General Court's Extensive Activity In Cartel Cases In July 2011

General Court partially annuls fines imposed on Japanese participants in gas insulated switchgear cartel

On 12 July 2011, the General Court ("GC") handed down its judgments in four appeals brought by addressees of the European Commission's gas insulated switchgear cartel decision. In its underlying decision, the Commission found that manufacturers of gas switchgear used to insulate electrical equipment ("GIS") had engaged in bid-rigging on the European market. According to the Commission, the cooperation of the companies was facilitated by the allocation of markets among the European and Japanese GIS manufacturers. After ruling on the first set of appeals brought by the European manufacturers in January 2011 (see VBB on Competition Law, Volume 2011, No. 3), the GC has now handed down its judgments concerning the appeals brought by the Japanese producers, i.e., Hitachi, Toshiba, Mitsubishi and Fuji.

Hitachi claimed in its appeal that it had provided the Commission with a plausible alternative explanation of the events interpreted by the Commission as participation in the cartel. The company argued that, in the absence of documentary evidence of its participation, the Commission should have accepted Hitachi's explanation. This argument was rejected by the GC, which considered that an alternative interpretation of one's conduct is to be accepted only where the evidence submitted by the Commission does not allow the existence of the infringement to be unequivocally established. According to the GC, this was not the case in the proceedings at hand, as Hitachi's involvement in the unlawful practices had been clearly demonstrated. The GC accordingly dismissed Hitachi's appeal in its entirety.

In contrast, the GC annulled on procedural grounds the fines imposed on Toshiba and Mitsubishi. These undertakings created a joint venture company (TM T&D) in 2002, which took over their GIS activities together with the cartel arrangements. According to the Commission, the shareholding structure of the joint venture (50/50) did not reflect the actual impact of the parties on the GIS market during the duration of the infringement. As a result, the Commission took 2001 as the reference year for calculating the starting amount of the fine for these companies, which was the last year before their GIS activities were transferred to the joint venture. The GC agreed with the appellants that this method of calculation was discriminatory, since the Commission took...