Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

In brief

with 5 comments

– I watched life –rather heard while working- the European Parliament hearings on the new Commissioner for Competition, Margrethe Vestager. She did so well that I couldn’t help thinking that perhaps she should have been given a more politically decisive portfolio (it also made me compare her with many politicians in my home country, but that’s another story).

– It’s been a while since our last quiz. I offer to pay lunch to whoever is able to tell us what was the new and special method for calculating fines that the General Court says to have used in this case (see in para. 5 the mysterious reference to “the Court’s choice of a methodology that diverges on purpose from the methodology laid down in the 2006 Guidelines”).

– Last Friday the Commission approved the acquisition of Whatsapp by Facebook (on which we had commented here). I’m looking forward to reading the decision, but from the press release I gather that the Commission has significantly refined the approach taken in Microsoft/Skype (e.g. no trace of the “inner circle” argument). Don’t know why that would have been necessary considering that, according to the General Court’s Judgment, that decision was irreproachable…

– Remember our discussion on the Groupe Gascogne Judgments (see here and here)? It has now been published on the Official Journal that Gascogne has introduced a damages action before the General Court…against the General Court: see here.

– If you have a minute (which I guess you do if you are reading this) read Kevin Coates’ new post: Gilding Refined Gold and Painting the Lily

– It is still possible to register to the Competition Day conference within the Brussels Technology Days series of events. I’ll be speaking on a panel discussing the Android proto-case together with Trevor Soames, Thomas Vinje and Neil Dryden. For more info, click here.

Written by Alfonso Lamadrid

7 October 2014 at 6:40 am

5 Responses

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  1. From the GC’s judgement of 11 July:
    “445 It follows that the objective sought by the introduction of the 10% ceiling can be realised only if that ceiling is applied initially to each separate addressee of the decision imposing the fine. It is only if it subsequently transpires that several addressees constitute the ‘undertaking’ in the sense of the economic entity responsible for the infringement penalised, and that is still the case at the date when the decision is adopted, that the ceiling can be calculated on the basis of the overall turnover of that undertaking, that is to say of all its constituent parts taken together. By contrast, if that economic unit has broken up in the meantime, each addressee of the decision is entitled to have the ceiling in question applied individually to it (Tokai II, cited in paragraph 271 above, paragraph 390; judgment of 13 September 2010 in Case T‑26/06 Trioplast Wittenheim v Commission, not published in the ECR, paragraph 113; and judgment of 16 November 2011, in Case T‑54/06 Kendrion v Commission, not published in the ECR, paragraph 92).”

    I guess this might be the answer to the quiz question.

    competitiongal

    7 October 2014 at 2:12 pm

    • I leave that to our dear blogger, but I guess he is more interested in the figure at paragraph 464, “corresponding” to the third period (which is payable by all entites and also determines the final overall amount). Yes, of course for first and second periods the fine was “capped”, but I guess the parties would not have requested rectification (both of them) for that reason, since the explanation is already in the judgment. For paragraph 464, i.e. the third period (which also affects the figure in paragraph 458 “before cap”), the General Court did something “on purpose” (a “choice of methodology”, so it says), which was not in application of the Guidelines. What exactly? Why is such “on purpose” alternative methodology not explained? What was so “wrong” with the Guidelines, that the General Court found it necessary to deviate from them? The two parts of the infringement had different durations in this third period (for slack wax one year shorter), different percentages for gravity and different aggravating circumstances.

      Joan

      8 October 2014 at 7:09 am

  2. Thanks competitiongal for looking into it, and many thanks also to Joan for saving me the time I would have spent replying 😉 The questions pointed out by Joan are indeed the intriguing ones. Perhaps there’s an explanation but I haven’t been able to identify it. My lunch invitation offer to whoever solves the riddle remains.

    Alfonso Lamadrid

    8 October 2014 at 11:56 am

  3. Maybe the solution is rather underwhelming, really. The GC decided that Sasol (the parent) could not be held liable for its subsidiary’s conduct during the JV period; however, it could of course be held liable for the period after its acquisition of the JV’s remaining shares. Hence, the Court had to split the part of the fine (EUR 250m) for which Sasol had been held jointly liable between the “JV period” and the “Sasol period” (para 16 et seqq).

    This is where the Court’s judgment appears to depart from the Guidelines: the Court doesn’t establish a separate “duration multiplier” for each of these periods; rather, it seems that it just split the fine arithmetically. I have not been able to reproduce the exact figures in the judgment, but if you split the fine based on the number of days before and after the acquisition, you get very close.

    Not exactly a question of principle 🙂

    HK47

    10 October 2014 at 7:04 pm

    • Interesting explanation. If it is correct, it means that the 250 million in question were simply split on the basis of duration only (with a formula which is not revealed), but this means that also the additional amount (which was included in the 250 million) was split, which in turn means that the ultimate parent was paying just one third of that additional amount and not the full additional amount as it is the practice. If that was the explanation, the GC would indeed be deviating from the Guidelines, without the judgment saying why. One could have reasonably expected (after such a long judgment) an explanation as to why different entities are not liable for the full additional amount (entry fee, as it often called).
      One additional problem with that explanation is that the fine becomes internally incongruous. The fine for the first period would contain a fraction of the variable amount only (the fine for that period was simply the difference between the fine for the full period and the fine for the shorter period), whereas the fines for the second and third periods would contain a fraction of the variable amount plus one fraction of the split additional amount each. In other words, the fines for the different periods would be based on a different methodology. I wonder if the GC would have followed such incongruous path “on purpose”. Maybe, that’s what the GC says in the order (not in the judgment). I would be inclined not to conclude that the explanation is an incongruous one.
      This is without prejudice of whether such methodology deviates from the one used as regards other addressees in the decision. I guess it does.
      This could be an issue of principle (or can be just considered an “ad hoc” enigma, without systemic consequences), since it raises the question whether the exercise of unlimited jurisdiction must at least be motivated, or it is enough to leave people guessing about what the GC has done. One may also wonder in which way this (mysterious/undisclosed, and potentially incongruous if HK47 is right) way of proceeding is better for legal certainty.

      Joan

      13 October 2014 at 9:49 am


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