On 19 March 2015, the European Court of Justice (ECJ) imposed a fine of €60.3 million on two banana importers for their participation in a price fixing cartel. The judgment confirms the low evidential hurdle for the Commission when prosecuting in cartel cases, and establishes “that communications between competitors leading to horizontal price-fixing through a cartel are anti-competitive by their very object and amount to a violation of EU antitrust rules, without requiring an analysis of their effect on competition in the market.”
The case started in June 2005 when the European Commission commenced investigations into an alleged price fixing cartel between the two importers in response to an application lodged by a third for immunity under the Commission’s 2002 Leniency Notice.
It was revealed that, between 2000 and 2002, all three banana importers had been discussing and exchanging information relating to banana pricing in advance of setting and releasing price quotations to customers. The Commission considered that the three players had been coordinating in such a way as to reduce uncertainty as to the quotation prices, and determined that this conduct amounted to a concerted practice having as its object the restriction of competition. It was therefore confirmed on 15 October 2008 that the parties had operated a price fixing cartel in violation of Article 101 of the Treaty on the Functioning of the European Union (TFEU) which had affected eight member States (Austria, Belgium, Denmark, Finland, Germany, Luxembourg, The Netherlands and Sweden).
The two importers who did not seek leniency strenuously denied involvement in any cartel activity, and repeatedly sought to challenge the Commission’s decision. On 14 March 2013, the General Court of the EU (GC) dismissed their appeals of the Commission’s decision. Later, on 19 March 2015, their appeal of the GC’s decision (alleging that there had been a breach of the rights of the defence on account of procedural errors, distortion of the facts relating to the economic context of the infringement, inadequate assessment of the evidence, and miscalculation of the fine) was also dismissed by the ECJ, which took the opportunity to wholly confirm the earlier decisions of the Commission and the GC.
The decision clarified that “certain forms of collusion between [parties] can be regarded, by their very nature, as being injurious to the proper functioning of normal competition” (T-Mobile Netherlands and Others ), and that there is therefore no need for the Commission to prove any actual “concrete effect” (Consten and Grundig v Commission ) on prices or on the market. This is in line with the Commission’s 2011 Guidelines on horizontal co-operation agreements, which state that “information exchanges between competitors…regarding intended future prices or quantities [are] considered a restriction of competition by object.”
It is also the latest in a long line of clear and consistent decisions which have afforded a wide definition to the term “concerted practice.” Previous case law has established that a concerted practice in breach of Article 101 may be established wherever there is “a form of coordination between [parties] which…knowingly substitutes practical cooperation between them for the risks of competition” (Imperial Chemical Industries Ltd ). Even a single instance of coordination (T-Mobile Netherlands and Others ), whether direct or indirect, and whether verbal or written (Suiker Unie and Others ), may constitute an infringement.
Whilst one importer was granted conditional immunity from fines of €80.2 million pursuant to the Leniency Notice, the Commission imposed a fine of €60.3 million on the remaining two importers for their role in the cartel.
The decision therefore serves as a stern reminder that participating in any level of information sharing between competitors will expose a company to liability for cartel behaviour. It also accentuates the importance of being first through the door in leniency applications. In other words, and as recently stated by the EU Competition Commissioner, “companies need to be aware that the Commission takes its anti-cartel enforcement duties very seriously…there are only two ways to avoid a fine: refrain from joining a cartel or, if you have fallen for it, repent rapidly and inform the Commission about it.”
Case C-286/13 P – Dole Food Company Inc and Dole Fresh Fruit Europe v Commission