Beware: Enterprises Facilitating, But Not Operating In, a Cartelized Market Can Be Fined For Participating In the Cartel

A recent ruling of the General Court of the European Union (GC) affirmed that enterprises that are not active in the same market as other cartel members, but facilitated the cartel, can face fines under EU competition law.

On February 6, 2014, the GC issued its judgment in AC-Treuhand AG (Treuhand II).¹ The judgment involved a review of one of the fines imposed by the European Commission (Commission) in 2009 on 24 companies in the heat stabilizers industry for having participated in cartel activities. The total fine was EUR 174 million, of which EUR 348,000 was imposed on Treuhand.

Treuhand is a consulting company offering a full range of services to professional associations.  It is not in the market for heat stabilizers. However, the Commission ruled that by: (i) making its offices available to cartel members, (ii) collecting and supplying sales data relating to the relevant markets to the cartelists, and (iii) encouraging alignment among the cartelists, Treuhand had played a central role in the organization and facilitation of cartel activities.

Treuhand appealed the Commission’s decision before the GC. It first argued that it had not infringed Article 101 of the Treaty of the Functioning of the European Union (TFEU) – also known as the cartel prohibition – because it had not entered into any anti-competitive agreement or participated in a concerted practice in the relevant heat stabilizers market. Second, Treuhand argued that the Commission had erred in imposing a high fine because the unforeseen application of Article 101 TFEU with respect to Treuhand justified no more than a symbolic fine and additionally that the Commission had erred in its application of its guidelines on the methods of setting fines (fining guidelines).²

The GC rejected the first argument out of hand.³ In a prior Treuhand ruling (Treuhand I),⁴  the GC had ruled that the crucial element in finding an infringement of Article 101 TFEU is a joint intention to engage in infringing conduct.  There is no requirement that the market in which an infringing company is active must be the same as the one in which the restriction in competition was deemed to materialize.⁵   The GC added that like any other company, a consulting company, although not active in the cartelized market, should be in a position to reasonably foresee the applicability of the Article 101 prohibition when it actively acts and deliberately contributes to an anti-competitive, albeit other, market.

As for Treuhand’s second argument, the GC concluded that the Commission had not erred in the implementation of the fine. First, the GC stated that the Commission is under no obligation to impose symbolic fines. In Treuhand I, the Commission had in fact imposed a fine of only EUR 1000 on Treuhand for facilitating a cartel in the organic peroxides sector.  However, Treuhand I was the first time a fine was imposed on an enterprise that was not itself involved in the production or distribution of the goods concerned.  Therefore, a symbolic fine was considered appropriate at that time. But it was not appropriate with respect to a second violation.

As to application of the fining guidelines in this instance, the GC recognized that the Commission is supposed to determine the basic amount of a fine by reference to a company’s sales of goods or services to which an infringement directly or indirectly relates in the relevant geographic area. Treuhand was not active in the market in which the infringement took place and consequently the value of the services it provided relating to the infringement was recognized as being null. However, the Commission had not referred to any value Treuhand had received for supplying the services to the infringement. The GC noted, however that a specific provision of the fining guidelines provides that the particularities of a given case or the need to achieve deterrence in a particular case may justify departing from the methodology set out in the fining guidelines.⁶  The GC concluded that the particular circumstances of the present case justified a departure from such methodology.

Explaining, the GC stressed that any undertaking engaging knowingly in a cartel should incur liability. According to the GC in Treuhand I, a sufficiently definite and decisive causal link is enough to fine a facilitating company.⁷ The fact that a company has participated in a cartel only in a subsidiary or passive way, or as an accessory, is not sufficient to rule out its liability for the entire infringement.  Treuhand II is an affirmation of this concept.

Importantly, while the Commission showed mercy in Treuhand I, its ruling in Treuhand II implies that it will not hesitate to impose significant fines on complicit undertakings in the future. The ruling by the GC is a fair warning to all facilitating enterprises. With a legal maximum of 10% of the total turnover in the preceding business year of a company participating in an infringement⁸, the mere facilitation of cartel activities can come at a high price.