) agreed on customer specific and non-customer specific price increases and shared customer reactions following such increases and non-customer specific increases often aimed at passing on the rising cost of paper; (c) coordinated their responses to tenders launched by major pan-European customers. In this context, they aimed at fixing actual tender prices and protecting their existing supplies; (d) put in place mechanisms aimed at maintaining the status quo by compensating the cartel participants for the loss of sales volumes and/or individual customers to another cartel participant; and (e) exchanged commercially sensitive information, in particular on commercial strategies, customers and sales volumes.

The geographic scope of the conduct regarding all parties covered Denmark, France, Germany, Norway, Sweden and the United Kingdom.

The decision was adopted on 10 December 2014 in the context of a settlement procedure, as all of the undertakings involved expressed their willingness to take part in settlement discussions with the European Commission. The applicants in the proceedings before the Court were imposed, jointly and severally, a fine of EUR 4,729,000. The Commission applied different rates of reduction to the undertakings concerned in the settlement procedure.

In the case before the Court, Printeos and other undertakings challenged the Commission decision, notably in what regards the amount of the fines applied, arguing the Commission:
(i) failed to state adequate reasons for adjusting the basic amount of the fines imposed on the undertakings concerned and for applying different fine reduction rates, notably vis-à-vis the rate of reduction granted to one of the cartelists, and as such misused its powers;
(ii) breached the principle of equal treatment; and
(iii) failed to take into account the principles of proportionality and non-discrimination when determining the amount of the fines.

The Court upheld the arguments submitted by the undertakings, in particular their first plea in law.

First, the General Court recalled that it is established case-law that the obligation to state reasons laid down in the second paragraph of Article 296 TFEU is an essential procedural requirement³.

Indeed the Court highlighted that the statement of reasons must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review⁴. In accordance with the General Court such analysis depends on the circumstances of each case and the adopted measure.

Furthermore, the General Court also emphasized the special importance attached
(i) to the Commission’s duty to adequately state the reasons for its decisions imposing fines in competition cases, namely to explain the weighting and assessment of the various factors taken into account in determining the fine amounts, and
(ii) the Court’s duty to verify if such reasons have been satisfactorily provided by the Commission.

As noted in the Judgement, this is far more important in cases where the Commission departs from the general methodology set out in the relevant guidelines on the method of setting fines⁵, as in this case. In such situations, the Court considers that ‘the Commission’s respect for the rights guaranteed by the EU legal order in administrative procedures, including the obligation to state reasons, is of even more fundamental importance’ and, in this particular case, ‘the Commission was required ( ... ) to explain with sufficient clarity and precision the way it intended to use its discretion, including the various facts and points of law it had taken into consideration for that purpose’⁶.

In light of the above, the General Court found that the Commission failed to state sufficient reasons for its decision regarding the adjustments to the basic fine amounts imposed and the respective justifications, as it was vague and did not provide enough information to the undertakings concerned. Hence, the first plea in law of the applicants was upheld by the Court who considered that the Commission’s decision was vitiated by failure to state adequate reasons for the purposes of Article 296 TFEU, second paragraph.

This judgement of the EU General Court underlines the importance of the European Commission, and indirectly of national Competition Authorities, providing sufficient and adequate reasons on the methodology followed for the application of fines in settlement procedures. The Court also highlights that this requirement is particularly relevant and must be thoroughly complied with in cases where Competition Authorities have adopted guidelines with a methodology for setting fines.

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