General Court Delivers Early Christmas Gift to the Airline Industry and a Lump of Coal to the European Commission

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On December 16, 2015, the General Court (GC) sent a message of unprecedented magnitude in the field of European cartels by annulling a decision from the European Commission (EC) that imposed fines of approximately €790 million1 ($860 million) on several airlines for their participation in the air cargo cartel.2

Apart from the GC's conclusion that the internal inconsistencies in the decision were liable to infringe the applicant's rights of defense and prevented proper judicial review, these judgments contain an important warning to the EC regarding its broad and ever-increasing use of the notion of single and continuous infringement (SCI) in cartel cases. These new judgments follow a number of recent rulings in which the courts in Luxembourg have expressed some discontent with the manner in which the EC increasingly relies upon this notion to establish jurisdiction and to increase the scope of its actions. The increase in private follow-on actions and the weight of competition authorities' decisions in the Antitrust Damages Directive3 may lead the GC to review such reliance with greater scrutiny.

SCI Under Recent Scrutiny

In its decision, the EC characterized the infringement as a global cartel involving all carriers on all routes. Mindful of its limited jurisdiction over the air transport sector during several years covered by this alleged global cartel, the EC followed a differentiated approach for purposes of determining fines. As a result, the EC created what the GC ultimately considered to be a contradiction between the grounds of the decision and its operative part, leading to the annulment of the decision.

Rather than calculating the fines on the basis of the limited period during which it had jurisdiction over all carriers (i.e., eight-and-a-half months), the EC elected to sanction different groups of carriers for four different geographies (and periods),4 thereby drastically increasing the fines imposed by extending the duration of the cartel (i.e., to as much as six years and two months). In this case, however, the EC's greediness turned out to be costly.

The GC stated that "the mere existence of a contradiction between the grounds and the operative part of a decision is not sufficient to establish that the decision is vitiated by a defective statement of reasons [...]."5

The GC then reminded the EC that it must demonstrate, first, that each company was made aware of the specific scope and characteristics of the infringement(s) attributed to it, and second, that it has sufficiently substantiated its claim of an SCI and not over-reached. To this effect, the GC criticized the EC for choosing "not to treat the evidence adduced as regards each of the carriers at issue differently depending on the routes or categories of routes to which that evidence related [and for] merely examin[ing] whether that evidence was liable to establish the participation of those carriers in the single cartel described in the grounds of that decision, without examining whether the existence of each of the four single and continuous infringements that it found in the operative part of the contested decision was supported by evidence."6

This is a resonant reminder of recent warnings by the European courts in relation to the EC's broad use of SCI (Soliver,7Aalberts,8 and Coppens9).

Ultimately, the GC concluded that it was unable to review the legality of the decision because it simply was not in a position to assess whether the evidence used by the EC to establish the SCI was sufficient to prove the existence of the four infringements found in the operative part.

In doing so, the GC appears to have further distanced itself from the EC's choice to use the SCI in this case and has added to the EC's woes, given that the EC now faces the hard task of deciding whether to appeal the judgment and/or to re-adopt its decision. Not only will the EC have to carefully review the evidence for its own sake, but it will also have to take into consideration the importance given by the GC to have regard to the consequences of an overextension of the principle of single and continuous infringement, particularly in the context of actions for follow-on damages.


1 Case COMP/39258 - Airfreight, Commission Decision of November 9, 2010.
2 Judgments of December 16, 2015, in Cases T-9/11 Air Canada, T-28/11 Koninklijke Luchtvaart Maatschappij, T-36/11 Japan Airlines, T-38/11 Cathay Pacific Airways, T-39/11 Cargolux Airlines International, T-40/11 Latam Airlines Group and Others, T-43/11 Singapore Airlines and Others, T-46/11 Deutsche Lufthansa and Others, T-48/11 British Airways, T-56/11 SAS Cargo Group and Others, T-62/11 Air France-KLM, T-63/11 Société Air France, and T-67/11 Martinair Holland v Commission.
3 See Article 9 of the Directive 2014/104/EU of November 26, 2014, on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union [2014] OJ L 349/1.
4 Used in the operative part of the its decision: (i) intra-EEA routes (overall from December 17, 1999 to February 14, 2006); (ii) routes between the EU and airports outside the EEA (excluding Switzerland) (from May 1, 2004 to February 14, 2006); (iii) routes between countries that are contracting parties of the EEA but not member states and third countries (from May 15, 2005 to February 14, 2006); and (iv) routes between the EU and Switzerland (from June 1, 2002 to February 14, 2006).
5 Case T-28/11, Koninklijke Luchtvaart Maatschappij NV v. Commission, Judgment of December 16, 2015, §81.
6 T-28/11, §84.
7 Case T-68/09, Soliver NV v. Commission, Judgment of October 10, 2014.
8 Case C-287/11 P, Commission v. Aalberts Industries NV and Others, Judgment of July 4, 2013.
9 C-441/11 P, Commission v. Verhuizingen Coppens, Judgment of December 6, 2012.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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