Alliance One International Inc., v European Commission [2013] EUECJ C-679/11 (26 September 2013)

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(Appeal – Competition – Agreements, decisions and concerted practices – Spanish market for the purchase and first processing of raw tobacco – Price-fixing and market-sharing – Infringement of Article 81 EC – Whether unlawful conduct of a subsidiary attributable to its parent company – Obligation to state reasons – Fundamental rights – Deterrent effect – Equal treatment – Mitigating circumstances – Cooperation – Unlimited jurisdiction – Ne ultra petita – Right to a fair hearing)

Alliance One International Inc., established in Morrisville (United States), represented by M. Odriozola and A. Vide, abogados,

European Commission, represented by F. Castillo de la Torre, E. Gippini Fournier, J. Bourke and C. Urraca Caviedes, acting as Agents, with an address for service in Luxembourg,

1 By its appeal, Alliance One International Inc. (‘AOI’), formerly Dimon Inc. (‘Dimon’), requests that the Court set aside the judgment of the General Court of the European Union of 12 October 2011 in Case T-41/05 Alliance One International v Commission [2011] ECR II-7101 (‘the judgment under appeal’), by which the General Court reduced the part of the fine imposed on Agroexpansión SA (‘Agroexpansión’) by Commission Decision C(2004) 4030 final of 20 October 2004 relating to a proceeding under Article 81(1) [EC] (Case COMP/C.38.238/B.2 - Raw tobacco - Spain) (‘the contested decision’) and dismissed the action brought by Dimon against that decision for the remainder.

2 The European Commission has brought a cross-appeal against the judgment under appeal whereby the Commission requests that the Court set aside that judgment in so far as the General Court applied, to the part of the fine imposed on Agroexpansión, for payment of which AOI was jointly and severally liable, the same further reduction of 5% as the General Court granted to Agroexpansión, for its cooperation, in the judgment of 12 October 2011 in Case T-38/05 Agroexpansión v Commission [2011] ECR II-7005.

3 Agroexpansión, Compañía española de tabaco en rama SA (‘Cetarsa’), Tabacos Españoles SL (‘Taes’) and World Wide Tobacco España SA (‘WWTE’) are four undertakings engaged in the first processing of raw tobacco in Spain (together, ‘the processors’). Deltafina SpA (‘Deltafina’), which also processes raw tobacco and which is an Italian company in the same group as Taes, was the principal purchaser of that product on the Spanish market.

4 Agroexpansión was originally a family business. On 18 November 1997 all its shares were purchased by Intabex Netherlands BV (‘Intabex’). At that time Intabex belonged to the Intabex group of companies, which had been acquired by Dimon in April 1997. AOI is the result of a merger, carried out in May 2005, of Dimon and the American company Standard Commercial Corp.

5 On 3 and 4 October 2001 the Commission carried out inspections pursuant to Article 14 of Council Regulation No 17 of 6 February 1962, First regulation implementing Articles [81 EC] and [82 EC] (OJ 1962, English Special Edition, 1959-1962 (I), p. 87) at the premises of, among others, Agroexpansión, in order to check information that the processors and the Spanish producers of raw tobacco had infringed Article 81 EC.

6 On 11 December 2003 the Commission initiated the procedure in the present case and adopted a statement of objections, which it addressed to 20 undertakings or associations, including the processors, Deltafina, Dimon and Intabex.

7 On 20 October 2004 the Commission adopted the contested decision which relates to, inter alia, a horizontal cartel entered into and implemented on the Spanish raw tobacco market by the processors and Deltafina.

8 According to the Commission’s findings, the object of that cartel was to fix each year, in the period from 1996 to 2001, the average delivery price for each variety and grade of raw tobacco and to share out the quantities of each variety of raw tobacco that each of the processors could purchase from the producers. Between 1999 and 2001 the processors and Deltafina also agreed price brackets per quality grade for each raw tobacco variety as well as average minimum prices per producer and producer group.

9 In the contested decision, the Commission held that that cartel constituted a single and continuous infringement of Article 81(1) EC, attributed liability for the cartel to, among others, the processors and Deltafina and ordered those undertakings immediately to bring that infringement to an end and henceforward to refrain from any restrictive practice with the same or equivalent object or effect. In Article 3 of that decision the Commission imposed fines on those undertakings and on the producers’ representatives.

10 It was also stated in the contested decision that Dimon was held jointly and severally liable for payment of the fine imposed on Agroexpansión, as were the three parent companies of WWTE in respect of the fine imposed on WWTE. On the other hand, Intabex was not held to be liable with regard to the fine imposed on Agroexpansión. As regards the fines imposed on Taes and Deltafina, Universal Leaf Tobacco Co. Inc. (‘Universal Leaf’), the parent company of which those two undertakings were wholly owned subsidiaries, and Universal Corp. (‘Universal’), which owned the entire share capital of Universal Leaf, were also not held to be jointly and severally liable.

11 As regards the persons to whom the contested decision was addressed, the Commission stated, in recitals 372, 375 and 376 of the contested decision:

‘(372) According to settled case-law, where the subsidiary is wholly owned by the parent company, it can legitimately be assumed that the parent company in fact exercises decisive influence over its subsidiary’s conduct .... such an assumption can be further strengthened by specific factors arising in individual cases.

(375) In the present case, three of the four Spanish processors of raw tobacco are controlled (to the extent of 100% or 90%) by US multinationals. There are other factual elements that confirm the presumption that the conduct of Agroexpansión and WWTE has to be ascribed to their respective parent companies. In these cases, the two companies – the parent company and the subsidiary – must be regarded as being jointly responsible for the infringements established in this decision.

(376) On the other hand, following the issuing of the Statement of Objections and the hearing of the parties, it has become apparent that the evidence in the file could not warrant a similar conclusion in respect of Universal[’s] … and Universal Leaf [Tobacco Co. Inc.’s] shareholdings in Taes and Deltafina. In fact, apart from the corporate link between the parents and their subsidiaries, there is no indication in the file of any material involvement of Universal … and Universal Leaf in the facts which are being considered in this decision. It would therefore not be appropriate to address them a decision in this case. The same conclusion would apply, a fortiori, to Intabex in so far as its 100% shareholding in Agroexpansión was purely financial.’

12 The Commission stated that it could legitimately be assumed that Dimon was exercising a decisive influence over the conduct of Agroexpansión as from the date when Dimon had purchased the entire share capital of Agroexpansión through Intabex. The Commission concluded that a number of factors, set out, in particular, in recital 379 of the contested decision, confirmed that Dimon was in a position to exercise influence over Agroexpansión and was informed of the practices of which Agroexpansión was accused, that the arguments put forward by Dimon in its reply to the statement of objections did not warrant any different conclusion in that respect and that Dimon had to be held jointly responsible for the conduct of Agroexpansión as established by the contested decision for the period extending from the second half of 1997 until 10 August 2001.

13 The Commission determined those fines by applying its Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty (OJ 1998 C 9, p. 3; ‘the Guidelines’) and the Commission Notice on the non-imposition or reduction of fines in cartel cases (OJ 1996 C 207, p. 4; ‘the Leniency Notice’).

14 Having characterised the infringements found as ‘very serious’, the Commission determined the starting amounts of the fines imposed on the processors, having regard to, inter alia, their size and their respective market shares.

15 In recitals 422 and 423 of the contested decision, the Commission held that, in order that the fines imposed on Agroexpansión and WWTE should be sufficiently deterrent, having regard to the fact that those two undertakings belonged to multinational groups of considerable economic and financial strength under whose decisive influence they had operated, it was necessary to increase the starting amount of the fine for those two processors by applying a multiplying factor which might take into account both the size of the groups to which they belonged and their comparative size vis-à-vis the other Spanish processors. As regards Agroexpansión, the Commission applied, for the purposes of deterrence, a multiplying factor of 2.

16 In respect of the duration of the infringement, the Commission found, in recital 432 of the contested decision, that the cartel of the processors and Deltafina began no earlier than 13 March 1996 and had ceased to exist, according to the processors’ statements, on 3 October 2001. However, since the latest evidence in the Commission’s possession was a meeting of 10 August 2001, the Commission considered, for the purpose of determining the duration of the infringements concerned, that that cartel had lasted more than five years and four months, which represents an infringement of long duration.

17 Having set the basic amounts, the Commission examined the aggravating and mitigating circumstances and whether it was appropriate to adjust the basic amounts calculated for the various addressees of the decision so that those amounts should not exceed the limit of 10% of turnover laid down in the second subparagraph of Article 23(2) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [81 EC] and [82 EC] (OJ 2003, L 1, p. 1).

18 Lastly, the Commission applied Section D of the Leniency Notice, in which there is provision for significant reduction in a fine, paragraph 2 thereof stating that the undertaking concerned may qualify for such a reduction either where information is provided to the Commission before a statement of objections is sent (the first indent of paragraph 2), or where it sends to the Commission, after receiving a statement of objections, information that the undertaking does not substantially contest the facts on which the allegations are based (the second indent of paragraph 2). The Commission decided that Taes should receive a reduction of 40% under paragraph 2, in the light both of its particularly valuable cooperation during the procedure, notably as regards the involvement of Deltafina in the cartel, and of the fact that it had never contested the facts as established in the statement of objections.

19 As regards Cetarsa and WWTE, the Commission considered, first, that the information provided by them, although significant, had not proved to be as useful for the Commission’s investigations as that provided by Taes and, secondly, that those two processors had contested a number of facts in their replies to the statement of objections. In those circumstances, in accordance with the first indent of Section D(2) of the Leniency Notice, the Commission granted to Cetarsa and WWTE a 25% reduction of the fine.

20 As regards Agroexpansión, the Commission considered that it had also provided it with useful information, but, in its reply to the statement of objections, Agroexpansión had contested the facts on the same lines as Cetarsa and WWTE and, moreover, had denied the secret nature of the processors’ agreements on (maximum) average delivery prices. Consequently, the Commission granted to Agroexpansión a 20% reduction of the fine. The final amount of the fine imposed on Agroexpansión was EUR 2 592 000, Dimon being held jointly and severally liable for payment of that fine.

21 By application lodged at the Registry of the General Court on 28 January 2005, Dimon brought an action for the annulment of Articles 1, 3 and 5 of the contested decision in so far as those articles concerned it and, alternatively, for reduction of the fine imposed on Agroexpansión and on itself as a company jointly and severally liable for payment of that fine.

– first, an infringement of Article 81(1) EC, Article 23(2) of Regulation No 1/2003 and the principle of proportionality in that the contested decision held it liable for the infringements committed by Agroexpansión;

– second, breach of the principles of proportionality and personal liability in that the Commission held it to be responsible for the infringement committed by Agroexpansión without having shown that it had directly participated in the infringement;

– third, breach of the principles of proportionality and personal liability and of Article 23(2) of Regulation No 1/2003 as regards the infringements committed by Agroexpansión before that company became part of the Dimon group;

– fourth, breach of the principle of protection of legitimate expectations by failing to take into account a mitigating circumstance when determining the amount of the fine;

23 By the judgment under appeal, the General Court upheld the third plea in law and rejected the other four pleas. In addition, it varied the contested decision to the extent that that decision held Dimon to be jointly and severally liable, with Agroexpansión, for payment of the total amount of the fine imposed on Agroexpansión. First, since Dimon could not be held jointly and severally liable for the infringement before 18 November 1997, the date of Intabex’s purchase of Agroexpansión, the General Court reduced, as regards Dimon, the rate of increase applied to the starting amount of the fine because of the duration of the infringement from 50% to 35%. Secondly, the General Court applied to Dimon the same further reduction of 5% which it had granted to Agroexpansión, on the basis of its cooperation, in Agroexpansión v Commission.

26 In support of its appeal, AOI relies on four grounds: first, infringement of Articles 101(1) TFEU and 296 TFEU and Article 23(2) of Regulation No 1/2003; second, infringement of the general principles of European Union law and the rights contained in the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950, and in the Charter of Fundamental Rights of the European Union; third, infringement of the principles of proportionality, joint and several liability and equal treatment and, fourth, failure to apply the third indent of Section 3 of the Guidelines and infringement of the principle of protection of legitimate expectations.

27 By the first part of its first ground of appeal, AOI considers that the General Court erred in law by not annulling the contested decision on the ground that the statement of reasons was insufficient. In that regard, AOI submits that the Commission did not define the single standard of proof laid down in that decision for the attribution of liability for the unlawful conduct of a subsidiary to its parent company, namely the standard of the parent company’s ‘material involvement’ in the conduct under consideration, referred to in recital 376 of the decision, and failed to explain in that decision why the Commission implicated some parent companies and not others.

28 AOI claims that the General Court exceeded the limits of its jurisdiction since it attempted to correct that absence of a statement of reasons ex post facto by setting out, in paragraph 112 of the judgment under appeal, the so-called ‘dual basis’ method. However, the Commission asserted for the first time before the General Court, in the case which gave rise to the judgment of 27 October 2010 in Case T-24/05 Alliance One International and Others v Commission [2010] ECR II-5329, that it had employed that method in the contested decision.

29 By thus reinterpreting the contested decision, the General Court sought to preserve the principle of equal treatment by claiming that the Commission had applied that method in the same way to all the parent companies concerned. However, the Commission stated that it had applied that same method to some of the parent companies while explaining, in its reply to a written question from the General Court, that it had held Dimon to be responsible for the infringement committed by Agroexpansión solely on the basis of the presumption that a parent company owning the entire share capital of a subsidiary in fact exercises a decisive influence over that subsidiary.

30 Further, recital 372 of the contested decision stated only that that presumption can be strengthened by other factors. Since the existence of additional evidence is not therefore a prerequisite of the attribution of liability to a parent company, the application of the dual basis method is arbitrary, since that presumption may be strictly applied in some cases, and not applied in others.

31 Further, even if the dual basis method was applicable, the evidence of the involvement of Dimon in the infringement is no more solid than that of the involvement of Universal and Universal Leaf in the same infringement.

32 By the second part of its first ground of appeal, AOI claims that the General Court should have declared that the Commission had failed to state sufficient reasons, in the contested decision, for its rejecting the arguments of Agroexpansión intended to rebut application of the abovementioned presumption to Dimon.

33 In that regard, the Commission confined itself to examining only one of the pieces of evidence put forward regarding the autonomous behaviour of Agroexpansión vis-à-vis its parent company. It is therefore impossible to determine whether the Commission had attributed liability to Dimon on the basis solely of that presumption or after taking into consideration the evidence relied on by Agroexpansión in order to rebut such a presumption. Since the Commission considered that that attribution of liability could be based on the material mentioned in recital 379 of the contested decision, which contains arguments which are vague and inaccurate, such a position is again not supported by an adequate statement of reasons.

34 The Commission considers that the first ground of appeal is partly inadmissible and must, in any event, be rejected as being unfounded.

35 As regards the first part of the first ground of appeal, the objection of inadmissibility raised by the Commission, on the ground that the arguments relied on by AOI are new, cannot be accepted. The criticism of the General Court is, in essence, that it re-interpreted the contested decision, following explanations which were produced by the Commission subsequent to that decision, in order to mitigate the infringements of the obligation to state reasons and the principle of equal treatment allegedly committed by the Commission in that decision. Since such arguments could not have been raised at first instance, they cannot be held to be inadmissible on appeal (see, to that effect, Case C-229/05 P PKK and KNK v Council [2007] ECR I-439, paragraph 33, and the judgment of 28 July 2011 in Joined Cases C-471/09 P to C-473/09 P Diputación Foral de Vizcaya and Others v Commission, paragraph 124).

36 As regards the substance, it must be recalled, first, that liability for an infringement of the competition rules committed by a subsidiary may be attributed to its parent company in particular where, although having a separate legal personality, that subsidiary does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities (see Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, paragraph 58, and Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others [2012] ECR I-0000, paragraph 43).

37 In such a situation, since the parent company and its subsidiary form a single economic unit and therefore form a single undertaking for the purposes of Article 81 EC, the Commission may address a decision imposing fines to the parent company, without having to establish the personal involvement of the parent company in the infringement (see, Akzo Nobel and Others v Commission, paragraph 59, and Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 44).

38 The Court has made it clear that, in the particular case of a parent company having a 100% shareholding in a subsidiary which has infringed the European Union’s rules on competition, that parent company is able to exercise decisive influence over the conduct of its subsidiary and there is a rebuttable presumption that the parent company does in fact exercise such influence (Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 46 and case-law cited).

39 In those circumstances, it is sufficient for the Commission to prove that the entire capital of a subsidiary is held by its parent company in order for it to be presumed that the parent actually exercises decisive influence over the commercial policy of that subsidiary. The Commission will then be able to hold the parent company to be jointly and severally liable for payment of the fine imposed on its subsidiary, unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market (Akzo Nobel and Others v Commission, paragraph 61, and Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 47).

40 However, that case-law does not imply that the Commission is bound to rely exclusively on that presumption. There is nothing to prevent the Commission from establishing that a parent company actually exercises decisive influence over its subsidiary by means of other evidence or by a combination of such evidence and that presumption (Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 49).

41 In this case, as the General Court stated in paragraphs 105 to 119 of the judgment under appeal, it is clear from the contested decision that the Commission had decided, in order to assess whether the parent companies actually exercised decisive influence over the subsidiaries, to hold the parent companies liable only where there was evidence to support the presumption of actual exercise by the parent companies of decisive influence which arises from the control by the parent companies of the entire share capital of the subsidiaries (the ‘dual basis’ method) and, accordingly, had waived reliance on the application solely of the presumption of decisive influence (Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 50).

42 As regards the use of that method in the contested decision, the General Court stated the following in paragraphs 112 and 113 of the judgment under appeal:

‘112 ... in the present case, in order to attribute liability for the infringement on the part of subsidiaries to the parent companies, which found themselves in such a situation, the Commission chose not to rely on that presumption alone [the presumption that a parent company which owns the entire capital of its subsidiary in fact exercises decisive influence over the conduct of that subsidiary], but also to base its findings on evidence designed to establish that those parent companies in fact exercised decisive influence over their subsidiary and, accordingly, to support that presumption (see, inter alia, recitals 372, 375, 376 and 378 of the contested decision).

113 Thus, recital 18 of the contested decision makes it expressly clear that, although the Commission did not hold Deltafina’s ultimate and intermediate parent companies – Universal and Universal Leaf – liable for the unlawful conduct of their subsidiary, despite the fact that they controlled Deltafina 100%, the reason was that the Commission did not have enough evidence that those companies in fact exercised decisive influence over that subsidiary. Recital 376 of the contested decision should also be understood in this way, even if it is drafted somewhat ambiguously. In particular, whilst it is true that the Commission states in that recital that there is “no indication” in its file “of any material involvement of Universal … and Universal Leaf in the facts which are being considered in [the contested decision]”, when read together with recital 18 of the decision and in the context of that decision, that statement cannot be interpreted as meaning that the reason that the Commission did not hold those two parent companies – or any other parent company – liable was their lack of involvement in the infringement.’

43 It follows from those paragraphs of the judgment under appeal that the General Court based its assessment of the dual basis method adopted by the Commission in the contested decision on its own interpretation of that method, considered as a whole (see Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraphs 121 and 132).

44 That finding of the General Court is not vitiated by any error of law. In particular, the General Court was correct to interpret the decision in such a way as to refute the reading of recital 376 of the contested decision proposed by Agroexpansión in its reply, to the effect that it was because of the absence of factors indicating the material involvement of the parent companies of Taes in the infringement that the Commission did not attribute liability to those companies, since such a reading was incompatible with a reading of that decision as a whole (see Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 133).

45 It follows, first, that, since the test of ‘material involvement’ was not used in the contested decision in order to determine whether the parent companies had any liability because of the conduct of their subsidiaries, AOI’s argument claiming that the statement of reasons was insufficient, as summarised in paragraph 27 of this judgment, is unfounded.

46 Secondly, AOI’s claim that the General Court defined the dual basis method following explanations produced by the Commission which post-dated that decision is also unfounded since, as is apparent from paragraph 43 of this judgment, the assessment made by the General Court of that method was based on its interpretation of the contested decision.

47 As regards AOI’s assertion that the Commission did not apply the dual basis method to Dimon, it is clear that the General Court correctly stated, in paragraphs 112 to 119 of the judgment under appeal, that the Commission had applied the dual basis method to all the parent companies in the contested decision (see, by analogy, Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 137), including, as is apparent from paragraphs 116 and 117, Dimon. That finding cannot be invalidated by the Commission’s reply to a question from the General Court in the course of proceedings, as referred to in paragraph 29 of this judgment, even if the interpretation of that reply advocated by AOI were to be correct.

48 As regards the argument, set out in paragraph 30 of this judgment, that the dual basis method is capable of being applied to some parent companies and not to other parent companies, suffice it to state that since, as is apparent from the preceding paragraph, the Commission in fact applied the dual basis method to all the parent companies concerned in this case, that argument is wholly irrelevant.

49 As regards the argument that, even if one accepts that the dual basis method is applicable, the evidence of Dimon’s involvement in the infringement concerned is no more solid than that relating to the parent companies who were not held to be liable for that same infringement, it is clear that AOI is seeking to call into question the findings of fact and the appraisals of the facts made by the General Court.

50 In that regard it must be borne in mind that the appraisal of the facts by the General Court does not constitute, save where the clear sense of the evidence produced before it is distorted, a question of law which is subject, as such, to review by the Court of Justice (Case C-397/03 P Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission [2006] ECR I-4429, paragraph 85, and Case C-352/09 P ThyssenKrupp Nirosta v Commission [2011] ECR I-2359, paragraph 180).

51 Since it is not claimed by AOI in this case that there was any distortion of the clear sense of the evidence, that argument must consequently be held to be inadmissible.

52 As regards, last, the second part of the first ground of appeal, it should be recalled that it follows from the second subparagraph of Article 256(1) TFEU, the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union and Articles 168(1)(d) and 169(2) of the Court’s Rules of Procedure that an appeal must identify precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal (see the judgment of 11 April 2013 in Case C-652/11 P Mindo v Commission [2013] ECR I-0000, paragraph 21 and case-law cited).

53 It is clear that, by its arguments put forward in the second part of its first ground of appeal, AOI’s complaint that the statement of reasons in the contested decision is insufficient is directed not at the General Court, but at the Commission. In particular, its case contains no argument that the statement of reasons in the judgment under appeal is insufficient. To the extent that the General Court is criticised for its failure to annul that decision because of an insufficient statement of reasons, it is not possible to identify from those arguments with the required precision either the challenged elements of the judgment under appeal or the legal arguments advanced in support of that challenge (see, by analogy, the order of 3 May 2012 in Case C-240/11 P World Wide Tobacco España v Commission, paragraphs 52 and 53).

54 It follows that the second part of the first ground of appeal must be held to be inadmissible.

55 Consequently, the first ground of appeal must be rejected as being in part inadmissible and in part unfounded.

56 By its second ground of appeal, relied on in the alternative, AOI considers that the judgment under appeal infringes a number of its fundamental rights, namely the right to the presumption of innocence and the principles of legality and individual liability for criminal offences and penalties stated, in particular, in Articles 48 and 49 of the Charter of Fundamental Rights of the European Union.

57 AOI adds that, in accordance with those fundamental rights, a presumption of guilt is in principle forbidden and should be permitted only when there are exceptional circumstances. Yet the Commission applied the presumption that a parent company actually exercises a decisive influence on the basis of the fact that it owns the entire share capital of a subsidiary when, in this case, there were no exceptional circumstances. Further, the fine which was imposed on it was substantial and not minimal.

58 The Commission contends that this ground of appeal is inadmissible, submitting, inter alia, that it is based on new arguments directed against the contested decision.

59 As correctly stated by the Commission, AOI did not raise in its action at first instance the arguments which it now relies on in respect of this ground of appeal.

60 In accordance with the Court’s settled case-law, to allow a party to put forward for the first time before the Court of Justice a plea in law which it has not raised before the General Court would in effect allow that party to bring before the Court a wider case than that heard by the General Court. In an appeal, the Court’s jurisdiction is, as a general rule, confined to a review of the assessment by the General Court of the pleas argued before it (see Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, paragraph 111 and case-law cited).

61 It follows that the second ground of appeal must be rejected as being inadmissible.

62 By the first part of its third ground of appeal, AOI claims that, taking account of the reduced rate of increase applied to the starting amount of the fine on the basis of the duration of the infringement, the General Court erred in applying, with regard to Dimon, a rate of 35% instead of 30%. The Guidelines permit increases of 10% per year of infringement, but ‘rounding up years’ is not permitted. Since that method was applied to the other addressees of the contested decision, the principle of equal treatment requires the same method to be used for calculation of the fine for which Dimon was held to be jointly and severally liable.

63 By the second part of that ground of appeal, AOI claims that it is apparent from recital 423 of the contested decision that, in order to justify application of a multiplying factor to the starting amount of the fine, the Commission applied the fifth paragraph of Section 1A of the Guidelines, relating to the possibility of taking account of the fact that large undertakings usually have legal and economic knowledge and infrastructures which enable them more easily to recognise that their conduct constitutes an infringement and the consequences stemming from it.

64 AOI claims that, in accordance with paragraph 125 of Case T-386/06 Pegler v Commission [2011] ECR II-1267, it is the size of the undertaking concerned at the time of the infringement which is the criterion relevant to the justification of such an increase on the basis of that provision in the Guidelines. Consequently, the multiplying factor applied to Dimon should have been reduced by the General Court after it was held that Dimon was jointly and severally liable for the infringement committed by Agroexpansión only from 18 November 1997.

65 Alternatively, AOI considers that the General Court erred in law by not reducing the multiplying factor of 2 applied by the Commission for purposes of deterrence, in order to take account of the fact that Dimon’s responsibility covered only part of the period in which Agroexpansión was involved in the infringement.

66 The Commission considers that the arguments relied on by AOI in respect of the third ground of appeal are unfounded.

67 As regards the first part of the third ground of appeal, it is apparent from the first paragraph of Section 1B of the Guidelines that the duration of the infringement should be taken into consideration by the Commission with a view to a possible increase in the amount of the fine. In respect of infringements of medium duration (in general, one to five years), there may be an increase by up to 50% in the amount determined for the gravity of the infringement whereas, in respect of infringements of long duration (in general, more than five years), there may be an increase of up to 10% per year in that amount.

68 However, in holding, in paragraphs 202 and 212 of the judgment under appeal, that Dimon could be held to be responsible for the infringement only in respect of a period of approximately three years and nine months, the General Court decided that it was appropriate to increase the starting amount of the fine, with regard to Dimon, by 35% and not by 50%, as in Agroexpansión’s case. That increase does not depart from the method followed by the Commission since that period constitutes an infringement of medium duration according to the Guidelines, which in no way specify that, in respect of such infringements, the increase pertaining to the duration of the infringement must be set only in blocks of 10% for each year in which the infringement lasted.

69 Moreover, the General Court cannot be criticised for any discrimination in that regard, since, in respect of the other addressees of the contested decision, the infringement lasted, according to recital 432 thereof, more than five years and four months and was consequently considered to be an infringement of long duration to which a separate rule for calculating the amount of the fine is applicable, in accordance with the first paragraph of Section 1B of the Guidelines.

71 As regards the main argument put forward by AOI in support of the second part of that ground, it is apparent from the file relating to the action before the General Court that Dimon did not, at first instance, rely on arguments such as that based by AOI on a reading of recital 423 of the contested decision, summarised in paragraph 63 of this judgment. In accordance with the case-law cited in paragraph 60 above, that argument is consequently inadmissible.

72 With regard to the argument relied on by AOI in the alternative, it must be held that the General Court did not err in law by holding, in paragraph 210 of the judgment under appeal, that the application, for purposes of deterrence, of a multiplying factor of 2, by which the starting amount of the fine imposed on Agroexpansión was adjusted, remained justified in the context of calculating the amount of the fine for which Dimon was held to be jointly and severally liable, since that factor was based on the size and overall resources of the undertaking concerned in 2003, the year preceding that in which the contested decision was adopted.

73 In that regard, it must be recalled that ‘deterrence’ is one of the factors to be taken into account in calculating the amount of the fine. In accordance with settled case-law, fines imposed for infringements of Article 81 EC, as laid down in Article 23(2) of Regulation No 1/2003, are designed to penalise the unlawful acts of the undertakings concerned and to deter both the undertakings in question and other economic operators from infringing, in future, the rules of European Union competition law. The link between, on the one hand, the size and overall resources of undertakings and, on the other, the need to ensure that the fine has a deterrent effect cannot be disputed (see Case C-289/04 P Showa Denko v Commission [2006] ECR I-5859, paragraph 16, and Case C-413/08 P Lafarge v Commission [2010] ECR I-5361, paragraph 102).

74 It is the impact sought on the undertaking concerned which justifies the size and overall resources of that undertaking being taken into consideration in order to ensure that the fine has sufficient deterrent effect, and the penalty must not be negligible in the light, particularly, of the financial capacity of that undertaking (Lafarge v Commission, paragraph 104).

75 It follows that, in order to impose a fine of an amount likely to deter the undertakings concerned from infringing, in future, the rules of European Union competition law, it is necessary to take into consideration the size and overall resources of those undertakings at the time when the contested decision is adopted (see, to that effect, the order of 7 February 2012 in Case C-421/11 P Total and Elf Aquitaine v Commission, paragraph 82). Consequently, the fact that Dimon was not held to be jointly and severally liable for Agroexpansión’s infringement for the period prior to 18 November 1997 has no relevance to the determination of a multiplying factor for purposes of deterrence.

76 It follows from the foregoing that the third ground of appeal must be rejected as being in part inadmissible and in part unfounded.

77 By its fourth ground of appeal, AOI submits that the General Court wrongly held, in paragraph 193 of the judgment under appeal, that the attenuating circumstance referred to in the third indent of Section 3 of the Guidelines, namely the termination of the infringement as soon as the Commission intervenes, could not be applied because the infringement committed by Agroexpansión had ended on 10 August 2001. In that regard, the Commission had also accepted that, according to the processors’ statements, the cartel had ceased to exist on 3 October 2001. Since termination of the infringement as soon as the Commission intervenes constitutes a mitigating circumstance, Agroexpansión could legitimately expect to be granted a reduction in the fine on that basis.

78 AOI further claims that the judgment under appeal is vitiated by an error in law in so far as the General Court held, in paragraphs 194 and 195 of the judgment under appeal, that that mitigating circumstance does not apply in this case because of the nature of the infringement. AOI states that, in other Commission decisions, fines imposed in respect of serious and secret infringements were reduced on the basis of that provision of the Guidelines. AOI seeks a reduction of the fine imposed on Agroexpansión to take account of the fact that Agroexpansión’s involvement in the infringement ceased as soon as the Commission intervened.

80 The Court has already had occasion to confirm the finding of the General Court that the circumstance referred to in the third indent of Section 3 of the Guidelines, namely termination of the infringement as soon as the Commission intervenes, can logically constitute a mitigating circumstance only if there are reasons to suppose that the undertakings concerned were encouraged to cease their anti-competitive conduct by the interventions in question (see, to that effect, Case C-407/04 P Dalmine v Commission [2007] ECR I-829, paragraph 158).

81 In paragraph 193 of the judgment under appeal, the General Court found that the infringement at issue had ceased on 10 August 2001, namely before the date of the first inspections carried out by the Commission, and consequently that termination could not constitute a mitigating circumstance for the purposes of setting the amount of the fine. In that regard, the General Court stated in the same paragraph that, notwithstanding what was stated by the processors, the Commission had accepted that date as being the date when the infringement came to an end on the ground that the latest evidence of the infringement in its possession was a meeting which took place on that date.

82 By its arguments AOI challenges, in essence, the finding of fact made by the General Court as regards the date when that infringement came to an end, but does not claim any distortion of the clear sense of the evidence. Yet it follows from the case-law cited on paragraph 50 of this judgment that such arguments are not admissible in an appeal.

83 Since AOI’s argument that Agroexpansión could legitimately expect a reduction in the fine on the basis of the attenuating circumstance set out in the third indent of Section 3 of the Guidelines is dependent on the challenge referred to in the preceding paragraph, that argument is also inadmissible.

84 As regards AOI’s criticism of paragraphs 194 and 195 of the judgment under appeal, suffice it to state that the considerations set out by the General Court in those paragraphs, relating to the hypothesis that the infringement might have been considered to have ended on 3 October 2001, as claimed by Dimon, are grounds which are included for the sake of completeness.

85 In accordance with the Court’s settled case-law, a complaint directed against a ground included in a judgment of the General Court purely for the sake of completeness cannot lead to the judgment being set aside and is therefore ineffective (see, inter alia, order of 20 January 2009 in Case C-374/07 P Mebrom v Commission, paragraph 57, and Case C-96/09 P Anheuser-Busch v Budějovický Budvar [2011] ECR I-2131, paragraph 211).

86 Consequently, the fourth ground of appeal must be dismissed as being partly inadmissible and partly ineffective.

87 Since none of the grounds relied on by AOI in support of its appeal can be upheld, the appeal must be dismissed.

88 In support of its cross-appeal, the Commission raises three grounds: (i) an insufficient statement of reasons; (ii) infringement of the principle ne ultra petita and of Article 266 TFEU, and (iii) infringement of the right to a fair hearing.

89 The grounds of the cross-appeal are directed against paragraph 214 of the judgment under appeal, where the General Court stated that, in its judgment in Agroexpansión v Commission, it granted to Agroexpansión, for its cooperation, a further reduction of 5% in addition to the reduction of 20% already granted in the contested decision. The General Court considered that it was therefore appropriate also to apply a reduction of 25% to the basic amount of the fine as calculated with regard to Dimon.

90 By its first ground of appeal, the Commission considers that the General Court does not explain why it was appropriate, in paragraph 214 of the judgment under appeal, to grant a reduction to the parent company, by reason of the fact that its subsidiary received such a reduction because of its cooperation.

91 According to the Commission, there is ambiguity as to whether the General Court exercised its unlimited jurisdiction in paragraph 214, since, after reaching the conclusion, in paragraph 202 of the judgment under appeal, that the Commission had made an error with respect to the duration of the infringement, the General Court stated, in paragraph 203 of that judgment, that it was ‘therefore necessary to [vary] the contested decision’. Yet as regards the reduction on the basis of cooperation, it is unclear whether the General Court considered that it was still acting in the exercise of its unlimited jurisdiction.

92 By its second ground of appeal, the Commission states, first, that the principle ne ultra petita means that, as a general rule and with the exception of matters involving public policy, the General Court can only rule on the pleas which are put before it. As stated in paragraph 52 of Case C-310/97 P Commission v AssiDomän Kraft Products and Others [1999] ECR I-5363, the scope of the annulment which the General Court pronounces may not go further than that sought by the applicant. That principle was not respected in this case, since the General Court reduced the fine imposed on Dimon on the basis of cooperation, although Dimon had not put forward arguments in support of such a request for reduction.

93 The Commission submits, secondly, that the judgment under appeal infringed Article 266 TFEU and erroneously extended the legal effects of the judgment in Agroexpansión v Commission. Consequently, the General Court encroached on the Commission’s responsibilities under that article. It is for the Commission to take any measures with regard to a parent company that may be required as a result of a judgment concerning one of its subsidiaries.

94 Referring, inter alia, to paragraph 55 of Commission v AssiDomän Kraft Products and Others, the Commission submits that a judgment annulling an act of European Union law cannot entail the annulment of other acts which have not been challenged before the Courts of the European Union, but which may be subject to a claim that they are vitiated by an illegality similar to that on which such an annulment is based.

95 By its third ground of appeal, the Commission claims that the General Court infringed the ‘principe du contradictoire’ [the adversarial principle] and the right to a fair hearing by depriving it of the opportunity to comment on the General Court’s intention to reduce Dimon’s fine on the basis of pleas raised, by Agroexpansión, in a separate case. In that regard, the General Court should have disclosed to the parties the conclusions which it intended to draw from certain facts.

96 The Commission submits that it could not have expected that such an approach would be adopted in the judgment under appeal, since this is the first time that the General Court has reduced a fine on the basis of pleas and arguments raised in a case other than that before the court.

97 AOI considers that the grounds relied on by the Commission are all unfounded.

98 As regards the first ground of the cross-appeal, it must be observed that the obligation to state the reasons on which a judgment is based arises under Article 36 of the Statute of the Court of Justice, which applies to the General Court by virtue of the first paragraph of Article 53 of the Statute, and Article 81 of the Rules of Procedure of the General Court. In accordance with the Court’s settled case-law, the statement of the reasons on which a judgment of the General Court is based must clearly and unequivocally disclose that court’s reasoning in such a way as to enable the persons concerned to ascertain the reasons for the decision taken and the Court of Justice to exercise its power of review (see Mindo v Commission, paragraph 29 and case-law cited).

99 As regards the further reduction of 5% granted to Dimon on the basis of the Leniency Notice, the judgment under appeal satisfies those requirements.

100 It is apparent, clearly and unequivocally, that the General Court intended to grant that reduction in the exercise of its unlimited jurisdiction. In that regard, it first stated, in paragraph 204 of the judgment under appeal, that as part of the exercise of that jurisdiction it considered that it was appropriate to calculate the part of the fine for payment of which Dimon was to be jointly and severally liable with Agroexpansión by adopting the method and criteria applied by the Commission, in the contested decision, in order to set the fines to be imposed on the addressees thereof. Then, the wording ‘[t]hus, in the first place’, which opens paragraph 205 of that judgment, clearly indicates that the General Court is there commencing the calculation intimated in the preceding paragraph. Last, by stating, in paragraph 214 of that judgment, that it is dealing with ‘[i]n the fourth place’ application of the Leniency Notice, the General Court showed that the considerations in paragraph 214 were taken into account in that calculation.

101 Further, in stating that it was adopting the method and criteria applied in the contested decision, the General Court thereby provided an explanation concerning the further reduction granted to Dimon on the basis of cooperation since, as the Commission acknowledged at the hearing, the amount of the fine for which Dimon was held jointly and severally liable in that decision also had the benefit of the reduction granted to Agroexpansión on that basis.

102 The first ground of the cross-appeal must therefore be rejected as being unfounded.

103 As regards the argument put forward in support of the second ground, that the General Court ruled ultra petita by reducing the fine imposed on Dimon on the basis of cooperation, notwithstanding the absence of any such request in Dimon’s action, it must be recalled, as stated in paragraph 100 of this judgment, that that reduction was made by the General Court in the exercise of its unlimited jurisdiction.

104 Such jurisdiction was conferred on the Courts of the European Union by Article 17 of Regulation No 17, and is now confirmed by Article 31 of Regulation No 1/2003, in accordance with Article 261 TFEU. The Courts of the European Union are therefore empowered not only to carry out a mere review of the lawfulness of the penalty but also to substitute their own appraisal for that of the Commission and, consequently, to cancel, reduce or increase the fine or penalty payment imposed (see Case C-3/06 P Groupe Danone v Commission [2007] ECR I-1331, paragraph 61, and Case C-199/11 Otis and Others [2012] ECR I-0000, paragraph 62). That jurisdiction is exercised by taking into account all the factual circumstances (see, to that effect, Case C-534/07 P Prym and Prym Consumer v Commission [2009] ECR I-7415, paragraph 86 and case-law cited).

105 It follows that the Courts of the European Union are empowered to exercise their unlimited jurisdiction where the question of the amount of the fine is before them (Groupe Danone v Commission, paragraph 62).

106 It is apparent from paragraph 71 of the judgment under appeal that Dimon had sought, in the alternative, the reduction of the fine imposed on Agroexpansión and, jointly and severally, on itself, and that the purpose of its third and fourth pleas in law was, inter alia, to justify the grant of such a reduction.

107 Consequently, the General Court was entitled to exercise its unlimited jurisdiction, in particular by taking into account, in paragraph 214 of that judgment, the fact that it had granted, in Agroexpansión v Commission, a further reduction to Agroexpansión on the basis of the latter undertaking’s cooperation. In exercising that jurisdiction, the General Court therefore did not encroach on the responsibilities of the Commission under the first paragraph of Article 266 TFEU.

108 Consequently, the second ground of the cross-appeal must be held to be unfounded.

109 By the third ground, the Commission claims that there was an infringement of the adversarial principle and the right to a fair hearing, inter alia because, first, the General Court did not disclose to the parties its intention to take into account, in the exercise of its power to vary the contested decision, the further reduction granted to Agroexpansión on the basis of its cooperation and because, secondly, the Commission could not have expected the General Court to adopt such an approach in the judgment under appeal.

110 However, as follows from paragraphs 105 to 107 of this judgment, taking into consideration that further reduction was part of a legal assessment which the General Court was entitled to make in the exercise of its unlimited jurisdiction, without notifying the parties, prior to the delivery of the judgment (see, by analogy, Case C-286/11 P Commission v Tomkins [2013] ECR I-0000, paragraph 61).

111 Further, as stated in paragraph 101 of this judgment, the application, in the judgment under appeal, of the same reduction for the benefit of Dimon was entirely consistent with the methodology followed by the Commission in the contested decision, and consequently there is no basis for the Commission’s claim that it was not foreseeable (see, to that effect, Groupe Danone v Commission, paragraph 82).

112 It follows that the Commission has not demonstrated in this case an infringement of the adversarial principle or the right to a fair hearing.

113 Consequently, the third ground relied on in support of the cross-appeal cannot be upheld and the cross-appeal must therefore be dismissed.

114 Under Article 184(2) of the Rules of Procedure of the Court, where the appeal is unfounded, the Court is to make a decision as to costs. Under Article 138(1) of those Rules, which apply to the procedure on appeal by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

115 In relation to the appeal, since the Commission applied for costs against AOI, and the latter has been unsuccessful, AOI must be ordered to pay the costs.

116 As regards the cross-appeal, since AOI applied for costs against the Commission, and the latter has been unsuccessful, the Commission must be ordered to pay the costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Alliance One International Inc., v European Commission [2013] EUECJ C-679/11 (26 September 2013) URL: http://www.bailii.org/eu/cases/EUECJ/2013/C67911.html Cite as: [2013] EUECJ C-679/11

Court of Justice of the European Communities (including Court of First Instance Decisions)