Judicial control in EU competition cases : the issue of unlimited

jurisdiction

King’s College King’s College 12 March 201512 March 2015

Marc van der WoudeMarc van der Woude

IntroductionIntroduction

I.Importance of the question

II.Legality control

III.Unlimited jurisdiction

IV.Need to change Reg. 1/2003 ?

I. Importance of the question : Strasbourg and/or Luxembourg

Ever since 1962 : is the EC combining incompatible roles ? (Total, T-548/08, 13 September 2013, ground 179)

The European system : ECHR (Article 6) and Charter (Article 47) : effective judicial protection

Two routes in 2011:

The ECHR route (Menarini) and the EU route (Chalkor & KME)

NCA’s and EC

Do and will they converge ?

Form or substance

I. Importance of the question : the test C-510/11 P Kone 24 October 2013, ground 22 :

“As the Court of Justice has already observed in paragraph 35 of Schindler Holding and Others v Commission, the European Court of Human Rights has held that, in administrative proceedings, the obligation to comply with Article 6 of the ECHR does not preclude a ‘penalty’ from being imposed by an administrative authority in the first instance. According to the European Court of Human Rights, compliance with that provision requires, however, that decisions taken by administrative authorities which do not themselves satisfy the requirements laid down in Article 6(1) of the ECHR be subject to subsequent review by a judicial body that has full jurisdiction. The characteristics of such a body include, according to the same judgment of the European Court of Human Rights, the power to quash in all respects, on questions of fact and law, the decision of the body below. The judicial body must in particular have jurisdiction to examine all questions of fact and law relevant to the dispute before it (judgment of the European Court of Human Rights in A. Menarini Diagnostics S.R.L. v. Italy, no. 43509/08, 27 September 2011, § 59).”

I. Importance of the question : What does this test mean in the EU ?

System of legality review set up by Article 263 TFEU supplemented by unlimited jurisdiction with respect to sanctions, as foreseen by Article 261 TFUE

 

The Commission sets the policy and the Courts control =>

inherent margin of discretion in making complex economic assessments,

:… that does not mean that the Courts of the European Union must refrain from reviewing the Commission’s interpretation of information of an economic nature. Those Courts must, among other things, not only establish whether the evidence relied on is factually accurate, reliable and consistent but also ascertain whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (Kone, ground 28).

I. Importance of the question : What is the counterfactual ?

If GC meets the standards of KME and Chalkor, the system set up by Regulation 1/2003 is presumed to be legal

But what if GC fails to or cannot meet these standards ?

in an individual case or systematically

The test is on the substance not the form

II Legality review : burden of proof

See for example Total, T-566/08, 13 September 2013

Burden of proof lies with EC, but undertakings must challenge decision.

If there is doubt, the undertaking concerned should benefit

Requirements as regards the existence of the infringement and its duration (Trelleborg, T-147/09)

Precise and consistent evidence: can be adduced as a bundle of elements (no salami tactics) all types of evidence,

statements (but if contested they must be corroborated)

market conduct, but plausible alternative (Woodpulp, CISAC)

II Legality review : the fine

Control on the existence of an infringement and control on the level of the fine

Article 23 Reg. 1/2003 : gravity and duration

KME large number of factors, “This large number of factors requires that the Commission carry out a thorough examination of the circumstances of the infringement.”

The issue of previous practice, Sachsa, T-79/06

The guidelines after Welded Steel Mesh (1996)

II. Legality review: the guidelines

Principle of estoppel  “Thus, although the Guidelines cannot not be regarded as rules of law which the administration is always bound to observe, they nevertheless form rules of practice from which the administration may not depart in an individual case without giving reasons” (AC Treuhand, T-27/10, 6 February 2014, ground 296).

 

But EC free to depart from them in light particular circumstances, provided that it is reasoned (AC Treuhand,

ground 304)

II. Legality review : equality and legality

Faci, T-46/10, 20 March 2014, ground 141 :

 

In any event, the applicant cannot rely, to its own benefit, on an unlawful act that may have been committed in favour of another party (…), particularly where, in this case, the Court considers, in the exercise of its unlimited jurisdiction, that the rates applied in respect of the applicant on the value of its sales in the relevant market and for the entry fee are appropriate, having regard to the gravity of the infringement and the objective of deterrence.

II. Legality review : the limits

No power to substitute reasons :

Nynäs Petroleum, T-428/07, 16 September 2013

The issue of the SCCI Coppens (C-441/11 P) Aalberts (C-287/11) and Soliver (T-68/09)

 

Where does legality review stop and full jurisdiction starts ?

the issue of proportionality review

the ability to pay problem (not necessarily linked to Guidelines, T-30/10 Reagens, 14 May 2014, grounds 305)

III Unlimited jurisdiction ; scope

Limited to the fine, not the existence of the infringement as such (Telefonica, C-295/12, 10 July 2014, grounds 45 and 46):

distinction not always to draw: GALP, T-462/07, 16 September 2013, grounds 618 – 624) content and nature of infringement may influence fine

even in the absence of any illegality (Groupe Danone C-3/06 P, 61)(does 261 TFEU an independent action ?)

cancelling, reducing or increasing the fine

 

Power to substitute reasons

III Unlimited jurisdiction : not ex officio

No obligation for the GC to carry out on its own motion a comprehensive review

Burden of proof on applicant (Telefonica, grounds 206 and 231)

What is on its own motion ?

Can applicant request the GC not to exercise its full jurisdiction ne ultra petita ?

Groupe Danone, C-3/06 P, 2007, ground 62, “where the question of the amount of the fine is before them”.

III Unlimited jurisdiction : altering the fine

Maintaining the fine at the same level, despite illegality : Zucchetti, T-396/10, 16 September 2013, ground 148 and 149

Increasing the fine : Groupe Danone

 

Lowering the fine

excessive delay : Heineken T-240/07

Romana Tabbachi, T-11/06

Some illegalities (duration and market share)

Deterrent effect and proportionality

III Unlimited jurisdiction : which criteria?

Proportionality principle, Romana Tabacchi, T-11/06, 2011

Equality principle (C-343/13 P, Commission/Parker Hannifin, 18 December 2014, ground 77)”…, the General Court is bound, when exercising its unlimited jurisdiction, by certain requirements. Those requirements include the duty to state reasons, by which it is bound in accordance with Article 36 of the Statute of the Court, (…), and the principle of equal treatment. When the amount of the fine imposed on them is determined, the exercise of unlimited jurisdiction cannot result in discrimination between undertakings which have participated in an infringement of the competition rules”.

III. Unlimited jurisdiction : back to the guidelines ?

Bathroom fittings cases 16 September 2013 : e.g. Zucchetti, T-396/10, ground 145

“Although the guidelines do not prejudge the assessment of the fine by the Courts of the Union when they adjudicate in the exercise of their unlimited jurisdiction (…), the Court deems it appropriate in the present case to draw on them in recalculating the fine, in particular because they allow all the relevant elements of an individual case to be taken into account and proportionate fines to be imposed on all the undertakings that have participated in the infringement found”.

III. Unlimited jurisdiction : is the equality principle sacrosanct ?

The AssiDomän problem (C-310/97 P):

Gigaset, T-395/09, 23 January 2014, ground 183, increasing the others ?

Tomkins, C-286/11 P, 22 January 2013, grounds 14 and 39, derived liability for parent company

 

What if the equality principle and the proportionality principle conflict ? GC may depart from the guidelines, as long as this is motivated Quinn Barlo, ground 46 : “If the General Court intends, in the case of one of those undertakings, to depart specifically from the method of calculation followed by the Commission, which it has not called into question, it must give reasons for doing so in the judgment under appeal (… )”.

III. Unlimited jurisdiction : the timing problem

Where do you position yourself in time ?

Knauf Gips, but still reaction of EC (calling into question degree of cooperation, Shell (§ 119)

Ability to pay

 

New evidence ?

GALP, T-462/07, 16 September 2013, grounds 618 – 624, new evidence before the GC

CEPSA, T-497/07, 16 September 2013, grounds, also by the Commission (added value of cooperation)

 

III Unlimited jurisdiction : rights of defence

Alliance One International, C-679/11 P, 26 September 2013, grounds 110 and 111 

“However, …, taking into consideration that further reduction was part of a legal assessment which the General Court was entitled to make in the exercise of its unlimited jurisdiction, without notifying the parties, prior to the delivery of the judgment (..)

 Further, (…), the application, in the judgment under appeal, of the same reduction for the benefit of Dimon was entirely consistent with the methodology followed by the Commission in the contested decision, and consequently there is no basis for the Commission’s claim that it was not foreseeable (see, to that effect, Groupe Danone v Commission, paragraph 82).”

 

III. Unlimited jurisdiction : the role of the two Courts

Appeal on questions of law only. Error of law must be properly identified (Telefonica, ground 58)

Quinn Barlo, C-70/12 P, 30 May 2013, “According to its settled case-law, it is not for the Court of Justice, when ruling on points of law in the context of an appeal, to substitute, on grounds of fairness, its own assessment for that of the General Court exercising its unlimited jurisdiction to rule on the amount of fines imposed on undertakings for infringements of EU law (…). Accordingly, only inasmuch as the Court of Justice considers that the level of the penalty is not merely inappropriate, but also excessive to the point of being disproportionate, would it have to find that the General Court erred in law, on account of the inappropriateness of the amount of a fine (…).

 

IV. Do we have to change Reg.1/2003?

Unease about unlimited jurisdiction:Unease about unlimited jurisdiction:

•Which criteria ?Which criteria ?

•Overriding importance of equality principleOverriding importance of equality principle

•Falling back on the GuidelinesFalling back on the Guidelines

•Reformatio in peius from the perspective of Reformatio in peius from the perspective of the applicant the applicant

IV. Do we have to change Reg.1/2003?

What is the legitimacy of the Guidelines ?What is the legitimacy of the Guidelines ?•Politically ?Politically ?•Scientifically ?Scientifically ?•Democratically ?Democratically ?

Trias PoliticaTrias Politica•Guidelines set by the Parliament Guidelines set by the Parliament •EC establishes the infringement and proposes the fine, in EC establishes the infringement and proposes the fine, in the absence of a settlementthe absence of a settlement•The GC rules on the fine in the light of the GuidelinesThe GC rules on the fine in the light of the Guidelines