Competition Law (Procedure)
1. Scope and purpose
European antitrust (competition) law, which is laid down in Arts 101, 102 TFEU/81, 82 EC, protects competition in the internal market (competition (internal market); prohibition of restrictive agreements and exemptions; abuse of a dominant position). The European Commission is responsible for the public enforcement of competition law (on private and criminal enforcement competition law (sanctions); competition law (private enforcement)). In order to render enforcement more effective, Arts 101, 102 TFEU/81, 82 EC have also been applied by the national competition authorities since the entry into force of Reg 1/2003 on 1 May 2004. Previously, only about half of the national competition authorities were authorized to do so. Today, all national competition authorities have the power to enforce Arts 101, 102 TFEU/81, 82 EC pursuant to Art 3(1) Reg 1/2003 alongside the Commission if a violation affects trade between Member States (potentially in parallel with national antitrust laws). Regulation 1/2003 is the core of what has become known as the Modernization Package of 2004, which replaced Reg 17/62 in particular (prohibition of restrictive agreements and exemptions).
Within the Commission, the Directorate General for Competition is responsible for the enforcement of Arts 101, 102 TFEU/81, 82 EC. Since 2004, the Commission’s procedures have been governed primarily by Regs 1/2003 and 773/2004 as well as by several communications and notices. These instruments are meant to ensure both the effective enforcement of European antitrust law as well as the respect of the fundamental rights of defence.
National competition authorities apply national procedural law when enforcing both Arts 101, 102 TFEU/81, 82 EC and national antitrust law. National procedural law is supplemented by Reg 1/2003 and the Commission Notice on cooperation within the Network of Competition Authorities whenever Arts 101, 102 TFEU/81, 82 EC are applied.
2. EU antitrust procedure
a) Overview over the Commission’s procedure
EU antitrust procedure governs both the Commission’s fact finding as well as the adoption of decisions. The Commission’s decision making and sanctioning powers include the power to find an infringement, impose a remedy, order interim measures, make commitments binding, impose fines as well as periodic penalty payments (for details see competition law (sanctions)) and find the non-applicability of Arts 101, 102 TFEU/81, 82 EC (see Arts 7–10, 23, 24 Reg 1/2003). According to Art 2 Reg 1/2003, the burden of proving an infringement of Arts 101(1), 102 TFEU/81(1), 82 EC rests on the Commission (or the national authority). For the conditions of Art 101(3) TFEU/81(3) EC, however, it is the undertaking claiming the benefit of that provision that bears the burden of proof. The Commission may provide informal guidance to undertakings in cases presenting novel or unresolved questions.
The Commission may open an investigation ex officio or pursuant to a complaint. Most cartel investigations are triggered by leniency applications (see below). The Commission may make use of its investigatory powers even before proceedings have been initiated. According to Art 11(6) Reg 1/2003, national competition authorities are no longer competent once the Commission has initiated proceedings for the adoption of one of the aforementioned decisions.
Complaints: Natural or legal persons who can show a legitimate interest are entitled to lodge a complaint. The Commission must carefully examine their submissions. It is, however, within the Commission’s discretion whether or not to open an investigation. Complaints may be rejected not only if they are unfounded, but also due to a lack of Community interest. Complainants have procedural rights to be heard and to access certain documents.
Investigatory powers: The investigatory powers under Arts 17–22 Reg 1/2003 derive from the Commission’s right to collect information and carry out checks pursuant to Art 337 TFEU/284 EC. They serve the purpose of fact finding and the gathering of evidence.
Requests for information: According to Art 18 Reg 1/2003, the Commission may request information, either by simple requests or by decision, from undertakings regarding, for example, market shares, contacts with competitors, development of prices as well as sales practices. If an undertaking intentionally or negligently supplies false (or, in the case of requests made by decision, incomplete) information, the Commission may impose a fine of up to 1 per cent of the total turnover of the undertaking in the preceding business year (Art 23 Reg 1/2003). The Commission may impose penalty payments to compel undertakings to supply complete and correct information sought by an information request made by decision (Art 24 Reg 1/2003) (competition law (sanctions)).
Inspections (investigations): Under the conditions laid down in Art 20 Reg 1/2003, the Commission may search the premises of an undertaking, obtain copies of relevant documents and affix seals to and in business premises. It may also ask for explanations of facts and record the answers. In practice, Commission officials are always accompanied by officials of national (competition) authorities who are also responsible for overcoming any resistance encountered during an inspection. If, according to national rules, such measures require an authorization from a court, such an authorization may be applied for as a precautionary measure (by the national authority). According to Art 20(8) Reg 1/ 2003, national judicial authorities have a limited scope of review which is largely limited to controlling that the coercive measures envisaged are neither arbitrary nor excessive (principle of proportionality). Obstructions by the undertaking may attract fines pursuant to Art 23 Reg 1/ 2003 (see the fine of €38 million imposed on E.ON by the Commission Decision of 30 January 2008, COMP/B-1/39.326 for breach of a seal).
Locations other than company premises may be searched subject to stricter conditions and prior authorization by a national court (Art 21 Reg 1/2003).
According to Art 22 Reg 1/2003, the Commission may request national competition authorities to undertake fact-finding measures. In such cases the national competition authorities exercise their powers under national law unlike when support is given during Commission inspections. National competition authorities may also request fact-finding assistance from each other.
Power to take statements: The Commission may interview any natural or legal person for the purposes of collecting information on the subject matter of an investigation provided they consent to be interviewed (Art 19 Reg 1/2003).
Sector inquiries: According to Art 17 Reg 1/ 2003, the Commission may conduct an inquiry into a particular sector of the economy using these investigatory powers save for searches of private premises. The results may be published in a report. To date, sector inquiries have been carried out, for instance, in the energy, financial services and pharmaceutical sectors. In practice, such inquiries often eventually lead to the opening of formal proceedings.
Legal settlement procedure for cartels: In 2008, in order to handle cartel cases more efficiently, the Commission introduced a settlement procedure by means of a regulation and a notice. Under this procedure parties may, after having had access to the file, introduce a settlement submission acknowledging the Commission’s objections. This submission will be included in the statement of objections (see below), which could be significantly shorter than in proceedings without such cooperation. In return, the Commission can reduce the fine imposed on the undertaking by 10 per cent. The right to appeal the Commission’s decision (see below) remains unaffected.
Leniency policy: In order to improve the detection of secret cartels (prohibition of restrictive agreements and exemptions) the Commission introduced a leniency policy (the first Commission notice on the subject dates back to 1996, it has been revised in 2002 and 2006 ( OJ C 298/17)). The leniency programme provides an incentive for undertakings involved in a cartel to disclose the infringement to the Commission, put an end to their participation and cooperate in the Commission’s investigation. The first undertaking that submits information and evidence (on access by third parties to corporate statements and other documents submitted by a leniency applicant to a (national) competition authority see ECJ Case C-360/09 – Pfleiderer  ECR I-0000) enabling the Commission to carry out a targeted inspection or to find an infringement will be granted immunity from fines, provided that the Commission did not already have sufficient evidence to adopt such measures, and subject to further conditions. In particular, the undertaking must fully cooperate with the Commission throughout the investigation and must not have coerced other undertakings to join the cartel. An undertaking which is not the first leniency applicant, but nonetheless submits evidence with a significant added value to the Commission, qualifies for a reduction by up to 50 per cent of the fine which would otherwise be imposed, depending on how many leniency applicants have previously come forward. A marker system was put in place to establish the order of applications.
Legal protection: Commission decisions are subject to appeal before the General Court of the European Union (GC).
b) Procedural safeguards
As a basic principle, the Commission enjoys discretion regarding the choice of investigatory measures subject to the principle of proportionality. There is no hierarchy of investigatory instruments. The Commission must observe procedural safeguards which follow from the general principles of law (see below). It is subject to debate whether safeguards can also be derived directly from the ECHR.
Art 6 ECHR (human rights and fundamental rights (ChFR and ECHR)) provides for a number of procedural rights of defendants. Counsel in appeal proceedings in front of the Union courts as well as academic commentators frequently call for the applicability of Art 6 ECHR to European antitrust procedure. As the Union has not been a contracting party to the ECHR so far (see, however, Art 6(2) TFEU and the 14th Additional Protocol to the ECHR), the ECHR has not been directly applicable to the Union. However, the fundamental rights guaranteed by the ECHR are also protected as general principles of Community (Union) law. The ECJ, which must ensure their observance, emphasizes the special significance of the ECHR as a source of inspiration for these general principles of law and concludes that ‘the Community cannot accept measures which are incompatible with observance of the human rights thus recognized and guaranteed’ (ECJ Case C-260/89 – ERT  ECR I‑2925 para 41). The Union courts have repeatedly pointed out that this special significance of the ECHR is recognized and affirmed by Art 6(2) EU as well as by the fifth recital, Arts 52(3) and 53 of the Charter of Fundamental Rights (on the scope and legal effects of the charter of human rights and fundamental rights (ChFR and ECHR); see also Art 6 TFEU). However, according to this case law, the obligation of the Union under Art 6(2) EU to respect the fundamental rights as ensured by the ECHR does not demand the direct applicability of the ECHR. According to the Union courts, the general principles of Community (Union) law guarantee a degree of protection equivalent to Art 6 ECHR in competition matters. The jurisprudence of the European Court of Human Rights (ECtHR) must, however, be taken into consideration in the interpretation of fundamental rights (see ECJ Case C-238/99 P – PVC (LVM)  ECR I‑8375 paras 274 ff; CFI Case T-112/98 – Mannesmann  ECR II‑729 para 59; CFI Case T-236/01 – Tokai  ECR II‑1181 para 403 f). In literature as well as in appeal proceedings, it is argued that the European Court of Human Rights (ECtHR) grants broader rights of defence in its jurisprudence regarding administrative procedures that may lead to an imposition of fines than the Union courts do in competition matters.
Under the case law of the Union courts the general principles of law guarantee, inter alia, the protection of the rights of defence. These include the privilege against self-incrimination, ie an undertaking may not be coerced into admitting its involvement in an infringement. Such coercion is only considered to be present if a refusal to cooperate with the investigation is sanctioned by a fine (see recital 23 Reg 1/2003). Obligations on undertakings to actively participate in investigations and respond to requests for information beyond providing pre-existing documents are therefore limited. There is, however, no comprehensive privilege to refuse to give evidence.
The rights of defence also include the protection of confidentiality of communications between lawyers and their clients (‘legal professional privilege’). Such written communications may neither be asked for in requests for information nor may they be reviewed during an inspection. A special procedure is to be applied in order to assess whether a certain document is covered by the legal professional privilege (CFI Case T-125/03 – Akzo  ECR II‑3523 paras 79 ff; Directorate General for Competition, Best Practices on the conduct of proceedings concerning Arts 101 and 102 TFEU, paras 47 ff). Correspondence between an undertaking and its in-house lawyers is not protected even if those lawyers are members of the bar (ECJ Case C-550/07 P – Akzo  ECR I‑0000 para 44).
Before adopting one of the above-mentioned types of decision, the Commission has to communicate its objections in writing to the addressee (statement of objections). At the latest before sending the statement of objections, the Commission must formally initiate proceedings. The undertaking concerned may reply to the objections in writing and at a hearing. It also has a right to access the file with the exception of business secrets and internal documents of the Commission or of the competition authorities of the Member States. However, information on which objections are based must be made accessible. Where business secrets are necessary to prove an infringement, the Commission must assess whether the need to (partially) disclose is greater than the harm which might result from disclosure.
The Hearing Officer, who directly reports to the member of the Commission responsible for competition, ensures in particular that the effective exercise of the right to be heard and to have access to files is respected as well as, on the other hand, that business secrets are adequately protected.
3. Antitrust procedure under national law
There is a national competition authority in each EU Member State. Member States in principle apply identical legal sanctions and procedures to infringements of European and of national antitrust law. In most Member States, an administrative authority carries out the investigation and imposes sanctions. In some Member States, however, the right to impose sanctions, and fines in particular, is the prerogative of a court (eg Austria, Sweden, Finland). Administrative competence for special sectors, such as network industries, may lie with specialized authorities.
The investigatory powers of the national competition authorities are largely identical to those of the Commission. However, some differences remain. Not all national competition authorities have the right to search private premises, to interview individuals or affix seals. Many national authorities have the power to seize original documents and not only make copies as under Reg 1/2003. In some Member States the authority’s investigatory powers against undertakings which are not themselves suspected of having committed an infringement are more limited than against undertakings suspected of an infringement.
As far as rights of defence are concerned, differences relate in particular to the status of attorney-client communications (especially to the scope of the legal professional privilege). Not all Member States require that objections are communicated to the addressee of an investigation prior to the adoption of a decision. The Hearing Officer is a specific element of the Commission’s enforcement regime.
4. The system of parallel competences
Since the implementation of the Modernization Package, the Commission and the national competition authorities have formed a network of agencies and apply the EU competition rules in close cooperation (European Competition Network (ECN)). Information and consultation procedures, supported by a dedicated computer network, have been put in place in order to achieve an efficient and effective allocation of cases within the network as well as the uniform application of EU competition law.
In principle, each case is to be dealt with by a single authority. Accordingly, the national authority which receives a complaint or initiates an investigation ex officio is supposed to stay in charge. If an authority does not consider itself well placed to deal with a case or if other authorities also consider themselves well placed, the case may be re-allocated, which is, however, very rare in practice.
To ensure the uniform application of Arts 101, 102 TFEU/81, 82 EC, the national authorities send drafts of decisions envisaged pursuant to these provisions to the Commission prior to their adoption. In theory, the Commission may as ultima ratio, after consulting the authority concerned, initiate proceedings itself. According to Art 11(6) Reg 1/2003, this would relieve the national authorities of their competence.
The national competition authorities participate in particular through the Advisory Committee on Restrictive Practices and Dominant Positions in the Commission’s antitrust enforcement activities. The Advisory Committee has to be consulted prior to the adoption of a Commission decision.
It is the exclusive prerogative of the Commission to take a decision, if the Union public interest so requires, finding that Arts 101, 102 TFEU/ 81, 82 EC are not applicable to a certain market behaviour (Art 10 Reg 1/2003).
Pursuant to Art 12 Reg 1/2003 the Commission and the national competition authorities have the power to exchange evidence, including confidential information, for the purposes of applying Arts 81, 82 EC/101, 102 TFEU.
On ne bis in idem competition law (sanctions).
ECN working groups address sector specific as well as horizontal aspects of antitrust law enforcement (eg leniency programmes, cooperation, sanctions). The large-scale introduction of leniency programmes is probably the most prominent example of convergence (on the abolition of the notification system for restrictive agreements prohibition of restrictive agreements and exemptions). While only four Member States had a leniency programme in 2002, in 2011 every Member State except for Malta has one. Some programmes do, however, still differ in certain respects, eg as regards the preconditions for immunity (eg criteria excluding certain applicants due to their role in the cartel) and the nature of the information that must be disclosed. Such differences may discourage potential applicants from disclosing a cartel affecting several Member States as they may not obtain immunity or a reduction of fines in all Member States concerned. In order to avoid such disincentives, the ECN published its Model Leniency Programme in September 2006. It contains detailed proposals on how the above-noted and other aspects of leniency programmes may be designed in view of triggering soft (minimum) harmonization. The majority of the Member States as well as the Commission have now adapted their leniency programmes, as explained in detail in the ECN’s report on the Assessment of the State of Convergence of October 2009. The Model Leniency Programme also sets out the features of a uniform type of short form applications (so-called summary applications) designed to alleviate the burden on both undertakings and competition authorities associated with multiple filings in large, cross-border cartel cases. This scheme allows an undertaking that applies to the Commission for immunity, in case the Commission is particularly well placed to deal with a case, to secure its place in the national leniency queues by submitting very limited information to other well-placed authorities. The vast majority of national competition authorities accept such summary applications.
Despite remaining differences (see above), there is also considerable convergence in the area of investigatory powers. In recent years, more and more national competition authorities have been granted the power to search private premises, to affix seals during inspections and to carry out sector inquiries. The ECN regularly publishes convergence reports which follow the structure of Reg 1/2003.
In April 2009, the Commission published a report on the functioning of Reg 1/2003 which concludes that the Regulation has contributed to more effective enforcement of the European antitrust rules. The report identifies a limited number of areas meriting further evaluation. These include remaining instances of divergence between national procedural laws (eg regarding the adoption and enforcement of commitments decisions, prescription periods and standards of proof) as well as certain aspects of the Commission’s investigations and procedures, such as voluntary interviews or the imposition of periodic penalty payments.
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