Court upholds fines in steal beams and alloy surcharge cases - International Law Office

Background
Decision
Comment


In two judgments delivered on March 29 2011 the European Court of Justice upheld the fines imposed by the European Commission on ArcelorMittal Luxembourg SA and ThyssenKrupp Nirosta.(1) In the decisions, which go against the advocate general's opinion, the court dealt with the application of the European Coal and Steel Community Treaty after its expiry and with the working of limitation periods for competition law infringements.

Background

In 1994 the commission fined ArcelorMittal (then Arbed SA) for having participated in a cartel in the steel beams sector. In 1998 it fined ThyssenKrupp for anti-competitive practices with regard to stainless steel flat products. Both decisions were adopted on the basis of the European Coal and Steel Community Treaty, which expired on July 23 2002. The decisions were quashed by the European Court of Justice in 2003 and 2005 respectively for violation of the appellants' rights of defence. Thereafter, the commission brought new proceedings and, in 2006, fined ArcelorMittal and its subsidiaries and ThyssenKrupp in respect of the same infringements – that is, for having participated in agreements and concerted practices contrary to the European Coal and Steel Community Treaty. The General Court annulled the commission's decision concerning ArcelorMittal's subsidiaries as the infringements were time barred in relation to them. The actions brought by ArcelorMittal and ThyssenKrupp were rejected.

In its judgments on the appeals lodged against the General Court's rulings, the court had to decide, in particular, whether:

• after the expiry of the European Coal and Steel Community Treaty the commission was empowered to impose fines based on the substantial provisions of that treaty;and
• the court had been correct in holding that the commission was not entitled to fine ArcelorMittal's subsidiaries, since the limitation periods regarding their participation in the infringement had expired.

Decision

Dismissing the grounds for appeal put forward by ArcelorMittal and ThyssenKrupp, the court held that the continuity of the legal order of the European Union – embodied by the succession of the European Coal and Steel Community Treaty, the EC Treaty and the Treaty on the Functioning of the European Union – requires that any conduct in breach of the European Coal and Steel Community Treaty, whether taking place before or after its expiry, could be and still can be penalised by the commission in order to guarantee free competition. The application of the European Coal and Steel Community Treaty provisions was not contrary to the principles of legal certainty and the protection of legitimate expectations. Since these provisions clearly defined the infringements and the penalties which could be imposed following such infringements, the court held that ArcelorMittal and ThyssenKrupp could not have been unaware of the consequences of their behaviour, and could not have expected that the subsequent amendments to the legal basis and procedural rules would enable them to escape punishment as a result of their past infringements.

With respect to the pleas raised regarding the operation of the limitation periods in relation to ArcelorMittal on the one hand and its subsidiaries on the other, the court held that – contrary to the commission and advocate general's view - the action brought by ArcelorMittal against the commission's initial decision suspended the limitation period only in relation to ArcelorMittal, and not in relation to the participation of its subsidiaries. In this connection, the court recalled that the object of an action brought against a commission decision is limited to the part of the decision addressing the complainant, whereas the decision becomes final in relation to the other undertakings which have not brought actions against the decision. For this reason, an action brought by another undertaking against the same final decision can have no suspensive effect.

Comment

The court's rulings provide clarification on the commission's power to impose fines for infringements of the European Coal and Steel Community Treaty that occurred before its expiry and, more importantly, advance the existing case law regarding limitation periods. In this regard, the court had previously ruled that the annulment of a commission decision does not retroactively abolish the suspensive effect in the same way as it abolishes the decision.(2) This principle has now been confirmed by the court – which again ruled against the advocate general's opinion – in ThyssenKrupp Nirosta, whereas in ArcelorMittal the court clarified the scope of the suspensive effect of actions for annulment of the commission's decision, an issue which had not been discussed in Limburgse Vinyl Maatschappij.

The court's verdict that an action brought against a commission decision suspends the limitation period only inter partes (ie, as between the parties of the court proceedings, and not with regard to third parties) appears convincing. Since the suspensive effect serves to protect the commission from the expiration of limitation periods in situations where it must await the decision of the Community judge, but not – as it is the case with respect to the interruption of the limitation – to enable the prosecution of cartel infringements, there appears to be no reason to expand the suspensive effect to parties other than those that have brought an action against the commission's decision. In the case at hand the suspension of the limitation period with respect to ArcelorMittal's infringement rightly enabled the commission to remedy the procedural faults of its initial decision. However, it is hard to conceive why, after not having fined ArcelorMittal's subsidiaries in its initial decision, the commission should bring proceedings against those companies by expanding the suspensive effect of ArcelorMittal's action for annulment of the initial decision.

For further information on this topic please contact Stefan Lehr at CMS Hasche Sigle by telephone (+49 69 717 010), fax (+49 69 717 40410) or email (stefan.lehr@cms-hs.com).

Endnotes

(1) Joined Cases C-201/09, P ArcelorMittal Luxembourg v European Commission and C-216/09 P, European Commission v ArcelorMittal Luxembourg and Case C-352/09, P ThyssenKrupp Nirosta v European Commission.

(2) Joined Cases C-238/99 P et al, Limburgse Vinyl Maatschappij v European Commission.