Contents

Court confirms joint and severe fine for parent companies involved in the calcium carbide cartel

I. Introduction

The European Commission (“Commission”) imposed fines of EUR 61 Mio. on nine companies for their involvement in the calcium carbide cartel. Parent companies Gigaset AG (“Gigaset”, formerly Arques IndustriesAG) and Evonik Degussa GmbH (“Degussa”) were amongst the ones fined for the direct involvement of their subsidiary SKW Stahl-Metallurgie GmbH (“SKW”) in the cartel.

The Commission found that the infringement lasted between 7 April 2006 and 16 January 2007. SKW was a 100% subsidiary of Degussa until 30 August 2004 and was afterwards 100 %-subsidiary of Gigaset until November 2006. Between 30 November 2006 and 16 January 2007 Gigaset held 57 % of SKW’s shares.

Degussa was held jointly and severally liable with SKW as the parent company of the economic unit until 30 August 2004 as well as Gigaset for the period afterwards as parent company of the latter economic unit. Degussa was jointly and severally liable for an amount of EUR 1.04 Mio. and Gigaset for EUR 13.3 Mio. In addition, an increase of 50 % was imposed on Degussa since it had been involved previously in other cartels. Thus, Degussa was held liable for an additional amount of EUR 1,24 Mio.

II. Additional fine for repeat offenders

The Court confirmed on 23 January 2014 in its case T-391/09, Evonik Degussa and AlzChem AG v. European Commission the additional fine imposed no Degussa. It stated that recidivism is considered an aggravating factor in the calculation of the fine even if the second infringement occurs within a different economic unit as the first time. Joint and several liability for recidivism of a subsidiary with its parents company, where the subsidiary constitutes a latter economic unit, which does not qualify as a repeat offender, cannot be justified. Hence, Degussa is solely liable for the additional amount of the fine for recidivism.

The Court also confirmed that the increment of the amount of the fine relies on the discretion of the Commission and cannot be calculated “linearly”.

III. Compliance program not always a mitigating factor

Furthermore, the Court also confirmed that the Commission does not need to accept the existence of a compliance program as a mitigating factor in the calculation of the fine. If an infringement occurs (again) despite the launch of such a program, it shows that it was not effective and should therefore not be rewarded.

IV. Joint and several liability of parent companies

Gigaset focuses mainly on the purchase and restructuring of companies in special circumstances. As part of the plan, Gigaset created SKW Stahl-Metallurgie Holding AG (“SKW-Holding”) as an intermediate. SKW-Holding was also held jointly and severally liable within the economic unit.

Regarding the period of time in which Gigaset only held 57 % of SKW’s shares, the Court confirmed on 23 January 2014 in its case T-395/09 Gigaset AG v. European Commission Gigaset’s joint and several liability with its subsidiary. The exercise of decisive influence had been proven, amongst other factors, by the following:

  • The CEO of SKW Holding was appointed by Gigaset;
  • SKW Holding reported to Gigaset about performance, cash flow, liquidity and budget planning of SKW;
  • Management and strategic decisions of SKW Holding were subject to approval of an executive manager of Gigaset;
  • A specific board member of Gigaset was available for any questions from SKW Holding
  • SKW was accompanied in some meetings by a board member of Gigaset;
  • SKW’s turnover was consolidated in Gigaset’s turnover;
  • Several board members of Gigaset were appointed as directors at SKW Holding.

In addition, the Court stated that it is not necessary to prove that the parent company exercised decisive influence on the specific business unit in which the infringement took place. Thus, the argument that Gigaset had only observed the development and restructuring of SKW was dismissed.  

Moreover, the Court determined that if a majority of the shares of a company quoted on the stock exchange are held by a natural person, that person has decisive influence and control over the company. However, the Court did not comment whether the capital presumption is applicable in such cases. 

V. “Repeated fine”

The Commission determined that SKW’s fine would be limited to EUR 13.3 Mio. However, the total of both fines, addressed to the different economic units, amounted to EUR 14.32 Mio, due to the application of a lower multiplier than prescribed by the Commission when calculating the fine for the latter economic unit.  

Nevertheless, the Court confirmed that SKW’s payment to the Commission shall not exceed EUR 13.3 Mio., since national courts may allow a refund to the parent companies.

VI. Scope of leniency applications

Moreover, the Court pointed out that a company within an economic unit, which did not belong to that economic unit when a leniency application was submitted, may not benefit from it. Thus, the leniency application submitted on 26 February 2007 by Degussa could not be extended to SKW and SKW Holding, since these had been sold in 2004. Hence, the reduction of the fine of 20 % corresponds exclusively to Degussa.

Authors:

Dr. Christina Hummer
Ori Kahn