Today, the General Court has dismissed the appeals lodged against the Commission’s decision in the calcium-carbide cartel case (see Cases T-352/09, T-392/09, T-400/09 and T-410/09). In their appeals, the applicants argued inter alia that the Commission failed to take into account their inability to pay pursuant to paragraph 35 of the fining guidelines. In line with established case-law, the General Court rejected these grounds of appeal, holding that it was not sufficient to show that the fine risks leading – or even that it has led – to bankruptcy.
First, the Court found that “while a bankruptcy may adversely affect the financial interests of the owners or investors concerned, it does not necessarily mean that the undertaking in question will disappear from the relevant market. The undertaking may continue to exist as such, either where the bankrupt company is recapitalised, or where all the company’s assets – and thus the undertaking as such – are acquired by another entity. Thus, while it cannot be ruled out that the bankruptcy of a company and its disappearance as a legal person may also lead to the demise of an undertaking as an economic unit, the latter eventuality cannot be deemed to have been established merely on account of the bankruptcy.” (Case T-392/09, paras 131 and 132).
Second, the Court explained that it is necessary to examine the social and economic context by analysing the consequences that the payment of the fine could have, for instance, by increasing unemployment or deteriorating economic sectors upstream or downstream of the undertaking concerned (T-400/09, para. 99).
The Court held that it is only when these two conditions are met that it can be argued that the fine is disproportionate and contrary to paragraph 35 of the fining guidelines (T-400/09, para. 100).
An important issue that was not really addressed in the judgments is the fact that Commission decisions which grant fine reductions on the ground of inability to pay generally contain limited justification for the reduction of the level of the fine. Moreover, the information is often redacted (see e.g., Case COMP/38.344 - Prestressing Steel). While the need to protect confidential information and business secrets is undeniable, the problem is that there is very little transparency and therefore no real way of scrutinizing these reductions in the light of the principle of equal treatment.