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Singapore – Court Of Justice Reduces Fines Imposed On Alstom And Areva.

20 August, 2014

 

On 10 April 2014, the European Court of Justice (“ECJ”) allowed the appeals of two French energy companies – the Alstom group of companies (“Alstom”) and Areva T&D Holding SA, and Areva T&D AG (collectively, “Areva”) relating to the financial penalties imposed by the European Commission (“EC”) and subsequently reduced by the General Court (“GC”).

The fines were initially imposed for the parties’ involvement in a cartel relating to gas insulated switchgear (“GIS”), in which 20 companies were fined EUR 750.71m (SGD 1.28bn) on 24 January 2007.


The cartel involved co-ordination on a worldwide scale relating to the award of GIS projects, price fixing by means of complex price arrangements for GIS projects which were not allocated, the termination of licence agreements with non-cartel members and the exchange of sensitive market information.


By way of background, the business units of Alstom operating in the electricity transmission and distribution sector, namely T&D, participated in the cartel until it was transferred to Areva. T&D continued to take part in the cartel whilst under the control of Areva, and as such both parent companies were implicated in the conspiracy, though for different periods.


The ECJ held that in the circumstances, if the EC intended to make the subsidiary involved jointly and severally liable with each of the parent companies in turn, the EC should have taken better account of the gravity of the infringement for which each of the undertakings concerned is individually responsible (as well as the duration of the infringement) in setting the financial penalties. The ECJ determined that where the liability of Areva and Alstom, as parent companies, is derived from the liability of a subsidiary which belonged to them in succession, the total amount which Alstom and Areva must be required to pay cannot be greater than the amount which T&D must pay.


For the above reasons, the ECJ reduced Alstom’s joint and several liability with T&D to EUR 27.79m (SGD 47.47m) and Areva’s joint and several liability with T&D to EUR 20.4m (SGD 34.78m).


In Singapore


The Competition Act (Cap. 50B) applies to “undertakings”. This refers to any person, being an individual, a body corporate, an unincorporated body of persons or any other entity, capable of carrying on commercial or economic activities relating to goods or services. A parent and its subsidiaries can be considered collectively as a single undertaking in certain circumstances, taking into account the precise relationship between them. The Competition Commission of Singapore (“CCS”) may consider the respective responsibility of both parent and subsidiary for an infringement and therefore for consequent liability to pay a penalty. Where CCS decides to impose a penalty on both the parent and subsidiary, it may be imposed jointly and severally.

 

Drew & Napier

 

For further information, please contact:

 

Cavinder Bull, Director, Drew & Napier

cavinder.bull@drewnapier.com

 

Chong Kin Lim, Director, Drew & Napier

chongkin.lim@drewnapier.com

 

Scott Clements, Drew & Napier

scott.clements@drewnapier.com

 

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