Supreme Court rules on Honda abuse of dominance case - International Law Office

On June 3 2011 the Supreme Court issued a succinct judgment on the scope of the Court of Appeal's powers to overturn Competition Council decisions and the nature of proceedings before the council. This is the latest decision in a case that began in 1995 with complaints filed by 12 independent motorcycle distributors in Belgium against five official importers of motorcycles, including Honda Belgium.

In 1996 the president of the council granted the distributors' request for preliminary measures against Honda Belgium. In January 1999 the council decided on the merits that Honda Belgium had abused its dominant market position on the market for issuing Belgian conformity certificates for Honda motorcycles. The council highlighted a number of abusive practices by the Honda official dealers which slowed down the issuance of conformity certificates to the independent distributors and restricted their access to such certificates. The council imposed substantial fines on official importers of Honda, Suzuki, Yamaha and Kawasaki motorcycles. At the time, Honda Belgium's €743,680 fine was the largest ever imposed by the council.

Honda Belgium appealed against the decision to the Brussels Court of Appeal, which:

• dismissed Honda Belgium's procedural arguments;
• agreed with the council's market definition;
• confirmed Honda Belgium's dominant position in the market for issuing conformity certificates for its motorcycles; and
• upheld the council's findings on abuse of dominant position.

However, the court declared that Honda Belgium's grievances about the council's calculation of the fine were well founded. As no guidelines on the calculation of fines had been issued at that time, and as the council had not indicated its principles or method of calculation either during the procedure or in its decision, Honda Belgium had been unable to exercise its rights of defence. Moreover, the council had apparently calculated the fine on the basis of an assessment of the infringer's means, but this assessment had no legal basis and did not explain how the turnover in the relevant market had been calculated or used in the calculation of the fine. In addition, the court objected to the fact that the council had failed to take into account the previous year's turnover, as required under the Competition Act. The court therefore annulled the fine and decided to re-open proceedings to allow the parties to provide more information and offer their views on an appropriate calculation method.

Honda Belgium appealed the decision to the Supreme Court, where it raised two main grievances.

First, Honda Belgium argued that the Court of Appeal should have reinvestigated the case in the same way as the council had done before reaching a decision. The Supreme Court confirmed that the Court of Appeal has full decision-making powers in antitrust and merger control cases, and that it has the right to rule on the merits of the case (and not merely to overturn a decision and remit the case to the council for a new ruling). However, despite the extent of these powers, the Court of Appeal's task is not identical to that of the council. The court was not obliged to start a new investigation or submit the case to the parties for further discussion on its own initiative. It could limit its analysis to establishing whether the procedural rules had been followed and whether the facts had been correctly stated, interpreted and legally construed. The Supreme Court ruled that in deciding whether an anti-competitive practice had taken place, the Court of Appeal was required to base its decision on the facts determined by it or by the council.

Second, Honda Belgium argued that investigations by the College of Competition Prosecutors are criminal procedures and must comply with the conditions for a fair trial under Article 6 of the European Convention on Human Rights. The Supreme Court firmly dismissed this argument. Although such investigations are examples of an accusatory procedure (as opposed to a so-called 'contradictory' procedure, which is used in other civil cases), its consequences are of a civil law nature. The fact that an undertaking which faces an investigation for abuse of dominance finds itself in a similar situation to an undertaking facing a criminal investigation does not alter the nature of the procedure.

The court consequently dismissed Honda Belgium's appeal on all grounds.

For further information on this topic please contact Carmen Verdonck at ALTIUS by telephone (+32 2 426 1414), fax (+32 2 426 2030) or email (carmen.verdonck@altius.com).