|Court||Court of Justice|
|Date of ruling||14 September 2017|
|Case name (short version)||LG Electronics v Commission|
|Key words||Appeal — Agreements, decisions and concerted practices — Global market for cathode ray tubes for television sets and computer monitors — Agreements and concerted practices relating to prices, markets sharing, customer allocation and production limitation — Rights of the defence — Sending of the statement of objections only to the parent companies of a joint venture and not to the joint venture itself — Fine — 2006 Guidelines on the method of setting fines — Point 13 — Determining the value of sales relating to an infringement — Intragroup sales of the relevant product outside the European Economic Area (EEA) — Account to be taken of the sales within the EEA of final products in which the relevant product has been installed — Equal treatment|
|Basic context||LG Electronics Inc. (‘LGE’) unsuccessfully the judgment of the General Court of 9 September 2015, LG Electronics v Commission (T‑91/13, EU:T:2015:609), by which the General Court dismissed its action seeking the annulment of Commission Decision C(2012) 8839 final of 5 December 2012 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement (Case COMP/39.437 — TV and Computer Monitor Tubes) (‘the contested decision’) in so far as it related to LGE and, as a subsidiary plea, a reduction of the amount of the fine imposed on it by that decision.|
|Points arising – admissibility||–|
|Points arising – substance||The first ground of appeal, alleging an infringement of the rights of defence
43 According to the Court’s settled case-law, observance of the rights of the defence in a proceeding before the Commission, the aim of which is to impose a fine on an undertaking for infringement of competition rules, requires that the undertaking concerned must have been afforded the opportunity to make known its views on the truth and relevance of the facts and circumstances alleged as well as on the documents used by the Commission to support its claim that there has been an infringement. Those rights are referred to in Article 41(2)(a) and (b) of the Charter of Fundamental Rights of the European Union (judgment of 25 October 2011, Solvay v Commission,C‑110/10 P, EU:C:2011:687, paragraph 48 and the case-law cited).
44 Accordingly, Article 27(1) of Regulation No 1/2003 provides that, prior to taking a decision establishing an infringement of the rules of competition and imposing a fine, the Commission is required to give those who are the subject of the proceedings the opportunity to have their point of view heard as regards the grounds that the Commission has advanced and is to base its decisions solely on the objections in respect of which the relevant parties have been able to set out their observations.
45 It follows, as the Advocate General found in point 57 of his Opinion, that the statement of objections is designed to ensure the exercise of the rights of the defence, individually, by each natural or legal person concerned by the administrative proceedings in relation to the competition rules.
46 By contrast, if the Commission has no intention of establishing that an infringement was committed by a company, the rights of defence do not require a statement of objections to be sent to that company. The sending of a statement of objections to a given company seeks to ensure that the rights of defence of that company are respected, rather than those of a third party, even though that latter party may well be affected by the same administrative proceedings.38 In doing so, the General Court did not err in law. An undertaking on which a fine has been imposed for its participation in a cartel, in breach of the competition rules, cannot request the annulment or reduction of that fine, on the ground that another participant in the same cartel was not penalised in respect of a part, or all, of its participation in that cartel (see, to that effect, judgment of 16 June 2016, Evonik Degussa and AlzChem v Commission, C‑155/14 P, EU:C:2016:446, paragraphs 58 and 59).
Second and Third grounds of appeal, alleging an error in law committed by the General Court regarding the taking into consideration by the Commission of direct EEA sales through transformed products for the purposes of calculating the amount of the fine
65 It is necessary to examine LGE’s second and third grounds of appeal and Philips’s first ground of appeal together, since, in essence, they deal with the same question relating to the taking into account, for the purposes of calculating the fine, of the LPD group’s direct EEA sales through transformed products.
66 In this regard, it should first be noted that, as the appellants have pointed out in their replies, by those grounds of appeal, they are, in essence, criticising the General Court for having erred in law when analysing the lawfulness of the taking into account of the sales referred to above for the purposes of calculating the amount of the fine. Those grounds of appeal are not, therefore, seeking to challenge the validity of the factual assessments made by the General Court and, consequently, they are admissible.
67 Next, it is apparent from the case-law of the Court of Justice that, although Article 23(2) of Regulation No 1/2003 leaves the Commission a certain discretion in determining the amount of the fine, it nevertheless limits the exercise of that discretion by establishing objective criteria to which the Commission must adhere. Thus, first, the amount of the fine that may be imposed on an undertaking is subject to a quantifiable and absolute ceiling, such that the maximum amount of the fine that may be imposed on a given undertaking can be determined in advance. Second, the exercise of that discretion is also limited by rules of conduct which the Commission imposed on itself, in particular in the Guidelines on the method of setting fines (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 48 and the case-law cited).
68 In the contested decision, the Commission applied those guidelines to calculate the fines. Point 13 of those guidelines states that ‘in determining the basic amount of the fine to be imposed, the Commission will take the value of the undertaking’s sales of goods or services to which the infringement directly or indirectly … relates in the relevant geographic area within the EEA’. Point 6 of those guidelines states that ‘the combination of the value of sales to which the infringement relates and of the duration of the infringement is regarded as providing an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement’.
69 Although the concept of the ‘value of sales’ referred to in point 13 of the Guidelines on the method of setting fines cannot extend to encompass sales made by the undertaking in question that in no way come within the scope of the alleged cartel, it would be contrary to the objective pursued by Article 23(2) of Regulation No 1/2003 if vertically integrated participants in a cartel could, solely because they incorporated the goods forming the subject matter of the infringement into products finished outside the EEA, expect to have excluded from the calculation of the fine the proportion of the value of their sales of those finished products within the EEA that are capable of being regarded as corresponding to the value of the goods forming the subject matter of the infringement (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 55 and the case-law cited).
70 Vertically integrated undertakings may benefit from a horizontal price-fixing agreement concluded in breach of Article 101 TFEU not only when sales are made to independent third parties on the market for the goods that are the subject of the infringement, but also on the downstream market for transformed goods into which those goods are incorporated, in two different ways. Either the price increases of the inputs which result from the infringement are passed on by those undertakings in the price of the transformed goods, or those undertakings do not pass those increases on, which thus effectively confers on them a cost advantage in relation to their competitors which obtain those same inputs on the market for the goods which are the subject of the infringement (judgment of 9 July 2015, InnoLux v Commission, C‑231/14 P, EU:C:2015:451, paragraph 56 and the case-law cited).
71 In the judgments under appeal, the General Court confirmed the Commission’s conclusion that the appellants had jointly exercised a decisive influence over the conduct of the LPD group. It follows from that conclusion, which is not contested by the appellants in their appeals, that during the period mentioned above the appellants and their common subsidiary group were part of the same undertaking and, consequently, formed an economic unit.
72 Given that the LPD group intervened in the product market affected by the infringement, while LGE and Philips were active in the market for the transformed goods in which those products were incorporated, it should be noted that, contrary to what Philips argues, the LPD group and its parent companies did form a vertically integrated undertaking within the meaning of the judgment of 9 July 2015, InnoLux v Commission (C‑231/14 P, EU:C:2015:451, paragraphs 56 and 57).
73 In those circumstances, the General Court did not err in law when it found, in paragraph 170 of the first judgment under appeal and in paragraph 164 of the second judgment under appeal, that the Commission was entitled to include direct EEA sales through transformed products by the economic unit formed by the LPD group and its parent companies when calculating the basic amount of the fine imposed on the appellants.
78 It is also necessary to reject Philips’s argument, summarised in paragraph 57 of the present judgment, which states, in essence, that establishing that a joint venture is part of the same undertaking as its parent companies would result in a failure to apply Article 101 TFEU to the agreements between that joint venture and its parent companies, something which would be contrary to Regulation No 139/2004. It must be noted, in this regard, that it follows from Article 2(4) of that regulation that, to the extent that the creation of a joint venture constituting a concentration within the meaning of Article 3 of that regulation has as its subject or effect the coordination of the competitive conduct of undertakings that remain independent, such coordination is to be appraised in accordance with the criteria of Article 101(1) and (3) TFEU, with a view to establishing whether or not the concentration is compatible with the internal market.
79 The fact that a joint venture and its parent companies are considered to form part of the same undertaking for the purposes of establishing an infringement on a certain market does not prevent the two parent companies from being independent, within the meaning of Article 2(4) of Regulation No 139/2004, on all other markets.
The principle of equal treatment, relied on by the appellants, must be reconciled with the principle of legality, according to which a person may not rely, to his benefit, on an unlawful act committed in favour of a third party (judgment of 16 June 2016, Evonik Degussa and AlzChem v Commission, C‑155/14 P, EU:C:2016:446, paragraph 58).
Fourth ground of appeal alleging an error in law, an infringement of the principle of equal treatment and a failure to adjudicate
91 The principle of equal treatment, relied on by the appellants, must be reconciled with the principle of legality, according to which a person may not rely, to his benefit, on an unlawful act committed in favour of a third party (judgment of 16 June 2016, Evonik Degussa and AlzChem v Commission, C‑155/14 P, EU:C:2016:446, paragraph 58).
92 Therefore, in so far as they are invoking for their own benefit unlawful acts allegedly committed by the Commission when determining the amount of the fine imposed on Samsung, the appellants could not, in any event, rely on the principle of equal treatment in order to challenge before the General Court the amount of the fines imposed on them by the Commission.
93 Admittedly, according to the settled case-law of the Court of Justice, when the amount of the fine is determined, there cannot, by the application of different methods of calculation, be any discrimination between the undertakings which have participated in the same infringement of Article 101 TFEU (judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraph 62 and the case-law cited).
94 However, in the present cases, as follows from paragraphs 135 and 159 of the first judgment under appeal and from paragraphs 148 and 187 of the second judgment under appeal, the Commission applied the same methodology to all the undertakings by taking into account, as regards each of them, the ‘first real sale’ and by distinguishing three categories on the basis of that criterion, namely ‘direct EEA sales’, corresponding to CRTs sold directly to customers within the EEA by one of the addressees of the contested decision, direct EEA sales through transformed products and ‘indirect sales’, corresponding to CRTs sold by one of the addressees of the contested decision to customers outside the EEA, which would incorporate the CRTs into the final goods, television sets or computer monitors and then sell them within the EEA. Only direct EEA sales and direct EEA sales through transformed products were taken into account to calculate the amount of the fine. In those circumstances, the fact that the category of direct EEA sales through transformed products was applied only in the case of some of those which participated in the cartel, namely to those whom the Commission was able to prove belonged to a vertically integrated undertaking, does not amount to discrimination, since the Commission assessed the applicability of that category to each of the participants on the basis of the same objective criteria.
95 The instant cases can therefore be distinguished from the case that gave rise to the judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission (C‑580/12 P, EU:C:2014:2363). By that judgment the Court reduced the amount of the fine imposed on a participant in an infringement in order to take into account the fact that, by erroneously applying the method that it had chosen to determine the amount of the fine, the Commission had imposed on another participant in the same cartel a fine that reduced the relative weight in the infringement of that other participant (judgment of 12 November 2014, Guardian Industries and Guardian Europe v Commission, C‑580/12 P, EU:C:2014:2363, paragraphs 70 to 80).
96 By contrast, by the pleas in law raised before the General Court, the appellants criticised the Commission, not for having applied to them a different legal criterion to determine the amount of the fine, but for having erroneously taken the view that, in the markets concerned by the infringement at issue, Samsung, along with its own subsidiaries, constituted an independent undertaking, and for having failed to identify a broader economic unit that, first, included not only Samsung and its subsidiaries, but also SEC, and, second, constituted the economic unit that had participated in the infringement at issue.
97 It follows from the foregoing considerations that the General Court cannot be criticised for erring in law or for infringing the principle of equal treatment on the ground that it did not reduce the amount of the fines imposed on the appellants in order to compensate for the favourable treatment allegedly received by Samsung.
|Order||1. Dismisses the appeal;
2. Orders LGE to pay the costs..
|Case duration||16 months|
|Notes on academic writings||–|