European Union: General Court Orders EU To Pay Damages For Excessively Long Court Proceedings In Flat Glass Cartel Case

On 7 June 2017, the General Court ("GC") delivered a judgment in relation to an action claiming damages for excessive duration of judicial proceedings and for an infringement of the principle of equal treatment in connection with the Car Glass cartel case. The GC ruled that the duration of the judicial proceeding was excessive and ordered the European Union to pay Guardian, a flat glass producer, € 654,523 (plus interest) as compensation for the damage suffered. It dismissed the second part of the damages claim.

In November 2007, the Commission adopted a decision in which it imposed a fine on Guardian totalling over € 148 million for its involvement in a cartel in the flat glass market. In September 2012, the GC dismissed in its entirety Guardian's request for annulment of the Commission Decisions (See VBB on Competition Law, Volume 2012, No. 10, available at www.vbb.com). In November 2014, however, the Court of Justice of the European Union ("ECJ") ruled that the Commission had breached the principle of equal treatment and reduced the fine imposed on Guardian to € 103.6 million (See VBB on Competition Law, Volume 2014, No. 11, available at www.vbb.com). In addition, the ECJ observed that the long duration of the GC proceedings could not be justified. Following the ECJ judgment, Guardian lodged an action against the European Union seeking damages of more than € 43 million as compensation for the injury suffered as a result of: (i) the GC's failure to adjudicate within a reasonable time; and (ii) the Commission and the General Court's "sufficiently serious infringement of the principle of equal treatment". Guardian sought to recover bank guarantee costs, loss profits, non-pecuniary losses and compensatory interest.

Damages linked to the failure to adjudicate within a reasonable time

The GC ruled that the EU's conduct was unlawful because of the excessive length of the proceedings. It first noted that a period of 15 months between the end of the written phase and the beginning of the oral phase of the GC proceedings is considered acceptable in complex cartel cases such as the one at hand. In the present case, the GC found that 41 months had lapsed between the end of the written phase and the beginning of the oral phase, which exceeded the reasonable time period by over 26 months. Accordingly, Guardian's right to adjudication within a reasonable time period, as enshrined in the Charter of Fundamental Rights of the European Union, had been breached.

The GC then examined the amount of damages allegedly suffered by Guardian. The GC took the view that Guardian was entitled to claim compensatory interest for the costs of a bank guarantee during the time period that exceeded the reasonable time period of 26 months. These costs were estimated at € 654,523.

This is the fifth time that the GC has ruled on damages claims for the excessively long duration of appeals against Commission cartel decisions. The GC previously awarded damages to Gascogne (See VBB on Competition Law, Volume 2017, No. 1, available at www.vbb.com), Kendrion, ASPLA and Armando Alvarez (See VBB on Competition Law, Volume 2017, No. 2, available at www.vbb.com), but dismissed the action brought by Aalbert (See VBB on Competition Law, Volume 2017, No. 2, available at www.vbb.com).

Damages linked to "sufficiently serious infringement of the principle of equal treatment"

The GC dismissed Guardian's claim that it suffered damages as a result of the Commission and the General Court's "sufficiently serious infringement of the principle of equal treatment". In essence, Guardian claimed that it had to provide a bank guarantee of € 37 million (in addition to the € 111 million it paid directly to the Commission), on which it had to pay interest. This would not have been necessary had the Commission or the General Court correctly applied the principle of equal treatment (as mentioned above, the ECJ reduced the fine imposed on Guardian from € 148 million to € 103.6 million after taking the view that the principle of equal treatment had been breached). The GC however considered that the bank guarantee taken out by Guardian was not a direct consequence of the unlawfulness of the Commission's decision. Guardian had the option to pay the amount of the fine in full, yet it decided at its own discretion to take out a bank guarantee and, therefore, incur the related costs.

The GC also rejected Guardian's claim that it suffered damages of € 14.8 million (i.e., 10% of the fine) related to a loss of reputation, as the decision created a misleading impression concerning Guardian's involvement in an infringement of competition rules. The GC noted that Guardian had only sought the annulment of the Commission's decision in part, which meant that Guardian had not questioned its actual participation in the cartel. Rather, Guardian had merely contested the gravity of its involvement in the infringement. In any event, Guardian had not substantiated by evidence how the "sufficiently serious infringement of the principle of equal treatment" was likely to have an effect on its reputation beyond the effect linked to its participation in the cartel. The GC rejected on similar grounds Guardian's claim that it suffered loss of reputation as a result of the excessive duration of the proceedings.

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