On March 18, 2021, the Court of Justice ruled on Pometon SpA (“Pometon”)’s appeal against the General Court’s judgment in the steel abrasives hybrid cartel settlement case. The Court of Justice ruled that the General Court had breached the principle of equal treatment when recalculating the fine imposed on Pometon by the Commission in 2016, the only non-settling party in this case. The Court of Justice therefore further reduced Pometon’s fine to €2.6 million, imposing an approximate 60% discount on the original fine calculated by the Commission.
The Court of Justice however dismissed the remainder of Pometon’s appeal, notably agreeing with the General Court that the Commission had not breached the presumption of innocence. In this context, the Court of Justice further clarified how the Commission ought to balance the efficiencies of the settlement process with the presumption of innocence of non-settling parties in hybrid cartel settlements.
In June 2010, the Commission launched an investigation and conducted dawn raids at the premises of five steel abrasives producers in the EEA. In January 2013, the Commission initiated proceedings against them for allegedly agreeing on a common scrap surcharge calculation formula for steel abrasives’ sales.
In April 2014, the Commission adopted a settlement decision concerning all producers under investigation except for Pometon, the only non-settling party, finding that these four settling parties had coordinated steel abrasives prices throughout the EEA.
Critically, the Commission published— “unintentionally,” as the Commission later asserted—a provisional non-confidential version of its 2014 settlement decision, prior to concluding the Pometon proceedings, and without redacting references to Pometon. Pometon claimed that, by doing so, the Commission had breached the principle of professional secrecy. Pometon further claimed that the Commission had violated its rights of defense and presumption of innocence because the settlement decision mentioned Pometon when describing the events of the case. This arguably showed that the Commission had already formed a view on Pometon’s involvement in the cartel before its 2016 decision.
The Commission continued its investigation into Pometon, the only non-settling party, under the standard cartel procedure, turning the process into a so-called “hybrid” cartel settlement procedure (i.e., a situation in which some parties allegedly involved in a cartel choose to settle with the Commission, while others opt to contest the Commission’s allegations under the standard cartel administrative process).
In May 2016, the Commission fined Pometon c. €6.2 million for its participation in the steel abrasives cartel. Pometon received a 10% fine discount because its participation in the cartel was not as extensive as that of other parties. In its decision, the Commission rejected all of Pometon’s arguments regarding a breach of the principle of professional secrecy, Pometon’s rights of defense, and the presumption of innocence.
The General Court judgment
In August 2016, Pometon brought an action to annul the Commission decision before the General Court. Pometon notably claimed that the Commission had breached the principles of impartiality of the procedure, as well as Pometon’s presumption of innocence and rights of defense, by referring to Pometon’s conduct in the 2014 settlement decision. Pometon also asked for an annulment or otherwise reduction of its fine because the Commission had failed to state reasons and breached the principles of proportionality and equal treatment when calculating its fine.
In March 2019, the General Court dismissed all of Pometon’s grounds of appeal, but still annulled the Commission’s fine and set it at c. €3.9 million. The General Court ruled that the Commission had not evidenced to the requisite legal standard the reasons for calculating the amount of Pometon’s fine, and it was not possible to discern if the principles of proportionality and equal treatment had been respected. Pometon appealed the General Court’s judgment in June 2019.
The Court of Justice judgment
The Court of Justice held that the General Court had breached the principle of equal treatment when it recalculated Pometon’s fine, but rejected Pometon’s other grounds of appeal, including its claims that the General Court had erred in law when finding that the Commission had not breached its presumption of innocence.
Equal treatment. Pometon claimed that the General Court treated two different situations identically when (re)calculating its fine, without objective justifications, thus breaching the principle of equal treatment. The Court of Justice agreed, finding that the General Court had failed to state why it applied the same fine reduction rate to Pometon as to another cartel participant, Winoa, even though Pometon’s infringement was less serious than Winoa’s, as the General Court itself had concluded. Based on the General Court’s own findings, the Court of Justice pointed out that “it was for the General Court to set out the reasons why, despite the difference in situation, it was consistent with the principle of equal treatment to grant Pometon a rate of reduction identical to that granted to Winoa.”
Presumption of innocence. While the Court of Justice dismissed the remainder of Pometon’s claims, its analysis relating to the presumption of innocence is instructive for hybrid cartel settlement proceedings. The Court of Justice confirmed that while “it may be objectively necessary” for the Commission’s hybrid cartel settlement decision to mention “certain facts and behaviour” related to non-settling parties, it must nonetheless “preserve [the non-settling parties’] presumption of innocence.”
The General Court had examined two elements to determine whether the Commission had breached Pometon’s presumption of innocence: (i) whether the Commission took “sufficient drafting precautions” in its decision to avoid a “premature judgment as to Pometon’s participation in the cartel” and (ii) whether references to Pometon in its decision were necessary.
The General Court had replied to both questions in the affirmative and the Court of Justice confirmed this reasoning:
- The Commission’s settlement decision had explicitly stated that Pometon was not an addressee, that it was subject to separate proceedings, and that references to Pometon served the sole purpose of establishing the settling parties’ 
- References to Pometon when describing the facts of the case in the settlement decision were necessary to accurately describe the events establishing the cartel and to examine the full extent of the settling parties’ liability.
A demoralizing outcome for non-settling parties in hybrid cartel settlement proceedings
The Court of Justice’s ruling that the Commission had not breached Pometon’s presumption of innocence must be a welcome result for the Commission. In contrast, the Commission was found to have breached the presumption of innocence in another recent hybrid cartel settlement case by the General Court in Icap v. Commission (“Icap”)—on which Pometon tried to rely before the Court of Justice.
This feeds into a broader debate: in hybrid cartel settlement cases, should the Commission adopt settlement and non-settlement decisions simultaneously to avoid breaching the non-settling parties’ presumption of innocence? While the Commission followed this approach in its first hybrid cartel settlement procedure, the Commission seems to have favored a staggered approach towards decisions in hybrid cartel settlement cases ever since.
Icap reignited this debate when the General Court suggested that one of the steps for the Commission to safeguard all parties’ presumption of innocence in a hybrid cartel settlement could be to simultaneously adopt both decisions.
The General Court and the Court of Justice’s judgments in HSBC Holdings plc v. Commission and Pometon respectively, however, did not repeat this thought.
While the jury is still out on HSBC’s appeal to the Court of Justice, for now, the Court of Justice’s Pometon ruling seems to favor the Commission’s preference for a speedy resolution of cartel settlement cases, and supports follow-on damages applicants in bringing their actions against the settling parties sooner rather than later.
 Steel abrasives are loose steel particles produced from steel scrap. They are mainly used in the steel, automotive, metallurgy, petrochemical, and stone-cutting industries.
 Pometon SpA v. Commission (Case C-440/19 P) EU:C:2021:214. See also Pometon SpA v. Commission (Case C-440/19 P), Opinion of Advocate General Hogan of October 8, 2020, EU:C:2020:816 (the “Opinion”). For reporting on the Opinion, see, our October 2020 EU Competition Law Newsletter.
 These producers were Pometon, Ervin Industries Inc. and its subsidiary Ervin Amasteel, WHA Holding SAS and its subsidiary Winoa SA (“Winoa”), Metalltechnik Schmidt GmbH & Co. KG, and Eisenwerk Würth GmbH.
 Steel Abrasives (Case COMP/AT.39792), Commission decision of April 2, 2014.
 Based on publicly available information, approximately 21% of cartel settlements are hybrid cases, with the number of “hold-outs” typically being one, except for the three “hold-outs” in the EIRD investigation (see also Icap v. Commission (Case T180/15) EU:T:2017:795, as reported in our European Competition Report Q4 2017, and our May 2019, and July 2019 EU Competition Law Newsletters, respectively).
 Steel Abrasives (Case COMP/AT.39792), Commission decision of May 25, 2016.
 Pometon SpA v. Commission (Case T-433/16) EU:T:2019:201.
 Pometon SpA v. Commission (Case C-440/19 P) EU:C:2021:214, para. 150.
 Ibid., para. 151.
 The Court of Justice rejected Pometon’s grounds of appeal claiming that the General Court erred in law when it found that the Commission had not breached the principle of impartiality and the presumption of innocence, that the General Court erred in law on the application of rules related to the burden of proof and the presumption of innocence, and that the General Court erred in law on the application of the burden of proof and presumption of innocence related to the duration of Pometon’s participation in the infringement.
 Pometon SpA v. Commission (Case C-440/19 P) EU:C:2021:214, para. 65.
 Ibid., para. 68.
 Ibid., paras. 69–74.
 Ibid., paras. 75–84.
 The General Court’s Icap ruling was also upheld by the Court of Justice. See Icap v. Commission (Case T180/15) EU:T:2017:795 (as reported in our European Competition Report Q4 2017, and our May 2019, and July 2019 EU Competition Law Newsletters respectively). See also Commission v. Icap (Case C-39/18 P) EU:C:2019:584. In Pometon, the Court of Justice distinguished Pometon’s case from the General Court’s ruling in Icap and confirmed that a case-by- case analysis of whether the Commission has respected the presumption of innocence is appropriate; see Pometon SpA v. Commission (Case C-440/19 P) EU:C:2021:214, para. 86.
 Animal feed phosphates (Case COMP/AT.38866), Commission decision of July 20, 2010.
 See Icap v. Commission (Case T-180/15) EU:T:2017:795, para. 268 (“in circumstances where the Commission considers that it is not in a position to determine the liability of the undertakings participating in the settlement without also taking a view on the participation in the infringement of the undertaking which has decided not to enter into a settlement, it is for the Commission to take the necessary measures—including possible adoption on the same date of the decisions relating to all the undertakings concerned by the cartel, as it did in the case which gave rise to the judgment of 20 May 2015, Timab Industries and CFPR v. Commission (Case T-456/10) EU:T:2015:296—enabling that presumption of innocence to be safeguarded”).
 HSBC Holdings plc v. Commission (Case T-105/179) EU:T:2019:675 (the “HSBC” case, as reported in our August/September 2019 EU Competition Law Newsletter). On December 3, 2019, HSBC appealed to the Court of Justice, with the following first plea: “the General Court erred in law as regards the effects of the Commission’s infringement of essential procedural requirements, namely HSBC’s right to the principles of the presumption of innocence, good administration and the rights of defence” (Case C-883/19 P). This appeal is currently pending before the Court of Justice, along with the Commission’s appeal to the Court of Justice on the same case.