Advocate General Rantos has delivered his Opinion in C-403/22 P, SAS Cargo Group and Others v Commission. The case concerns numerous appeals brought by airfreight sector carriers, and fines imposed on them for partaking in a cartel. Substantively, the cases revolve around a Commission Decision finding an infringement of Article 101 TFEU, Article 53 EEA, and Article 8 EU-Swiss Air Transport Agreement in the airfreight market. In his Opinion, Advocate General Rantos was of the view that the case be referred back to the General Court.
Background and facts
There is a longstanding case concerning a cartel in the airfreight sector, and the carriers running of particular routes. The cartel involved the coordination of airfreight service prices, including fuel surcharges, security surcharges, and the payment of commission on surcharges.
There are three ‘SAS’ companies here who are active in the airfreight market:
- SAS Cargo Group A/S,
- Scandinavian Airlines System Denmark-Norway-Sweden, and,
- SAS AB.
The European Commission received an application for immunity from Lufthansa in 2005, alleging anticompetitive contacts among carriers regarding surcharges. Following this, the Commission carried out inspections and addressed a statement of objections to 27 carriers in the airfreight market in 2007, alleging an infringement of competition laws. The Commission found twenty plus carriers, including SAS, guilty of a single and continuous infringement of competition laws and imposed fines on them. SAS sought the annulment of that Commission Decision, and the fines imposed on them.
The carriers appealed the case. They are applicants argued that the Commission infringed their rights of defence, lacked jurisdiction to apply competition laws to inbound freight services, and made errors in assessing their involvement in the infringement. They contended that the Commission failed to provide access to all necessary evidence, misapplied the qualified effects test, and incorrectly assessed their participation in the alleged cartel.
Judgment of the General Court – The points where the applicants’ failed
This judgment of the General Court, delivered in an extended Fourth Chamber, was delivered on 30 March 2022 (here).
First, it examined the applicants’ claim regarding the right to access evidence. The General Court found that the Commission was wrong to refuse access to certain evidence, but nevertheless concluded that this did not significantly affect the outcome of the case.
Second, the General Court assessed the Commission’s jurisdiction to apply competition laws to inbound freight services. It upheld the Commission’s application of the qualified effects test, which allows the application of EU/EEA competition rules when conduct has foreseeable, immediate, and substantial effects in the internal market. The General Court agreed with the Commission that the surcharges increased costs for consumers in the EU/EEA and affected competition for interlining services.
Third, the General Court also evaluated the characterisation of the conduct as a single and continuous infringement. The Commission had argued that the infringement involved coordination on fuel surcharges, security surcharges, and the refusal to pay commission. The General Court rejected the applicants’ arguments against this characterisation were rejected, with the General Court noting the involvement of the same undertakings and the parallel nature of discussions. The General Court further examined the contacts within the WOW alliance, finding that these were outside the legitimate framework of the alliance and contributed to the single and continuous infringement. The applicants’ arguments that these contacts were justified by the alliance’s objectives was dismissed.
Regarding the bilateral alliance with Lufthansa, the General Court noted that the Commission had excluded bilateral contacts covered by the 1996 exemption from the body of evidence. However, contacts not covered by the exemption were considered in establishing the applicants’ participation in the infringement. The General Court also addressed the email exchange of December 1999 among Star Cargo alliance members, considering it part of the single and continuous infringement. The applicants’ arguments that this exchange was justified by the alliance or covered by exemptions was rejected.
Judgment of the General Court – The point where the applicants’ succeeded
However, when it came to conduct in third states, the applicant’s had an argument. The General Court examined the conduct of SAS in third countries, finding that no state coercion in Hong Kong and Japan would preclude the application of Article 101 TFEU and Article 53 EEA. That said, the General Court partially accepted the applicants’ arguments regarding Thailand, annulling the decision for conduct between 20 July 2005 and 14 February 2006.
The applicants argued that the regulatory regime in Thailand required them to coordinate tariffs, including a fuel surcharge, due to the actions of the Thai Department of Aviation (DOA). The General Court examined the evidence, which included evidence of a letter of the Thai DOA which instructed carriers to apply a provisional adjustment to the fuel surcharges and communicate these tariffs to all carriers for implementation. The General Court found that the Thai DOA created a legal framework that eliminated any possibility of competitive behaviour between carriers regarding the fuel surcharge for flights departing from Thailand.
The Court concluded that the Commission erred in applying Article 101 TFEU and Article 53 EEA to SAS concerning the fuel surcharge for flights from Thailand between 20 July 2005 and 14 February 2006 (for periods before 20 July 2005, the Court found before 20 July 2005, SAS did not establish that Thailand eliminated all competition regarding the fuel surcharge). The General Court therefore annulled the Commission’s Decision for this specific period and conduct.
The appeal
Many of the carriers appealed their case, which is now pending before the Fifth Chamber of the Court as Cases C‑367/22 P, C‑369/22 P, C‑370/22 P, C‑375/22 P, C‑378/22 P, C‑379/22 P, C‑380/22 P, C‑381/22 P, C‑382/22 P, C‑385/22 P, C‑386/22 P, C‑401/22 P and C‑403/22 P Air Canada (C‑367/22 P), Air France (C‑369/22 P), Air France-KLM (C‑370/22 P), LATAM Airlines Group and Lan Cargo (C‑375/22 P), British Airways (C‑378/22 P), Singapore Airlines and Singapore Airlines Cargo (C‑379/22 P), Deutsche Lufthansa and Others (C‑380/22 P), Japan Airlines (C‑381/22 P), Cathay Pacific Airways (C‑382/22 P), Koninklijke Luchtvaart Maatschappij (C‑385/22 P), Martinair Holland (C‑386/22 P), Cargolux Airlines (C‑401/22 P) and SAS Cargo Group and Others (C‑403/22 P) v Commission.
Advocate General Rantos was of the view that the appeals brought by the carriers by dismissed, with one exception – the case of SAS in Case C-403/22 P.
Opinion of Advocate General Rantos in the SAS appeal.
Advocaten General Rantos delivered his Opinion on 5 September 2024.
He noted that in the judgment under appeal, the General Court included the turnover from internal sales (sales within Denmark, Sweden, and Norway) in the calculation of the fine, despite the fact that this turnover had been excluded during the administrative procedure. In addition, the judgment of the General Court, included internal sales turnover (which was partly based on ensuring equal treatment among the incriminated carrier). For him, General Court had overstepped its jurisdiction by altering the factual basis of the Commission’s decision without sufficient grounds.Furthermore, he found that SAS was not given adequate opportunity to contest the inclusion of internal sales turnover in the fine calculation, which could be seen as a breach of their rights of defence.
Advocate General Rantos therefore found that the General Court had erred in its assessment of the fines imposed on SAS, as taken together, these flaws of the General Court were significant enough to warrant a referral back to the General Court for a more thorough examination and proper adherence to procedural fairness.
Read the Opinion
The judgment of the Fifth Chamber of the Court of Justice will be delivered in late 2024, or early 2025.
For now, however, the Opinion of Advocate General Rantos in C-403/22 P, SAS Cargo Group and Others v Commission, delivered on 5 September 2024, can be read here.