Parent company liability test applied by General Court upholding €25 million fine on FMC companies in hydrogen peroxide cartel

29/06/11

The General Court of the European Union has upheld the European Commission's infringement and fining decision imposed on FMC Corp. and its subsidiary, FMC Foret, concerning their participation in the hydrogen peroxide and perborate cartel.

The cartel, which lasted from 31 January 1994 until 31 December 2000, consisted mainly of competitors exchanging commercially important and confidential market and company information, limiting and controlling production, allocating market shares and customers, and fixing and monitoring prices. Fines totaling €388.13 million were imposed on a number of companies.

FMC Corp. and FMC Foret brought separate actions unsuccessfully challenging the legality of the decision and level of the fine which was imposed upon them, jointly and severally.

In its judgment in FMC Foret v Commission, the General Court rejected pleas alleging an incorrect appraisal of the evidence by the Commission concerning the applicant's direct participation in the cartel, and considered, in some detail, the standard of proof that the Commission must meet in order to prove the existence of an infringement under Article 81(1) EC, including the issue of the probative value of leniency statements. It also rejected pleas alleging an infringement of the right of access to the Commission's investigation file and errors in the determination of the fine, including a failure to consider mitigating circumstances, such as the applicant's allegedly passive role in the infringement.

In FMC Corp. v Commission, the General Court considered and applied the test for establishing liability for a parent company for a competition law infringement committed by its subsidiary, and addressed, at some length, the issue of why the parent company, in this case, failed to rebut the presumption that it exercised decisive control over its subsidiary in which it had a 100 percent shareholding.

The judgment in Case T-191/06 FMC Foret v Commission is here.

The judgment in Case T-197/06 FMC Corp. v Commission is here.