EU High Court reduces cartel fine by 30 percent on appeal and stresses need for timely resolution of cases by the General Court.

Summary -

On 12 November 2014, the Court of Justice of the European Union (ECJ) issued its judgment in Guardian Industries, an important ruling stressing the need for the European Commission to respect the principle of non-discrimination when calculating fines for competition-law infringements. The judgment concerned the Commission’s treatment of “captive sales,” i.e. sales within the same corporate group that were affected by cartel conduct, a recurring issue in the Commission’s fining practice. In the future, if the Commission decides to exclude such sales for purposes of calculating fines, it will also have to grant proportionate reductions to companies that do not have such captive sales, and may generally have to be more mindful of avoiding fines that may not reflect a companies’ relative weight in the market and role in the infringement. Moreover, the ECJ found that the General Court (GC) had taken too long to rule on the defendant’s appeal at first instance, paving the way for a possible damage action against the European Union.

Background -

In 2007, the Commission issued a decision fining four flat glass manufacturers, including Guardian Industries, for an alleged cartel infringement. Even though Guardian was the smallest producer of the four, Guardian received the highest fine (EUR 148 million). Guardian appealed the decision to the General Court, asking for an annulment based on insufficient evidence of its participation in the infringement and, in the alternative, a reduction of the fine to remedy the discrimination it had suffered vis-à-vis the other producers. The GC rejected all of Guardian’s pleas. Guardian appealed to the ECJ on the discrimination issue, and also argued that the GC had taken an excessive amount of time (almost five years) in dealing with the case at first instance. In April 2014, Advocate General Wathelet issued his Opinion recommending that the ECJ should partially annul Guardian’s fine. Latham & Watkins partner Sven Völcker was co-counsel to Guardian before the GC and on appeal to the ECJ.