EU Court of Justice rejects appeal brought by European Commission and Alliance One International regarding €20M fine imposed on five companies that participated in cartel on Spanish raw tobacco market

Nevin Barich

September 27, 2013 (Europolitics) – The EU Court of Justice rejected, on 26 September, the appeal brought by the European Commission and Alliance One International, Inc (AOI) against two 2001 rulings by the EU General Court reducing the fines imposed in 2004 on several companies that participated in a cartel on the Spanish raw tobacco market (Cases C-668/11 P and C-679/11 P).

The EU executive had imposed 20 million in fines on five companies - Compania espanola de tabaco en rama (Cetarsa), Agroexpansion, World Wide Tobacco Espana (WWTE), Tabacos Espanoles and Deltafina - for fixing the prices paid to tobacco producers between 1996 and 2001 and setting the quantities bought from them. Agroexpansion, originally a family business, was bought in 1997 by Intabex Netherlands BV, then taken over by Dimon and later by Alliance One International of the United States.

Deltafina, an Italian firm wholly owned by Universal Corp of the United States and specialised in raw tobacco processing and the sale of processed tobacco, was given the highest fine (11.88 million) due to its role as ringleader. The General Court ruled that the Commission had failed to establish sufficient proof of the leadership role and consequently reduced the fine. It also lowered by 20% the fine imposed on Agroexpansion and reduced AOI's fine, arguing that it could not be held jointly and severally liable for the infringement before 18 November 1997 (date of acquisition of Agroexpansion by Intabex).

DECISIVE INFLUENCE

The Court of Justice concluded that the tribunal did not err in law by declaring that the Commission had applied an identical method to all the parent companies concerned, including AOI, contrary to what the latter alleged. Referring to settled case law, the court noted that where all the capital of a subsidiary is owned by the parent company, the Commission may presume that the parent company actually exercises decisive influence over the commercial policy of the subsidiary.

It may thus fine the parent company without first having to establish its personal involvement in the infringement. However, it may also establish such influence by means of other evidence (the dual-basis method), which is what it did in this case by relying on factual evidence.

The Court of Justice also found that the General Court did not exceed the limits of its jurisdiction because the findings it made in relation to that method were based on its interpretation of the Commission's decision and not solely on the explanations presented by the Commission after adoption of the decision, in order to mitigate alleged infringements of the obligation to provide reasons and of the principle of equal treatment in its decision.

(c) 2013 Europolitics

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