Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EU General Court upholds €131M fines against Toshiba, Mitsubishi for roles in cartel, (Jan 19, 2016)

By Linda O’Brien, J.D., LL.M.

The General Court of the European Union has upheld fines of €131 million imposed on Japanese technology companies Toshiba and Mitsubishi Electric for their roles in a cartel in the market for gas insulated switchgear, according to an announcement issued today.

In an electric power system, switchgear is the combination of electrical disconnect switches, fuses, or circuit breakers that are used to control, protect, and insulate electrical equipment. Gas insulated switchgear (GIS) is used for electric substations to convert electrical current from high to low voltage or vice versa.

In January 2007, the European Commission (EC) imposed fines totaling €750 million on 20 European and Japanese companies for their participation in a cartel in the market for GIS between 1988 and 2004. Mitsubishi and Toshiba were fined €113.92 million and €86.25 million, respectively. In addition, the two companies were ordered to pay the amount of €4.65 million, jointly and severally. In July 2011, the General Court annulled the fines imposed on Mitsubishi and Toshiba, finding that the EC infringed the principle of equal treatment in the calculation of the fines, but confirmed that the two companies participated in the cartel. In December 2013, the judgments of the General Court were upheld by the Court of Justice.

The Commission recalculated the fines imposed on Mitsubishi and Toshiba and fixed them at €74.82 million and €56.79 million, respectively. The amount to be paid joint and severally by those two undertakings was again fixed at €4.65 million. Subsequently, the two Japanese producers brought an action before the General Court for the annulment of the new fines.

Mitsubishi and Toshiba contend that the Commission deemed them to be equally as liable for the cartel as the European producers, even though they participated in only one aspect of the cartel. The Japanese undertakings committed only not to enter the European Economic Area (EEA) market. Their participation was thus merely a failure to act. They did not participate in the allocation of market shares in the EEA. However, the General Court considers that the failure to act of the Japanese undertakings was a prerequisite for ensuring that the allocation of market shares in the EEA could be carried out among the European producers, with the result that those undertakings made a necessary contribution to the functioning of the infringement as a whole and their degree of liability cannot be qualified as being lower.

Toshiba and Mitsubishi Electric also argue that the determination of the fines should have been based on the value of their respective individual GIS sales in 2003. However, in calculating the new fines the Commission did not take account of the value of sales of each of those two undertakings, but the value of sales of TM T&D, a joint venture owned in equal shares by the two Japanese undertakings.

In its judgments today, the General Court rejected the arguments of Toshiba and Mitsubishi Electric and upheld the new fines imposed by the EC. The Court noted that the Commission was required, following the annulment of the initial fines, to use 2003 as the reference year in order to determine the value of sales. During that year, Toshiba and Mitsubishi Electric did not record any GIS sales themselves, given that that had transferred their activities in that sector to their joint venture, TM T&D. Consequently, by using 2003 as the new reference year, the Commission was able to determine the value of sales in accordance with detailed rules, relying on the sales made by TM T&D.

Companies: Toshiba Corporation; Mitsubishi Electric Corporation

News: Antitrust