Tampering Fine Appeal May Add to Penalty

(CN) - The $47.5 million judgment against a German energy company that tampered with an antitrust investigation could increase at the urging of an adviser to the European Union's highest court.

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 it may get another crack at the case after Court of Justice Advocate General Yves Bot recommended vacating the order Thursday.

Noting that the General Court has "unlimited jurisdiction" with regard to commission fines, Bot said the court should have carried out its own assessment.

Bot said the General Court shirked its responsibilities to comply with the EU principle of proportionality.

"I think that the General Court's appraisal was not sufficiently independent of that of the commission," he wrote.

"In the present case, the question was whether the fine ... imposed by the commission was a just penalty for the appellant's alleged conduct," he continued. "Did a fine of that amount make it possible to penalize the applicant's unlawful conduct effectively, in a manner which is not negligible and which remains sufficiently deterrent? On that point I have a feeling that the General Court did not form its own opinion, relying on the amount fixed in a rather general way by the commission."

Bot said the General Court considered only the points of law disputed by the parties and the commission's assessment.

"It seems to me difficult to assess the proportionality of the fine imposed on the appellant without mentioning and considering the appellant's size and global resources," Bot wrote.

"In my opinion, there should be no such doubts as to the appellant's turnover [net profit], particularly at this stage of the proceedings and in relation to the calculation of a fine expressly based on the appellant's turnover," he added. "The General Court ought to have clarified this point without relying on the relatively general percentage referred to by the commission. ... It is essential to know and to consider the appellant's financial figures in order to assess the fine justly."

To ensure that the fine has a sufficient deterrent effect on E.ON, the General Court should have considered the company's size and global resources, the adviser said.

The General Court also erred when it rejected negligence on the part of E.ON in its assessment of the fine, Bot found.

Noting that the commission's own investigation found that the seal breakage occurred "at least negligently," the court should have recognized the difference between intentional and negligent, Bot said.

The decision urges the Court of Justice to vacate the lower court's finding and remand for another look at proportionality.

The advocate general's opinion is not binding on the Court of Justice, which will consider it as deliberations start.

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