WELCOME TO CHARLES RUSSELL SPEECHLYS.
We would like to place strictly necessary cookies and performance cookies on your computer to improve our website service.
Otherwise, we'll assume you are OK to continue. Please close this message
On 19 March 2015, the Court of Justice of the EU (“CJEU”) issued its ruling turning down the appeal made by two companies within the Dole banana importing group against fines for exchanging information and indications about pricing policy with competitors. This ruling is a powerful reminder to all businesses that you do not necessarily have to be outright fixing prices with competitors in order to meet with the sternest sanctions from the competition authorities.
Fines totalling €45.6 million against Dole Food Company Inc and Dole Fresh Fruit Europe had been imposed in October 2008 by the European Commission (“Commission”), which had then subsequently been upheld on appeal by the EU General Court in March 2013.
The Commission decided to penalise Dole and its competitor Fresh Del Monte Produce Group after Chiquita came forward with information in return for immunity from fines (under the Commission’s 2002 Leniency Notice, which encourages firms to volunteer information about cartels by incentivising them with reductions in or immunity from fines). Having followed up on Chiquita’s approach with unannounced inspections at various banana importers’ offices, the Commission conducted an investigation culminating in its finding that between 1 January 2000 and 31 December 2002 the companies involved had been illegally sharing information about so-called “quotation prices” on a weekly basis.
This revolved around the practice among importers of leading banana brands into eight EU member states to set and announce their reference (known as “quotation”) price for the ensuing week each Thursday. These quotation prices served as signals to the market about the trends and/or indications as to the intended movement in prices of bananas for the following week. The Commission’s investigations revealed that Dole, Del Monte and Chiquita were engaging in bilateral phone calls, normally taking place the day prior to quotation prices being announced. These calls involved discussions about pricing intentions and how the parties envisaged prices evolving, and also indications as to whether each company intended to bring their prices up or down or to maintain them at the same level.
The Commission decided that these communications reduced uncertainty as between the companies as to their pricing levels and follow-up exchanges allowed each to monitor one another’s individual pricing decisions in light of their pre-pricing discussions. This gave rise to a state of cooperation, whereby, in its view, the participants to this concerted practice that continued active trade in bananas would inevitably have acted on the information shared between them in deciding how to behave in the marketplace. For this reason, the Commission decided there had been what is known as an infringement of EU Competition law by object; in other words, one so inherently anti-competitive that there need be no proof of actual effects (eg increased prices for consumers) for proceedings to be taken against the parties to it and fines imposed on them.
The Commission’s finding, and, in particular, its having subsequently been endorsed by both chambers of the European Courts serves as a powerful reminder that to be found culpable of serious infringements companies need not necessarily be engaging in direct price-fixing. Exchanging information relevant to pricing which allows the parties to that information to trade with increased certainty as to the direction in which prices will move can meet with similarly draconian fines, which can amount to millions of Euros.
Dole raised a number of points of fact, law and procedure in seeking to overturn the decision of the General Court to uphold the Commission’s finding. However, each of these failed.
In relation to its key submissions to the CJEU, the reasons for the CJEU dismissing them are summarised below:
Notably, Dole also sought to claim that its fine had been miscalculated on the basis that the Commission had double-counted certain banana sales which had been made first by Dole Fresh Fruit Europe to a third party and then subsequently by that third party to another Dole Food subsidiary for onward sale to retailers. The CJEU concluded that the General Court had been right to support the Commission’s methodology on the basis that both sets of transactions had contributed to the turnover of the Dole group of companies, and so the Commission was entitled to calculate its fine by reference to all of these sales in aggregate.