Julian Joshua, Elvira Aliende Rodríguez

Howrey LLP

E Pluribus Unum: rolling up cartel infringements in EC Competition Law

An increasingly controversial question in EC Competition law enforcement is whether collusive price-fixing behaviour constitutes a single or multiple infringements. In some recent decisions, the Commission uses the label of the 'single continuous infringement' to roll up what look like different cartels into one overall infringement of article 81. One result is to defeat potential limitation defences on one of the cartels that would be available if it were treated as a stand-alone infringement - and thus increase the fine. Combining several cartels into one global infringement may also render minor participants responsible for arrangements in which they did not directly participate. In other cases presenting almost identical facts separate infringements have been found. The inconsistency extends to the geographical delineation of cartels: will the Commission find there is one overall 'European' cartel, or a series of parallel national agreements? The choice can have far-reaching and unpredictable implications in terms of substantive and procedural law, due process and the operation of the leniency notice.

The Commission introduced the concept of the continuous cartel infringement in the Polypropylene decision¹ in 1986. The model was the common law conspiracy as 'an agreement with a continuance in time'. Whereas previous analysis had been static, the 'single continuous infringement' (or SCI) as it was dubbed aimed to capture the dynamic of one and the same ongoing cartel in a 'continuing infringement' over its lifetime.

Endorsed enthusiastically by the Community judiciary² the common law transplant of conspiracy into Community law now forms the template for every Commission cartel decision. But its more recent application exemplifies what the great American jurist Cardozo called 'the tendency of a principle to expand itself to the limit of its logic'.³ A number of cases suggest that the Commission has omitted to temper the development of the principle by confining it within the limits of its own history and internal rationale.

'Single continuous infringement' is not a term of art, more a label for a fluid concept that aimed to connect more efficiently and in a practical fashion the legal prohibition of article 81 with the reality of cartel conduct. The analysis mandates treating a cartel as a single dynamic instead of multiple repeated infringements. It does not support rolling up different cartels into a single infringement in order to maximise the fine. Deciding whether the case involves one overall cartel or entirely separate cartels requires proper analysis and the application of a consistent principle.

After recalling the roots of the continuing infringement concept in the common law of conspiracy, we draw on the lessons provided by US Sherman Act experience to suggest a uniform approach that provides a fair and workable solution to the problem.

Hidden inside article 81: the cartel offence

Despite the superficial resemblance to the Sherman Act section one, article 81(1) of the EC Treaty was not primarily intended to condemn hard-core cartel conduct. The provision had instead the economic and regulatory rationale of bringing under the ambit of administrative surveillance the broadest range of commercial arrangements, allowing the Commission to evaluate their compatibility with the Treaty goals of breaking down barriers to trade. For many years the Commission viewed its exclusive power to grant exemptions as its most potent tool for developing competition policy. Article 81(1) was interpreted broadly to catch restrictions on competition a long way short of a hard-core cartel.

To be sure, secreted inside the expansive reach of article 81, there was indeed the essence of a 'cartel offence'.⁴ Delineating its shape and exact terms was however not aided by the then prevailing conventional legal analysis. According to the received wisdom, the category of 'agreement' was reserved for formal commercial contracts: an un-notified cartel could only be caught as a concerted practice. The absence of an aggressive investigative ethos in turn meant that hard evidence of collusion was sparse and it was always open to suspected price fixers to plead oligopoly theory. Practitioners with experience only of today's unrelentingly cartel-hostile climate would be bemused by the two flagship cases of the sixties, Quinine⁵ and Dyestuffs.⁶ There is no awareness in the decisions, the judgments or any of the voluminous commentary of the time of the harm done by cartels, still less of any turpitude. Analysis, such as it was, was preoccupied with finding the line between conscious parallelism (permitted) and concerted practice (unlawful) in cases where there were few plus factors.

Capturing the conspiracy

The turning point came in October 1983 with the uncovering in a series of cases in the European petrochemical industry of highly organised cartels of an unsuspected level of sophistication: top-level direction, hierarchical structures, regular secret meetings in luxury Swiss hotels, choreographed price initiatives, quota systems, compensation mechanisms monitored by fiduciary companies; even elaborate sham organisations to conceal the existence of the cartel.

The thinking of the time with its static definitions of anti-competitive conduct was ill adapted to hard-core cartels. To capture the whole entrenched scheme of conspiratorial behaviour the concept of the single continuous infringement was devised.⁷ In essence, it treats the continuum of collective activity of a cartel as an agreement in terms of article 81:

A complex cartel may properly be viewed as a single continuing infringement for the time frame in which it existed. The agreement may well be varied or modified, the cartel's activities may progressively be expanded to cover new markets or its mechanisms may be adapted or strengthened. Members may join or leave the cartel from time to time without its having to be treated as a new 'agreement' with each change in participation.⁸

Of course viewed in isolation the elements of a continuing course of conduct could each constitute a violation of article 81, but that would miss the point. The model was the notion of 'agreement' in the common law of conspiracy, the approach adopted in the Sherman Act. Criminal conspiracy is basically an agreement to commit an unlawful act, usually a criminal offence.⁹ The utility of the conspiracy concept for the purposes of cartel analysis is that agreement shades into execution: while the crime is complete the moment the agreement is made, subsequent actions of the conspirators are not only evidence of the initial agreement but also form part of the crime itself.¹⁰ The conspiracy continues until its abandonment or success. It can evolve over its duration, and members may join and leave at different times. The idea which most neatly encapsulates the conspiratorial agreement is that of a 'partnership' in illegality.¹¹ In PVC the decision stated that 'the agreement to which the Commission takes objection relates to a continuing enterprise or partnership to prevent restrict or distort competition in the PVC market over a period of several years'.¹²

In a leading US case on conspiracy Kissel v US, Justice Holmes stressed the temporal nature of the conspiracy agreement:

[…] (W)hen the plot contemplates bringing to pass a continuous result that will not continue without the continuous co-operation of the conspirators to keep it up, and there is such continuous co-operation, it is a perversion of natural thought and of natural language to call such continuous co-operation a cinematographic series of distinct conspiracies, rather than to call it a single one.¹³

This time element is probably the single most critical aspect in which the 'conspiracy agreement' captured the essence of cartel misbehaviour. Emphasising the continuing nature of the venture rendered otiose any discussion whether a cartel was one or a series of infringements. In Rhône-Poulenc¹⁴ the Court of First Instance in an unconscious echo of Oliver Wendell Holmes stated that the various schemes to which the polypropylene producers subscribed 'were part of a series of efforts made by the undertakings […] in pursuit of a single economic aim, namely to distort the normal movement of prices on the market in polypropylene. It would thus be artificial to split up such continuous conduct, characterised by a single purpose, by treating it as consisting of a number of separate infringements'.

Single or multiple infringements

As is clear from Rhône-Poulenc, the 'continuing infringement' concept was conceived as an instrument for treating conduct that was clearly all part of the same cartel as a single scheme and not as a series of distinct conspiracies. Yet the Commission now routinely cites the 'artificiality' analysis out of context as a justification for rolling up separate infringements into one overarching scheme. Rhône-Poulenc does not even address the question of whether there are one or several cartels. It presupposes the existence of a single cartel, as is implicit in the ECJ judgment in Cement: 'An infringement of Article 81 (1) may result not only from an isolated act but also from a series of acts or from continuous conduct.'¹⁵

Economic analysis based on 'relevant markets' has no great role in the inquiry either. Cartels define their own scope, so there is no need of proxy methods to determine what competition has been affected.¹⁶

In pre-leniency days, if the issue of single or multiple cartels came up, the hard documentation seized in the dawn raids often provided the answer. Even where the arrangements covered several distinct products, this did not necessarily mean different infringements: the rationale, functioning and structure of the cartel itself may provide the best indication of its scope. The parties sometimes even resolved the 'one agreement or several' question themselves by covering several products in one written agreement. In Peroxygen Products¹⁷ the producers at different times concluded formal, though secret, 'France', 'Germany' and 'Benelux' agreements.

A growing inconsistency

As the Commission's case docket has grown, driven largely by the institution of leniency, the issues have become less clear-cut and the decisions less consistent.

The 'single or manifold infringement(s)' question has become increasingly controversial in various contexts in EU enforcement, including when:

• the 'continuous' conduct arguably comprises successive cartels, which the Commission combines to increase duration (thus the fine) or even to avoid the first fact set being time-barred;¹⁸
• collusive arrangements operating in parallel in different products, not all of which are made by all players, are treated by the Commission as one cartel, making undertakings jointly liable for price-fixing in products they do not make, with exposure as co-conspirators to civil damages;¹⁹
• alleged cartel arrangements in the EU and overseas with a multiplicity of parties are conflated into a single 'global infringement', treatment which risks blurring jurisdictional lines and fudging precise definition of the aspects in which article 81 is infringed;²⁰
• the Commission rolls up what look like separate national 'trade association' cartels, started and ending at different times, into a grand overarching conspiracy covering the whole period, thus maximising duration;²¹
• minor players with a position only in a particular national market participate in collusive arrangements relating to that market, which for the major producers are a subset of the wider pan - European cartel;²² and
• big players operate identical collusive arrangements in several national markets and the Commission (while fining the top parent companies) treats the arrangements as separate local cartels rather than one overall scheme, complicating yet further the unpredictable operation under modernisation of leniency at member state and EU level.²³

The list is not exhaustive and scenarios often overlap.

Making the choice

Although with an eye on double jeopardy it is sometimes the defence that argues there was one infringement, rolling up conduct into a 'single infringement' usually works to the undertakings' disadvantage in terms of increasing duration or follow-on civil liability.

In the decisions, the Commission sometimes invokes various 'objective elements'²⁴ to justify its analysis: a 'common objective'; arrangements covering several products or services; similar behaviour in different geographic areas; and points of commonality in cartel membership, modus operandi, personnel and meetings. The elements are to be considered together, no one factor is decisive, and the weight accorded to each varies from case to case. This approach may sound reasonable enough, but the Commission seems to take the view that, provided it rehearses the various considerations, it has a wide margin of discretion.²⁵ But merely checking boxes could not only fuel accusations that the outcome of the enquiry is driven by extraneous policy considerations; it also leads to the contradictory and confusing patchwork of decisions.

Multiple products, one cartel?

In most decisions, the Commission simply characterises a complex cartel as a single continuing infringement - and in essence as an agreement - without complicating matters by attempting an exhaustive definition. When it has ventured to do so in a few cases, the reader is left none the wiser:

Scenario	Case	Treatment	Infringement(s) found	Applicants claim	CFI findings
1. Two successive cartels	Choline Chloride	One SCI	One cartel: Choline Chloride (Global agreement) and (EEA agreement)	Applicants claim separate consecutive agreements	CFI found two successive infringements
2. Multiple products	Greek Ferries	Reasoning of decision claims one SCI	Article 1 of operative part found two separate infringements, three routes (North/South)	Applicants challenged three routes were one SCI	CFI held decision found two infringements
	Carbon & Graphite Products	One SCI	One cartel: two products (carbon and graphite products and blocks of carbon and graphite)	One applicant challenged SCI approach	CFI found one SCI (ECJ appeal pending)
	Hydrogen Peroxide and Perborate	One SCI	One cartel: two products (PBS, PCS)	Applicant challenges the SCI	Pending
	Methacrylates	One SCI	One cartel: three PMMA products (allegation in upstream product dropped)	One applicant challenges SCI	Pending
	Synthetic Rubber	One SCI	One cartel: two products (BR, ESBR)	Applicant challenges SCI	Pending
	Intl Removal Services	One SCI	One cartel: two agreements: i) prices and ii) commission, and cover quotes	Applicant challenges overall single infringement	Pending
	Candle wax	One SCI	One cartel: two products (paraffin waxes and slack wax)	Applicants challenge SCI	Pending
	Vitamins	Multiple infringements	12 cartels, 12 vitamins	BASF claimed that SO alleged one cartel	CFI found 12 infringements
	Specialty Graphite	Multiple infringements	Two separate cartels: isostatic and extruded graphites	Applicants claimed isostatic, extruded and Graphite Electrodes formed one cartel only	CFI dismissed claims of one SCI
	Citric Acid	One SCI	Cartel in citric acid (Sodium gluconate entirely separate cartel)	Applicants claimed Sodium Gluconate and Citric Acid formed one cartel	CFI dismissed claims of one SCI
	Threads	Multiple infringements	Three cartels: Automotive thread (EEA) Industrial Thread (Benelux and Nordic countries) and Industrial Thread (UK)	Applicants claim one SCI	Pending
	Needles	One SCI	One cartel: three separate agreements (the last one on zip and fasteners)	Applicants claimed zip and other fasteners SCI together with Fasteners	CFI confirmed the separation of Needles and Fasteners (ECJ appeal pending)
	Fasteners	Multiple infringements	Separate cartels: zip fasteners, other fasteners and attaching machines	Applicants claim zip and other fasteners SCI together with Needles	Pending
3. EU and overseas cartels	Seamless Steel Tubes	One SCI	One cartel: Seamless steel tubes (European-Japan agreement) and (EEA agreement)	Applicants claim two separate home market agreements	CFI dismissed claims of sparate home markets
	Choline Chloride	One SCI	One cartel: Choline Chloride (Global agreement) and (EEA agreement)	Applicants claim separate consecutive agreements	CFI found two infringements
	Gas Insulated Switchgear	One SCI	One cartel: Gas Insulated Switchgear (European-Japan agreement) and (EEA agreement)	Applicants claim Commission wrongly assumed spillover from ROW arrangement to EU	Pending
4. National (trade association) cartels	Industrial bags	One SCI	One cartel: Industrial bags in Belgium, Germany, Spain, France, Luxembourg and the Netherlands	Applicants claim multiple agreements	Pending
5. National subset only	Organic Peroxides	One SCI	One cartel: Organic Peroxides (European/ Spanish agreement)	Applicant claimed separate national agreement	CFI dismissed claims
6. Separate national cartels	Threads	Multiple infringements	See above	See above	See above
	Elevators and Escalators	Multiple infringements	Four cartels: installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands	ThyssenKrupp claims one SCI	Pending

'A single infringement is a set of infringements interlinked by an objective identity (all its component features serve the same purpose) and a subjective identity (same parties, aware of participating in or supporting a common objective).'²⁶

Apart from the obscurity, talking of a 'set of infringements' is confusing when the whole basis of the concept is its unitary nature. To be sure, in many cases the Commission has reached the right result, perhaps intuitively. In Vitamins,²⁷ despite the two main players BASF and Roche both making the full range, and a list of other commonalities, the Commission found there were 12 separate cartels, one per product, attracting separate fines. Four of the infringements were found to be time-barred. The CFI made the point that if the Commission had found that there was a single infringement covering all vitamin products, it could probably also have included the company's turnover in two products where as a discrete infringement the collusion was time barred under Regulation No. 2988/74.²⁸

The Commission may have baulked at making the less prominent producers liable, along with the two largest players, as co-conspirators in arrangements in products they did not make. No such qualms affected its approach in Methacrylates:²⁹ there, one single infringement was found covering three different downstream PMMA (polymethyl-methacrylate) products, despite some producers making only one. The Commission held there were 'sufficient links' between the arrangements to demonstrate a common scheme. To be sure, a cartel combining an upstream product and its downstream derivatives may well make sense: controlling the price of the basic feedstock may be the key to rigging the downstream markets³⁰ - although then the inherent conflicts of interest could mean that a company that produces only the downstream product would be a victim rather than a beneficiary of the arrangements in the upstream product. In Methacrylates, the Commission had to drop for lack of evidence the original allegation that the cartel included the upstream product MMA (methacrylate monomers), a development that could undermine the force of its arguments on the 'links' between the downstream products.

Of course one cartel can cover several products that are not substitutable. What counts is not economic 'relevant market' analysis but the scope and functioning of the cartel itself. The cartel members can agree to collude in one forum in a whole group of related products.³¹

In Austrian Banks,³² where there was an overall coordinating body for the various (closely interconnected) agreements, it made sense to find a single cartel: the individual committees 'were part of an organisational whole' and as the Commission observed, an artificial division of the network into its individual components would have borne no relation to reality. In other cases, there was no evidence of 'overall coordination' between the arrangements, separate meetings were held and there was no need for coordination between the different bodies. Here the Commission tends to differentiate separate infringements, emphasising for example in Industrial Threads³³ that although some participants took part in two or three of the cartels identified, most were members of only one.

Local players, European cartel

Another problem is whether a minor local producer whose role is limited to participation in a narrow national arrangement is liable along with the ringleaders who saw that arrangement as a subset of their overall European-wide cartel. According to the case law, such a player may be held responsible for the overall cartel 'if it knew, or must have known, that the collusion in which it participated was part of an overall plan and that the overall plan included all the constituent elements of the cartel.'³⁴ In Pre-Insulated Pipes, the Italian producer Sigma may have been lucky to have had the Commission's finding that it was a party to the global arrangements reversed, given that in the decision it had already received a substantial fine reduction.³⁵

Separate 'national' infringements, or one EC wide infringement?

In Industrial Bags,³⁶ a network of national 'trade association' cartels operating in the various member states was treated as one overall 'European' infringement. Yet in Lifts and Escalators³⁷ the Commission determined with no explanation that the arrangements between the four big players were 'separate but related single and continuous infringements of article 81 in Belgium, Germany, Luxembourg and the Netherlands'. (Each national agreement covered the two products.) Strangely, the decision even lists a whole series of commonalities pointing to a single pan-European scheme, which are then left in the air. The fragmentation of the violations generated a confusing leniency patchwork. The case had started with ex officio dawn raids in Belgium that seem to have been inconclusive. Kone came in and received full 8(b) post-inspection immunity for Belgium, and also in Luxembourg; Otis obtained full immunity under 8(a) for the Dutch market. For Germany nobody received immunity. Only ThyssenKrupp disputed the Commission's analysis of four separate infringements. (It now claims in the CFI that the Commission ignored amnesty granted by the national authorities in Belgium and Luxembourg.)

Once the Commission had started investigations, Brussels would seem the natural first port of call for leniency applicants. But if (as the Commission found) there was a string of separate national cartels, applying to the NCA's 'well placed to deal with the case' might also make sense.³⁸ The CFI will now have to unravel the Byzantine ramifications of competing immunity applications to different national authorities as well as to the Commission.

Judicial decisions

Several cases on point have already been decided in Luxembourg. Others are slowly working their way through the courts. A multitude of issues is raised ranging from double jeopardy to limitation. Sometimes it is the companies themselves which argue for one combined infringement, usually when they are serial offenders and claim ne bis in idem. In SGL v Commission,³⁹ where the applicant had taken part in three cartels in isostatic graphite, extruded graphite and graphite electrodes, the CFI, to nobody's surprise, rejected the claim that the Commission had artificially unravelled one cartel in order to fine the company three times over. The same ingenious argument was made with equal lack of success in Citric Acid.⁴⁰ Jungbunzlauer, which had already been fined for the sodium gluconate cartel, claimed that by 'artificially severing' the two cases, the Commission had contrived to exceed the 10 per cent turnover cap. Although the CFI found the Commission had based its assessment on 'objective grounds', it did not see the need to articulate any test.

In most cases, the applicants have argued for separate agreements. In JFE Engineering,⁴¹ the CFI made short work of the argument of the Japanese producers that the 'home market agreement' was in fact two cartels, one in Japan, another in Europe - to which they did not belong. In a few terse paragraphs, the Court found that the agreement to which all the producers subscribed was an 'integrated set of rules' that it would be artificial to decorticate. If again the judgment gives little general guidance, it is hard to disagree with the Court that any other finding by the Commission would have been 'inappropriate'.

The CFI took a very different view in December 2007 in a second case where there were both global price stabilisation arrangements and a European carve-up. The two agreements were consecutive and limitation came into play. In BASF and UCB v Commission the Commission was called to order for what the applicants claimed was a colourable attempt to circumvent article 25(1) of Regulation 1/2003 and extend duration by two years. An otherwise time-barred global cartel between the North American and EU producers of choline chloride that stopped in April 1994 was rolled into the same 'continuous infringement' as a later agreement between the EU producers alone that still operated. But while the US and Canadian producers escaped fines entirely on the ground that 'their' violation was time-barred, the EU players were held responsible for an infringement going back to the formation of the first (global) cartel with the North Americans in 1992.

The Commission claimed to 'link' the two fact sets by means of the producers' common (but generic) intention to distort competition in the same product market. The CFI found that if a broad intention to increase prices were enough, different types of offending conduct in a particular industrial sector would automatically have to be treated as constituent elements of a single infringement. Simply showing links between two agreements was in any case insufficient: to establish a single violation, since there had to be a common plan or economic aim; and crucially the arrangements had to be complementary, in the sense of interacting to realise the intended set of anti-competitive effects within the framework of a single objective. For the CFI, interdependence was the key.

The European and global infringements were each single continuous infringements on their own. The Commission had failed to demonstrate sufficient interdependence between the global and the later EU cartel: the Europeans had only begun to allocate the European market among themselves after the global arrangement had failed. That the agreements were successive rather than simultaneous may have facilitated the analysis. To be sure, cartels develop organically, but without firm evidence of continuity, the Commission invoked in vain Pre-Insulated Pipes, where right from the cartel's beginnings in Denmark the aim had been to extend it to the whole of Europe. On the facts, the CFI held that the two arrangements were not 'interdependent'. BASF is the clearest attempt so far by the Court to address the issue, but while useful in identifying 'complementarity' as the decisive question, it stops just short of proposing a litmus test of general application.

Finding the right answer

Durable as the single infringement concept has proved, it was never intended as a slogan to substitute conveniently for robust legal or factual assessment. It assumes there is one cartel, hence the obvious 'artificiality' of treating each successive or related manifestation as a discrete infringement. On its own, and without more detailed analysis, it begs the question whether a given course of conduct constitutes a single conspiracy or multiple conspiracies. Sharing a similar general purpose of restricting competition does not turn separate agreements into a single infringement. Finding the 'right' answer is an empirical process, but it would be desirable to formulate a uniform test that the Commission could apply free from suspicion that its choice was driven by the desired outcome.

Given the single infringement's origins in the law of conspiracy, the US jurisprudence provides a rich source to draw on to resolve the conundrum. As in EC practice, the 'single v multiple conspiracy' question arises in several contexts, including both double jeopardy and the due process clause in the Fifth Amendment.⁴² In the latter, when one broad conspiracy is charged, the evidence as it comes out in court may show the existence of several conspiracies. The inquiry on appeal is then whether a variance between indictment and proof at trial has prejudiced the defendant's substantial rights. Casting the dragnet too wide can result in jury confusion and transference of the core players' guilt to minor actors.

Conspiracy as an agreement

One approach deriving from the nature of conspiracy as an agreement is to enquire what exactly it was that the parties agreed to. According to the US Supreme Court in Braverman v US:⁴³ 'The precise nature and extent of the conspiracy must be determined by reference to the agreement which embraces and defines its objects.'

But just like the EC single infringement analysis, the Braverman approach on its own is circular. It presupposes there is one conspiracy, and the enquiry is thus of limited value. True, the more that is known of the facts, the more material there is to inform the decision how many agreements there are. Cartels however normally thrive on secrecy, not only towards the outside world but even internally where success may require information to be rationed on a 'need-to-know' basis. It may suit the minor players to mind their own business and not ask too many awkward questions.

For the courts, the task has been to find a way of analysing the facts that will lead to an objective determination of the scope of conspiracies.

In earlier cases, US courts were willing to draw inferences from the structure of the conspiracy or 'nature of the enterprise'.⁴⁴ In the 'hub and spoke' or 'wheel conspiracy' each of the actors forming the various spokes may have been unaware of the existence of the others. Classical conspiracy reasoning distinguished the 'hub and spoke' from the 'chain' conspiracy, where, because of the obvious interdependence of the actors, it was easier to find a single overall scheme. But structure is not in itself the determining factor: the essential point in either case is whether the actions of the conspirators were in furtherance of the same goal and there was interdependence between them. What the case law sometimes calls the 'nature of the scheme' really involves the analysis of interdependence.⁴⁵

Recent US antitrust cases have applied a 'totality of the circumstances' test.⁴⁶ The usual context is a dispute whether there is a single nationwide price-fixing conspiracy or separate local conspiracies. Normally, it suits minor defendants to have the latter finding as it limits their culpability. Courts have developed a checklist of important factors not very different from the Commission's - with one critical addition. The factors are:

• number of alleged overt acts in common;
• overlap in personnel and in the time periods;
• similarity in the modus operandi;
• location of the actions;
• the sharing of a common objective; and
• in addition, however, the US courts will examine the degree of interdependence required between the parts and the whole in order for the scheme to succeed.⁴⁷

Establishing the critical element of 'interdependence' not only requires an objective determination as to 'whether the activities of one aspect of the scheme are necessary or advantageous to the success of another aspect of the scheme'; in addition there is a subjective requirement for each participant to understand that this is the case. 'Each defendant's state of mind, and not his mere participation in some branch of the venture is key'.⁴⁸

Knowing involvement is thus a vital component of interdependence.

The DoJ Antitrust Division Grand Jury Manual⁴⁹ instructs prosecutors that the allegations in the indictment must mirror what the available evidence demonstrates: if the evidence supports one overall conspiracy with several sub-parts, it is appropriate to charge a single conspiracy. Where there is both a core group and minor players, prosecutors must ask themselves whether the latter knowingly participated along with the core to achieve a common goal (overall conspiracy) or each conspired separately with a common central figure. The key is the scope of the agreement:

However this is not agreement in a subjective, contract sense of the word, for this would often result in extremely narrow conspiracies. If the general contours of a conspiracy are known, all those that interact with any other conspirators in such a way as to further the goals of the conspiracy are parties to the conspiracy and the sum of the interactions becomes the scope of the agreement.⁵⁰

The DoJ's formulation encapsulates the critical point neatly. It is the interaction of the parties that defines the terms of their agreement. In a global conspiracy, the role of the fringe players may well be limited to a narrow local arrangement. They should not be held responsible for merely knowing about the existence of an entirely unrelated conspiracy in which they have no stake or interest. Nor should mere suspicion on their part of the existence of a wider conspiracy necessarily make them guilty of participation in the entire scheme. Even where there is one overall plan, imputing to all the players a commitment to a common cause could be problematic absent knowledge of how the parts interact. But their knowledge does not have to be perfect. Consolidated Packaging⁵¹ provides an instructive counterweight to protestations of ignorance: 'Consolidated [...] knew enough about the [overall] conspiracy to use it to serve its own purposes when needed [...] there was interested co-operation with a stake in the venture'. As the 7th Circuit put it, 'known interdependence […] makes it reasonable to speak of a common understanding'.

In US practice, to be able to hold a 'fringe player' responsible for the whole venture, the factfinder must therefore make a two-step inquiry:

• were the defendants generally aware of the objectives and composition of the larger conspiracy?; and
• was the success of the various parts of the necessary to the success of the whole and vice versa?⁵²

***

The question of 'one or multiple infringements' will keep recurring in the Commission enforcement environment.

Sometimes the question may be whether a minor player participating only in a limited 'national' sub-conspiracy that is a subset of a European-wide cartel is co-responsible along with the main actors for the whole plan. Here the CFI rightly insists on awareness by the minor players of the overall scheme⁵³ but apart from BASF, the judgements have not emphasised the importance of interdependence between the components. Another context is where the Commission rolls up into a single 'multi-product' cartel the producers of just one or a limited number of the products involved. With the increasing risk in Europe of exposure to civil claims, companies may feel a sense of injustice at being made co-responsible on a joint and several basis for the loss caused by a cartel in a product they did not even produce.

Whatever the test for determining the question is called, it should involve a consistent, reasonable and objective approach. Reference to structure alone is too formalistic and inadequate as a test; the members of a cartel constantly devise new subtleties to improve the effectiveness and reduce the visibility of their plot. However attractive the Commission finds its current approach of enumerating a string of 'links', this alone, without a proper examination of interdependence, is too vague and imprecise. Two equally reasonable people applying the approach can come to opposite conclusions.

For a web of agreements to be combined into one overall conspiracy, vague links or similarities between the components are not enough. The participants should all be 'knowing stakeholders' in the overall venture. To provide a fair and workable test in the EC context, the interdependence inquiry mandated by the CFI in BASF should be refined into a two-stage factual assessment of whether the success of the various parts of the conspiracy is essential to the success of the whole and vice versa; and the participants, whatever their role, consciously contributed to and had a stake in the success of the whole enterprise. With minor adaptations, the test can be used in any scenario. The key is giving the 'totality of the circumstances' test a clear focus on answering the question: what was the scope of the enterprise in which all players had a stake?

Notes

1.

Re Polypropylene [1986] OJ L230/1.

2.

Re Rhône-Poulenc v Commission [1991] ECR II-867.

3.

Cardozo, The Nature of the Judicial Process, Lecture II, p 51 (Yale University Press, 1921).

4.

Harding and Joshua, Regulating Cartels in Europe, OUP (2003).

5.

[1969] JO L192/5; ACF Chemiefarma v Commission [1970] ECR 661.

6.

[1972] ECR 619.

7.

Joshua and Jordan, "Combinations, Concerted Practices and Cartels" (2004) 24 Northwestern Journal of International law and Business, 647 for the history.

8.

Pre-Insulated Pipes [1999] OJ L24/1, recital 134.

9.

Section One Sherman Act is an unusual type of statutory conspiracy where neither the underlying end nor the means adopted were in themselves unlawful. Rather the enacting statute creates the 'initial' illegality.

10.

DPP v Doot [1973] AC 807.

11.

US v Kissel, 218 US 601 (1910).

12.

PVC II [1994] OJ L239/14.

13.

US v Kissel.

14.

[1991] ECR II-867, paras 125-126. Another main effect of the SCI concept was to render superfluous any distinction between agreement and concerted practice in a cartel case.

15.

[2004] ECR I-123, para 258.

16.

Industrial Bags, http://ec.europa.eu/competition/antitrust/cases/decisions/38354/en.pdf. See also Tokai Carbon and others v Commission, [2005] ECR II-10*, recital 90.

17.

Peroxygen Products [1985] OJ L35/1.

18.

BASF and UCB v Commission [2007] ECR II-4949.

19.

Methacrylates http://ec.europa.eu/competition/antitrust/cases/decisions/38645/en.pdf.

20.

BASF and UCB v Commission; Commission Decision in Gas Insulated Switchgear [2008] OJ C5/7.

21.

If the national cartels are treated as one infringement, 'duration' is calculated from the start of the first manifestation: Industrial Bags.

22.

See the position of Sigma in Pre-Insulated Pipes where the CFI annulled the finding of participation in the overall infringement.

23.

Lifts and Escalators, http://ec.europa.eu/competition/antitrust/cases/decisions/38823/en.pdf

24.

Faull and Nikpay The EC Law of Competition, (2nd ed, 2007), 8.499, citing Tokai Carbon Co v Commission, paras 118-124, supra n 16.

25.

Faull and Nikpay, 8.499.

26.

Eg Plasterboard [2005] OJ L166/8; Organic Peroxides [2005] OJ L110/44.

27.

Vitamins [2003] OJ L6/1.

28.

Now article 25 of Regulation 1/2003.

29.

Methacrylates, supra No. 19.

30.

As in Hydrogen Peroxide, [2006] OJ L353/54.

31.

Carbon and Graphite Products http://ec.europa.eu/competition/antitrust/cases/decisions/38359/en.pdf

32.

Austrian Banks, [2004] OJ L56/1.

33.

Industrial Threads, [2008] OJ C21/10.

34.

Buchmann v Commission [1998] ECR II-813.

35.

Sigma v Commission [2002] ECR II-1845.

36.

Industrial Bags, supra note 16.

37.

Lifts and Escalators, http://ec.europa.eu/competition/antitrust/cases/decisions/38823/en.pdf.

38.

Commission Notice on cooperation within the Network of Competition Authorities, [2004] OJ C101/43.

39.

Tokai Carbon and others v Commission, supra note 16.

40.

Jungbunzlauer v Commission, [2006] ECR II-3435.

41.

[2004] ECR II-2501, para 179.

42.

Note, Single v Multiple Conspiracies (1980-1981) 65 Minn L Rev. 295

43.

317 US 49 (1942).

44.

US v Magnano, 543 F2d 431, 434 (2nd Cir 1976); See also 'Federal Treatment of Multiple Conspiracies', (1957) 57 Colum L Rev 387, 390.

45.

US v Portela, 167 F3d 687 (1st Cir 1999).

46.

Grand Jury Manual, Ch 7, page 28.

47.

US v Chagra, 653 F2d 26,29 (1st Cir 1981); US v Tercero, 580 F2d 312, 315 (8th Cir 1978).

48.

US v Glenn, 828 F2d 855, 857-859 (1st Cir 1987); US v Portela, 167 F.3d 687 (1st Cir 1999).

49.

Grand Jury Manual, Ch 7 page 24.http://www.usdoj.gov/atr/public/guidelines/207021.htm.

50.

Grand Jury Manual, ch 7, page 31.

51.

US v Consolidated Packaging, 575 F.2d 117 (7th Cir 1978).

52.

Grand Jury Manual, Ch 7, page 28.

53.

See the position of Sigma in Pre-Insulated Pipes.

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