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District Court of Rotterdam rules in silverskin onion cartel

16-04-2014

On May 25, 2012, ACM (one of its predecessors, the Netherlands Competition Authority) imposed fines totaling more than EUR 9 million on undertakings that grow and process silverskin onions for having violated the Dutch and European cartel prohibitions. The undertakings involved, which had a substantial combined market share, had made agreements about the maximum area to be sown with silverskin onions. They also restricted competition by jointly purchasing equipment of undertakings that had ceased operations (preventing such equipment from falling into the hands of others), and by exchanging information about prices amongst each other.

With the approval of ACM, the five undertakings involved filed a direct appeal with the District Court of Rotterdam (the objection procedure was skipped). The court issued its ruling on March 20, 2014.

The court is of the opinion that ACM correctly established a violation for the agreements that had the objective of restricting/controlling supply, and of stabilizing the competitive positions in the market in order to get prices to a higher level.

It was not possible for the undertakings to invoke the European agricultural rules (CMO) in order to escape the cartel prohibition.

The violation spanned the period of 1998-2006. That includes the period until 2003, when four of the five undertakings were still working together as part of a cooperative.

With regard to the fines, the court agrees with ACM that this violation was very serious (seriousness factor 2.75 on a scale of 0 to 3, in accordance with the 2007 NMa Fining Policy Rules that were applicable at the time).

Furthermore, the court is of the opinion that ACM was allowed to base the fine on the ‘affected’ turnover that had been generated from silverskin onion sales in the entire European Union, and not just from sales in the Netherlands, as argued by the undertakings. However, the court does note that this has only been possible since the national competition authorities were expressly charged by the EU with the task of decentralized enforcement of European antitrust regulations in Regulation 1/2003.

The court stands by its ruling of 1 July 2010 in the ‘Tree Nurseries’ case, where ACM, for the calculation of the fines, was not allowed to include the affected turnover that was older than the prescription time limit of five years. ACM filed an appeal against this ruling, and, on 10 April 2014, the Dutch Trade and Industry Appeals Tribunal allowed this appeal in the Tree Nurseries case. However, even if turnovers in silverskin onions of more than five years ago were not included in the calculation, the subsequent fines would still exceed the statutory maximum of 10 percent of total annual turnover. That is why, for four of the five parties, the court’s opinion (which turned out to be an incorrect opinion) does not result in a reduction of the maximum fines imposed by ACM. These fines have thus been upheld, although the fine on one of the parties will be reduced after all because ACM acknowledged to have erroneously counted an item twice when it calculated the fine maximum.

With regard to the fifth party, the court did not have the correct turnover data in order to issue a ruling straightaway in line with the Tree Nurseries case. The court has therefore given ACM the opportunity to formulate a position thereon, after which a final decision will be rendered.

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