EU General Court rules on hybrid cartel settlement for first time

On 20 May 2015, the EU General Court (“GC”) rejected an application for annulment by Timab Industries against a 2010 Commission decision imposing a fine of € 59.8 million on the company for its participation in the animal feed phosphates cartel. Timab, a subsidiary of Cie Financière et de Participations Roullier (“CFPR”), challenged the fine on the basis that it was higher than the range of fines (i.e., € 41-44 million) that had been indicated by the European Commission during settlement discussions, which Timab subsequently abandoned. This is the first case in which the GC has assessed the relationship between the standard cartel procedure and the Commission’s cartel settlement procedure, in which parties to a cartel can admit their participation and liability in return for a 10% reduction in the amount of the fine.

The cartel in question was a six-party European cartel among makers of phosphates used in animal feed, dating back to 1969. It involved the allocation of sales quotas and customers and the coordination of conditions of sale. Following settlement discussions between the Commission and each of the parties, all of the other parties to the cartel opted to enter into a settlement with the Commission, but Timab chose not to. This resulted in a “hybrid” cartel case involving two parallel investigations: one accelerated procedure for the parties that had opted to settle; and another full standard procedure for Timab. The differentiation in procedures subsequently resulted in reduced fines for the parties that opted to settle and to a larger fine for Timab (see VBB on Competition Law, Volume 10, No 7, available at www.vbb.com). In the proceedings before the GC, Timab argued that this amounted to a form of punishment for its withdrawal from the settlement talks.

The GC emphasised that, although the cartel was investigated under two separate procedures, the Commission was bound by the principle of non-discrimination in the methodology applied in setting the fine in relation to both the settling parties and the non-settling party, Timab. Nonetheless, the GC held that, on the facts, the Commission had been within its rights to impose a higher fine than it had initially proposed during the settlement talks and was thus not bound by the range indicated to Timab during the settlement talks. The GC emphasised that the larger fine was not a penalty for Timab having left the settlement procedure. Rather, the difference between the fine initially proposed and that which was ultimately imposed was due to the absence of a number of reductions that would have applied as part of the settlement. This was due to the inclusion of new information in the Commission’s assessment of the extent and duration of the infringement, which became apparent through the regular procedure. For example, during the settlement procedure, the Commission had proposed to grant Timab a 35% reduction in the fine on account of the fact that Timab was allowing the Commission to extend the duration of the infringement back to 1978. However, during the regular procedure, Timab subsequently challenged the existence of an infringement prior to 1993 and the Commission accordingly withdrew the proposed reduction. Likewise, the Commission reduced the leniency discount it had originally proposed, on account of Timab’s subsequent challenge to certain aspects of the evidence on which the Commission intended to rely against it for the period prior to 1993.

The GC thus concluded that the Commission had applied the same methodology to calculate both the range of fines at the stage of the settlement procedure and the amount of the fine ultimately imposed on Timab. The GC also determined that the Commission had correctly investigated the case during settlement discussions, had conducted a proper analysis and assessment of the anti-competitive practices attributed to Timab and had not erred in calculating the amount of the fine.

Accordingly, the GC dismissed the claim and upheld the fine imposed by the Commission.