C-297/98

OPINION OF MR MISCHO — CASE C-297/98 P

OPINION OF ADVOCATE GENERAL MISCHO delivered on 18 May 2000 *

1. By application lodged on 29 July 1998 reduction of the fine. Reference is made to SCA Holding Limited ('SCA Holding') the contested judgment for a full explana- appealed against the judgment of the Court tion of the objections raised by SCA of First Instance of 14 May 1998 in SCA Holding in challenging the decision and Holding v Commission 1(hereinafter 'the the grounds on which the Court of First contested judgment'). Instance considered that those objections had to be rejected in their entirety.

2. By that judgment the Court rejected SCA Holding's application contesting Commis- 4. In its appeal SCA Holding claims that sion Decision 94/601/EC of 13 July 1994 the Court of Justice should: relating to a proceeding under Article 85 of the EC Treaty (IV/C/33.833 — Carton- board) 2('the decision') in which the Com- mission imposed fines on 19 manufacturers supplying cartonboard on the Community market on the ground that they had infringed Article 85(1) of the EC Treaty (a) set aside the contested judgment; (now Article 81(1) EC).

(b) annul Article 1 of the decision in so far 3. In that action SCA Holding asked the as it concerns the appellant or, in the Court of First Instance to annul the deci- alternative, annul or substantially sion both in so far as it found that SCA reduce the fine imposed on the appel- Holding had committed an infringement lant in Article 3 thereof; and in so far as it imposed a fine of ECU 2 200 000 on account of that infringement. In the alternative, it sought a substantial

The first plea: the addressee of the decision

(3) in any event, order the appellant to pay the costs of the appeal.

8. Before the Court of First Instance, the appellant challenged the decision on the ground that it should not have been held 6. In support of the form of order sought, responsible for the behaviour of the Col- SCA Holding puts forward two groups of throp Mill (hereinafter 'Colthrop') and that pleas: it was not therefore the correct addressee of the decision, which imposed fines in respect of practices by Colthrop that were contrary to Article 85 of the Treaty. The Court rejected that plea in the following terms: — pleas by which it seeks to show that the Court of First Instance wrongly rejected its argument that it should not have been the addressee of the decision; '61. It is common ground that Colthrop was the factory at which cartonboard was manufactured and that throughout the full period of the infringement that — pleas by which it seeks to show that the factory was owned by Reed P&B, then Court could not, without infringing by SCA Aylesford Ltd and lastly by Community law, uphold the fine SCA Holding.

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or

65. Thus, even if Colthrop could be regar- ded as an undertaking within the meaning of Article 85 of the Treaty (2) where there [was] express evidence implicating the parent company of the group in the participation of 3 — Case T-6/89 Enichem Anic v Commission [1991] ECR II-1623, paragraphs 236 to 238. the subsidiary in the cartel,

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SCA HOLDING V COMMISSION

[in which cases] the proceedings have been mitted by an undertaking which, not- addressed to the group (represented by the withstanding one or more changes of parent company)". ownership during or after the period of infringement, maintains "functional and economic continuity" throughout the period of infringement and up until the date of the Decision, continues to 68. Since the Commission did not consider exist "in its essential form" at the date that either of the two conditions for of the Decision and has legal person- making an exception to the principle in ality at the date of the Decision. The point 143 was satisfied, it was entitled Court's finding that there was no issue to decide not to address the Decision to of succession in this case is based on the successive parent companies of deficient reasoning and is contrary to Reed P&B/SCA Aylesford/SCA Hold- legal principle and the jurisprudence of ing. the European courts;

69. This plea must therefore be rejected as unfounded.'

11. Are those criticisms founded? undertaking has ceased to exist in law, it is necessary, first, to find the combination of physical and human elements which contributed to the commission of the infringement and 12. Let me point out first of all that then to identify the person who has paragraphs 61 and 62 of the contested become responsible for their opera- judgment, which constitute the premiss on tion, so as to avoid the result that which the Court's reasoning is based, refer because of the disappearance of the to facts which the Court found to have person responsible for its operation been established and which, as such, cannot when the infringement was commit- be questioned in the context of an appeal. ted the undertaking may fail to Nor does the appellant dispute those facts. answer for it. It challenges paragraph 63 of that judg- ment, in which it is asserted that those facts rule out any issue of succession.

238. In the case of the applicant, the legal person responsible for the operation of the undertaking when the infringe- 13. As the Court of First Instance presented ment was committed continued to that assertion as a simple application to the exist until the adoption of the Deci- case before it of the principles laid down in sion. The Commission was therefore paragraphs 236 to 238 of the judgment in entitled to hold it answerable for the Enichem Anic v Commission, cited above, infringement.' it is appropriate to set out those para- graphs, which are as follows:

14. If one analyses those principles, one finds that proceeding from the premiss that '236. When such an infringement is found a distinction must be made between an to have been committed, it is neces- undertaking, that is to say, the business sary to identify the natural or legal active on the market, and the person person who was responsible for the responsible for its operation, two possible operation of the undertaking at the cases are envisaged. time when the infringement was committed, so that it can answer for it.

There is not therefore any issue of succes- for operating Colthrop at the material time. sion in the sense of a transfer, from one It is therefore wholly logical that, applying legal person to another, of obligations the principles laid down in the judgment in arising out of a liability. Etlichem Anic v Commission, cited above, the Court of First Instance held that there was no issue of succession and took the view that SCA Holding had to be the addressee of the decision. 16. In the second case, the person respon- sible for the operation of the business has ceased to exist in law when the decision is adopted and it is then necessary, if the infringement is not to escape sanction, to 19. Where, according to the appellant, is establish who has replaced that person and, the defect in that reasoning? in order to do so, to trace the undertaking as an actual economic concept and not a legal concept, so as to identify the person who is now directing the operation. Through the use of a method of attributing 20. It lies, in so far as it is possible to make liability, which, for convenience, is classi- out a clear position from the lengthy fied as 'succession', it is that person who arguments which the appeal devotes to this will be the addressee of the decision and question, not in the incorrectness of the who will have to bear the fine imposed. principles laid down in the judgment in Etlichem Anic v Commission, which SCA Holding claims that it does not wish to call in question, but in their inapplicability to the present case. According to the appli- 17. Under that approach, which could be cant, the particular feature of the present summarised as the principle that 'responsi- case is the fact that, when the decision was bility must lie where the power is to be adopted, the undertaking which had com- found', the undertaking is not itself mitted the infringement not only was no required to bear responsibility for its longer, for operational purposes, the actions. That principle serves to identify responsibility of the legal person bearing the person who is liable to bear the fine that responsibility at the time when the imposed, it being understood that that infringements occurred, but had itself person may be selected to some extent by acquired legal personality, the business unit default if the person who directed the which had been constituted by Colthrop undertaking when the infringement was having been incorporated into a separate committed has disappeared and a sanction limited company before being sold. can therefore no longer be imposed on it.

grounds for the view that this is not a case which ultimately leaves liability at the level falling within the first category envisaged of the undertaking itself. above, in which the legal person responsi- ble for operating the undertaking over the period of the infringement still exists on the day on which the Commission adopts its decision. 25. In that subtle argument, the legal person taking on responsibility for the operation of the undertaking is no longer the person truly responsible for the prac- tices contrary to the competition rules, it is 22. Consequently, even if not expressly no more than a representative to which the stated, SCA Holding is in fact seeking to undertaking, the entity with real responsi- contest or, more subtly, modify the very bility, is attached. That undertaking, when approach adopted in the judgment in it changes hands, is of course going to Enichem Anic v Commission, in order to retain responsibility — it cannot divest show that there is an issue of succession itself of it — and when the Commission, through which it could escape the conse- after having discovered the anti-competi- quences of its conduct over the period tive practices, proposes to impose sanctions when it directed the operation of Colthrop. in respect of them, the proceedings will have to be addressed to the person who has become the new representative of the undertaking. However, if the undertaking has gained its independence as it were, through incorporation as a limited com- pany — like a minor reaching his majority, 23. Its fundamental objection is that the like succession in family law to take a Commission and the Court of First Instance rather strained analogy, — it will have to did not accept that once it had divested answer for its responsibilities itself. Applied itself of Colthrop it was discharged from to the present case, that theory would mean liability incurred as the legal person respon- that Colthrop Board Mill Ltd would have sible for operating it over the period in to answer for the anti-competitive acts which the infringements of the competition committed by the Colthrop mill when it rules took place. was managed by SCA Holding.

28. SCA Holding managed Colthrop throughout the period of the infringement 32. But the entire reasoning in paragraph and it is only normal that it should now 63 of the contested judgment, constructed shoulder its responsibilities for its past by reference to the judgment in Enichem conduct. Anic v Commission, is posited on the existence of Colthrop as an undertaking, since it makes the distinction between an undertaking and the legal person responsi- ble for its operation, if the Court of First Instance had intended to find that Colthrop was not an undertaking and was only a mere asset of P&B, which subsequently 29. I would have finished my appraisal of became SCA Holding, there would have this plea if the Court of First Instance had been no need to refer to the judgment in not sought to support its conclusion by Enichem Anic v Commission. In that case, other arguments, the correctness of which the only identifiable undertaking would is disputed by the appellant with, let me have been P&B and no problem of liability say, more reason. for the infringement would have arisen because the decision would quite simply have been addressed to the 'company undertaking' which had itself infringed the competition rules, the subsequent sale of Colthrop's assets being wholly irrelevant. 30. SCA Holding states that paragraph 65 of the contested judgment not only contra- dicts paragraph 63 but is also erroneous in that it accepts that the Commission may in certain circumstances have a choice as to the addressee of its decision imposing fines 33. The very fact that, in paragraph 65 of in respect of practices contrary to the the contested decision, Colthrop's status as competition rules and asserts that this an undertaking was put forward as a mere choice cannot be validly called into ques- hypothesis clearly cannot substantiate the tion once made. above arguments.

37. One might be tempted to reply that that is in fact the case. Once it is accepted that the decision could be addressed just as well to A as to B, then A, if he has been chosen, may be able to show that B could just as well have been the addressee, but doing so would not alter the fact that the choice of A was not contrary to the legal 35. I can only express the same reservations rule. It seems to me that that is the answer regarding the consequences which the which the Court wished to give to SCA Court of First Instance attaches to a finding Holding. that Colthrop may be an undertaking. In no way does it seem to me to be desirable that the Commission should have a choice as to the addressee of its decision. I do not dispute that in some cases, such as that with which we are presently dealing, pro- blems may arise when determining the 38. But can it be accepted that the only addressee of the decision. But it is certainly reason given for choosing A is that nothing not a ground for allowing a choice. The precluded the choice of A, or even that no complexity of a problem does not mean reasons have to be given for choosing A? that any approach whatever to that pro- That would amount to allowing the Com- blem is correct. The identification of the mission such a wide discretion as to border addressee must follow rules of law, such as on arbitrariness. those laid down in the judgment in Etli- chem Anic v Commission, and it is through their application, after a rigorous examina- tion, that the addressee must be identified and not through the exercise of a choice. It will always be extremely difficult to per- 39. However, if it is required that a real suade the persons concerned that the choice statement of reasons be given for choosing was not capricious. A, then A will at the same time have to be

43. First, to find fault with that paragraph of the contested judgment would not mean that SCA Holding was not the correct 40. It can be seen, from that point of view addressee of the decision. Quite the con- too, that, if one wishes to avoid being trary, because, in my view, taken on their locked in the contradictions inherent in the own, paragraphs 61 to 64 must escape existence of a choice and, at the same time, censure. of a minimum of review by the courts, it is clearly not desirable to accept that the Commission may, even if only in quite specific cases, have a choice as to the addressee of its decision. 44. Second, in paragraph 66 et seq. of the contested judgment the Court gave another reason for dismissing the action brought before it by SCA Holding to contest the decision in so far as it was addressed to it, namely the fact that P&B, that is to say SCA Holding under its former name, was 41. Suppression of infringements of the on the list of members of the PG Paper- competition rules is too serious a matter board, that is to say, the body within which for there to be room in it for approxima- the cartel was organised. tion. The Commission may be in two minds, but it must take a decision, that is to say, choose between the approaches which seem to it to be conceivable. Ulti- mately it is for the Community judicature to decide whether it made the right choice, 45. That factor seems to me to be decisive, which is another way of saying that at the since it reinforces what has been stated in level of the Commission there is no real paragraphs 61 to 64 of the contested choice, merely options, only one of which judgment. It shows that it was indeed correctly applies the particular rule of law. SCA Holding which caused Colthrop to become involved in the cartel, which was the partner of the other members of the cartel, and which committed itself in its own name. SCA Holding's participation in the activities of the PG Paperboard rules out the possibility that it could now refuse 42. Must the view therefore be taken that to shoulder responsibility for the anti- what is stated in paragraph 65 of the competitive practices implemented on the

48. Before the Court of First Instance, SCA Holding claimed that the position it adopted during the administrative proce- dure, which consisted in not commenting on the existence of the facts constituting the infringement alleged against it, whilst stat- ing that it had no knowledge of the cartonboard sector, having owned Col- The second plea: the amount of the fine throp only for a very short period before transferring it to another company, entitled it to benefit, like other addressees of the decision, from a reduction in the amount of the fine. The Court rejected that claim in the following terms: 47. SCA Holding complains that the Court of First Instance erred in law in exercising its unlimited jurisdiction when reviewing the fine imposed on it. This plea is itself divided into three parts. First, the Court is alleged to have erred in law in holding that the position adopted by the appellant '156. The Commission correctly consid- during the administrative procedure did ered that the applicant, by replying not justify a reduction in the fine. Second, it in that way, did not conduct itself in erred in law in holding that the decision a manner which justified a reduction was not vitiated by defective reasoning in the fine on grounds of cooperation which justified annulment or reduction of during the administrative procedure. the fine. Third, the Court could not accept A reduction on that ground is justi- that the Commission could choose SCA fied only if the conduct enabled the Holding as the addressee of the decision Commission to establish an infringe-

158. The situation is different where the 50. Contrary to the Commission's submis- essential allegations made by the sion, this plea is not inadmissible. The Commission in its statement of objec- applicant is not calling in question simply tions are contested by an undertaking findings of fact made by the Court of First in its reply to that statement, or Instance but is alleging that the Court where the undertaking does not reply wrongly held that the position which it or merely states, as the applicant did, had adopted could not be regarded as the that it is not expressly any view on same as that of the undertakings which had the Commission's factual allegations. not contested the facts on which the By adopting such an attitude during Commission's objections were based and the administrative procedure the which, on that ground, received a reduction undertaking does not further the in the fine merited by their participation in

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the cartel, the correctness of that reduction prevented from doing so, that was solely on not being at issue. the ground that it had not challenged those facts in its originating application.

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SCA HOLDING V COMMISSION

the fine which had been imposed on it, Case C-283/98 P Mo och Domsjö v Com- because the only criterion for the award of mission. In that opinion I have proposed such a reduction was the actual facilitation that the plea should be rejected. of the Commission's task.

56. SCA Holding has not been 'punished' for its attitude. It is merely that its attitude, The third part of the second plea as regards its consequences, cannot be treated in the same way as that of the undertakings to which a reduction was awarded. The refusal by the Court of First 58. The last part of the plea directed at the Instance to exercise its unlimited jurisdic- Court's refusal to annul or reduce the fine tion and reduce the fine on SCA Holding imposed on the applicant does not call for does not appear to me to be in any way lengthy argument. First, I have already arbitrary or contrary to law and I therefore explained above why it seems to me that propose that the Court of Justice should there is no question of a true choice made reject that part of the second plea. by the Commission, endorsed by the Court of First Instance, so that the very premiss on which it is based turns out to be incorrect.

(1) dismiss the appeal in its entirety; and

(2) order the appellant to pay the costs.

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