Judgments nº T-279/02 of Court of First Instance of the European Communities, April 05, 2006

• Resolution Date: April 05, 2006
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-279/02

(Competition – Article 81 EC – Cartels – Methionine market – Single continuous nature of the infringement – Fine – Guidelines on the method of setting fines – Gravity and duration of the infringement – Cooperation during the administrative procedure – Article 15(2) of Regulation No 17 – Presumption of innocence)

In Case T-279/02,

Degussa AG, established in Düsseldorf (Germany), represented by R. Bechtold, M. Karl and C. Steinle, lawyers,

applicant,

v

Commission of the European Communities, represented by A. Bouquet and W. Mölls, acting as Agents, and H.‑J. Freund, lawyer, with an address for service in Luxembourg,

defendant,

supported by

Council of the European Union, represented by E. Karlsson and S. Marquardt, acting as Agents,

intervener,

APPLICATION, as the primary claim, for annulment of Commission Decision 2003/674/EC of 2 July 2002 relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case C.37.519 – Methionine) (OJ 2003 L 255, p. 1), and, in the alternative, for reduction of the fine imposed on the applicant by that decision,

THE COURT OF FIRST INSTANCEOF THE EUROPEAN COMMUNITIES (Third Chamber),

composed of M. Jaeger, President, V. Tiili and O. Czúcz, Judges,

Registrar: K. Andová, Administrator,

having regard to the written procedure and further to the hearing on 27 April 2005,

gives the following

Judgment

Facts

1 Degussa AG (Düsseldorf) is a German company formed in 2000 by the merger of SKW Trostberg and Degussa-Hüls, the latter having itself been formed by the merger in 1998 of the German chemical companies Degussa AG (Frankfurt am Main) and Hüls AG (Marl) (‘Degussa’ or ‘the applicant’). It operates inter alia in the animal feed sector and is the only undertaking producing all three most important essential amino acids: methionine, lysine and threonine.

2 Essential amino acids are amino acids which cannot be produced naturally by the body and must, therefore, be added to feeds. The first amino acid which, by its absence, interrupts protein synthesis of the other amino acids is called the ‘first limiting amino acid’. Methionine is an essential amino acid added to compound feeds and premixes for all animal species. Its main use is in poultry feed (for which it is the first limiting amino acid) and, increasingly, in pig feed and speciality animal feeds.

3 Methionine comes in two principal forms: DL-Methionine (‘DLM’) and methionine hydroxy analogue (‘MHA’). DLM is produced in crystallised form with virtually 100% active content. MHA, which was introduced in the 1980s by Monsanto, the predecessor of Novus International Inc., has a nominal 88% active content. In 2002, it accounted for approximately 50% of world methionine consumption.

4 At the material time, the world’s three leading producers of methionine were Rhône-Poulenc (now Aventis SA), whose subsidiary responsible for methionine production was Rhône-Poulenc Animal Nutrition (now Aventis Animal Nutrition SA), Degussa and Novus. Rhône-Poulenc produced methionine in both its forms whereas Degussa produced only DLM and Novus only MHA.

5 On 26 May 1999, Rhône-Poulenc submitted to the Commission a statement admitting its participation in a cartel to fix prices and allocate quotas for methionine and requesting application of the Commission notice on the non-imposition or reduction of fines in cartel cases (OJ 1996 C 207, p. 4; ‘the Leniency Notice’).

6 On 16 June 1999, Commission officials and officials of the Bundeskartellamt (German Federal Cartel Office) carried out an investigation under Article 14(3) of Regulation No 17 of the Council of 6 February 1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-1962, p. 87), then in force, at the premises of Degussa-Hüls in Frankfurt am Main.

7 Following that investigation, on 27 July 1999, the Commission sent a request for information to Degussa-Hüls under Article 11 of Regulation No 17 regarding the documents obtained. Degussa-Hüls replied to the request on 9 September 1999.

8 The Commission also sent requests for information to Nippon Soda Co. Ltd (‘Nippon Soda’), Novus International Inc. (‘Novus’) and Sumitomo Chemical Co. Ltd (‘Sumitomo’) on 7 December 1999 and to Mitsui & Co. Ltd on 10 December 1999. The replies were received during February 2000 and Nippon Soda submitted a supplementary statement on 16 May 2000.

9 On 1 October 2001, the Commission adopted a statement of objections against five producers of methionine, including the applicant. The same statement of objections was sent to Aventis Animal Nutrition (‘AAN’), a wholly owned subsidiary of Aventis.

10 In its statement of objections, the Commission accused those companies of having participated from 1986 until, in the majority of cases, the beginning of 1999 in a continuous agreement contrary to Article 81 EC and Article 53 of the Agreement on the European Economic Area (‘the EEA Agreement’) covering the whole of the EEA. According to the Commission, the agreement in question involved the fixing of methionine prices, the implementation of a mechanism for implementing price increases, the allocation of national markets and market share quotas and a mechanism for monitoring and enforcing those agreements.

11 All the parties submitted written observations in response to the Commission’s statement of objections, although Aventis and AAN informed the Commission that they would submit only one response on behalf of both companies.

12 Replies were received by the Commission between 10 and 18 January 2002. Aventis, AAN (together ‘Aventis/AAN’) and Nippon Soda admitted the infringement and acknowledged the correctness of the facts as a whole. Degussa also admitted the infringement, but only in respect of the period from 1992 to 1997. On 25 January 2002, there was an oral hearing with the undertakings concerned.

13 At the end of the proceeding, considering that Aventis/AAN, Degussa and Nippon Soda had participated in a continuous agreement and/or concerted action covering the whole of the EEA, by which they agreed on price targets for the product, agreed on and implemented a mechanism for implementing price increases, exchanged information on sales volumes and market shares and monitored and enforced their agreements, the Commission adopted Decision 2003/674/EC of 2 July 2002 relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case C.37.519 – Methionine) (OJ 2003 L 255, p. 1; ‘the Decision’).

14 In recitals 63 to 81 to the Decision, the Commission described the cartel as aimed at fixing price ranges and ‘rock-bottom prices’. The participants agreed that they needed to increase their prices and discussed what the market would accept. The price increases were then organised in several successive ‘campaigns’, the implementation of which was reviewed during subsequent cartel meetings. The participants also exchanged information on sales volumes and production capacity and exchanged their respective estimates of the total volume of the market.

15 As regards the implementation of target prices, the Commission found that sales were monitored by the participants, the figures exchanged being compiled and discussed at regular meetings, although no volume control scheme supported by a compensation scheme existed, despite the fact that Degussa had made a proposal to that effect. Regular multilateral (more than 25 between 1986 and 1999) and bilateral meetings were an essential element of the organisation of the cartel. They took the form of ‘summit’ meetings and more technical meetings at staff level.

16 Finally, the operation of the cartel went through three distinct periods. The first, during which prices were on an upward trend, extended from February 1986 to 1989 and ended with Sumitomo’s withdrawal from the arrangement and the entry into the market of Monsanto and MHA. During the second period, extending from 1989 to 1991, prices began to fall dramatically. The cartel members were then in doubt about how to react to this new situation (regain market shares or focus on prices?) and concluded, after holding several meetings in 1989 and 1990, that they needed to focus their efforts on increasing prices. During the third and last period, extending from 1991 to February 1999, the dramatic increase in sales of the MHA produced by Monsanto (Novus since 1991) led the participants in the arrangement to focus primarily on sustaining price levels.

17 The Decision includes inter alia the following provisions:

‘Article 1

Aventis … and [AAN], jointly liable, Degussa … and Nippon Soda … have infringed Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement by participating, in the manner and to the extent set out in the reasoning, in a complex of agreements and concerted practices in the sector of methionine.

The duration of the infringement was as follows:

– from February 1986 until February 1999.

…

Article 3

The following fines are hereby imposed on the undertakings name[d] in Article 1 in respect of the infringement found [t]herein:

– Degussa …, a fine of EUR 118 125 000,

– Nippon Soda …, a fine of EUR 9 000 000

…’

18 For the purpose of calculating the fine, the Commission, without expressly referring to them, essentially applied the methodology set out in 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’) and the Leniency Notice.

19 In setting the basic amount of the fine, the Commission took into consideration, firstly, the gravity of the infringement. It found that, taking into account the nature of the behaviour under scrutiny, its impact on the methionine market and the size of the relevant geographic market, the undertakings concerned by the Decision had committed a very serious infringement of Article 81(1) EC and Article 53(1) of the EEA Agreement (recitals 270...