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Competition: Commission welcomes Court of Justice ruling in Danone case, confirming higher fines for repeat offenders

Commission Européenne - MEMO/07/49   08/02/2007

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MEMO/07/49

Brussels, 8th February 2007

Competition: Commission welcomes Court of Justice ruling in Danone case, confirming higher fines for repeat offenders

The European Commission welcomes the judgment by the European Court of Justice (Case C-3/06 P) dismissing in its entirety the appeal by Danone against the judgment of the Court of First Instance (CFI) of October 2005 and confirming that repeat offences by companies, even when many years in the past, should be taken into account when setting fines in competition cases. The original case concerned cartels operated on the Belgian beer market between 1993 and 1998. The Court upheld the fine of €42 412 500 as set by the CFI. This means that over 96 % of the Commission's fine on Danone and 97% of the Commission's fines on all cartel participants remain.

On 5th December 2001 the Commission fined Danone/Alken-Maes, Interbrew, Haacht and Martens for operating two secret cartels on the Belgian beer market in violation of the EC Treaty's rules on cartels and restrictive business practices. As the Commission noted at the time of the original decision (see IP/01/1739), one of the extraordinary features of this case was the personal involvement of Interbrew's, Alken Maes' and Danone's top managers at the time. In addition, the fact that Danone was a repeat offender was considered by the Commission to be a very serious matter. Danone appealed this decision to the CFI, which upheld the main elements of the Commission's decision.

Today's European Court of Justice (ECJ) judgment confirms the CFI ruling on all points subject to the appeal. In particular, the ECJ confirms that the Commission was right to take into account the fact that Danone was a repeat offender: fines imposed on companies that breach the competition rules can be increased if the companies concerned are repeat offenders, even if the earlier offence was many years in the past. The Court ruling also confirms that the Commission has a "particularly wide discretion" as to the factors it takes into account in setting the fines, and that the proper application of the competition rules requires that the Commission may at any time adjust the level of fines to the needs of that policy.
This judgment is therefore important in that it confirms the Commission’s policy of increasing fines imposed on repeat offenders. The Commission has recently announced the adoption of new Guidelines on fines (which have not yet been applied). One of the main changes to these Guidelines is to get even tougher against repeat offenders (see IP/06/857).

The Belgian beer cartels

On 5 December 2001, the Commission fined several companies a total of over €91 million for participating in two distinct secret cartels on the Belgian beer market between 1993 and 1998. The infringements included market sharing, price fixing and information exchange. They affected sales to hotels, restaurants and cafés as well as the retail sector (i.e. supermarkets and other food shops), including the sale of private label beers. Danone appealed the € 44 043 000 imposed on it for the larger of these two cartels.

On 25 October 2005, the Court of First Instance dismissed the appeal, but slightly reduced the fine since one of the aggravating circumstances used against Danone had not been sufficiently established. However, the Court of First Instance also found that, due to a calculation error, the amount of fine imposed was less than what it would have been if the Commission had properly followed the method set out in the Guidelines. The CFI therefore increased the fine on that particular point.

The judgment of the European Court of Justice

In today's ruling, the European Court of Justice holds that the Commission was right to consider Danone to be a repeat offender. Contrary to Danone’s assertions, the European Court of Justice confirms that Article 23 of Regulation No 1/2003 (the article on fines in the basic antitrust procedural Regulation) entitles the Commission to increase fines on repeat offenders.

It also holds that decisions adopted 17 and 27 years earlier can be used as proper references for repeat offences, in light of the fact that a relatively limited number of years elapsed between each such decision and the next infringement Danone engaged in.

Finally, the European Court of Justice confirms that the Court of First Instance had rightly spotted a calculation mistake (to the benefit of the company) and therefore confirms the increase of the fine decided by the Court of First Instance on that point.


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