03.10.2006

JCB appeal leads to increased fine

The EU Court of Justice has raised the fine imposed on telehandler producer, JCB to €30.9 million in a case involving anti-competitive distribution contracts.

The fine covers a period from 1973, (when the UK joined the EU), to 1996. Shortly after the UK joined the EU, JCB notified the European commission of its contracts and applied for an exemption. It apparently re-notified the Commission of its agreements, once in 1980 and again in 1995.

But then in 2000 the European Commission imposed a €39.6 million fine on JCB, apparently on the basis that the contracts included an anti-competition sanction on its distributors. It seems that JCB had declared in its 1985 and 1995 notifications, that there were no such clauses in its distribution contracts.

JCB appealed against the judgement and in 2004 the European Court of First Instance (CFI) upheld the appeal on a number of counts and reduced the €39.6 million fine to €30 million.

However, JCB refused to accept that judgement and launched a further appeal to have all of the charges quashed, that appeal has now been dismissed.

The higher court said that the CFI was wrong to deduct €864,000 from the original fine relating to aggravating circumstances. 'This part of the fine was imposed by the commission because of a sanction clause in the distribution agreement which had not been notified to the commission,' it said.

According to JCB, it attempted to comply with European competition laws when the UK joined the EU by applying for exemption for its distribution agreements. JCB has said that it later amended its agreements, on the advice of the European Commission, and believed that the matter was settled.

The Court has agreed with JCB that the 27 year delay by the Commission is "regrettable" and breaches the Commission’s obligation under European law but decided that the delay did not infringe JCB's fundamental rights, a decision with which JCB strongly disputes.

John Patterson, managing director and CEO of JCB, said: “We are very frustrated indeed that, after six years of pursuing this action in the courts, the European Court of Justice has ignored the failings of the Commission and found against us. The Commission is not giving European industry the efficient and effective legal framework it needs in order to compete globally.”