AG Opinion in ICAP (relating to YIRD fining decision against ICAP as cartel facilitator)

Posted by Chantal Lavoie on 5 May 2019

In his opinion this week in the ICAP appeal (in relation to the Yen interest rate derivatives cartel decision), AG Tanchev compares the European Commission's view of the fining methodology used in setting a fine on ICAP to a "Coca-Cola formula, which the parties and the EU Courts can enjoy and 'taste', but are expected to accept as being secret".  AG Tanchev rejects this view and suggests to the Court of Justice to uphold the General Court's judgment annulling the nearly EUR 15 million fine imposed on ICAP (now NEX International Limited) for failure to provide sufficient reasoning regarding the methodology applied for setting the fine. 

AG Tanchev finds that it was not sufficient for the Commission to provide general assurances that the fine reflected the gravity, duration and nature of NEX's involvement.  Key takeaways from the AG’s opinion: (i) the Commission departed from the fining guidelines because ICAP was a facilitator and therefore not active on the market on which the infringement took place: the obligation to state reasons must be applied all the more rigorously where the general fining methodology is not relied upon; (ii) there were two facilitators fined in this case (ICAP and R.P. Martin) and the Court (and the defendant) must be able to assess whether there was any discriminatory treatment in setting the fine; (iii) it is not sufficient for the Commission to give general assurances that the fine reflects the gravity, duration and nature of the infringement; (iv) the fining methodology is not a mere internal calculation made by the Commission.  In this instance the Commission arrived at a so-called lump sum amount but based on a complex five-stage methodology which was not mentioned in the statement of objections.  It was not sufficient for the Commission to have disclosed some general elements of the fine calculation in a meeting with ICAP during the proceedings and to disclose the methodology during the Court proceedings.  Interestingly, as in the Intel decision where an AEC test was carried out even though the Commission considered it was not necessary, the Commission did rely here on a complex methodology to arrive at a lump sum fine amount.  As a result, the methodology for calculating the fine, like the econometric model in the UPS decision and the AEC test in the Intel decision, was an important element of the Commission’s decision and its non-disclosure constituted a breach of the rights of the defence; (v) this case is different from Treuhand in several respects, notably in Treuhand there was only one facilitator and therefore no risk of unequal treatment; a lump-sum approach was used, not an underlying complex fining methodology undisclosed in the statement of objections; (vi) the opinion also provides a useful clarification in interpreting the Treuhand judgment in the light of the Chalkor judgment: whilst the Commission is not required to disclose the actual calculations and figures used in setting a fine (Treuhand), the Commission must explain the weighting and assessment of the factors taken into account in setting the fine (Chalkor). 

The opinion highlights the important role played by the EU Courts in ensuring due process and upholding the fundamental rights of parties in Commission proceedings.  In this particular case, where the Commission departed from the fining guidelines and risks of unequal treatment were present given the fines imposed on two facilitators, the review role of the Court becomes all the more important and consequently the need to verify the factors taken into account in setting the fine, rather than rely on general assurances from the Commission.  If upheld by the Court of Justice, this case will be another confirmation, after the UPS judgment and Intel judgment, of the EU Courts’ willingness to exercise a ‘checks and balances’ to constrain the Commission’s discretion.

Copyright 2015, Lavoielegal. All rights reserved.