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06 April 2017
The Villeroy & Boch AG judgment(1) confirms that businesses can be liable for cartelising products that they do not even have in their portfolio and in jurisdictions in which they are not active, provided that:
In 2010 the European Commission fined a number of manufacturers of bathroom fittings and fixtures, including the Villeroy & Boch Group, for agreeing on sales prices to wholesalers and exchanging information relating to their business in Austria, Belgium, France, Germany, Italy and the Netherlands. According to the commission, the products covered by the infringement were shower enclosures and accessories, as well as ceramics and taps and fittings. Villeroy & Boch manufactures two of the three products: shower enclosures and accessories as well as ceramics, but not taps and fittings. In the relevant period, Villeroy & Boch was active in all member states concerned except Italy. The commission found that under the concept of a 'single and continuous infringement', Villeroy & Boch could be held liable for the infringement concerning all products (ie, including taps and fittings) and all member states (including Italy). Villeroy & Boch appealed before the General Court and, after achieving a partial annulment concerning the duration of its participation, lodged a further appeal before the European Court of Justice (ECJ).
Before the General Court, Villeroy & Boch argued that it could engage in anti-competitive agreements only with regard to products that it actually manufactures. It should therefore not have been held liable for agreements of manufacturers of taps and fittings that:
The General Court rebutted these arguments and held that the commission was correct in attributing comprehensive liability to Villeroy & Boch since it took part in a 'single and continuous infringement'. Under this concept (accepted by the courts in a long line of judgments), different infringements can be grouped together as one, provided that they form part of an overall plan.(2) According to the commission, the overall plan was to present a united front regarding the wholesalers that play a central role in the distribution chain and sell all the product sub-groups in question. Given the importance of the wholesalers, the manufacturers had an interest in coordinating how they would raise wholesale prices for the different bathroom fittings and fixtures. Due to its membership in a number of national trade associations covering all cartelised product groups, the courts found that Villeroy & Boch must have been aware of the illicit agreements – not only for its own products, but also concerning taps and fittings and Italy. Since Villeroy & Boch contributed to the overall plan by directly engaging in anti-competitive conduct in relation to ceramics and shower enclosures, its mere knowledge of the infringement in Italy was sufficient for it to also be held liable for that portion of the cartel. It did not matter that Villeroy & Boch itself does not manufacture taps and fittings and has no business in Italy in general.
On these grounds, the General Court and the ECJ upheld the commission's decision.
The concept of 'single and continuous infringement' allows the commission to penalise undertakings for the wrongdoing of third parties, even with regard to products and geographies served only by those third parties. The consequences are far reaching:
It is therefore prudent to keep in mind that undertakings do not have to be directly involved in all parts of a cartel to be liable – knowledge or the ability to foresee other participants' anti-competitive behaviour is sufficient to establish liability.
For further information on this topic please contact Bill Batchelor or Miklos Mudrony at Baker & McKenzie by telephone (+32 2 639 36 11) or email (firstname.lastname@example.org or email@example.com). The Baker & McKenzie website can be accessed at www.bakermckenzie.com.
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