German Utility Must Pay $47.5M for Tampering

     (CN) – Europe’s highest court upheld a $47.5 million fine against E.ON Energie for tampering with official seals during an antitrust investigation.
     E.ON Energie incurred the penalty for its conduct during a 2006 antitrust probe by the European Commission.
     Unable to complete their inspection of the company’s Munich headquarters in a single day, commission investigators placed some documents in a room, locked the door and affixed a tamperproof seal.
     Inspectors took the key to the room, unaware that 20 master keys could also open the door.
     Removal of commission seals creates a void mark on the surface of the sticker. Inspectors saw the tell-tale signs of trespass the next morning, and the commission imposed a fine of about $47.5 million on E.ON for the tampering.
     The Luxembourg-based General Court of the European Union upheld the fine in December 2010. But an adviser to the highest court suggested that the lower court may have shirked its responsibilities by simply agreeing to the commission’s fine – rather than carrying out its own unlimited jurisdiction assessment of the case – and recommended imposing the maximum fine.
     EU law allows the commission to impose fines of up to one percent of a company’s annual turnover – in this case up to $88 million – for tampering with an investigation.
     The Court of Justice declined Thursday to augment the fine against E.ON. It also rejected the company’s defense that it never tampered with the seals, but that the void mark appeared because the seals were old and defective.
     “In so far as E.ON Energie seeks to derive an argument, in the first ground of appeal, from the seal at issue having exceeded its shelf life, it is sufficient to note that E.ON Energie is contesting the factual assessments made by the General Court as regards the various pieces of evidence produced,” the ruling states. “In this respect, its argument is therefore inadmissible.”
     “As regards the argument alleging uncertainty, attributable to the commission, concerning the effectiveness of the seal at issue actually used in the present case, it must be recalled … that the General Court did not err in law in finding that the burden of proof lay with E.ON Energie, except in so far as such proof could not be provided by the undertaking concerned on account of the conduct of the Commission itself,” the ruling continues. “After asking itself the correct question in law, the General Court then found, on the basis of the evidence before it … that uncertainty attributable to the commission had not been established, with the result that the burden of proof actually lay with E.ON Energie. In so far as E.ON Energie disputes that factual assessment by the General Court, its arguments are inadmissible.”
     The Court of Justice also rejected E.ON’s claim that the fine violates the EU’s law of proportionality. This finding relies on proof that the lower court erred in law, according to the ruling.
     “The General Court did not err in law by considering … that an infringement consisting of a breach of seal is particularly serious by its own nature, E.ON Energie’s arguments – that alleged non-opening of the door of room G.505 ought to have changed the General Court’s assessment – must therefore be dismissed,” the justices found. “As regards the second of those reasons, concerning E.ON Energie’s size, it should be observed that the General Court, in order to assess the proportionality of the fine in relation to E.ON Energie’s size, points … to the fact that the EUR 38 million fine imposed on that undertaking represents 0.14% of its annual turnover. In this regard, it is sufficient to observe that that percentage … was not contested by E.ON Energie either before the General Court or the Court of Justice, and therefore is an established fact in the context of the present appeal. In those circumstances, it must be held that E.ON Energie has not put forward any argument demonstrating that the General Court’s confirmation of the setting of such an amount of a fine was disproportionate in relation to the size of the undertaking as such.”
     Finding that the commission has the power to levy antitrust fines of up to 10 percent of E.ON’s previous-year turnover, the 0.14 percent fine cannot be considered excessive, the court concluded.

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