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Brussels, 22nd May 2008

Antitrust: Commission welcomes Court of Justice judgement in Methionine cartel case

The European Commission welcomes today's judgement by the European Court of Justice (case C-266/06) dismissing the action by the German methionine producer Evonik Degussa GmbH (formerly Degussa AG) against the judgement of the European Court of First Instance of 5 April 2006 (case T-279/02). In this latter judgement, the Court of First Instance had dismissed most of the action brought by Degussa against the Commission's decision of 2 July 2002 setting fines on the company for participating in a price-fixing cartel in the animal feed sector. The Court of First Instance had partly reduced the amount of Degussa'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. In particular, the Court confirmed the validity of the legal basis on which the Commission inflicts fines in competition matters. It held that this legal basis complies with standards applicable in terms of legal certainty. It underlined that it is not required that the amount of the fine be predictable with absolute certainty.

On 2 July 2002, the European Commission fined Degussa AG and Nippon Soda Company Ltd respectively €118 million and €9 million for participating in a price fixing cartel together with Aventis SA in the market for methionine, an amino acid used in animal feed (see IP/02/976). Aventis SA (formerly Rhône-Poulenc) was granted full immunity from fines because it revealed the cartel's existence to the Commission and provided decisive evidence on its operation. The cartel operated for nearly thirteen years until 1999.

In its judgment of 5 April 2006 (case T-279/02), the Court of First Instance largely confirmed the Commission's decision, whilst reducing the basic amount of Degussa's fine from €35 million to €30 million, to take into account the fact that the impact of the infringement on prices could not be demonstrated for the entire period of the infringement. The Court of First Instance also reduced the multiplying factor applied by the Commission to Degussa from 100% to 80% to take into account the difference in size between Degussa and Aventis.

The judgment of the Court of justice

In June 2006, Degussa AG filed an appeal against the judgement of the Court of First Instance. Degussa claimed in particular that the Court of First Instance disregarded the principle of certainty (nulla poena sine lege certa) in relation to penal provisions, and consequently wrongly denied the unlawfulness of Article 15(2) of Regulation no 17/62 (on the Commission's discretion to set the level of fines).

Degussa also claimed that the CFI distorted the facts in its assessment of the duration of the infringement, and infringed the presumption of innocence (in dubio pro reo) and the basic right to a fair hearing.

It further argued that the CFI had infringed the principle of proportionality by setting the basic amount of the fine at €30 million, even though the infringement had little impact on the price of methionine. At the same time, the Court infringed the duty to state reasons by contradictory statements.

Finally, a last claim related to the violation of the principle of equal treatment for not having reduced the multiplying factor applied to the fine in accordance with the difference in size between the appellant and Aventis.

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

The cartel

Methionine is one of the most important amino acids used to compound animal feeds and premixes for all animal species, especially for poultry and pig feeds.

After an investigation started in 1999, the Commission found that Aventis SA and its subsidiary Aventis Animal Nutrition SA of France, Degussa AG of Germany and Nippon Soda Company Ltd of Japan participated in a worldwide cartel between 1986 and 1999, through which they agreed on price targets, implemented price increases and exchanged information on sales volumes and market shares for methionine.

During the infringement period, the annual market was worth around €260 million in the European Economic Area – the 15 EU member states plus Norway, Iceland and Liechtenstein.

The cartel’s aim was to fix ‘target’ and minimum prices, implement concerted price increases, exchange information on sales figures, as well as to agree on prices to individual customers.

The companies held regular meetings both at top level – the so-called “Summit” meetings – and at a technical level – the “Managerial” or “Staff” level meetings. During these meetings, the participants exchanged sales volumes, which would then be compiled and used in the discussions to determine the target prices to be fixed.

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