An undertaking cannot invoke a legal error with regard to the lawfulness of its conduct to avoid a fine

In a decision of June 18, 2013, the European Court of Justice (ECJ) clarified that an undertaking cannot – save in exceptional circumstances – invoke a legal error to avoid paying a fine sanctioning an infringement of European competition law.

The case stems from Austrian freight-forwarding agents which had colluded to fix the prices they applied within a “freight-forwarding agents consolidated consignment conference” (hereafter “SSK”).

In 1996, the Austrian Competition Authority considered that the SSK constituted a “minor cartel”, exempt under Austrian competition law, due to the very small market share of the undertakings involved. This appreciation was confirmed by advice given by a law firm. As a result, the undertakings continued their practices.

However, neither the Court nor the law firm had examined the undertakings’ conduct with respect to European competition law. In 2010, a procedure was initiated by the Austrian competition authority to establish that the SSK members had infringed European competition law and order them to pay fines. The freight-forwarding agents then invoked the 1996 exemption decision and the legal advice. In the course of the procedure, a request for a preliminary ruling was submitted to the ECJ so that it could decide whether an undertaking can avoid paying a fine because it relied on legal advice given to it by a lawyer or on a national competition authority’s decision.

The ECJ first explained that European competition law provides for monetary sanctions not only when the infringement was committed intentionally, but also when it was committed through negligence. This condition is satisfied when the undertaking concerned cannot be unaware of the anti-competitive nature of its conduct, whether or not it is aware that it is infringing competition rules. In this case, the ECJ noted that the freight-forwarding agents directly coordinated their behavior in respect of their selling prices and evidently could not be unaware of the anti-competitive nature of their conduct.

The Court indicated that national competition authorities may only exceptionally decide not to impose a fine, particularly when a general principle of European Union law, such as the principle of the protection of legitimate expectations, precludes imposition of a fine. This principle can only be invoked if precise assurances had been given to the undertaking by a competent authority, which rules out legal advice given by a law firm. A decision adopted by a national competition authority also cannot be invoked since national competition authorities are not competent to find that a company’s conduct complies with European competition law.

The decision illustrates the importance of the primacy of European law and the need to assess the lawfulness of conduct not only under national competition law but also with respect to European law. The fact that a practice is lawful under national competition law does not protect undertakings from being sanctioned on the grounds of European competition rules when such rules are applicable.

The French competition authority sanctions a local cartel among veterinarians and refuses to grant an individual exemption in respect of the quality of treatment

In a decision of June 11, 2013, the French Competition Authority sanctioned the Council of the Alsace Regional Veterinary Order and a veterinarians’ union for having implemented a charter establishing uniform prices for treatment given by member veterinarians in favor of an Animal Protection Society (SPA).

This charter also organized the sharing of the market of the veterinary treatment provided in the animal shelter through a system of distribution of the interventions among the member veterinarians. This rotation system allowed them to share equally the turnover generated by these interventions, thereby preventing the SPA from using exclusively or mainly one of them or a non-member veterinarian.

According to the Authority, these practices, which lasted for more than 17 years, eliminated all competition among the member veterinarians and restricted the SPA’s freedom to choose its provider, while depriving it of the possibility of obtaining lower prices.

The aforementioned organizations and another professional union were also sanctioned for trying to extend this pricing system to other Alsace SPAs by threatening the practitioners who refused to apply the pricing policy with disciplinary actions for attempted customer poaching.

The Authority recalled that, even though the practices in issue apparently had a limited effect on competition, they could not benefit from the de minimis exemption insofar as this rule does not apply to restrictions whose purpose is to fix sales prices or share a market, as is the case here.

The parties also tried to justify the practices by their contribution to economic progress, considering that they enabled animals to be given proper treatment at the best possible cost. Although the Authority admitted that the search for a better quality of veterinary treatment can constitute economic progress, it refused to grant the requested individual exemption as it had not been demonstrated in what way a uniform pricing policy was indispensable to achieve this purpose.

The Authority once again recalled that a professional union can never be the vector for price harmonization among competitors, which will always be sanctioned, whatever the impact on the market or the benefits and efficiencies which might result from such harmonization.

An approach full of nuances to requests for access to the national competition authorities’ file in the actions for damages

The June 6, 2013 judgment (case C-536/11 – Donau Chemie et al.) of the European Court of Justice (ECJ) outlined the principles governing requests made by (presumed) victims of anti-competitive practices, seeking to substantiate their claims for damages, to have access to the competition authorities’ file. This judgment is in line with the previous Pfleiderer judgment (2011) whose contours it clarifies. Based on the victim’s right to compensation, which is inherent in Articles 101 and 102 of the EU Treaty, the ECJ emphasized that the national courts hearing requests for access to the file must balance the interest of the victims to have access to evidence of the infringement and the interest of protecting business secrecy. The courts must then take into account the potential deterrent effect that access to the file might have on the cooperation of the undertakings concerned with the competition authorities. However, the ECJ rejected the proposal that information made available in a leniency application should not on principle be disclosed to the victims, preferring a case-by-case approach, which conditions the confidentiality of the information on the existence of a risk “that a given document may actually undermine the public interest relating to the effectiveness of the national leniency programme”. This solution contrasts somewhat with the draft Directive on actions for damages of June 11, 2013, which categorically excludes from access to the file the statements made by undertakings, and the settlement proposals, in connection with a request to benefit from a leniency program.