European Commission welcomes judgments in Italian raw tobacco cartel

Tuesday, 13 September 2011

The European Commission (‘Commission’) welcomes the judgments by the General Court which uphold a decision of 2005 fining four Italian tobacco processors for operating a buying cartel in the Italian raw tobacco market. 

In the decision of the Commission of October 2005 the Commission fined the Italian tobacco processors Deltafina, Transcatab, Dimon Italia (Mindo) and Romana Tabacchi for anticompetitive behaviour. Deltafina was granted conditional immunity at the beginning of the procedure under the terms of the Leniency Notice of the Commission. In the final decision however the Commission did not grant immunity due to a serious breach by Deltafina of its co-operation obligations. During the investigation Deltafina revealed to its main competitors that it applied for leniency. The Commission imposed the following fines: Deltafina € 30 million, Transcatab € 14 million, Dimon Italia € 10 million and Romana Tabacchi € 2.05 million.

Deltafina, as well as Alliance One (the legal successor of the group of undertakings to which Dimon Italia and Transcatab belong) appealed against the decision of the Commission. The Court dismissed the actions brought by Deltafina and Alliance One in their entirety maintaining the fines of € 30 million on Deltafina and a total of € 24million on Alliance One for having colluded during more than six years on the prices paid to growers and intermediaries in Italy and on the allocation of suppliers.

The ‘Deltafina judgment’ is important for the Commission because it confirms the Commission's policy of granting immunity to a cartel participant only if its cooperation is "full, continuous and expeditious" as stated in the Leniency Notice on immunity or reductions from fines. In the recent judgment, the Court confirmed that Deltafina had seriously breached its co-operation obligations as immunity applicant and that it was right that the Commission did not to grant immunity in the end. The Court stated that Deltafina should at least have told the Commission about the disclosure to its main competitors.

In the appeal case of Alliance One, as part of the same Italian raw tobacco cartel, the Court upheld the Commission's assessment that the parent company was jointly and severally liable for the infringement. This in line with previous case law. The Commission decision had found that a 100% ownership was sufficient to presume that the parent exercised a decisive influence on the conduct of its subsidiary. There are a number of other appeals pending in the Italian case.