Cartel facilitators liable even if they are not cartel participants

A Swiss consultancy firm has been found liable under EU competition law for facilitating a cartel, although it was not a member of that cartel, and it did not operate in the heat stabiliser market in which the cartel operated.

AC‑Treuhand, a consultancy based in Zurich, offers a range of services including business management and administration, the collection, processing and assessment of market data, presentation of market statistics and the audit of reported figures.

In this case, the European Court of Justice (ECJ) upheld a lower court ruling that AC Treuhand had violated EU cartel rules by directly helping to facilitate two separate cartels in the heating stabiliser supplier market, and been fined €348 000. The heat stabiliser companies involved in the cartel were engaged in price fixing, dividing up markets, allocating customers and the exchange of commercially sensitive information, including data on customers, production and sales. The ECJ found that AC‑Treuhand played an essential role in the cartels by organising meetings (which it attended and participated in); collecting and supplying sales data to the producers of heat stabilisers; offering to act as a moderator in the event of tensions between those producers; and encouraging the producers to find compromises, for which it received remuneration.

This judgment clarifies that competition infringement can occur under European Competition law irrespective of whether the parties to a restrictive agreement, or concerted practice, impact the market directly or merely facilitate the infringing conduct.

Agreements or concerted conduct between undertakings

The finding is interesting because of the wording of the European Union Treaty dealing with cartel conduct (Article 81(1) EC (now Article 101)) refers to “agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market…”. AC-Treuhand argued that that provision is directed only at the parties to such agreements or concerted practices themselves, and that an ‘agreement between undertakings requires at least two parties to have expressed their concurrent intention to conduct themselves on the market in a particular manner. It therefore contended that, as it did not relinquish its own independence in its commercial conduct in favour of coordination with other firms, its activities could not be classified as a ‘concerted practice’.

The ECJ disagreed. It stated that there is nothing in the wording of that provision that indicates that it is directed only at the parties who are active in the markets affected by those agreements. Case law refers generally to all agreements and concerted practices in a vertical or horizontal relationship (i.e., between competitors or suppliers and customers) which distort competition, irrespective of the market in which the parties operate. Only the commercial conduct of one of the parties needs be affected by the terms of the arrangements in question.

Facilitating others to distort the market makes one liable for the distortion of competition

The Court pointed out that the main objective of Article 81(1) EC is to ensure that competition remains undistorted. If AC-Treuhand’s interpretation were adopted, it would negate the effectiveness of the prohibition. In this case, AC-Treuhand was aware that its own conduct contributed to the common objectives of the cartel participants. In fact, the very purpose of the services provided by AC‑Treuhand was to assist in achieving those objectives — price-fixing, market-sharing and customer-allocation and the exchange of commercially sensitive information. The Court stated, “notwithstanding the fact that AC Treuhand is a consultancy firm, it cannot be concluded that the action taken by AC Treuhand in that capacity constituted mere peripheral services that were unconnected with the obligations assumed by the producers and the ensuring restrictions of competition…”

Application in South Africa

Such facilitators are unlikely to be caught under section 4 of the Act, which prohibits cartel conduct, because that provision speaks explicitly about agreements “between parties in a horizontal relationship”.

The South African authorities may try to follow the same reasoning as the European courts in concluding that any conduct which enables a cartel to be established; to function; and to detect cheaters, is itself a contravention of the Competition Act, even if the facilitators are not “competitors” with the cartel participants. Whether such conduct can contravene section 4 of the Competition Act (the provision dealing with cartel conduct) is unclear, because that provision speaks explicitly about agreements “between parties in a horizontal (competitor) relationship”. But potentially, facilitators or consultants which help parties exchange competitively sensitive information could be targeted under other provisions of the Act, such as section 5 (which deals with agreements between suppliers and customers). To the extent that the supply of consulting or information collection services results in customers undermining competition, this provision could form the basis of a complaint against cartel facilitators.

Therefore, independent consultancies, advisors and auditors should be aware of the risks of collecting and distributing information of their clients, and consider the extent to which their consultancy services assist other firms to co-ordinate their conduct in the markets in which they operate.