CJEC, 1st chamber, September 11, 2008, No C-468/07 P

THE COURT (First Chamber),

1 By their appeal, the companies Coats Holdings Ltd and J & P Coats Ltd ('Coats') seek a reduction of the fine imposed on them, the amount being set in paragraph 2 of the operative part of the judgment of the Court of First Instance of the European Communities of 12 September 2007 in Case T-36-05 Coats and Coats v Commission ('the judgment under appeal') partially allowing their action for annulment of Commission Decision C(2004) 4221 final of 26 October 2004 relating to a proceeding under Article 81 [EC] (Case COMP/F-1/38.338 - PO/Needles) ('the contested decision').

Facts

2 Coats comprises two undertakings which, at the material time, manufactured and distributed needles.

3 Following the provision of information by the Director of Marketing and Sales of another undertaking active in that market, the Commission of the European Communities carried out investigations at the premises of several Community producers and distributors of haberdashery products.

4 On 26 October 2004 the Commission adopted the contested decision which, first, held that Coats had been a party to a number of meetings with undertakings in that market sector, and had entered into a series of agreements with them on sharing or contributing to sharing product markets and geographic markets, and, secondly, imposed a fine on Coats.

5 Referring to Article 23(3) of Council Regulation (EC) No 1-2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 [EC] (OJ 2003 L 1, p. 1), the Commission set the fine to take into account the gravity and duration of the infringement.

6 The Commission assessed the gravity of the infringement as 'very serious' and accordingly set the starting amount of the fine imposed on Coats at EUR 20 million.

7 As regards the duration of the cartel, the Commission took the view that the agreements entered into by Coats had operated from 10 September 1994 until at least 31 December 1999, in other words, for at least five years and three months. The Commission therefore increased the starting amount of the fine by 50% and so set the basic amount of the fine imposed on Coats at EUR 30 million.

Procedure before the Court of First Instance and the judgment under appeal

8 On 31 January 2005 Coats brought before the Court of First Instance an action seeking, principally, annulment of the contested decision or, alternatively, annulment or reduction of the fine imposed on Coats.

9 In support of its action Coats relied on two pleas in law: the first, an allegation that there were errors in the assessment of the evidence, in support of the request for annulment of the contested decision, and the second in support of the claim for the annulment or reduction of the fine.

10 After consideration of the first plea in law, the Court of First Instance, in paragraphs 168 and 191 of the judgment under appeal, held that Coats' liability had to be regarded as established for the period from 10 September 1994 to 13 March 1997, but not for the period after that date. The Court of First Instance therefore annulled the contested decision insofar as it held that Coats had infringed Article 81(1) EC after 13 March 1997.

11 As regards the second plea in law, the Court of First Instance observed in paragraph 199 of the judgment under appeal, that, in order to determine the amount of a fine, the Commission must have regard to all relevant circumstances and particularly to the gravity and duration of the infringement, it being possible for the basic amount of the fine to be either increased to take account of aggravating circumstances or reduced to take account of mitigating circumstances.

12 In relation to the assessment of the gravity of the infringement, the Court of First Instance held, in paragraph 203 of the judgment under appeal, that the description of that infringement by the Commission as 'very serious' was well founded and accordingly approved the Commission's choice as the financial penalty of the minimum starting amount laid down for such an infringement by the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty (OJ 1998 C 9, p. 3, 'the Guidelines'), namely EUR 20 million.

13 As regards the assessment of the duration of the infringement, the Court of First Instance exercised its unlimited jurisdiction 'in order to take account of the proven duration of the infringement' which, as determined by the Court, was equivalent to one half of the period determined by the Commission. The Court therefore ruled, in paragraph 206 of the judgment under appeal, that the rate of increase of 50% applied by the Commission should be reduced to 25%, resulting in an additional amount of EUR 5 million and a total fine of EUR 25 million.

14 As regards consideration of mitigating circumstances, the Court of First Instance took the view, in paragraph 214 of the judgment under appeal, that Coats' role was more akin to that of a mediator than that of a full member of the cartel. The court therefore deemed it appropriate, in the exercise of its unlimited jurisdiction, to reduce the amount of the fine by 20% to take account of those circumstances, with the result that, in paragraph 215 of the judgment under appeal, the Court set the total amount of the fine at EUR 20 million.

Forms of order sought by the parties

15 By its appeal Coats claims that the Court should:

- in the exercise of its unlimited jurisdiction, reduce the fine imposed on Coats.

16 The Commission contends that the Court should:

- dismiss the appeal in its entirety,

- order Coats to pay the costs incurred by the Commission in the present appeal.

The appeal

Arguments of the parties

17 Coats states that it does not in any way challenge the appraisal in the contested decision, in relation to either the facts or the law, made by the Court of First Instance, but only the way in which the findings of the Court of First Instance were reflected in the amount of the fine. Coats submits that the Court of Justice has unlimited jurisdiction to review that matter.

18 Coats' first criticism is that the Court of First Instance did no more than declare that the Commission, having found that there was market sharing by the undertakings under investigation in the sector in question and, consequently, that a 'very serious' infringement had been committed by those undertakings, could mechanically set as a financial penalty a fine at a starting amount of EUR 20 million. First, the Commission chose that amount because of the finding of fact, which the Court of First Instance recognised to be mistaken, that the roles of the parties in the cartel were of equal weight. Secondly, such an amount has not been imposed in other cases. In those circumstances, the mechanistic approach approved by the Court of First Instance is an infringement of the principle of equal treatment.

19 Secondly, Coats complains that the Court of First Instance did not take sufficient account, when considering extenuating circumstances, of the fact that the role played by it within the cartel was not active but merely passive. The findings of the Court of First Instance on that point require, on grounds of fairness and consistency, a substantially greater reduction of the fine imposed on it.

20 As regards the first complaint, the Commission contends that this betrays a confusion between the gravity of the infringement, on the one hand, and the gravity of the specific part played in the infringement by a given undertaking, on the other hand. In relation to the infringement to which Coats was a party, the Court of First Instance ruled that it was justifiably described as 'very serious', which Coats does not dispute. As regards an alleged contradiction in the decision-making practice of the Commission, because of discrepancies, in the amount of the fine imposed, between the starting amount chosen in the present case and that chosen in other cases, the Commission contends that that is a new argument and, as such, inadmissible.

21 The Commission considers that the second complaint put forward by Coats is clearly unfounded, since it is clear from reading paragraph 214 of the judgment under appeal that the Court of First Instance did take into consideration the role played by Coats within the cartel. The Commission adds that the Court of Justice is not empowered in an appeal to substitute, on grounds of fairness, its own assessment for that of the Court of First Instance.

Findings of the Court

22 Under Article 119 of the Rules of Procedure, where the appeal is, in whole or in part, clearly inadmissible or clearly unfounded, the Court may at any time, acting on a report from the Judge-Rapporteur and after hearing the Advocate General, by reasoned order dismiss the appeal.

23 In an appeal brought against a judgment of the Court of First Instance ruling on the validity of a Commission decision relating to a proceeding under Article 81 EC, the purpose of review by the Court of Justice is, first, to examine to what extent the Court of First Instance took into consideration, in a legally correct manner, all the essential factors to assess the gravity of particular conduct in the light of Article 81 EC and Article 23 of Regulation No 1-2003 and, second, to determine whether the Court of First Instance responded to a sufficient legal standard to all the arguments raised by the appellant undertakings with a view to having the fine cancelled or reduced (see, in particular, Case C-185-95 P Baustahlgewebe v Commission [1998] ECR I-8417, paragraph 128; Case C-359-01 P British Sugar v Commission [2004] ECR I-4933, paragraph 47; and Joined Cases C-189-02 P, C-202-02 P, C-205-02 P to C-208-02 P and C-213-02 P Dansk Rørindustriand Others v Commission [2005] ECR I-5425, paragraph 244).

24 On the other hand, it is not for the Court of Justice, when ruling on questions of law in the context of an appeal, to substitute, on grounds of fairness, its own assessment for that of the Court of First Instance exercising its unlimited jurisdiction to rule on the amount of fines imposed on undertakings for infringements of Community law (see, in particular, Baustahlgewebe v Commission, paragraph 129; British Sugar v Commission, paragraph 48; and Dansk Rørindustri and Others v Commission, paragraph 245).

25 It follows that this appeal must be dismissed as clearly inadmissible insofar as its aim is that the Court of Justice, in the exercise of its unlimited jurisdiction, should reduce on grounds of fairness the amount of the fine set by the Court of First Instance.

26 To the extent that the appeal can be interpreted as an application for the partial annulment of the judgment under appeal, based on an infringement, by the Court of First Instance, of the principle of equal treatment in the determination of the amount of the fine, that is certainly a question of law which it is the task of the Court of Justice to examine (see, to that effect, Case C-280-98 P Weig v Commission [2000] ECR I-9757, paragraph 63).

27 Nonetheless, as thus interpreted, the appeal must be dismissed as clearly unfounded.

28 As regards, first, the alleged discrimination against the appellant as compared with the other undertakings involved in the same Article 81(1) EC infringement proceedings, on the ground that the Court of First Instance did not take into account Coats' less active role when assessing the gravity of the infringement, suffice it to note that, according to the first paragraph of Section 1A of the Guidelines, which the Court has held are part of the legal framework imposed by the Community legislature (see Dansk Rørindustri and Others v Commission, paragraph 252), the assessment of the gravity of an infringement must take into consideration the nature of the infringement, its actual impact on the market, where that can be measured, and the size of the relevant geographic market. It follows that the Court of First Instance, which expressly referred to the Guidelines in paragraph 200 of the judgment under appeal, committed no error of law by not taking into account, at the stage of assessing the gravity of the infringement, the role played by Coats in the commission of that infringement.

29 Furthermore, it cannot be accepted that the Court of First Instance failed to give due effect to its findings in relation to Coats' less active role, since it took them into account as an mitigating circumstance, in paragraph 214 of the judgment under appeal, and used them, in paragraph 215 of that judgment, to justify a reduction of the fine of 20%.

30 As regards, secondly, the alleged discrimination against the appellant as compared with undertakings involved in other Article 81(1) EC infringement cases, even supposing that that argument could be admitted as a development of a plea in law argued at first instance, suffice it to note that the fact that the Commission may have penalised certain types of infringement in the past with fines of a particular level cannot prevent it from raising that level within the limits indicated in Regulation No 1-2003 if that is necessary to ensure the effectiveness of Community competition policy (see Joined Cases 100-80 to 103-80 Musique Diffusion française and Others v Commission [1983] ECR 1825, paragraph 109; Case C-196-99 P Aristrain v Commission [2003] ECR I-11005, paragraph 81; and Dansk Rørindustri and Others v Commission, paragraphs 169, 171 and 172).

31 In light of all of the foregoing, this appeal must be dismissed in its entirety, as being clearly inadmissible and, in any event, as being clearly unfounded.

Costs

32 Under Article 69(2) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 118 thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs and Coats has been unsuccessful in its grounds of appeal, Coats must be ordered to pay the costs.

On those grounds, the Court hereby orders:

1. The appeal is dismissed.

2. Coats Holdings Ltd and J & P Coats Ltd are ordered to pay the costs.