On May 14, 2019, the General Court dismissed Recylex’s application for annulment of a Commission decision that imposed a fine on Recylex for its participation in a buyer cartel in the battery recycling sector.[1]

Battery recycling companies purchase scrap lead-acid car batteries, which they use to produce recycled lead. In June 2012 Johnson Controls blew the whistle on a cartel in this sector by applying for immunity. This prompted the Commission to raid several companies. Eco-Bat submitted a leniency application during the raids, as did Recylex several weeks later. On February 8, 2017, the Commission fined these companies and Campine for coordinating to pay lower prices for scrap lead-acid car batteries, thereby increasing their profit margins.[2] In setting the fines, the Commission found that the value of purchases—the Commission’s usual starting point for setting fines—would likely underestimate the economic significance of the infringement and lead to under-deterrence, because the cartel concerned purchases and not sales. The Commission explained that “the more successful a sales cartel is, the higher the value of sales and thus the amount of the fine. The inverse is true for purchase cartels: the more successful a purchase cartel is, the lower the amount of the value of purchases and thus the amount of the fine.”[3] The Commission therefore departed from its Fining Guidelines[4] and increased all fines by 10%, without explaining how it had arrived at 10%. Moreover, the Commission awarded fine reductions of 50% and 30% to Eco-Bat and Recylex, respectively, for being the first and second companies to provide additional evidence of significant added value to its investigation.

Recylex appealed, notably against this 10% increase in the amount of the fine and by claiming that Eco-Bat failed to cooperate fully with the Commission and therefore Recylex, and not Eco-Bat, should be considered the first company to provide evidence with significant added value. The General Court rejected all of Recylex’s grounds of appeal. First, the General Court accepted the Commission’s position that the value of purchases was imperfect because it could have been biased downward as a result of the cartel. Accordingly, “[t]hat assessment of the deterrent effect of the fine … adequately justifies its decision to apply a 10% increase to the amount of the fine imposed on Recylex.”[5] The General Court also found that the Commission did not need to check whether the cartel did in fact depress the value of purchases, since the conduct amounted to a per se (by object) infringement, for which the Commission does not need to prove effects. In other words, the Commission’s assumption that the value of purchases could have been imperfect and artificially deflated was enough to support the fine increase; there was no need for the Commission to further justify the increase or its size.

Second, the General Court rejected Recylex’s claim that it, not Eco-Bat, should be treated as the first company to provide evidence of significant added value due to Eco-Bat’s alleged failure to cooperate fully with the Commission (as required by the Leniency Notice). The General Court held that “[e]ven if Eco-Bat had failed to fulfil its duty to cooperate fully with the Commission, the fact remains that Recylex was the second undertaking to provide evidence that had significant added value.”[6] In other words, failure to fulfil the duty to cooperate does not affect the order in which leniency applications are deemed to have arrived. Accordingly, Recylex could only enjoy a reduction of up to 30% of the fine as the second company to provide evidence with significant added value— regardless of the quality of Eco-Bat’s cooperation.

The judgment affords the Commission a wide margin of discretion in setting fines in situations where its Fining Guidelines do not readily apply— like buyer cartels. It may lead the Commission to increase fines in other buyer cartels, to the extent that the Commission can sufficiently explain its methodology. However, in Icap, the Commission departed from its Fining Guidelines when fining two cartel facilitators, but did not detail its methodology to the companies concerned. As reported in this edition of the newsletter, both the General Court and Advocate General Tanchev in the pending appeal found that the methodology was “an important element on which the Commission based its decision”[7] that should have been disclosed to Icap.

[1]      Recyclex v. Commission, (Case T-222/17), EU:T:2019:356.

[2]      Car battery recycling (Case COMP/AT.40018), Commission decision of February 8, 2017.

[3]      Ibid, para. 364.

[4]      Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, OJ 2006 C 210/2, para. 37. (“Although these Guidelines present the general methodology for the setting of fines, the particularities of a given case or the need to achieve deterrence in a particular case may justify departing from such methodology or from the limits specified in point 21.”)

[5]      Recylex, para. 127. (emphasis added.)

[6]      Recylex, para. 153.

[7]      Commission v. NEX International Limited (Case C-39/18 P), opinion of Advocate General Tanchev, EU:C:2019:359, para. 48.