-
Presentation prepared for the workshopMILESTONE JUDGEMENTS IN
COMPETITION LAWOrganised by the Small States Network for Economic
Developmentin collaboration with the Barbados Fair Trading
Commission
Barbados Hilton30-31 July, 2012Gas Insulated Switchgear
David BaileyKings College London
-
Gas Insulated SwitchgearOutline of presentationHow did the case
arise?Legal issues for determination by the General CourtThe
judgmentThe aftermathLessons to be learned from the case
David Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearHow did the case arise?In January 2007
the European Commission imposed fines totalling over 750 million on
eleven groups of companies for having infringed Article 101(1) of
the EU Treaty
The companies had participated in an illegal cartel in the
market for gas insulated switchgear projects for 16 years
David Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearDavid BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearHow did the case arise?Cartel members
took sophisticated measures to keep the cartel secretCode names for
companies and individualsAnonymous e-mail addresses
ABB blew the whistle to the EU Commission ABB was a
recidivist!Importance of the evidence provided by leniency
applicant
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearHow did the case arise?The Commission
found that the suppliers had engaged in a complex of agreements and
concerted practices to:share marketsallocate quotas and maintain
historic market sharescollusive tenderingexchange of sensitive
market information
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearNine appeals to the General Court:
Breach of rights of defenceDenied involvement in all or parts of
the cartel Contested fines as excessive and/or
unjustifiedChallenged liability for the cartel where ownership of
one of the cartelists changes
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearLegal issues for determination by the
General CourtFirst issueWhat is the correct approach to the
evidence?Note the difficulties of proving a secret cartelNote the
Commissions investigatory powers and leniency programmeDoes modern
technology help or hinder the discovery of cartels?
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearLegal issues for determination by the
General CourtSecond issueDid each of Mitsubishi, Toshiba, and
Hitachi participate in a market-sharing agreement and/or concerted
practice? Was there a common understanding that Japanese suppliers
would not compete for contracts in Europe and vice versa?David
Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearLegal issues for determination by the
General CourtThird issueWas the fine lawfully and fairly imposed by
the Commission and was it calculated correctly?Year of turnover
used for calculationsUnequal treatment concerning deterrence
multiplierRingleader role in the cartelRules for attributing
liability for payment of finesDavid Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearThe judgmentThe first issueWhat is the
correct approach to the evidence?Evidence must be precise and
consistent (para 75)Evidence is evaluated solely by its reliability
(para 85)Can rely on leniency materials (paras 87-89)Some caution
is generally called for But attempts to mislead Commission could
call into question the cooperation of the undertaking and affect
any leniency
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearThe judgment
the Commission cannot be required to produce documents expressly
attesting to contacts between the traders concerned The existence
of an anti-competitive practice or agreement may therefore be
inferred from a number of coincidences and indicia which, taken
together, can, in the absence of another plausible explanation,
constitute evidence of an infringement of the competition rules
(Mitsubishi, para 76)David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearThe judgmentSecond issueWas there a
common understanding that the European and Japanese producers would
not enter each others markets?No document recording the common
understandingWhistleblowers evidence was credibleWhistleblowers
evidence was corroborated Whistleblowers evidence was not
contradicted by the appellantsCompensation mechanism was indirect
evidence
David Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearThe judgmentThe existence of a mutual
agreement necessarily implies the existence of a meeting of minds,
even if there is no evidence which makes it possible to determine
with precision the exact point in time that meeting of minds was
manifested the content of that understanding was understood,
accepted and implemented by all the participants to the cartel
without the need for any specific discussion on it. (Mitsubishi,
para 231)
David Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearThe judgmentThe third issueAlstom and
Areva did act as ringleaders, but not for as long as SiemensThe
infringing entity itself continues to be liable even if it is
acquired by another The acquirer may be held responsible only for
the wrongdoings of its subsidiary post-acquisitonApportionment of
joint and several liability (para 158)
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearThe aftermathEight appeals to the Court
of JusticeEven if an appellant successfully appeals on procedural
grounds, the Commission will often rectify the error and readopt
its infringement decisionOn 27 June 2012 readopted decision imposed
total fines of 131.6 million on Toshiba and MitsubishiDavid
BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
-
Gas Insulated SwitchgearLessons to be learned from the case
Proved an unwritten cartel on the basis of statements made by
other participants in an unwritten cartel, including the
whistleblower
David Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearLessons to be learned from the case
The EU Courts have consistently been sensitive to the
difficulties of unearthing and proving secret cartelsApply a
realistic standard of proofEnsure the effective enforcement of the
competition rules
The EU Courts will reduce the level of fines where one member of
a cartel has been treated unequally compared with others in the
same cartelDavid Bailey*SSNED-Barbados FTC
SSNED-Barbados FTC
-
Gas Insulated SwitchgearLessons to be learned from the case
Follow-on actions for damages have been brought in the
Netherlands and the UKE.g. National Grid v ABB (England and
Wales)
Difficulties of obtaining access to the evidenceCase T-164/12
Alston v Commission (pending)Case T-344/08 EnbW v Commission
(2012)
David BaileySSNED-Barbados FTC*
SSNED-Barbados FTC
In particular, the Japanese companies agreed not to sell in
Europe and European companies would not sell in JapanCommission
says at para 308 By its very nature, the implementation of a cartel
agreement of the type described above leads to a significant
distortion of competition, to the exclusive benefit of producers
participating in the cartel and to the detriment of their customers
****