On July 4, 2019, following two losses at the EU Courts, the Commission re-adopted its decision to fine five Italian manufacturers of reinforcing steel bars for a price-fixing cartel. The Commission reduced the fines by an unprecedented 50% due to the length of proceedings spanning almost two decades.

Background

On December 17, 2002, the Commission fined 11 Italian companies a total of €85 million for a price-fixing cartel for reinforcing steel bars between December 1989 and July 2000 (the “2002 Decision”). On October 25, 2007, the General Court annulled the 2002 Decision because its legal basis (Article 65 of the Treaty constituting the European Coal and Steel Community) was no longer in force when the decision was adopted.

The Commission re-adopted its decision on September 30, 2009 based on corresponding provisions of Regulation 1/2003.[1] The re-adopted decision confirmed the Commission’s original findings, and re-imposed near-identical fines (the “2009 Decision”). All 11 companies appealed to the General Court again. On December 9, 2014, the General Court handed down a series of judgments that upheld the 2009 Decision. Five of the companies appealed to the Court of Justice. On September 21, 2017, the Court of Justice set aside the General Court judgment and annulled the 2009 Decision on the ground that the Commission had infringed the appellants’ rights of defense by not granting an Oral Hearing for the Statement of Objections (the “SO”) preceding the 2009 Decision.

On July 4, 2019, the Commission re-adopted its decision (presumably following an Oral Hearing), citing “public interest in pursuing an effective and deterrent enforcement against cartels.”[2] It granted the five companies an exceptional 50% fine reduction (from €32 million to €16 million) due to the excessive length of proceedings caused by appeals to the EU courts as a result of procedural errors of the Commission.

An unprecedented fine reduction

The 50% fine reduction is unprecedented. In previous cartel cases, fine reductions due to length of proceedings were significantly lower: a 1% discount to makers of heat stabilizers (2009); 10% for a member of a smart-chip card makers cartel (2014); and 5% for members of a seatbelt systems cartel (2019).[3] The Commission’s willingness to compensate for long proceedings is also notable in the context of the recent Court of Justice judgment in Gasgogne that set a high bar for recovery of damages in cases involving protracted judicial proceedings.[4]

Implications

The Commission’s willingness to compensate for protracted proceedings may therefore further motivate companies to litigate, in particular, in circumstances where the Commission has committed a procedural error. Indeed, it is notable that the average length of proceedings in cartel investigations is around 5.6 years.

Not all cartel participants benefited from a fine reduction. Lucchini was one of the companies that did not appeal the December 2014 General Court judgment. After the Court of Justice’s annulment of the Commission’s 2009 Decision, however, Lucchini appealed to the General Court to request reimbursement of its €14.3 million fine.


[1]      See Council Regulation 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1/1, Article 7(1) and Article 23(2).

[2]      Commission Press Release MEX/19/3709, “Antitrust: Commission re-adopts decision and fines five producers of reinforcing steel bars €16 million for price- fixing cartel,” July 4, 2019.

[3]      Heat Stabilisers (Case COMP/AT.38589), Commission decision of June 29, 2016; Smart Card Chips (Case COMP/AT.39574), Commission decision of September 3, 2014; and Occupant Safety Systems (Case COMP/AT.40481), Commission decision of March 5, 2019.

[4]      European Union v. Gascogne Sack Deutschland and Gascogne (Joined Cases C-138/17 P and C-146/17 P) EU:C:2018:1013. The Court of Justice dismissed Gascogne’s claim for damages resulting from additional bank guarantee costs incurred by the excessive length of proceedings (more than 14 years), on the grounds that there was no causal link between the injury and the length of proceedings.