Lincoln’s Inn lecture on public and private enforcement: part 4 – single and continuous infringement

Thomas Sharpe QC and James Flynn QC invited me to speak to the Lincoln’s Inn Eurogroup on the relationship between public and private antitrust enforcement.

This is the third main section of the speech. The others are:
The Damages Directive and the protection of leniency submissions and settlement statements;
Publications and the content of decisions.

For those who prefer to read paper documents, I attach PDFs of the full prepared remarks and the handout.

In a selection of cases over the last couple of years the General Court and Court of Justice have grappled with what to do about cases where the Commission has found a particular company to have participated in part of a broader set of infringements, that broader set constituting a single and continuous infringement. We may, for example, be looking at a case where a company participated in respect of one product of a two-or-more product cartel, or where it was a fringe player in terms of either its participation, or its geographic reach.

Commission practice has tended to take an all or nothing approach to single and continuous infringement, secure in the knowledge that the fine imposed on any fringe player would properly reflect its fringe participation.

As a reminder, the finding of a single and continuous infringement has broadly three potential consequences for a case.

First prescription: if earlier conduct can be regarded as a single infringement with later conduct, then earlier conduct that might otherwise be prescribed would still be attackable.

Second, fines: if there is one single infringement, then there is one fine, one entry fee and one ten percent cap. If there are two infringements, then there can be two fines, with two entry fees, each subject to the ten percent cap.

Third, damages: participants in a single and continuous infringement are jointly and severally liable for the damage that they have caused.

It is this third point that makes the characterisation of a single and continuous infringement more important now than in the past.  The Commission can tailor the fine to the actual sales of the undertaking involved in the cartel – so that if it sold only one product in a cartel that encompassed several in a single infringement, the fine would be based on the sales of that one product. So for the fine, the finding of a single infringement does not necessarily increase the fine.

However a finding of a single infringment could substantially increase damages. If a maker of widgets was involved in a cartel which the Commission found to have covered both widgets and sproggets, then a finding of a single infringement would potentially expose that company to damages claims from purchasers of sproggets as well.

Once you take into account that a finding of participation in a single and continuous infringement brings with it joint and several liability for damages, then the position looks rather different. This, I think, is one of the main drivers of recent case law on single and continous infringement, and how the Commission has characterised it in its decisions.

Unfortunately the case law is not entirely clear as to how fringe players should properly be characterised.

In Coppens,1 the Court of Justice found that a company had participated in one product of a two product cartel, and was not a part of the two-product single and continuous infringement. Nevertheless a finding of infringement in respect of that one product was upheld.

In Aalberts,2 the Court took a different approach, finding that a company had only participated in some of the anti-competitive contacts. The Court – relying on the Commission’s characterisation of the contacts as a single indivisible infringement – annulled the entire decision.

Then more recently in Soliver,3 the Court found that a fringe player carried out acts that fell short of full complicity in the more extensive single infringement carried out by other players, recognised that those acts were clearly anti-competitive, but nevertheless annulled the decision as a whole indicating that although the anti-competitive nature of those acts was clear, the party had not had an opportunity to respond to objections focussed solely on those anticompetitive acts during the administrative procedure. Soliver appears to change a substantive issue of the characterisation of the single infringement into a procedural one. The Court felt that it could not maintain the infringement in relation to those lesser acts without violating the party’s rights of defence.

I suspect that all of these cases were motivated at least in part by the concern of joint and several liability for possibly extensive follow on damages. The counter argument of course is that this can properly be resolved by a national court taking a view as the relative contributions of each party. But I suspect that many parties will want to avoid getting drawn into cases, rather than rely on their minor role being properly characterised once they are there. And there is, of course, always the possibility that one party may be bankrupt, potentially increasing the liability of the others.

So I think it inevitable that the Commission will have to deal with a single infringement in a more nuanced way in future decisions. Unfortunately the Courts’ rulings have not left us with clear guidance as to how this should be done.

I tend to the view that we should recognise more explicitly that findings of infringements can be asymmetric – that, for example, one party may be liable for a single and continuous infringement for a range of conduct, and another party may be liable for only a subset of that conduct, contributing to, but not being party to, the entire single infringement.

That is the type of reasoning used in the Commission’s decision in respect of Bananas. There the Commission did impose asymmetric liability. Weichert was found liable only for part of the single and continuous infringement for which the other parties were liable.

The General Court upheld this finding,4 though the reasoning used does not seem entirely consistent with the other caselaw mentioned above. At paragraph 648, the Court held that: “…the fact that an undertaking has not taken part – like the undertaking comprising Weichert and Del Monte in the present case – in all aspects of an anti-competitive scheme or that it played only a minor role in the aspects in which it did participate is not material to the establishment of the existence of an infringement on its part. Such a factor must be taken into consideration only when the gravity of the infringement is assessed and if and when it comes to determining the fine”

How to draft a decision taking into account the differing participation of different firms? How many alternative characterisations of the infringement need to be set out in order to ensure that rights of the defence are properly respected? How to characterise a fringe player’s participation in a broader infringement? None of these points are, I’m afraid, easy to determine based on the case law. Yet given the importance of an SCI finding to damages claims, the Commission is going to be under increasing pressure on the point.


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