The question of whether to appeal a cartel fine in court is often not an easy one for the companies involved – not least because some courts in Europe even have the power to increase fines. To give companies new “hope” for the future, this post brings together a number of recent court decisions across Europe either annulling or reducing fines.
As everybody knows, cartel proceedings can take quite some and often involve
blood, sweat and tears considerable financial and human resources. Consequently, the appetite for appealing fining decisions in potentially similarly long court proceedings is often limited.
But there is even a legal reason why companies tend to be hesitant to prepare for a move through the instances: The prohibition of the reformatio in peius generally does not apply under European (and national) competition law, which means that (some national) courts have the power to even increase the fine imposed on a company.
Since the beginning of the month, there have been a remarkable number of court decisions either annulling or reducing fining decisions by regulators – potentially motivating companies to go the extra mile next time?
Blockbuster reductions in France
Starting with a case which was all over the news, a French court lowered a fine imposed on Apple and two of its wholesalers by roughly 65% (for Apple this meant a reduction from EUR 1.1 billion to EUR 371.6 million). In another case, the same court cut fines to the benefit of several preserve manufacturers by 30% to 53% (overall from EUR 58.3 to approx. EUR 32 million).
It is striking that in both cases, the court significantly reduced the duration of the conduct for which fines were imposed. In preserve manufacturers, the court said that the illegal conduct ended roughly 9 months earlier than concluded by the regulator. On a similar note, the court held in Apple that there was insufficient evidence for the first four (!) years of the alleged conduct.
But in the latter case, the court additionally had more material concerns. Most interestingly, it annulled the entire fine relating to retail price maintenance. The court found that (i) nothing in the contracts between Apple and its retailers indicated a minimum reselling price; (ii) there was no proof for a price policy and retaliation measures by Apple; and (iii) similar pricing could be explained by the market characteristics.
Back to zero in Italy
Apple also played a role in one of the two annulment decisions by an Italian court this month. Together with Amazon, Apple was fined more than EUR 173 million for entering into an anti-competitive agreement which allowed only Apple and certain other parties the sale of Apple and Beats products on the Amazon marketplace.
The Italian regulator found that the other parties were selected in a discriminatory manner. However, the Italian court annulled the fine mainly for two formalistic reasons: (i) the Italian regulator only started an investigation almost one and a half year after it had received a complaint regarding the issue; and (ii) the Italian regulator breached the parties’ right of defence by not giving the parties sufficient time to respond to its preliminary findings.
The Italian courts also quashed bid-rigging fines imposed on several security services companies amounting to EUR 30 million. Honestly, not much can be drawn from (English!) information in the public domain, but it appears as if the main reasons for the decision were also procedural errors on the part of the regulator.
Taking too long in Spain
Finally, a Spanish case is worth mentioning here. For one, the initial decision by the Spanish regulator is already an interesting read and a good example of antitrust concerns also in smaller cases. In 2016, a dentists’ industry body received a fine of EUR 230,000 for a marketing campaign which restricted patients’ ability to choose their own dental technician by emphasizing that dental technicians are not dentists and patients should not use their services directly.
Originally, the fine amounted to EUR 350,000, but was reduced by a Spanish court in May 2015. The court argued that the regulator had changed its allegations after the statement of objections. In the new ruling last week, the court now completely annulled the fine and said that the regulator exceeded the 18-month deadline for competition investigations after the case was returned to the regulator following the first reduction in 2015.
Check the details?
Without overstating the importance of the five rulings, it is quite stunning that in all cases formal errors were key aspects of the decision to reduce or annul the fine. So, while the desire to bring proceedings to an end for good after having received a fine, it makes sense to also check the nitty gritty procedural details when weighing the pros and cons of going to court.