Fordham Law

EU Court Must Decide View on "Single, Continuous Cartels," Wahl Says

Fordham 40th Annual Conference on International Antitrust Law and Policy in MLex, September 30, 2013

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The EU's highest court must resolve conflicting judgments over how companies with varying involvement in a cartel are bundled into one single breach of European antitrust law, Nils Wahl, a senior member of the court said.

He also said the "presumption" that parent companies are liable for subsidiaries' price-fixing had turned into a "legal rule." 

Speaking in New York* on Friday, Wahl highlighted inconsistencies in some recent rulings from the EU's Court of Justice, saying that issues over prosecuting cartels needed addressing.

Wahl is an advocate general at the EU's top court, tasked with providing legal opinions to judges to help them understand cases.  AGs propose potential solutions which judges aren't bound to take up, but often do.

While companies caught in a cartel sometimes participate to varying degrees, EU investigators can fall back on the concept of a "single and continuous infringement."  This means all participants are liable for the entire conduct.

AG Wahl said he thought it was a "good concept" but it raised questions over what happens when judges find a company didn't participate in the entire infringement.

"If we find [a cartel] is not proven to be as it should be, does that mean the whole decision on a single and continuous infringement goes away?  Or is it for the [lower court] to split up the decision and make several smaller decisions?"

"First of all, I don't think this is a small question," AG Wahl said.  The European Commission uses the concept frequently and if courts "start splitting up" decisions then it raises questions over their "standard of review," he said.

He pointed to two divergent rulings in separate cartels which had led to inconsistent outcomes before the Court of Justice.

Before the EU's lower court, known as the General Court, judges had ruled in both cases that the companies hadn't participated in the whole cartel.  So, they annulled the European Commission's entire decision.

But when these rulings were challenged further at the Court of Justice, separate panels of judges took different views.  One bench said it was wrong to annul the whole decision and the company should still be liable for a lesser part of the illegal conduct.

In the other case, the judges "took the opposite view," AG Wahl said.  But "if you read the two cases, it will be hard to find any difference between them," he said.

"Clearly, this is something that will be a hot topic for 2014," he continued.  "The Court of Justice has simply to decide which of the two is a leading case."

"The two can't be used at the same time."

Parental Liability

Alongside the concept of a "single and continuous infringement," a parent company's responsibility for the actions of its subsidiaries is one of the major pillars of EU antitrust law.

The European Commission can "presume" that a parent company controls the conduct of its business units.  So, for example, when a Slovak subsidiary is caught up in a cartel this can be traced back to the holding group's head office in Dortmund, ultimately meaning higher fines.

It is up to the parent company to "rebut" this presumption, arguing that even though there may be strong links in capital holdings, board members or corporate strategy, Dortmund knew nothing of the conduct.  But it is famously difficult - some defence lawyers say impossible - to succeed with this argument.

"My interpretation is the presumption that we have is not a presumption, and it should not be called a presumption," AG Wahl said pointing to two more rulings of the Court of Justice.

"It should be called a legal rule," he continued.  "No matter what the court would like to say."

"There is a responsibility for the mother company, and there is simply no way of escaping that responsibility."

He stressed that this didn't "pose any problem whatsoever" and was in line with human-rights laws.  But it has consequences for cases before the courts.


AG Wahl said that one further ruling in June from the Court of Justice had "done away with another presumption" in cartel cases: "whether or not you have to be negligent, or whether it has to be intentional infringement, to pay fines."

The dispute concerned a cartel in Austria where 31 logistics companies had sought opinions from lawyers and the national authority, checking that agreements on shipping rates were legal.  Both said yes.

Later on, in 2007, the European Commission raided the companies, suspecting them of having broken EU cartel law.

Asked to adjudicate, the Court of Justice ruled this summer that the companies couldn't hide behind the faulty legal advice they had received.

"The presumption that you were negligent has now turned into a legal rule," AG Wahl said.

Furthermore, the logistics companies couldn't rely on any indications from Austrian antitrust investigators since they didn't have the power to issue formal acquittals.

Only the European Commission can adopt a decision which categorically states conduct is legal.  National investigators can only opt not to investigate.

"The reason why you couldn't rely on the national authority is since they do not have the power to adopt a negative decision," AG Wahl said, quoting the judgment.

"Has anyone ever heard of [the European Commission] doing it?  Has anyone ever heard of them trying to do it?  Are they going to do it?" he asked.

"No.  No-one is."

"There is simply no way of escaping being fined if what you did had an anticompetitive effect," AG Wahl said.

*Fordham 40th Annual Conference on International Antitrust Law and Policy