The Court of Justice of the European Union (Court), the EU’s highest court, recently issued a judgment in case C-603/13 P, Galp Energía España SA and others v. Commission, reducing the fine imposed on certain companies that were found to have engaged in cartel behaviour. This decision overturned a decision of the General Court of the European Union (GCEU), and is notable because the Court found that the GCEU had exceeded its jurisdiction in the case by considering facts that had not been previously introduced.

By way of background, in October 2007, the European Commission (Commission) fined several companies for their participation in the bitumen cartel, including Energía España, SA, Petróleos de Portugal (Petrogal), SA and Galp Energia, SGPS, SA (Appellants).  Among the infringing conduct, the Commission identified a monitoring system of the cartel and its compensation mechanism. When determining the fines, the Commission reduced the fine imposed on Appellants by 10% in light of their limited involvement in the infringement.

In response, Appellants challenged the Commission’s decision before the GCEU. The GCEU annulled the Commission’s decision as it applied to Appellants, because the Commission failed to establish that Appellants participated in both the monitoring system and the compensation mechanism. However, and critically, based on grounds and evidence that had not been included in the contested decision or on the appeal, the GCEU concluded on its own initiative that Appellants were aware of both the monitoring system and compensation mechanism. Consequently, even though the Commission failed to prove Appellants’ actual involvement in this conduct, the GCEU nevertheless held that the appellant companies could still be held liable because of their alleged awareness. Based on these findings, the GCEU decided to reduce the fine imposed on Appellants by an additional 4%.

Appellants challenged the GCEU’s ruling before the Court. Appellants claimed, among other things, that the GCEU exceeded its jurisdiction because it considered evidence, and substituted grounds for the decision, that had not been introduced in the Commission’s underlying proceedings. The Court agreed, finding that the GCEU exceeded its jurisdiction. The Court found that GCEU concluded that the Commission failed to establish that Appellants participated in the monitoring system and compensation mechanism of the cartel. Yet, the GCEU, based on arguments and facts not considered in the Commission’s proceedings or addressed in the GCEU appeal, continued to find that Appellants were aware of the infringing conduct and could still be held liable for the infringement.  Therefore, the Court concluded that the GCEU exceeded its authority by ruling on its own initiative, based on arguments and evidence not before it, that Appellants were liable based on different grounds than those used by the Commission in the contested decision or on the appeal.

The Court’s ruling further clarifies that the GCEU had unlimited jurisdiction in this case to review the matter brought before it i.e. the fine imposed by the Commission. But, this did not give the GCEU the authority to alter the basis for the contested decision. In other words, the Court found that the GCEU erred in law and exceeded its jurisdiction, by taking into account different elements than those on which the Commission had based its decision when fining the appellant companies.

Having overturned the GCEU’s assessment, the Court conducted its own analysis of the determination of the fine imposed by the Commission, and increased the further reduction of the fine to 10% (on top of the 10% reduction initially determined by the Commission).

This judgment clarifies the scope of the GCEU’s jurisdiction, and confirms that the GCEU cannot substitute alternative grounds for a ruling based on arguments and evidence that had not been introduced in the prior proceedings.