Printeos tells EU court price-fixing fine was 'total improvisation' and amounted to discrimination

03 Apr 2019 12:43 pm by Nicholas Hirst

Printeos suffered discrimination when the European Commission imposed price-fixing fines worth 19 million euros ($21 million) on five envelope-makers, a lawyer for the Spanish company told EU judges today.

The EU antitrust regulator’s methodology — or alleged lack thereof — when calculating fines came under intense scrutiny today before the lower-tier General Court as judges heard a rare dispute arising from a cartel decision where all the parties settled.

The appeal arises from a particularity of the 2014 cartel decision, where all five envelope-makers faced fines exceeding the legal cap of 10 percent of turnover in the last year. Rather than reduce everyone's fine to 10 percent of the previous year's revenues, the commission set the fines in a way that it felt reflected the different parties' involvement in the cartel and would ensure deterrence.

The commission “has not explained any methodology — it is total improvisation,” said Helmut Brokelmann, a lawyer for Printeos.

If the commission doesn't give a "clear explanation" as why fine reductions differ between companies, "how can we understand?” asked judge Nina Półtorak to the commission.

— Settlement —

In December 2016, EU judges annulled the fine imposed on Printeos, stating the commission had failed to explain why it reduced penalties by different amounts for members of the price-fixing cartel.

The commission re-imposed an identical fine in June of the following year, saying the ruling hadn't put the regulator's cartel findings in question. Printeos re-appealed the sanction in July 2017, arguing the commission was still not clear on why the fines across the five companies were differentiated.

Fructuoso Jimeno Fernandez, a lawyer for the commission, appeared on the defensive as he sought to explain the various factors in consideration when the commission reduced the basic amount of the fine before issuing sanctions back in 2014.

The various criteria were not applied in a manner that was “automatic,” he insisted, but “to maintain the balance of between the basic amount and the final amount.”

— Product/turnover ratio —

Among other things, Printeos has taken issue with the way the commission reduced the “basic” fine, which is used as a baseline to calculate the final fine, for the various defendants.

To arrive at the reduction, the commission first considered what proportion of the companies' overall sales came from envelopes, before applying a percentage reduction to the base fine. Those figures only appeared after the commission re-adopted the decision in 2016 and were made public today in court.

Printeos noted today, however, that the ratio between the envelope proportion and the percentage reduction differed between companies. For Printeos, both figures were 90 percent; but in Mayer-Kuvert's case 76 percent of sales came from envelopes but it had a fine reduction of 88 percent.

Jimeno Fernandez defended the commission's calculations, saying the reductions took in a range of circumstances including each company's participation.

He noted that, following a ruling delivered in an appeal brought by Pilkington, the commission no longer applied the “mono-product policy” but that it had done so when re-adopting the fine against Printeos in 2016 to ensure equal treatment between it and the other companies originally fined in 2014.

“The possibility that Printeos could escape without a fine is the real risk of discrimination,” he said.

— Appeal —

Viktor Kreuschitz, the reporting judge, said he was not clear on whether the different treatment was “justified” but asked the parties whether Printeos should benefit just because the figure applied to other participants may have been illegal.

“A person may not rely in his favor on an unlawful act created in favor of a third party,” he said.

Brokelmann replied that “Printeos isn't saying the fines are illegal ... the illegality comes from the comparison between Printeos's fine and the others.”

Judge Ezio Perillo asked whether a party could appeal a settlement fine if it fell within the range that had been indicated to it before it settled and, if so, whether it was open to the court to impose a fine outside that range.

Printeos's lawyer Brokelmann said it was possible to appeal the fine. "You cannot consent to unequal treatment, especially if you don't know it. You agree in the belief that the [commission] will respect equal treatment," he said.

But Jimeno Fernandez said appeals should be reserved for “exceptional” circumstances. “Personally I don't think the General Court is limited by the [fine range]," he said, adding that it could reduce a fine but also increase it.

But he warned that such action could undermine the commission's settlement procedure.

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