How (not) to untie a Gordian know: the division of power between the Commission and National Courts in the application of the EC competition rules

Autor:Janusz Zielinski
Cargo del Autor:Legal Consultant
Páginas:335-386
 
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HOW (NOT) TO UNTIE A GORDIAN KNOT: THE DIVISION OF POWER BETWEEN THE COMMISSION AND NATIONAL COURTS IN THE APPLICATION OF THE EC COMPETITION RULES

Janusz Zielinski

Legal Consultant

SUMMARY: 1. INTRODUCTION. 2. UNTYING THE KNOT: DEVELOPMENT OF THE DIVISION OF POWERS MODEL. 2.1. Concurrent Procedures. 2.1.1. Proceedings before the Commission.
2.1.2. Private Enforcement before National Courts. 2.1.3. Clash of Procedures. 2.2. Dividing the Power to Enforce. 2.2.1 Delimitis; a Subtle Model of Co-operation. 2.2.1.1. The Judgment of the ECJ.
2.2.1.2. The Commission’s Notice on Co-operation. 2.2.2. Masterfoods; a Rigid Model of Subordination. 2.2.2.1. The Judgment of the High Court of Ireland. 2.2.2.2. The Decision of the Commission. 2.2.2.3. The Judgment of the ECJ. 2.2.2.4. Codification. 3. TIPPING THE TRIPOD: WEIGHING UP THE BENEFITS AGAINST THE SHORTCOMINGS. 3.1. Putting on the Pressure. 3.1.1. The Principle of the Separation of Powers. 3.1.2. The Principle of Judicial Independence. 3.1.2.1. Applicability of the Principle. 3.1.2.2. Application of the Principle. 3.2. Testing the Tripod. 3.2.1. The Principle of Uniform Application. 3.2.2. The Principle of Legal Certainty. 3.2.3. The Principle of Sincere Co-operation. 4. UNTANGLING THE SOLUTION: ALTERNATIVE MODELS OF ENFORCEMENT. 4.1. Cutting the Knot. 4.1.1. Antitrust Federalism.
4.1.1.1. Antitrust federalism in the United States. 4.1.1.2. Antitrust

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federalism in Europe? 4.1.2. Separation of Power to Prosecute and Power to Judge. 4.2. Manoeuvring between the Threads. 4.2.1. The Scope of the Obligations. 4.2.2. Decisions ‘Sufficiently Distinguished on the Facts’. 5. CONCLUSION.

1. INTRODUCTION.

EC competition law may be enforced at both Community and national level. On the one hand the European Commission, acting as an enforcement agency, may commence administrative proceedings against an undertaking or a group of undertakings suspected of antitrust violations. On the other hand, Articles 81(1) and 82 of the Treaty have been relied on in civil proceedings before national courts of the Member States for many years. This enforcement role of national judges was further increased by Regulation 1/20031 (the Modernisation Regulation) and the abolition of the Commission’s monopoly over the application of Article 81(3).

Since it is possible for a natural or legal person who suffers a violation of the EC antitrust rules to complain to the Commission and, at the same time, commence a civil action, concurrent proceedings may be initiated. In itself this does not seem to be a problem, however it is not difficult to imagine national judges and Commission officials arriving at different conclusions. This risk of conflicting decisions at national and Community level may undermine the principle of legal certainty and the uniform application of EC law.

The problems which could potentially arise due to the possibility of concurrent proceedings needed to be addressed but due to the delicacy of the subject matter, finding a clear-cut solution was anything but obvious. Trying to divide power between national judiciaries and Community officials to decide cases involving EC competition rules can only be described as trying to untie the Gordian knot. Moreover, the threads are

1Council Regulation 1/2003 of 16 December 2002, on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, [2003] O.J. L1/1.

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many; division of powers between politicians and judges, division of competences between the Community and the Member States and finally, principles of uniform application, legal certainty and judicial independence, which do not always go hand in hand. These are only the basic issues which, when the egos are included in the equation, have the potential to be impossible to settle in a civil manner.

The ECJ, lacking Alexander’s sword, was obliged to consider the issue of the division of power to enforce EC antitrust rules on two separate occasions. The first of those occasions was the Delimitis2 case, where the ECJ had defined the main issues and addressed them in a subtle manner. Subsequently, in Masterfoods3, the Court toughened its approach and imposed a set of obligations on the national courts, which were not allowed to rule contrary to an existing or envisaged Commission decision. Where such a decision existed, national judges were obliged to stay the proceedings.

Finally, these obligations and therefore the model of division of power to enforce EC antitrust provision were codified in Article 16 of the Modernisation Regulation (Article 16).

The main question posed in this paper is whether the model developed by the ECJ to diminish the risk of conflicting decisions being delivered, is appropriate. To address this question in a proper manner, one first needs a base to build upon, thus the problem and then the solution will be defined, outlined and prepared for evaluation.

Thereafter, the division of power described in Masterfoods will be broken down and assessed in detail. It will be argued that the Judgment was based on three principles; uniform application, judicial certainty and sincere cooperation. On the other hand, a situation in which an administrative decision has an impact on judicial proceedings raises red flags in the context of separation of powers and judicial independence. Therefore, the

2Judgment of the ECJ of 27 February 1991, in Case C-234/89, Delimitis v Henninger Bräu, [1991] ECR I-935.

3Judgment of the ECJ of 14 December 2000, in Case C-344/98, Masterfoods v HB Ice Cream, [2000] ECR I-11369.

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three principles, which were the driving force behind the ECJ Judgment, will be put to a crash test with the restraints that the Judgment imposed.

Finally, if the crash test is a catastrophe and the three pillars of the Masterfoods Judgment cannot support Article 16 against the restrictions it imposes, alternative solutions will be discussed. The two alternatives we will turn to are the American concept of antitrust federalism and, already advocated on many occasions, the separation of the Commission’s power to judge from its power to prosecute. Since both solutions require substantial changes to the Community institutional framework, a possibility of minimising the negative impact of Article 16 on judicial independence will be explored as an interim solution.

It should be born in mind that, since Article 16 of the Modernisation Regulation is entirely based on the Masterfoods ruling, the critique of the Judgment also applies to its codified version contained in the Regulation.

2. UNTYING THE KNOT: DEVELOPMENT OF THE DIVISION OF POWERS MODEL.

This section will set the stage for the subsequent detailed discussion. The first part will attempt to outline the relevant procedures and introduce the problem, while the second part will focus on the solution developed in the ECJ case law, by outlining and critically assessing its two main judgments on the subject.

2.1. CONCURRENT PROCEDURES.

The double enforcement of the EC competition rules may lead to a situation, where a national court and the Commission are independently considering the same case. In order to diminish the risk of conflicting decisions, the relationship between the national courts and the Commission has to be clearly defined. However, before discussing the way in which the boundaries of the power to enforce were developed by the ECJ, the proceedings before the Commission and national courts should be examined separately.

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2.1.1. Proceedings before the Commission.

The Treaty provides that it is the European Commission who bears the primary responsibility for ensuring the application of the Community competition rules.4To this end, the competition arm of the Commission, the Directorate-General for Competition, may initiate administrative proceedings against alleged offenders of EC antitrust rules.

The procedure before the Commission may be initiated, inter alia, following a complaint, whether formal or informal, from a third party. During the fact-finding stage which then follows, the Commission is entitled to investigate reported infringements of EC antitrust provisions. To this effect, DG Competition officials have three main investigatory powers; a right to request information, a right to inspect premises and, since the enactment of Regulation 1/2003, a right to take statements5.

If the investigatory phase turns out to be fruitful and the evidence obtained indicates an infringement of the competition rules, a Statement of Objections is served on the undertakings concerned, which marks the opening of the formal procedure.6Those to whom the Statement of Objections is addressed will then submit in writing their observations on the accuracy of the facts and the validity of the Commission’s arguments. In addition an oral hearing chaired by a Hearing Officer, who acts as a guarantee of the right to be heard but not as a judge7, may be held. This hearing cannot be compared to a formal trial, although it may have an adversarial character if the complainant is present.8Finally, after taking the

4See Art 85, EC Treaty.

5See ORTIZ BLANCO, L., EC Competition Procedure, 2nd ed., Oxford University Press, Oxford, 2006, pp. 245 to 292.

6KERSE, C.S. and KHAN, N., EC Antitrust Procedure, 5th ed., Sweet & Maxwell, London, 2005, p. 40.

7See DURANDE, S. and WILLIAMS, K., “The Practical Impact of the Right to be Heard: A...

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