CRIMINALISATION OF EU COMPETITION LAW ENFORCEMENT: THE LONG AND WINDING ROAD
José Manuel Panero Rivas
SUMMARY: 1.INTRODUCTION 2.DESCRIPTION AND ANALYSIS 2.1. Contextual elements for understanding the idea of criminalising EU competition law enforcement 2.2. Which conduct must be criminalised? 2.3. What sanctions are to be considered? 2.4. Possible criminal enforcement models and legal basis 2.5. The main arguments against criminalising EU competition law 2.6. Relevant effects of criminalisation on the status quo 3. CONCLUSION.
Criminal enforcement of EU competition law - a sort of entelechy some years ago - is nowadays a reality due to the criminal enforcement by some Member States of Articles 101 and 102 of the TFEU under Regulation 1/2003. This has led to serious drawbacks which could spark the intervention of the EU legislator in the short- to medium-term. A wide spectrum of elements must be analysed to determine the ways in which the
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EU should - and could - behave. Some conditions will have to come into effect and novel instruments be created if a general criminal enforcement scenario is to be considered desirable.
This paper examines the elements behind the idea of criminalising competition law in general terms, in terms of what might happen under the EU competition regime, and in comparison with the US’ successful experience. It revisits, under the spotlight of criminal law, anticompetitive conduct and the armoury of criminal sanctions at stake, proposes alternative solutions, and considers the impact of eventual criminal enforcement within the existing legal framework. It will also discuss the potential impact on the leniency policy and settlement procedures.
Hard-core cartels seem to remain under-deterred in Europe today. The powerful mechanisms provided by the 2006 Guidelines on the method of setting fines are not being completely explored by the Commission – even if the fines are reaching compensatory thresholds - on the grounds of avoiding corporate “capital punishment penalties”, an idea which probably merits revisiting. Private actions and other mechanisms intended to prevent or compensate for competition law infringements remain anecdotal on our side of the Atlantic, but are expected to increase in coming years.
For a range of reasons, the US criminal enforcement model can neither be replicated at EU level nor, leaving aside structural impossibilities, should it be uncritically adopted. Institutionally, it appears that the EU – as opposed to the options individually chosen by its Member States - is still not at the threshold of criminalising EU competition law enforcement at any level. Additionally, when referring to hypothetical criminal enforcement at the EU institutions’ level, the possibility of arranging a mandatory revolution -something pushing the boundaries of the EC Treaty - seems to be outside of the TFEU possibilities, requiring a change to the treaty.
Leaving that aside, the theoretical structural options seem to be either the harmonisation of national criminal enforcement of certain kinds of competition law infringements - with a variant consisting of a hybrid model of prosecution before national courts from a centralised EU authority - or the creation of a completely new ad hoc procedure, at the level of the EU institutions, applying novel criminal tools for enforcing EU Competition Law (through a modification of the Treaties). In any case, an administrative system of fines for infringements other than cartels should be preserved, and
clear mechanisms of allocation of cases between both jurisdictions must be created. Regardless of the level considered, the “offence” must be described in clear and enforceable terms, in a manner which avoids double jeopardy, and clarifies the elements of blameworthiness.
Leniency programmes, which have proved to be an extraordinary tool in the fight against cartels, simply cannot be sacrificed. If Member States’ criminal law principles preclude this possibility, then it appears that only non-criminal sanctions must be considered in those States.
Competition law is a peculiar branch of the law, not only because it is deeply imbued with economic considerations, but also because the conducts prohibited and prosecuted are sometimes those of undertakings operating beyond national borders. Against them, competition authorities around the world dispose of a heterogeneous armoury. While some of them rely only on sanctions on the undertakings that are the main beneficiaries of the infringement, others provide for human-targeted measures on individuals within the company. Sanctions vary widely in their severity, including, in some countries, the possibility of imprisonment penalties for individuals.
The European Commission which, together with the US Department of Justice and the Federal Trade Commission, the UK Office of Free Trade, the Canadian Competition Bureau and, in recent years, the Japanese Free Trade Commission, leads the global enforcement has, however, a limited number of weapons at its disposal. It lacks the possibility to impose either criminal sanctions1 or administrative fines on undertakings’ directors or employees. This limitation could constrain the efficiency of EU competition law enforcement but must be seen in light of EU history and its Member States’ background, culture, legal traditions and EU citizens’ beliefs. This being said, some of the Member States (the best-known examples are Ireland and the UK) have been criminalising the enforcement of certain aspects of their
1Even if the current fines may be qualified as being criminal sanctions within the meaning of Art.6 ECHR, as the ECJ seems to have acknowledged in Case C-199/92P Hüls v. European Commission  ECR 4287 § 150.
national competition law provisions in recent years and, correlatively, in the framework of the decentralised model provided by Regulation 1/20032, of the TFEU provisions.
Philip Lowe – at the time, the Director General of DG COMP - said in 2006 that:
“[i]t is unrealistic to suppose that the Commission […] could in the foreseeable future, propose a criminalisation of the infringements and the defence of those rights at European level. It is however, in the medium term, probably realistic to suppose that, with the further criminalisation of offences at national level, there could be some degree of judicious combination of administrative fines on the one hand and sanctions against individuals on the other, which could work”.3
It is not the purpose of this paper to contradict this statement but rather to provide some discussion on the points behind it and to examine the direction the EU could reasonably take, given the different options available.
The proposed structure for analysing the question is as follows: i) an introduction of the elements behind the criminalisation of EU competition law enforcement, ii) an evaluation, under a criminal law spotlight, of the conduct typically prohibited by competition law, iii) an evaluation on the specific criminal sanctions to be considered, iv) the criminalisation models available and their legal basis under the current treaties, v) some arguments against the idea of criminalisation and, finally, vi) some important additional elements to bear in mind should criminal enforcement become the standard, including the impact on leniency programmes and settlement procedures.
2Council Regulation (EC) 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Arts. 81 and 82 of the Treaty OJ L 1, 4.1.2003.
32007 Annual Proceedings of the Fordham Competition Law Institute, Roundtable on Criminal Enforcement of Antitrust Laws in B.E.HAWK Annual Proceedings of the Fordham Competition Law Institute, International Antitrust Law & Policy, 2007
2. DESCRIPTION AND ANALYSIS
2.1. CONTEXTUAL ELEMENTS FOR UNDERSTANDING THE IDEA OF
CRIMINALISING EU COMPETITION LAW ENFORCEMENT
Three main elements behind the idea of criminalising EU competition law are going to be explored in this section. The first is a universal economic one, related to the alleged insufficient deterrent effect of competition law enforcement systems based on administrative fines on undertakings (at least as regards cartels). The second one is an argument arising from the influence of the US criminal enforcement model. Finally, the third one relates to the position of the EU as a regional jurisdiction and its placement vis-à-vis US federal jurisdiction and over Member States’ competition law enforcement.
2.1.1. Criminalisation, an economic necessity?
Despite the astonishing increase in the level of fines imposed by the Commission in recent years and the 2006 Guidelines on setting fines,4 there is an argument that it is impossible, regarding cartel infringements, to reach the “optimal deterrence point” in which a rational entity would not enter into a competition law infringement solely via administrative fines on undertakings.5
Deterrence (in the individual and general sense) is one of the ends of the utilitarian theory of punishment,6one of the generally accepted goals of criminal remedies and one of the ECJ’s accepted aims of the current fines.7
This promotes, when looking to the future of sentencing,8the idea of “imposing a cost on one individual in order to get a benefit for the whole society”9.
4Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, OJ C 210, 1.9.2006, pp. 2–5.
5WILS, W.P.J., “Is Criminalisation of EU Competition Law the Answer?”, World Competition Review, 28 (2), 2005, p.138.
6See ROSOCHOVICZ, P.H., “The...