Fine on Graphite Cartel Upheld by European Court
On October 8, the European Court of First Instance upheld the European Commission’s ruling that imposed a 96 million euro fine on a group of carbon and graphite makers for forming a cartel.
An investigation by the European Commission, which began in 2001, found that six companies had colluded in carbon and graphite markets, which are mainly used to transfer electricity to and in electrical motors. Applications include carbon brushes, electric shavers, vacuum cleaners, and current collectors which power trains. In December 2003, the EC imposed the fine. One of the six companies received immunity from fines for being the first to notify the EC of the illegal cartel.
The companies appealed the fines. In the appeal, the companies did not claim that no cartel existed. Instead, they focused on the amounts of the fines. Two companies argued that the fines should be reduced because the effects of the cartel, especially on car manufacturers, had been minimal relative to buying power. A third company argued its fine should be reduced because it notified the EC that certain documents were destroyed by a fellow member of the cartel, which had applied for immunity in the case.
The Court disagreed, finding that a cartel existed and the EC had stayed within its margin of discretion in determining the size of the fines. The Court rejected the argument that the effects of the cartel had been minimal, finding that the cartel did have an impact on the market. The Court noted that the EC classified each company as small, medium or large, taking into account each company’s turnover, and did not violate the principles of equal treatment and proportionality in determining the size of the fine.
The Court also dismissed the claim that fines against one company should be reduced because it notified the EC of the destruction of documents by the company that had been granted immunity. The Court found that the company that destroyed the documents did so well before applying for immunity, and brought very extensive evidence of the cartel to the EC.
The Court also found that the EC investigation had uncovered that the cartel held more than 140 meetings, which they called summits, to decide price increases for products, as well as for large individual customers. The cartel also plotted how to ward off competition by undercutting any rivals left in the business. The summits provided strategic direction and solved problems, while the detailed price arrangements were discussed in ‘technical’ meetings. None of the companies involved disputed these facts. In fact, some of the companies involved were also involved in two other cartels during the same time period.
The cartel operated across the entire European Economic Area, which consists of the EU plus Liechtenstein, Iceland and Norway. The cartel operated between 1988 and 1999 and controlled 93 percent of the European market for carbon and graphite. The European carbon and graphite market is valued at around 290 million euros per year.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
An investigation by the European Commission, which began in 2001, found that six companies had colluded in carbon and graphite markets, which are mainly used to transfer electricity to and in electrical motors. Applications include carbon brushes, electric shavers, vacuum cleaners, and current collectors which power trains. In December 2003, the EC imposed the fine. One of the six companies received immunity from fines for being the first to notify the EC of the illegal cartel.
The companies appealed the fines. In the appeal, the companies did not claim that no cartel existed. Instead, they focused on the amounts of the fines. Two companies argued that the fines should be reduced because the effects of the cartel, especially on car manufacturers, had been minimal relative to buying power. A third company argued its fine should be reduced because it notified the EC that certain documents were destroyed by a fellow member of the cartel, which had applied for immunity in the case.
The Court disagreed, finding that a cartel existed and the EC had stayed within its margin of discretion in determining the size of the fines. The Court rejected the argument that the effects of the cartel had been minimal, finding that the cartel did have an impact on the market. The Court noted that the EC classified each company as small, medium or large, taking into account each company’s turnover, and did not violate the principles of equal treatment and proportionality in determining the size of the fine.
The Court also dismissed the claim that fines against one company should be reduced because it notified the EC of the destruction of documents by the company that had been granted immunity. The Court found that the company that destroyed the documents did so well before applying for immunity, and brought very extensive evidence of the cartel to the EC.
The Court also found that the EC investigation had uncovered that the cartel held more than 140 meetings, which they called summits, to decide price increases for products, as well as for large individual customers. The cartel also plotted how to ward off competition by undercutting any rivals left in the business. The summits provided strategic direction and solved problems, while the detailed price arrangements were discussed in ‘technical’ meetings. None of the companies involved disputed these facts. In fact, some of the companies involved were also involved in two other cartels during the same time period.
The cartel operated across the entire European Economic Area, which consists of the EU plus Liechtenstein, Iceland and Norway. The cartel operated between 1988 and 1999 and controlled 93 percent of the European market for carbon and graphite. The European carbon and graphite market is valued at around 290 million euros per year.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: court case, eu competition law, eu law, european antitrust lawsuits, graphite
posted by European Antitrust Law at
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