TOWARDSAN OPTIMAL ENFORCEMENT

OF COMPETITION RULESIN EUROPE

Time for a Review of Regulation 1/2003?

GCLC Annual Conference11-12 June 2009

EDITED BY

MASSIMO MEROLA AND DENIS WAELBROECK

BRUYLANTB R U X E L L E S2 0 1 0

TABLE OF CONTENTS

PAGES

LIST OF CONTRIBUTORS ...-. xix

MAIN ABBREVIATIONS AND ACRONYMS - REFERENCE TO THE TREATY PROVI-

SIONS xxi

INTRODUCTORY REMARKS 1

PARTI

THE VIEWS OF THE GCLC

CHAPTER 1

The Directly Applicable Exception Systemand the Direct Applicability of Article 81(3) EC:

Positive Enforcement and Legal Certainty

PRELIMINARY REMARKS 11

SECTION 1. - THE NEED FOR A NEW DOCTRINE AND POLICY ON THE

RESPECTIVE ROLES OF ARTICLE 81(1) AND 81(3) EC 15

§1. - The role of the bifurcation of article 81 EC - a law of evidence issue 15

§2. - The need for a more balanced approach in the interpretation of

article 81(1) EC 21

The position of the CFI 21

The position of the ECJt 25§ 3 . - The bifurcation of article 81 EC: suggestion for a new approach . . . . 3 5

§4. - Recommendations 46

SECTION 2. - T H E LEGAL EXCEPTION REGIME AND THE DIRECT APPLICA-BILITY OF ARTICLE 81(3) EC IN PRACTICE IN NATIONAL CASE LAW 47

Decisions of National Competition Authorities (and review courts).. . 49

Judgments of national courts 53

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SECTION 3. - POSITIVE ENFORCEMENT AND LEGAL CERTAINTY - THE NEED

FOR MORE BALANCED ENFORCEMENT 58

§1. - Preserving legal certainty in a decentralised and directly applicable

exception system 59

§ 2 . - Regulation 1J2003 in practice: an absence of positive enforcement. . . . 6 1

§3. - A need for more guidance 64

§4. - The us business review procedure 69

§5. - Striking a better balance: some recommendations 71

SECTION 4. - A CRITICAL REVIEW OF THE GUIDELINES ON THE APPLICATION

OF ARTICLE 81(3) EC 77

§1. - The guidelines on article 81(3) entail overly complex economicassessments 78

§2. — The guidelines are not consistent with the Case-haw of the Community

Institutions 81

Non-competition concerns under Article 81(3) EC 82

The "market by market" standard 86

Hardcore restrictions under Article 81(3) EC 89

Conclusion 90

§3. — The Guidelines interpretation of the fourth condition under arti-cle 81(3) EC Exhibits a logical flaw 90

§4. - Conclusive remarks 92

ANNEX 1: ARTICLE 81 EC - COMMISSION DECISIONS (2004-2008) 93

ANNEX 2: ARTICLE 81(3) EC - NATIONAL CASES (2004-2008) 103

CHAPTER 2

Relationship between EC competition lawand national competition law

EFFECTIVE AND UNIFORM APPLICATION OF COMPETITION LAW 125

SECTION 1. - THE SYSTEM OF INTERPLAY BETWEEN EC AND NATIONAL

LAWS AS LAID DOWN IN ARTICLE 3 131

§1. - Historical background 131

§2. — Article 3 (2) first part (agreements I concerted practices) 133A. - Scope of the provision 133

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1. Conflicts between EC and national legislation 134

2. Application of national competition legislation by nationalauthorities 136

3. No role of Article 3(2) with respect to misapplication of EC lawat national level 136

B. - Is Article 3(2) first part a useful tool and does it work pro-perly? 138

C. - Proposals to improve Article 3(2) first part 139

§3. - Article 3(2) second part (unilateral conduct) 141

A. - Scope of the provision 141

B. - Have Member States made use of the possibility provided byArticle 3(2) second part? 146

C. - Proposals 146

§4. - Article 3(3) 149

A. - Scope of the provision 149

B. - Does Article 3(3) work properly ? 150

C. - Proposals concerning Article 3(3) 152

§5. - Summary of the proposals relating to article 3 154

SECTION 2. - PROPER ALLOCATION OF CASES BETWEEN THE MEMBERS OF

THE ECN 156

§ 1. - Introduction 156

§2. - The risks of violation of the ne bis in idem principle under thecurrent enforcement regime 159A. - Legal basis, scope and conditions of application of the ne bis

in idem principle 159

B. - The principle of ne bis in idem is infringed if two or more NCAsadopt a decision based on Article 81 or 82 EC addressed to thesame undertakings and concerning the same facts 160

§3. - Proposals for reform 163

A. - Proposals concerning Regulation 1 164

B. - Proposals concerning the ECN Notice 167

SECTION 3. - CASE ALLOCATION AND LENIENCY PROGRAMMES 169

§1. - Regulation 1 and the purpose of leniency programs 169

§2. - Current barriers to the effective functioning of Europe's leniencyprograms 170

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§3. — A proposal for reform 174

SECTION 4. - Do NCAs HAVE A VETO ON THE APPLICATION OF ARTI-

CLE 11(6)? 177

§1. - Scope of the provision 177

§2. - Is article 11(6) a useful tool and does it work properly? 180

§3. - Proposals to improve article 11(6) second, part 181

A. - Recognition of a right of veto to NCAs 181

B. - Reinforcement of the role of the Commission 182

SECTION 5. - ARE NEGATIVE CLEARANCE/EXEMPTION DECISIONS ISSUED BY

NCAS WHEN APPLYING ARTICLES 81 /82 EC STILL POSSIBLE UNDER

NATIONAL LAW 185

§1. - Individual authorisations under Regulation 1 185

§2. - The practice of some NCAs 187

§3. - Proposal 190

SUMMARY OF THE PROPOSALS FOR REFORM 193

CHAPTER 3Enforcement by the Commissionthe decisional and enforcement

structure in antitrust casesand the Commission's fining system

PRELIMINARY REMARKS 199

SECTION 1. - THE PRACTICAL PROBLEMS RESULTING FROM THE CURRENT

ENFORCEMENT STRUCTURE 201

§ 1. — The Commission's power of investigation, prosecution, decision and

punishment i 202

§2. - The Commission has multiple roles that can conflict with one another 205

§3. - Possible types of bias 207

§4. - Measures taken to avoid prosecutorial bias 209

SECTION 2. - THE LEGAL PROBLEMS FLOWING FROM THE "CRIMINALISATION"

OF COMPETITION LAW 211

§1. - Sanctions imposed by the Commission in competition proceedings are"criminal charges" within the meaning of article 6 EGHR 211

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§2. - The legal consequences of a criminal "charge classification" for aproper enforcement procedure 217

A. - Determination of the charge by an independent and impartial

tribunal at first instance 217

B. - The hearing of the parties must be public 220

C. - The hearing must be held before the persons actually adjudi-cating the case 221

D. - The right to a "full jurisdictional review" by the Communitycourts 224

§3. - The legal consequences of a "criminal charge" classification asregards the fines and other sanctions imposed 228

A. - Compliance with article 7 of the ECHR: principles of legalcertainty, foreseeability and non-retroactivity 229

1. Legal certainty and foreseeability 229

2. Principle of non-retroactivity 232

B. - Issues relating to liability 233

1. Liability of the undertaking for its employees' behaviour 233

2. Liability of the parent entity of the group for its subsidiaries . . 234

C. - Issues relating to the leniency notice 235

§4. - Conclusions 235

SECTION 3. - THE WAY FORWARD AS REGARDS THE ENFORCEMENT SYSTEM. 237

§ 1. - Separation of decisional power from prosecutorial power (or at leastgiving the court the power to "remake" the Commission's decision) . . . . 237

A. - Creation of an independent European Competition Agency(ECA) 238

1. Introduction 238

2. Model 1 240

3. Model la ; 240

4. Model lb 243

5. Model 2 244

6. Model 2a 244

7. Model 2b 245

8. Model 3 245

9. Conclusion 247

B. - Giving the Community courts power of full jurisdictionalreview 248

1. Legal basis 248

2. Creation of a separate judicial panel? 251

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3. More extensive judicial review but without a power to "remake"the decision 252

C. - Establishment of a specialised chamber within the CPI or ajudicial panel exercising the effective adjudicative function incompetition cases 254

D. - Conclusion 256

§2. - Other "less ambitious" reforms that could be envisaged in order toimprove the enforcement system .\ ..-. .-.-: 256

A. - Separation within DG Competition itself of the prosecutionfunction from the adjudication of the case 257

B. - Formalisation and improvement of the working of peer review

panels system 257

C. - Increased role for the Hearing Officer 259

D. — Increased role for the Legal Service and the Chief CompetitionEconomist 263

E. - Improved procedure with increased respect for the rights ofdefence 263

1. Statement of Objections 264

2. Cross-examinations 266

3. Time limits 267

4. Public hearings 269

5. Clarifying the status of all contacts between the Commissionand the parties 270

SECTION 4. - THE WAY FORWARD AS REGARDS THE SYSTEM OF SANCTIONS . 271

§1. - Introduction of detailed principles on the setting of fines in Regu-lation 1 271

§2. - Clarification of the principles governing liability for competitionlaw infrigements 272

A. - Company liability 'for employees and consideration of com-pliance efforts of an undertaking 272

B. - Parent liability for subsidiaries 274

§3. — Modification of the legal framework and implementation of theleniency programme 274

SECTION 5. - CONCLUSIONS 275

TABLE OF CONTENTS XI

CHAPTER 4

Report on the enforcementby NCAs and the ECN

PRELIMINARY REMARKS 289

SECTION 1. - INSTITUTIONAL ISSUES 293

§1. - Composition of the ECN 293

§2. - Transparency of the ECN 7. 294

§3. - The ECN and the powers of the NCAs 296

S E C T I O N 2. - CASE ALLOCATION AND CONSULTATIONS PURSUANT TO

ARTICLES 11 AND 13 OF REGULATION 1 298

§1. - The issue of parallel proceedings and decisions 299

A. - Parallel proceedings against the same infringement are ineffi-cient 299

B. - NCAs ought to be empowered to impose sanctions that aresufficiently effective to bring an infringement to an end for thewhole Community 301

~C. - Parallel decisions by members of the ECN regarding the sameinfringement are contrary to the "ne bis in idem" principle 304

1. Parallel prosecution by NCAs under Articles 81 and 82 EC 305

2. Decision by the Commission and subsequent decision by anNCA based on national law 306

§2. - Case allocation 307

A. — Information on and judicial review of case allocation 307

B. - Allocation rules should be made binding 309

§3. - Due process: transparency and the principle of equality of arms 310

SECTION 3. - CIRCULATION OF INFORMATION UNDER ARTICLE 12 AND

MUTUAL ASSISTANCE UNDER ARTICLE 22 OF REGULATION 1 312

§1. - Ensuring the protection of private parties in cross-border investiga-tions 314

A. - The problem: the coexistence of different due process standards 314

B. - The unsatisfactory solutions currently offered by Regulation 1and the ECN Notice 316

C. - Achieving a balance between effective enforcement and dueprocess 318

D. - Specific protection for leniency applicants and individuals 324

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1. Coordination of leniency applications 324

2. Strengthening the protection of individuals 326

§2. - Cooperation among NCAs pursuant to Article 22 of the regulation 1. 327

Conclusion ' 328

CHAPTER 5

Articles 15 and 16 of Regultion 1:the tools intended to achieve

consistency in the applicationof the competition rules by national courts

PRELIMINARY REMARKS 345

SECTION 1. - RECOMMENDATIONS 347

SECTION 2. - ARTICLE 15(1) 349

§1. - How has article 15 (1) been applied in practice? 349

A. - Lack of transparency 349

B. - Delay in providing opinions 351

C. - Reluctance to express a genuine opinion 352

§2. - Have the objectives been attained? 352

§3. - Recommendations 354

SECTION 3. - THE PROVISION OF NATIONAL JUDGMENTS TO THE COMMISSION

PURSUANT TO ARTICLE 15(2) OF REGULATION 1/2003 355

SECTION 4. - INTERVENTION BY THE COMMISSION IN NATIONAL PROCEE-

DINGS UNDER ARTICLE 15(3) OF REGULATION 1 358

§ 1. - Introduction 358

§2. — Cases in witch the Commission has intervened under Article 15(3) . . 358

Oarage Oremeau v Daimler Chrysler France 359

Inspecteur van de Belastingdienst v X BV 360

§3. - The Commission's policy on intervention under Article 15(3) 361

§4. - Scope of Article 15(3) , 362

§5. - Contents of the Commission's observations 364

§6. - Procedure for intervention 366

§7. - The weight to be attached to the Commission's observations 367

TABLE OF CONTENTS XIII

§8. - Improving the use of Article 15(3) 368

SECTION 5. - INTERVENTION BY NCAS IN NATIONAL PROCEEDINGS PUR-

SUANT TO ARTICLE 15(3) 371

§1. - Use of Article 15(3) and corresponding national provisions by theNCAs 372

§2. - Does Article 15(3) jeopardise the independence of the court? 375

SECTION 6. - ARTICLE 16 OF REGULATION 1 377

§1. - Correctness as a matter of community law 380

§2. - Does the Crehan litigation suggest that Article 16 requires modifi-cation? 382

§3. - Crehan: a note of realism 383

CHAPTER 6

International Cooperationin Antitrust Enforcement

PRELIMINARY REMARKS 387

SECTION 1. - JURISDICTION OF THE COMMUNITY OVER UNDERTAKINGS

ESTABLISHED OUTSIDE THE EC 389

§1. - Ambiguous case-law: need for legislative clarification? 389

§2. - Comity 390A. - Definitions 390

B. - Assessment 392

1. Scope of application 392

2. Comity in practice 393

C. - A need for the insertion of a comity provision in Regulation 1 ? 395\

SECTION 2. - INVESTIGATION MEASURES CONCERNING EXTRA-EC UNDER-

TAKINGS ESTABLISHED OUTSIDE THE EC 397

§1. - Collecting information from undertakings established outside the EC. . 397

A. - The economic entity doctrine: collecting information throughEC members of a group present within the EC 397

B. - Formal and informal requests for information 398

1. Informal requests for information (voluntary cooperation) 398

2. Formal requests for information 398

C. - Should a specific provision be inserted in Regulation 1 ? 400

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§2. - Exchange of information between competition authorities 400

A. - Limitation of the use of the information exchanged 400

B. - Exchange and protection of confidential information 401

SECTION 3. - ENFORCEMENT AND RECOGNITION OF COMMISSION'S DECISIONS

AND ECJ'S JUDGMENTS ABROAD 403

§1. - Notification of acts of procedure and decisions 403

A. - Statement of objections '. .'. 403

B. - Final decision 404

§2. - Enforcement of decisions and injunctions against foreign undertakings 405

SECTION 4. - IMPOSITION OF FINES, mi BIS IN IDEM AND "GENERAL

REQUIREMENT OF NATURAL JUSTICE" 4 0 6

§1. - Obligation to take account of the penalties previously imposed by

another state ? 407

A. - At intra-EC level 407

B. - At international level ? 407

§2. - Obligation to calculate the fine on the turnover within the EC (asopposed to the worldwide turnover) ? 409

SECTION 5. - COMMUNITY "BLOCKING STATUTE" ? 411

§1. -Is the adoption of a Community blocking statute necessary? 411

A. - Introduction 411

B. - The Impact of US Discovery Rules on the EC leniency policy:A Case for the Adoption of a Community "Blocking Statute" ?. . 414

1. Discovery of documents filed with the Commission in the frame-work of proceedings before U.S. courts 414

2. Discovery of documents at the request of a complainant inproceedings before the Commission 418

The Intel case: rejection of the "foreign discoverability" rule . . . 418

Background of the dispute 418

Judgment of the Supreme Court 419

Has the problem been solved following the Intel judgment? . . . . 420

3. Conclusion 421

§2. - Does the EC have competence to adopt a "Blocking statute"? 422

Conclusion 424

TABLE OF CONTENTS XV

PART II

THE VIEWSOF THE ENFORCEMENT OFFICERS

CHAPTER 7

A critical view on chapter 1 -The directly applicable

exception system and the directapplicability of Article 81 (3) EC:

positive enforcement and legal certainty

SECTION 1. - GENERAL COMMENTS 429

SECTION 2. - MORE SPECIFIC COMMENTS 433

§1. - The need for a new doctrine and policy on the respective roles ofArticle 81(1) and 81(3) EC 433

§2. - Legal exception regime and direct applicability of Article 81 (3) ECin practice 441

§3. - Positive enforcement and legal certainty - need for more balanced

enforcement 444

§4. - Critical review of the guidelines on application of Article 81(3) EC . 447

§5. - Conclusion 448

CHAPTER 8

A critical view on chapter 2 -Relationship between

EC competition law andnational competition laws

SECTION 1. - THE FUNCTIONING OF ARTICLE 3 OF REGULATION 1 453

§1. - Exemption from the convergence rule for unilateral conduct 454

§2. - National rules which pursue a "different objective" 456

Case Allocation 457

SECTION 2. - OTHER COOPERATION MATTERS WITHIN THE ECN 458

Ne bis in idem 459

SECTION 3. - LENIENCY 462

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CHAPTER 9

A critical view on chapter 3 -The compatibility of the Commission's role

in competition procedureswith the fundamental rights:a real pressing legal problem

or just a question of opportunity ?

PRELIMINARY REMARKS ; 467

SECTION 1. - PROCEDURAL ISSUE OF THE COMPATIBILITY OF THE COMMIS-

SION'S ROLE WITH FUNDAMENTAL RIGHTS 469

§1. - The chapter 3's criticism 469

§2. - Assessment of the criticism in light of the case-law of the ECtHR andthe community courts 470

A. - Characterisation of EC competition law (fines) as criminal(Section II of the Chapter 3) 470

1. The relevant case-law of the ECtHR 471

2. Qualification of EC Competition procedures 474

B. - Consequences of the possible qualification as criminal sanctionon the procedure 476

1. Consequences for the procedure as a whole 476

2. Consequences for the procedure followed by the Commission. .. . 478

3. Consequences for Community courts 480

C. - Community courts' case-law on the compatibility 482

SECTION 2. - ECONOMIC IMPLICATIONS 485

SECTION 3. - PROCEDURAL PROPOSALS FOR CHANGE MADE BY THE

AUTHORS OF THE CHAPTER 3 486

§ 1. - Proposals for fundamental changes 486

A. - European Competition Agency (ECA) 486

B. - Give fuller jurisdiction to courts, combined with creation ofjudicial panel 487

C. - Give adjudicative power to courts combined with the creationof a judicial panel 487

§2. - Other "less ambitious" proposals 488

A. - To formalise and improve the work of the peer review panels . . 488

B. - To increase the role of the Hearing Officer 489

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C. - To increase and formalise the role of the Legal Service and ofthe Chief Economist 489

D. - To improve the procedure with respect of rights of defence . . . . 489

SECTION 4. - CRITICISM OF THE COMMISSION'S FINING PRACTICE AND

PROPOSALS FOR SUBSTANTIVE CHANGES 491

SECTION 5. - CONCLUSION 494

CHAPTER 10

Comments on chapter 6 -Report on international

cooperation in antitrust enforcement

COOPERATION IN INTERNATIONAL ANTITRUST INVESTIGATIONS 497

ACQUIRING INFORMATION LOCATED OUTSIDE THE EUROPEAN COMMUNITY . . . . 499

NS BIS IN IDEM ASPECTS 500

DISCOVERY OF INFORMATION IN COMMISSION FILES 500