29 June 2006 10:31 [Source: ICIS news]
BRUSSELS (ICIS news)--?xml:namespace>
The Luxembourg-based European Court of Justice ruled that the European Commission was allowed to fine the Japanese company based on its worldwide turnover for its participation in a cartel in the graphite electrode industry in the late 1990s.
The company argued the fine was unfair since it had already been prosecuted for the same cartel in the
The EU’s second highest court, the Court of First Instance, had reduced Showa Denko’s fine from €17.4m in 2004.
Showa Denko appealed to the Court to withdraw the deterrence multiplier used by the Commission in setting the high fines against the company. That multiplier is the predecessor to the entry fee included in Wednesday’s new guidelines allowing cartel fines to include up to 25% of company turnover in the fine.
The Court halved to 4% from 8% the extra reduction granted by the Court of First Instance to SGL for having provided more information to the Commission than it was obliged to under the law. The Court agreed on Wednesday with Advocate General Geelhoed that only a minor element of the questions put by the Commission to SGL went beyond what the Commission was entitled to ask and the reduction granted by the CFI should be changed to reflect that.
SGL Carbon said it had been confident that the court would substantially reduce the fine under the principle of double jeopardy, as it had been fined by the US Department of Justice in 1999 in the same case..
"The ECJ, however, did not do this in spite of many strong arguments, and ultimately decided to side with the European Commission," the company said in a statement. "Due to this ruling, the company will now undertake adjustments in its provisions, leading to a negative impact on EBIT (earnings before interest and tax) in the second quarter of €23.5m and on the financial result of €12.7m."Four Japanese companies, including Showa Denko, two American companies - GrafTech International, formerly UCAR International Inc and The Carbide/Graphite Group Inc - and Germany-based SGL Carbon were implicated in the cartel. The American companies did not appeal their fines. The European Union has increased its pressure on European and worldwide cartels in recent years, taking a no-tolerance policy against anti-competitive behaviour. European chemical companies have been hardest hit over the past decade and especially during 2006.
The European Commission released Wednesday new guidelines that will pose stiffer penalties for price fixing and cartels, set to come into effect within the next two months.
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