Antitrust Law Daily Wrap Up, ANTITRUST—EUGenCt: EC Finding of Marine Hose Cartel Partially Annulled, Fines Reduced for Some Defendants, (May 17, 2013)

By John W. Arden, J.D., LL.M.

A European Commission decision, finding that 11 companies had participated in a marine hose cartel from April 1986 through May 2007, was partially annulled by the European General Court with regard to some of the defendants (Parker ITR Srl v. European Commission, May 17, 2013, Frimodt Nielsen, S.).

On January 28, 2009, the Commission found that the 11 companies—including Parker ITR, Parker-Hannifin Corp., Trelleborg Industrie SAS, Trelleborg AB, and Manuli Rubber Industries SpA—had participated in a cartel intending to allocate tenders, fix prices and quotas, fix sales conditions, share geographic markets, and exchange sensitive information. The Commission imposed a fine of €24.50 million on Trelleborg Industrie, €12.20 million of which Trelleborg was jointly and severally liable and a fine of €25.61 million on Parker ITR, €8.32 million of which Parker-Hannifin was jointly and severally liable.

The five companies brought actions before the General Court, seeking either annulment of the Commission’s decision or a reduction of the fines imposed on them.

In ordering a partial annulment for Parker ITR, the General Court held that (1) the EC did not show that there was a structural link between Parker ITR and the entity that preceded it and actually took part in the cartel and (2) there was no proof that the transfer of Parker ITR was an abuse. Thus, the court annulled the Commission decision insofar as it found that Parker ITR had participated in an infringement before January 2002 and reduced the amount of the initial fine from €25.61 million to €6.40 million—€6.30 million of which Parker-Hannifin must be held jointly and severally liable.

With regard to Trelleborg Industrie and Trelleborg AB, the court ruled that the Commission erred in categorizing their infringement as continuous, as there was no showing that those companies participated in the cartel during the intermediate period from May 1997 to June 1999. During that period, the cartel’s activity was reduced or even nonexistent. In the absence of objective and consistent indicia that the applicants still intended to restart the cartel or subscribe to its objectives, the Commission was not entitled to assume continued participation on their part.

Although the infringement by the companies could not be categorized as continuing, it was repeated. The Commission did not impose any fines for the intermediate period, the court observed. The error made by the Commission with regard to the continuing nature of the infringement did not therefore have any effect on the duration of the cartel, which served as the basis for calculating the fines. Consequently, the court found no need to reduce the fines imposed on Trelleborg Industrie and Trelleborg AB.

As for Manuli Rubber Industries SpA, the court partially annulled the contested decision inasmuch as the Commission did not follow its guidelines in applying the rate of reduction of the fine on the company for its cooperation. Neither the earliness of company’s cooperation nor the degree of added value of the evidence it provided was reflected in the rate of reduction applied by the Commission, the court found. In such circumstances, the rate of reduction should have been 40% instead of the 30% applied by the Commission.

However, considering the gravity of the infringement and the duration of Manuli Rubber Industries’ participation, the court held that the fine was appropriate and should not be reduced.

The case is T-146/09.

Attorneys: B. Amory, F. Marchine Camia, and F. Amato for Parker-Hannifin Corp. N. Khan, V. Bottka, and S. Noë, and R. Sauer for the European Commission.

Companies: Parker ITR Srl; Parker-Hannifin Corp.; Trelleborg Industrie SAS; Trelleborg A; Manuli Rubber Industries SpA

Cases: Antitrust