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Competition: Commission welcomes Court of Justice judgment in specialty graphite cartel case

European Commission - MEMO/07/182   10/05/2007

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Brussels, 10th May 2007

Competition: Commission welcomes Court of Justice judgment in specialty graphite cartel case

The European Commission welcomes today’s judgment by the European Court of Justice (case C-328/05) dismissing the action by the German specialty graphite producer SGL Carbon AG against the judgment of the European Court of First Instance of 15 June 2005 (case T-91/03). In this latter judgement, the Court of First Instance had dismissed most of the action brought by SGL against the Commission decision of 17 December 2002 setting fines on the company (although the Court of First Instance also reduced in part the amount of SGL's fine). The Court of Justice has now confirmed the original findings of the Court of First Instance, and dismissed the appeal in its entirety. Following today's judgment, 83.7% of the fines imposed by the Commission in the original decision have now been definitively upheld.

On 17 December 2002, the European Commission fined seven companies a total of €60 600 000 for participating in two price-fixing cartels in the market for specialty graphite, which is used to make industrial tools for the automobile, electronics, and other industries. The companies fined were SGL Carbon AG of Germany (€27 750 000[1]), Carbone-Lorraine S.A. of France (€6 970 000), Japanese firms Ibiden Co. Ltd. (€3 580 000), Tokai Carbon Co. Ltd (€ 6970 000), Toyo Tanso Co. Ltd. (€ 10790 000), Nippon Steel Chemical Co. Ltd (€ 3580 000), and Dutch company Intech EDM B.V. (€980 000). US company GrafTech International, Ltd. (formerly UCAR International Inc.) had been granted immunity from fines on the basis of the Commission's 1996 Leniency Notice for revealing the cartel (See IP/02/1906).

In its judgment of 15 June 2005 (joined Cases T-71/03, T-74/03, T-87/03 and T-91/03), the Court of Instance largely confirmed the Commission's decision, whilst limiting the joint and several liability of Intech EDM AG, and reducing the fine imposed on SGL Carbon AG on account of the infringement committed in the isostatic graphite market to €9 641 970. This latter reduction was due, on the one hand, to a finding that the Commission had not correctly determined the basic amount of the fine when using turnover figures supplied by SGL, which included other products than isostatic graphite. On the other hand, the 50% increase of the fine for SGL's role as a ringleader was reduced to a 35% increase, as the CFI found SGL's role not to be easily distinguishable from the role of other cartel members.

The judgment of the Court of Justice

In August 2005, SGL filed an appeal against the judgment of the Court of First Instance. SGL claimed, in particular, that when setting the fine with regard to the violation of EC competition rules, the Commission should have taken into account the fines already imposed in the US in relation to SGL's cartel behaviour, in application of the general principle that nobody can be sentenced twice for the same offence (the "ne bis in idem" principle ").

SGL also claimed that the 35% increase of the fine for its role as sole ring leader was not justified, and that in addition it violated its rights of defence, since the leadership allegation had not been properly set out in the Commission's statement of objections.

SGL further alleged errors of law with regard to its complaint concerning the inadequate language knowledge of the members of the Commission's team working on the case.

It also argued that its cooperation during the administrative procedure was undervalued with regard to the reduction of the fine under the Leniency Notice, and assessed in a discriminatory fashion as compared to other cartel participants.

SGL further claimed that the fine imposed on the company was disproportionately high, given the financial difficulties encountered at the time.

Finally, a last claim related to the level of the interest rate applied on the fine.

In its judgement, the Court of Justice rejects all the arguments of SGL and dismisses the appeal in its entirety.

The two cartels

Specialty graphites are a group of graphite products for diverse applications. Isostatic graphite (produced through isostatic moulding), is used in EDM electrodes, continuous casting dies, hot press moulds and semiconductor applications; extruded graphite (produced through extrusion), is used in electrolytic anodes and cathodes, boats, sintering trays, crucibles. During the infringement period, the companies concerned accounted for most of the EEA-wide market for both products.

The investigation started in the spring of 1999 during the graphite electrodes cartel probe (see IP/01/1010), when GraphTech (formerly known as UCAR) revealed information about anti-competitive practices also in the neighbour market of specialty graphite products.

On the basis of this information, the Commission opened a new investigation in March 2000, which was concluded on 17 December 2002 with the finding that eight companies participated in a worldwide cartel between 1993 and 1998, through which they fixed the price for isostatic specialty graphite products, exchanged sensitive commercial information, and occasionally shared out the market.

SGL and GrafTech were also found to have participated in a parallel price-fixing cartel for extruded graphite products.

The isostatic graphite cartel began with a "Top Level meeting" in Gotenba, Japan, on 23 July 1993, where the major producers agreed the basic operating principles of the worldwide market. A monitoring and enforcement scheme was set up, which entailed the holding of regular multilateral meetings from top-executive level (always in Japan) to regional and national executive's level. The cartel functioned for a period of more than four and a half years until 1998.

A meeting in Paris on 24-25 February 1993 marked the beginning of the extruded graphite cartel. Throughout the duration of the cartel, the parties regularly discussed prices, including who would announce what price on which date. These arrangements went on for more than three and a half years.

In each case the companies' conduct was a very serious infringement of the competition rules, as set out in Article 81 of the EC Treaty.

[1] Of which € 18.94 million for the cartel concerning isostatic graphite and € 8.81 million for the cartel concerning extruded graphite.

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