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Brussels, 25th January 2007

Competition: Commission welcomes judgments of the European Court of Justice in Seamless steel tubes cartel case

The European Commission welcomes today’s judgments by the European Court of Justice (Joined cases C-403/04 P and C-405/04 P, Case C-407/04 and Case C-411/04 P) dismissing in its entirety the appeals by Sumitomo Metal Industries Ltd, Nippon Steel Corp, Dalmine SpA and Salzgitter Mannesmann GmbH, formerly Mannesmannröhren – Werke AG in respect of the seamless steel tubes cartel. The Court confirmed the existence of an illegal market sharing cartel and the participation of these companies in this cartel. Moreover, it confirmed the Commission's approach as regards the calculation of the fines imposed on the companies. The fines of the companies which have been reduced by the Court of First Instance (from initially €10,8 million to € 10,080 million for Dalmine SpA, from initially €13,5 million to € 12,6 million for Salzgitter Mannesmann, from initially €13,5 million to €10,935 for Nippon Steel and Sumitomo respectively) were maintained by the Court. All four companies have to pay the Commission's cost of the appeals.

On 8 December 1999, the Commission fined eight producers of seamless steel tubes (the four European companies British Steel Limited, Dalmine SpA, Mannesmannröhren – Werke AG and Vallourec SA and the four Japanese companies Sumitomo Metal Industries, Nippon Steel Corporation, Kawasaki Steel Corporation and NKK Corporation) for operating a market sharing cartel. The fines imposed were totalling €99 million. (see IP/99/957)

Seven of the eight companies concerned appealed to the Court of First Instance which upheld the Commission's decision in substance, but reduced the fines on those companies appealing the decision by €13 million as the Commission had not produced sufficient evidence covering the entire duration of the infringement.

Four companies (Sumitomo Metal Industries Ltd., Nippon Steel Corp., Dalmine SpA and Salzgitter Mannesmann GmbH, formerly Mannesmannröhren-Werke AG) appealed this judgment to the Court of Justice.

The judgments of the European Court of Justice

The Court held that as regards evidence of the existence of the infringement, the Court of First Instance did not err in law in concluding that there was a cartel designed to share domestic markets and having an appreciable effect on trade between Member States.

Furthermore, the Court of First Instance was correct to rely on consistent case-law according to which there is no need to prove the actual existence of harm to intra-Community trade for the purpose of the application of competition law, since it is sufficient to prove that an agreement is potentially capable of producing such an effect.

As regards the Japanese producers' participation in the infringement, the Court confirmed that the judgment of the Court of First Instance in concluding that they participated in the infringement.

Finally, as regards the calculation of fines, the Court confirms the Commission's approach, which was consistent with its "Guidelines on fines" of 1998 aimed at defining the context of its margin of discretion in setting fines.

The Commission's investigation

The product concerned by the cartel agreements were "standard" steel borehole pipes (commonly known as "oil country tubular goods", or OCTG) and "project" transportation pipes (commonly known as "line pipe"); both varieties are used in the exploration and transport of oil and gas.

The Commission decision found that during 1990-1995, the main producers of seamless steel tubes set up a cartel, the so-called "Europe-Japan club", requiring that the domestic markets of the different producers should be respected: the supply of seamless tubes to Member States of the Community where a national producer was established was limited by the other producers party to the agreement refraining from delivering tubes to those markets.

The Commission considered that an agreement aimed at the observance of the domestic markets of the participating firms constituted a very serious infringement of Article 81(1) of the European Union Treaty and Article 53 of the EEA Agreement.

The judgment of the Court of First Instance

Seven of the eight companies subject to the Commission decision of 1999 appealed against the decision to the Court of First Instance, requesting in particular a reduction of their fines (Cases T-44/00, T-48/00, T-50/00 and Joined Cases T-67/00, T-68/00, T-71/00 and T-78/00). The Court of First Instance, in its judgment of 8 July 2004, upheld the Commission decision in substance but annulled the contested decision to the extent which it found that the infringement predated 1 January 1991 and, in the case of the Japanese companies, had continued after 30 June 1994, and it reduced the fines imposed on the companies accordingly.

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