Judgments nº T-24/05 of The General Court, Wednesday October 27, 2010

• Resolution Date: Wednesday October 27, 2010
• Issuing Organization: The General Court
• Decision Number: T-24/05

In Case T‑24/05,

Alliance One International, Inc., formerly Standard Commercial Corp., established in Danville, Virginia (United States),

Standard Commercial Tobacco Co., Inc., established in Wilson, North Carolina (United States),

Trans-Continental Leaf Tobacco Corp. Ltd, established in Vaduz (Liechtenstein),

represented initially by M. Odriozola Alén, M. Marañon Hermoso and A. Emch, and subsequently by M. Odriozola Alén, M. Barrantes Díaz and A. João Vide, lawyers,

applicants,

v

European Commission, represented by F. Castillo de la Torre and É. Gippini Fournier, acting as Agents,

defendant,

Application for the annulment of Commission Decision C (2004) 4030 final of 20 October 2004 relating to a proceeding under Article 81(1) [EC] (Case COMP/C.38.238/B.2 − Raw tobacco – Spain),

THE GENERAL COURT (Fourth Chamber),

composed of O. Czúcz, President, I. Labucka and K. O’Higgins (Rapporteur), Judges,

Registrar: C. Kantza, Administrator,

having regard to the written procedure and further to the hearing on 17 June 2009,

gives the following

Judgment

Background to the dispute

1. Applicants and administrative procedure

   1 World Wide Tobacco España, SA (‘WWTE’) is one of four undertakings established in Spain and engaged in the first processing of raw tobacco (‘the processors’ or ‘the Spanish processors’).

   2 The three other Spanish processors are Compañia española de tabaco en rama, SA (‘Cetarsa’), Agroexpansión, SA, and Tabacos Españoles, SL (‘Taes’).

   3 Between 1995 and 5 May 1998, two-thirds of the capital of WWTE was held by Trans-Continental Leaf Tobacco Corp. Ltd (‘TCLT’), a wholly-owned subsidiary of Standard Commercial Tobacco Co., Inc. (‘SCTC’), which is itself a wholly‑owned subsidiary of the American multinational Standard Commercial Corp. (‘SCC’). The remaining third was held by the chairman of WWTE and two members of his family.

   4 On 5 May 1998, TCLT increased its holding in WWTE to 86.94%, the remainder of the shares being held in the form of own shares by WWTE (9.73%) and by a natural person (3.33%). In October 1998, WWTE acquired that person’s shares and SCC acquired a direct holding of 0.04% in WWTE. In May 1999, TCLT and SCC increased their holding in WWTE to 89.64% and 0.05%, respectively, the remainder being held in the form of own shares by WWTE.

   5 SCC, SCTC and TCLT are the applicants in the present case. The group of companies to which the applicants belong will be referred to in this judgment as ‘the Standard group’.

   6 On 3 and 4 October 2001, the Commission of the European Communities (now ‘the European Commission’; ‘the Commission’), possessing information that the Spanish processors and the Spanish producers of raw tobacco had infringed Article 81 EC, carried out inspections pursuant to Article 14 of Council Regulation No 17 of 6 February 1962, First regulation implementing Articles [81 EC] and [82 EC] (OJ 1962, English Special Edition, Series I, 1959-62, p. 87) at the premises of three of those processors, namely Cetarsa, Agroexpansión and WWTE, and at the premises of the Asociación Nacional de Empresas Transformadoras de Tabaco (‘Anetab’).

   7 The Commission also carried out inspections at the premises of Tobacco House AISBL and the European Federation of Tobacco Processors on 3 October 2001 and at those of the Federación nacional de cultivadores de tabaco (‘FNCT’) on 5 October 2001.

   8 In the course of January and February 2002, the processors and Anetab provided the Commission with certain information. The Commission then sent the processors, Anetab and FNCT a number of requests for information on the basis of Article 11 of Regulation No 17. It also requested information from the Spanish Ministry of Agriculture, Fisheries and Food concerning the Spanish rules governing agricultural products.

   9 On 11 December 2003, the Commission initiated the procedure which gave rise to the present case and adopted a statement of objections, which it addressed to 20 undertakings or associations, including the Spanish processors, Anetab, FNCT, the applicants and Deltafina SpA. Deltafina is an Italian company whose main activities are the first processing of raw tobacco in Italy and the marketing of processed tobacco. It belongs to the same group of companies as Taes, the ultimate head of that group being the US company, Universal Corp.

   10 The undertakings and associations in question had access to the Commission’s investigation file in the form of a copy on CD ROM which had been sent to them. They submitted written observations in response to the Commission’s objections.

   11 A hearing took place on 29 March 2004.

   12 After consulting the Advisory Committee on Restrictive Practices and Monopolies and in the light of the final report of the Hearing Officer, the Commission adopted, on 20 October 2004, Decision C (2004) 4030 final relating to a proceeding under Article 81(1) [EC] (Case COMP/C.38.238/B.2 — Raw tobacco — Spain) (‘the contested decision’), a summary of which was published in the Official Journal of the European Union of 19 April 2007 (OJ 2007 L 102, p. 14).

2. Contested decision

   13 The contested decision relates to two horizontal cartels entered into and implemented on the Spanish raw tobacco market.

   14 The object of the first cartel, which involved the processors and Deltafina, was to fix each year, over the period from 1996 to 2001, the (maximum) average delivery price for each variety and grade of raw tobacco and to share out the quantities of each variety of raw tobacco that each of the processors could purchase from the producers (see, in particular, recitals 74 to 76 and 276 of the contested decision). Between 1999 and 2001, the processors and Deltafina also agreed among themselves price brackets per quality grade for each raw tobacco variety mentioned in the schedules annexed to the ‘cultivation contracts’, as well as ‘additional conditions’, namely the average minimum price per producer and the average minimum price per producer group (see, in particular, recitals 77 to 83 and 276 of the contested decision).

   15 The cartel described at paragraph 14 will be referred to in this judgment as ‘the processors’ cartel’.

   16 The second cartel identified in the contested decision involved the three agricultural unions in Spain – the Asociación agraria de jóvenes agricultores (‘the ASAJA’), the Unión de pequeños agricultores (‘the UPA’) and the Coordinadora de organizaciones de agricultores y ganaderos (‘the COAG’) – as well as the Confederación de cooperativas agrarias de España (‘the CCAE’). The object of that cartel was to fix each year, over the period from 1996 to 2001, the price brackets per quality grade for each raw tobacco variety mentioned in the schedules annexed to the ‘cultivation contracts’, as well as the ‘additional conditions’ applicable (see, in particular, recitals 77 to 83 and 277 of the contested decision).

   17 The cartel described at paragraph 16 will be referred to in this judgment as ‘the cartel of the producers’ representatives’.

   18 In the contested decision, the Commission found that each of those cartels constituted a single and continuous infringement of Article 81(1) EC (see, in particular, recitals 275 to 277 of the contested decision).

   19 In Article 1 of that decision, the Commission attributed liability for the processors’ cartel to the Spanish processors, Deltafina, Dimon Inc. – the parent company of the group to which Agroexpansión belongs – and to the applicants, and liability for the cartel of the producers’ representatives to the ASAJA, the UPA, the COAG and the CCAE (collectively, ‘the producers’ representatives’).

   20 In Article 2 of the contested decision, the Commission ordered those undertakings and the producers’ representatives to bring immediately to an end the infringements referred to in Article 1, if they had not already done so, and to refrain from repeating any restrictive practice having the same or similar object or effect.

   21 The following fines were imposed in Article 3 of the contested decision:

   – Deltafina: EUR 11 880 000;

   – Cetarsa: EUR 3 631 500;

   – WWTE: EUR 1 822 500;

   – Agroexpansión: EUR 2 592 000;

   – Taes: EUR 108 000;

   – the ASAJA: EUR 1 000;

   – the UPA: EUR 1 000;

   – the COAG: EUR 1 000;

   – the CCAE: EUR 1 000.

   22 Under Article 3 of the contested decision, the applicants are jointly and severally liable for payment of the fine imposed on WWTE, and Dimon for payment of the fine imposed on Agroexpansión.

3. Addressees of the contested decision

   23 Section 2.4 of the contested decision deals with the question of the addressees (recitals 357 to 400 of the contested decision).

   24 First of all, the Commission states in that section that it has been shown that the Spanish processors and Deltafina participated directly in the processors’ cartel and the ASAJA, the UPA, the COAG and the CCAE in the cartel of the producers’ representatives and, accordingly, each of those undertakings and associations ‘is required to assume responsibility for the infringement, and [the contested decision] is, therefore, addressed to each of them’ (recitals 357 and 358 of the contested decision). In recitals 359 to 369 of that decision, the Commission specifically assesses Deltafina’s role in the processors’ cartel.

   25 The Commission then examines the question of attributing the unlawful conduct of a subsidiary to a parent company, and observes that, here, that question arises in three cases, namely that of Agroexpansión, WWTE and Taes (recitals 370 to 400 of the contested decision).

   26 In that respect, in the first place, the Commission recalls the principles which in its view are applicable in this area (recitals 371 to 374 of the contested decision).

   27 In particular, it states as follows:

   – in order to determine whether a parent company is to be regarded as liable for the unlawful conduct of its subsidiary, it needs to be established that the subsidiary ‘does not decide independently upon its own conduct on the market, but carried out, in all material...