Competition – Reduction of fine for cartel of steel producers

In December 1999, the Commission adopted a decision concluding that eight companies (four European and four Japanese) producing certain types of seamless carbon-steel pipes and tubes used in the oil industry had participated in the period of 1990 – 1995 in a cartel agreement. The agreement, which was concluded at meetings known as the “Europe-Japan Club”, consisted of a division of the markets so that each of the companies undertook not to sell the pipes and tubes in question on the domestic market of any other company that was a party to that agreement. Given the general prohibition of cartel agreements set forth in Article 81 of the EC Treaty, the Commission imposed on all eight producers fines of a total amount of EUR 99 millions.

Seven out of eight convicted producers subsequently filed an action for annulment of the Commission’s decision before the Court of First Instance (the “CFI”). The CFI rejected all arguments of the steel producers except for arguments relating to the duration of the infringement concerned and, consequently, on the size of the fines imposed.

Given that between 1977 and 1990, certain voluntary agreements between the European Community and Japan on restraint of imports have been in force, the Commission concluded that although it could have set the start-date of the infringement as 1977, the infringement started, for the purpose of the proceedings, only in 1990. The CFI noted that its examination must not relate to the legality or appropriateness of that concession of the Commission, but only to the question whether the Commission correctly applied it in this case.

The Japanese producers, however, claimed that the voluntary agreements between the EC and Japan have lasted till the end of 1991 (not 1990). They, however, were not able to produce any direct evidence to that end and nor was the Commission able to demonstrate the opposite, although it was the Commission who represented the EC in negotiations with Japan on the voluntary agreements. The CFI recalled that although, in general, an applicant (the Japanese producers) cannot transfer the burden of proof to the defendant (the Commission), the concept of burden of proof couldn’t be applied for the benefit of the Commission in this case. Consequently, the CFI considered, by way of exception, that it was incumbent on the Commission to produce evidence of when such voluntary agreements had ceased to exist. The CFI finally concluded, also on the basis of certain indirect evidence produced by the Japanese producers, that for the purposes of these proceedings, and having regard to the burden of proof falling upon the Commission regarding the existence of an infringement, the voluntary restraint agreements concluded between the Commission and the Japanese authorities remained in force during 1990. In view of that finding of fact the CFI decided that the duration of the infringement was reduced by one year.

The Japanese companies also contested the date on which the infringement imputed on them had ended. The CFI held that it had not been established, in the case of the Japanese undertakings, that the infringement had continued beyond 1st July 1994 and, therefore, considered it necessary to reduce the duration of the infringement by an additional six months.

Consequently, the CFI partially annulled the Commission’s decision and slightly reduced respective fines to a total amount of EUR 86 million.