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EU Competition Procedure, 3rd Edition edited by Ortiz Blanco, Luis (1st September 2013)

Part I Antitrust Rules (Articles 101 and 102 TFEU), 1 The Institutional Framework

Luis Ortiz Blanco, Konstantin Jörgens

From: EU Competition Procedure (3rd Edition)

Edited By: Luis Ortiz Blanco

Subject(s):
Enforcement and procedure — Enforcement by EU Commission — Enforcement of Articles 101 and 102 TFEU — European Competition Network — National Courts — National Competition Authorities (NCAs) — Cooperation with ECN — Court of Justice — General Court — Regulation 1/2003 — Transport

(p. 3) The Institutional Framework

  1. I.  Sources of Procedure 1.01

    1. A.  Substantive Provisions 1.01

    2. B.  Procedural Rules 1.05

      1. 1.  General regime 1.07

      2. 2.  Special regimes 1.13

      3. 3.  Limitation periods 1.21

    3. C.  General Principles and ECHR Case Law 1.22

      1. 1.  The principle of proportionality 1.27

      2. 2.  The principle of observance of the right to a fair hearing 1.28

      3. 3.  The principle of presumption of innocence 1.30

      4. 4.  The privilege against self-incrimination 1.31

      5. 5.  The principle that administrative measures must be lawful 1.34

      6. 6.  The principle of sound administration 1.35

      7. 7.  The principle that undertakings’ business secrets must be protected 1.37

      8. 8.  The right to respect for private and family life, home, and correspondence 1.38

      9. 9.  The principle of the protection of legitimate expectations 1.39

      10. 10.  The requirement of legal certainty 1.40

  2. II.  The Authorities Empowered to Apply the Competition Rules 1.41

    1. A.  Antitrust Law and Decentralization 1.41

    2. B.  The National Judicial Authorities 1.46

      1. 1.  Role of the national courts 1.46

      2. 2.  Actions before national courts 1.50

    3. C.  National Authorities for Upholding Competition 1.54

      1. 1.  Substantive powers 1.54

      2. 2.  Cooperation between the Commission and NCAs and the European Network of Competition Authorities 1.56

    4. D.  The Commission 1.57

      1. 1.  The Commission’s monitoring powers 1.57

      2. 2.  The internal procedure for the adoption of decisions 1.60

      3. 3.  Commission policy documents 1.97

      4. 4.  Function and terms of reference of the Hearing Officer 1.104

    5. E.  The EU Courts 1.106

      1. 1.  The EU judicature 1.106

      2. 2.  Main types of proceedings 1.109

I.  Sources of Procedure

A.  Substantive Provisions

1.01  The basic European Union (‘EU’) competition provisions applicable to businesses or undertakings are Articles 101 and 102 of the Treaty on the Functioning of the European Union (‘TFEU’).1 Both provisions are an important part of the EU legal order and pursue one of the main objectives of the TFEU and the Treaty on European Union (‘TEU’), namely that of achieving an internal market. While Title 1 of the TEU and Part One of the TFEU only refer to the establishment of (p. 4) the internal market as a key objective and no longer declare that ‘a system ensuring that competition...is not distorted’ is one of the stated objectives of the EU,2 a legally binding Protocol on the Internal Market and Competition which contained the previous wording was ultimately annexed to the Treaties, thus enabling the EU to take appropriate action to this end.3

1.02  Article 101(1) TFEU prohibits agreements and arrangements between undertakings that affect trade between Member States and which have as their object or effect the prevention, restriction, or distortion of competition within the EU.4 Article 102 TFEU prohibits abuses of a dominant position within the internal market by one or more undertakings. Apart from various actions listed in Article 102(2) TFEU, abuses may take the form of any conduct by a dominant undertaking that appreciably distorts competition or exploits customers in the market in question. The effective enforcement of Articles 101 and 102 TFEU is recognized as an ‘objective of general interest recognised by the Union’.5

1.03  The assessment of the effect of agreements and conduct on competition often involves a complex analysis of the facts, and the conclusions derived from these facts may differ significantly depending on the underlying economic theory and model employed. Establishing the most basic concepts in competition law, such as the relevant market, are often major challenges that require very specific data and sophisticated analytical tools.6 Competition authorities are increasingly confronted with the need to investigate such complex cases, which require in-depth fact-finding and rigorous economic and empirical analysis.7 Due to the increasing importance of economics in complex cases, the European Commission (‘Commission’) often (p. 5) requests substantial economic data, and parties often submit arguments based on complex economic theories or provide empirical analysis. In order to streamline the submission and assessment of such evidence, the Commission published in 2011 ‘Best Practices’ that outline the criteria that economic and econometric analysis should fulfil and explain how they will be dealt with.8

1.04  The shift from the traditional approach towards a more economic-oriented assessment to ensure quality and the key role of economic advice in enforcement and policy making has been a key objective of the Commission in recent years.9 Further, competition law procedures often make it necessary for the public authorities to take economic policy decisions based on public interest considerations and social welfare objectives which fall outside national courts’ traditional sphere of activity, as they are better placed to deal with private damages actions for breaches of antitrust rules.10 Unlike a normal commercial dispute, where to some extent the parties can determine the rules of the game, where Articles 101 and 102 TFEU are concerned, the parties are bound by the public interest aim of these provisions with a view to guaranteeing the maintenance of a system that ensures that competition is (p. 6) not distorted.11 Furthermore, EU competition law extends beyond the interests of any one Member State and seeks to attain specific economic objectives on a much greater scale.12 All these features, together with the principle of limited intervention laid down in Article 103 TFEU and the principle that the Commission’s administrative practice must be appropriate to the prevailing circumstances, are reflected in the rules and procedural practices according to which the Commission and the EU Courts have applied substantive competition law.13

B.  Procedural Rules

1.05  Article 103 TFEU empowers the EU Council to adopt regulations and directives in order, in particular, to do the following:

  1. (a)  ensure compliance with the prohibitions laid down in Article 101(1) and in Article 102 TFEU by making provision for fines and periodic penalty payments;

  2. (b)  lay down detailed rules for the application of Article 101(3), taking into account the need to ensure effective supervision on the one hand, and to simplify administration to the greatest possible extent on the other;

  3. (c)  define, if need be, in the various branches of the economy, the scope of the provisions of Articles 101 and 102;

  4. (d)  define the respective functions of the Commission and the Court of Justice (‘ECJ’) in applying the provisions laid down in this paragraph;

  5. (e)  determine the relationship between national laws and the provisions contained in this Section or adopted pursuant to this Article.

1.06  On the basis of that provision, the Council adopted a series of regulations which define in detail the procedure applicable to competition matters, and has entrusted the application of that procedure to the Commission. The Council also authorized the Commission to adopt supplementary procedural rules.

(p. 7) 1.  General regime

1.07  On 1 May 2004, Regulation 1/200314 entered into force and modernized the procedural rules contained in the First Regulation implementing Articles 81 and 82 of the Treaty, commonly known as Regulation 17.15 Regulation 1/2003 is the result of a comprehensive reform process that the Commission started more than a decade ago with the adoption of the White Paper on modernization of the rules implementing Articles [101] and [102] TFEU.16 The key features of this process were the following:

  • •  The abolition of the practice of notifying business agreements to the Commission, enabling the Commission to focus its resources on the important fight against cartels and other serious violations of the antitrust rules.

    •  The empowerment of national competition authorities (‘NCAs’) and courts to apply EU antitrust rules in their entirety, so that there are multiple enforcers and therefore wider application of the EU antitrust rules.

    •  A more level playing field for cross-border businesses, as all competition enforcers, including NCAs and national courts, are obliged to apply EU antitrust rules to cases that affect trade between Member States.

    •  Close cooperation between the Commission and national competition authorities in the European Competition Network (‘ECN’).

    •  Enhanced enforcement tools for the Commission so that it is better equipped to detect and address breaches of the antitrust rules.17

1.08  In order to complement Regulation 1/2003, following extensive consultations the Commission adopted the ‘Modernization Package’ which, with respect to procedural matters, includes the following:18

  • (p. 8) •  Commission Regulation 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles [101] and [102] [TFEU].19 Regulation 773/2004 contains detailed rules regarding, in particular, the initiation of proceedings, oral statements, complaints, hearings of parties, access to the file, and the handling of confidential information in antitrust procedures conducted by the Commission. In 2008, this implementing Regulation was modified when the Commission introduced the settlement procedure in cartel cases.20

  • •  Commission Notice on cooperation within the network of competition authorities (‘ECN Cooperation Notice’).21 The ECN Cooperation Notice sets out the main pillars of cooperation between the Commission and the competition authorities of the Member States in the European Competition Network (‘ECN’). It also spells out the principles for sharing case work between the members of the network. In this respect, the ECN Cooperation Notice follows the Joint Statement of the Council and the Commission, which was issued on the day when Regulation 1/2003 was adopted.22 It provides for particular arrangements regarding the interface between exchanges of information between authorities pursuant to Articles 11(2) and (3) as well as Article 12 of Regulation 1/2003 and the operation of leniency programmes. The NCAs signed a statement in which they declared that they would abide by the principles set out in the Commission Notice.23

  • •  Commission Notice on the cooperation between the Commission and the courts of the EU Member States in the application of Articles [101] and [102] [TFEU] (‘National Courts Cooperation Notice’).24 The notice was intended to serve as a practical tool for national judges who apply Articles 101 and 102 TFEU in accordance with Regulation 1/2003. It brings together the relevant case law of the ECJ up to 2004, thus clarifying the procedural context in which national judges are operating. Particular attention is given to the situation where the national court deals with a case at the same time or after the Commission and where national judges ask the Commission for an opinion or to supply information which it holds. In addition, it created the possibility for the Commission to submit written and oral observations to the national courts in the interest of coherent application. The National Courts Cooperation Notice spells out how cooperation mechanisms work.

  • •  Commission Notice on the handling of complaints by the Commission under Articles [101] and [102] [TFEU].25 This Notice starts by providing general information on the work sharing (p. 9) of the different enforcers and invites potential complainants to make an informed choice of the authority where they will lodge their complaint or file their claim (whether the Commission, a national court, or an NCA) in the light of the case allocation criteria. The bulk of the notice contains explanations of the Commission’s assessment of complaints in the field of antitrust and the procedures applicable. The notice also includes an indicative deadline of four months, within which the Commission endeavours to inform complainants whether or not it intends to conduct a full investigation of a complaint.

  • •  Commission Notice on informal guidance relating to novel questions concerning Articles [101] and [102] [TFEU] that arise in individual cases (Guidance Letters).26 The goal of Regulation 1/2003 is to enable the Commission to concentrate its enforcement action on the detection of serious infringements. The abolition of the notification system is a crucial element in this context. However, in a limited number of cases, where a genuinely novel question concerning Articles 101 and 102 TFEU arises, it would also seem reasonable for the Commission, subject to its other enforcement priorities, to provide guidance to undertakings in writing (guidance letter). The notice sets out details about this instrument.

1.09  It should be noted that the Modernization Package did not affect the existing enabling block exemption regulations which remain in force. Thus, Council Regulations 19/65/EEC,27 (EEC) 2821/71,28 (EEC) 487/2009,29 (EEC) 1534/91,30 or (EEC) 246/200931 all empower the Commission to apply Article 101(3) TFEU by Regulation to certain categories of agreements, decisions taken by associations of undertakings, and concerted practices. In the areas defined by such Regulations, the Commission has adopted and may continue to adopt ‘block’ exemption regulations, by which it declares Article 101(1) TFEU to be inapplicable to certain categories of agreements, decisions, and concerted practices. In addition, a number of Commission notices and guidelines remain fully applicable alongside Regulation 1/2003.32

1.10  Under Regulation 1/2003, the Commission is jointly competent with NCAs to apply Article 101 and 102 TFEU, unless it initiates proceedings for the adoption of a Commission decision under Regulation 1/2003.33 By enabling NCAs and national courts to apply Articles 101 and 102 TFEU in full, Regulation 1/2003 has removed the principal obstacles to the prosecution of infringements of Articles 101 and 102 TFEU at the Member State level. (p. 10) On the one hand, Article 35 of Regulation 1/2003 obliges the Member States to designate the competition authority or authorities responsible for the application of Articles 101 and 102 TFEU and to take the measures necessary to empower those authorities to apply those Articles. On the other hand, the Member States remain free to organize their system of public enforcement. In this regard, Regulation 1/2003 recognizes the wide variety of public enforcement systems existing in the Member States,34 which is acceptable as long as Member States can ensure that their NCAs have the necessary resources to be represented on the Advisory Committee,35 provide assistance in inspections conducted by the Commission in their territory,36 and undertake inspections requested by the Commission.37

1.11  Article 3(1) of Regulation 1/2003 provides that where an NCA or national court applies national competition law to agreements, decisions of undertakings, or concerted practices within the meaning of Article 101(1) TFEU which may affect trade between Member States or any abuse prohibited by Article 102 TFEU, they must apply Article 101 or 102 TFEU. When dealing with an agreement, decision, or practice within the meaning of Article 101(1) TFEU which may affect trade between Member States or an abuse prohibited by Article 102 TFEU, NCAs will thus have the choice of either applying just Articles 101 or 102 TFEU, or applying both national competition law and Articles 101 or 102 TFEU.38 When NCAs of the Member States rule on agreements, decisions, or practices under Articles 101 or 102 TFEU which are already the subject of a Commission decision, they cannot take decisions which would run counter to that adopted by the Commission.39 In the same vein, when national courts rule on agreements, decisions, or practices under Article 101 or 102 TFEU which are already the subject of a Commission decision, they cannot take decisions running counter to the latter.40 The NCAs’ powers to take decisions are circumscribed by Regulation 1/2003. They may require that an infringement be brought to an end, order interim measures, accept commitments, and impose fines, but they may not adopt non-infringement decisions like those the Commission may adopt under Article 10 of Regulation 1/2003.41 The underlying idea is that the Commission and the NCAs should have parallel competences and together should form a network of authorities applying Articles 101 and 102 TFEU in close cooperation.

1.12  In fact, NCAs may have stronger powers than the Commission under Regulation 1/2003. Thus, whereas Regulation 1/2003 only empowers the Commission to impose fines on undertakings for infringements of Articles 101 and 102 TFEU, Article 5 of the Regulation also allows NCAs to impose ‘any other penalty provided for in their national law’, including imprisonment or criminal sanctions on natural persons. With regard to the application of national competition law, the (p. 11) obligation to apply Articles 101 and 102 TFEU does not exist where the NCAs and national courts apply national merger control rules. Nor does Regulation 1/2003 preclude the application of provisions of national law that predominantly pursue an objective different from that pursued by Articles 101 and 102 TFEU.42 Member States can apply national legislation that protects legitimate interests other than the protection of competition in the market, provided that such legislation is compatible with general principles and other provisions of EU law.43

2.  Special regimes

Transport

1.13  Initially, the Commission’s powers under Regulation 17 to enforce the competition rules did not apply to the transport sector, since Council Regulation 141 retroactively excluded this sector from the application of the procedural rules.44 Over the years, however, the Council adopted rules for the application of Articles 101 and 102 TFEU to road, rail and inland waterway transport,45 maritime transport,46 and air transport47 (‘Council Transport Regulations’).

(p. 12) 1.14  Regulation 1/2003 brought about a highly desirable simplification of a previously somewhat confusing situation.48 In essence, all transport sectors are now governed entirely by Regulation 1/2003.

EU Merger Control Regulation

1.15  Regulation 1/2003 does not apply to concentrations as defined in Article 3 of Regulation 139/2004,49 except in relation to joint ventures that do not have an EU dimension and which have as their object or effect the coordination of the competitive behaviour of undertakings that remain independent.50 Regulation 139/2004 provides for the prior notification of concentrations with an EU dimension and is particularly rigorous from the procedural point of view, laying down very strict time limits which have to be observed by the Commission. The Council Regulation is supplemented by very detailed rules on notifications and hearings.51

Other procedures for the application of Articles 101 and 102 TFEU
Article 104 TFEU

1.16  Article 104 TFEU requires Member States’ authorities to apply Articles 101 (in particular paragraph 3) and 102 TFEU where the EU Council has not adopted Regulations under Article 103 TFEU giving effect to Articles 101 and 102. These powers are limited, transitional, and cease to exist on the entry into force of the implementing provisions adopted under Article 103 TFEU. While the adoption of Regulation 17 had already curtailed the scope of this provision considerably, Regulation 1/2003 and further amendments in recent years have virtually made Article 104 TFEU obsolete.52 For example, as indicated above, in the maritime transport sector, Regulation 1/2003 now also applies to tramp vessel service and cabotage services, although it did not remove from Member States’ authorities the powers derived from Article 103 to enforce Articles 101 and 102 TFEU.

Article 105 TFEU

1.17  Article 105(1) TFEU confers upon the Commission a general supervisory role for competition matters,53 although Article 105(2) TFEU could be construed as limiting the effectiveness of the power granted to the Commission by stating that if the (p. 13) infringement is not brought to an end, the Commission may merely record it in a reasoned decision which it may publish and authorize Member States to take the measures needed to remedy the situation. Despite this, in the past the Commission has acted in a number of proceedings on the basis of Article 105, particularly those involving airline alliances.54

Article 4 third paragraph, second subparagraph TFEU [former Article 10, second paragraph EC] in connection with Articles 101 and 102 TFEU55

1.18  While it is true that Articles 101 and 102 TFEU are primarily aimed at undertakings and do not cover measures adopted by Member States by legislation or regulations, Member States may require or encourage undertakings to adopt restrictive agreements or concerted practices prohibited under Article 101 TFEU or to engage in abusive practices contrary to Article 102 TFEU. For example, they may do this by imposing minimum or maximum prices for goods or services; adopting discriminatory taxation measures; imposing regulatory rules that make it difficult for undertakings to enter markets; or operating restrictive licensing regimes for particular economic activities.56 The EU Courts have consistently held that Article 4, third paragraph, second subparagraph TFEU (former Article 10, second paragraph EC) imposes a duty on Member States not to maintain or to adopt measures which deprive these provisions of their effectiveness.57 Member States may not enact measures enabling private undertakings to escape from the constraints imposed by Articles 101 and 102 TFEU. In the current case law, the Court (p. 14) considers that a State measure is liable to negate the effectiveness of the competition rules in three situations:

  1. (1)  where a Member State requires, or favours, the adoption of agreements, decisions of associations of undertakings, or concerted practices contrary to Article 101 TFEU;

  2. (2)  where a Member State reinforces the effects of such conduct; and

  3. (3)  where a Member State deprives its own rules of their legislative character by delegating to private economic operators the responsibility for taking decisions affecting the economic sphere.58

1.19  In procedural terms, EU law does not provide for a particular procedure against Member States for not fulfilling their obligations under Article 4, third paragraph, second subparagraph in connection with Articles 101 and/or 102 TFEU. A complainant could request the Commission to direct a request to the Member State to comply with its obligations under the TFEU and, if need be, to initiate infringement proceedings against it.59 In this case, the relationship between the complainant and the Commission is governed by the Commission Communication on relations with the complainant in respect of infringements of EU law.60 To what extent a complainant is able to challenge a refusal to initiate proceedings before the EU Courts is subject to debate. The ECJ stated that the Commission has the right but no obligation to commence proceedings under Article 258 TFEU; it would have a discretionary power precluding the right of individuals to require it to adopt a particular position and to bring an action for annulment against its refusal to take action.61 If the Commission considers that a Member State has failed to fulfil an obligation under the TFEU, it delivers a reasoned opinion on the matter after giving the Member State concerned the opportunity to submit its observations. If the Member State does not comply with the opinion within the time allowed, the Commission is entitled, but not obliged, to apply to the ECJ for a declaration establishing the failure to fulfil an obligation of which the Member State is accused.62 The EU Courts are also likely to reject an action under Article 265 TFEU in respect of the (p. 15) failure to act. It would be possible to challenge a failure to take a decision or to define a position, but not the adoption of a measure different from that desired or considered necessary by those concerned. In this context, the General Court (‘GC’) has noted that the action for failure to act under Article 265 TFEU is contingent on the institution concerned being under an obligation to act, so that its alleged failure to act is contrary to the TFEU. Yet this is not the case here, since whether or not the procedure in question is initiated is at the Commission’s discretion.63

1.20  However, it is questionable whether the discretionary power of the Commission must be excluded from the outset from any judicial review. A refusal by the Commission to act against a Member State contains a legal assessment, which is capable of producing legal effects within the meaning of Article 263 TFEU. It terminates proceedings governed by a Communication of the Commission and it may contain an assessment of the Commission on the compatibility of national law with EU law. The purpose of the legal challenge would probably not be to oblige the Commission to initiate proceedings, since this is considered as coming within the scope of the Commission’s discretionary power,64 but rather to annul the legal assessment of the Commission according to which it decided not to investigate the complaint.65

3.  Limitation periods66

1.21  Article 25 of Regulation 1/2003 replaced the rules formerly contained in Regulation 2988/74,67 which laid down limitation periods both for proceedings and for the enforcement of sanctions under the EU competition rules. It establishes limitation periods for action on the part of the Commission against competition law infringements: three years for provisions concerning requests for information or the conduct of inspections, and five years for all other infringements. Article 26 of Regulation 1/2003 provides that the limitation period for enforcing fines and periodic penalty payments is five years.68

(p. 16) C.  General Principles and ECHR Case Law

1.22  Case law is an important source of EU law. The sometimes imprecise, incomplete, or excessively general nature of the provisions of the TFEU and the fact that the instruments containing secondary legislation are often flawed, aided and abetted by political compromise and the linguistic and legal diversity of the EU, offers the EU Courts an opportunity to establish what the law is. In short, they fill the gaps where neither primary nor secondary law has provided an adequate solution to the problems caused by the development of the EU. In carrying out this quasi-legislative task, the EU Courts use very dynamic interpretative methods and resort extensively to general principles of law. For example, the ECJ has recognized that although the Commission is not a ‘tribunal’ within the meaning of Article 6 of the European Convention on Human Rights (‘ECHR’),69 the observance of fundamental rights forms part of the EU legal order.70 Regulation 1/2003 specifically states that it respects the fundamental rights and observes the principles recognized, in particular, by the Charter of Fundamental Rights which is now part of the TFEU with all legally binding effects.71 Regulation 1/2003, which spells out a number of guarantees on which undertakings may rely during the investigation stage,72 must be interpreted and applied with respect to those rights and principles. The main provisions of the Charter that are relevant in the context of EU antitrust enforcement are contained in Article 7 (respect for private life, home, and communications); Article 41 (right to good administration, including inter alia the right to be heard and the right to have access to one’s own case file); Article 47 (right to an effective remedy and to a fair trial); Article 48 (presumption of innocence and right of defence); Article 49 (principles of legality and proportionality of criminal offences and penalties); and Article 50 (right not to be tried or punished twice in criminal proceedings for the same criminal offence).73

(p. 17) 1.23  The case law of the EU Courts has also developed a series of general principles inspired by the legal traditions of the different Member States,74 which must be applied together with the Treaty provisions and secondary legislation. EU competition procedure takes all of these principles into account, which guide the conduct of authorities responsible for ensuring compliance with the competition rules.75 It should be noted, however, that not every procedural irregularity will be sufficient to vitiate a decision. As a general principle of EU law, a person seeking the annulment of an administrative decision on the grounds of a procedural irregularity must be able to show at least the possibility that the outcome would have been different but for the irregularity complained of.76

1.24  At the same time, in recent years, fundamental rights invoked under the ECHR have steadily grown in importance.77 This has caused the EU Courts to pay increasing regard to the case law of the European Court of Human Rights (‘ECtHR’). One of the recurring themes is how far the EU system for judicial review of decisions by the Commission imposing fines in competition cases is compatible with Article 6(1) of the ECHR. In a recent judgment, the ECtHR had the occasion to apply these principles to a case in which the Italian national competition authority had imposed a fine in an antitrust enforcement case.78 The decision was confirmed on appeal. The Italian national competition authority is (like the Commission) an integrated authority that adopts decisions imposing fines, subject to a two-tier judicial control. While every system has its particularities, the institutional set-up in this case is thus not very dissimilar from the EU system. In this case, the ECtHR ruled that Article 6 ECHR was complied with in particular in view of the circumstance that the decisions of the administrative (p. 18) competition authority were subject to judicial review, in which it was assessed whether the competition authority had used its powers appropriately; and with respect to fines, the court could verify the suitability of the sanction and had the power to change the amount imposed.79

1.25  Based on a dataset of 207 competition judgments delivered by the GC between 1 September 2000 and 30 September 2010, it has been found that provisions of the ECHR have been cited by the GC in 23.8 per cent of cases, almost a quarter of its competition judgments.80 Allegedly, the limited number of references obtained in relation to the Charter and the ECtHR case law (5.8 per cent and 2.3 per cent respectively) might have to do with the fact that the first lacked binding force until the adoption of the Lisbon Treaty in 2009. Regarding the latter, the GC and, more generally, the EU Courts have arguably sought to promote their own interpretation of fundamental rights.81 Additionally, two other general principles of EU law (ie the principles of ‘legal certainty’ and ‘legitimate expectations’) and of one general principle of EU competition law (the reference to ‘free and undistorted competition’ that appeared under Article 3(1)(g) of the EC Treaty) can be spotted in the competition judgments of the GC. It has turned out that the GC discusses general principles of law in approximately one-fifth to one-third of the competition cases which it deals with. The relatively high number of cases referring to the principles of legal certainty and legitimate expectations would suggest that both the parties and the GC pay close attention to general principles of EU law, which generally protect the subjects of EU competition law. In any event, it appears these indicators show that the EU Courts constitute a forum where fundamental values are discussed.82

1.26  Without intending to be exhaustive, the paragraphs that follow describe some of the main principles. Where appropriate, references will be made to the case law of the ECHR.

1.  The principle of proportionality

1.27  The principle of proportionality means that the acts of EU institutions should not be unnecessarily burdensome for those to whom they are addressed, and must be limited to what is strictly necessary to attain the objectives pursued.83 The principle is of particular relevance in (p. 19) the context of Commission investigations, where the coercive measures must be proportional to the subject matter of the investigation and must not constitute a disproportionate and intolerable interference.84 In this respect, in Roquette Frères85 the ECJ confirmed its previous decision in Hoechst86 and held that the Commission must respect national law procedures when exercising its investigative powers, and at the same time national authorities must respect general principles of EC law, notably the principle of proportionality.87 As regards the imposition of fines,88 the amount of the fine must be proportionate in relation to the factors taken into account in the assessment of the gravity of the infringement.89 However, fines do not have to be in direct proportion to the size of the market affected, that factor being just one amongst others. The fine imposed on an undertaking for an infringement of the competition rules must be proportionate to the infringement as a whole and, in particular, to the gravity of that infringement.90 Regard must be had to a large number of factors, the nature and importance of which vary according to the type of infringement in question and the particular circumstances of the case.91 While the Commission has a degree of discretion (p. 20) when fixing the amount of each fine and is not obliged to apply a precise mathematical formula in this regard, it is nevertheless for the EU Courts to review whether the amount of the fine imposed is proportionate, given the duration of the infringement and the other factors capable of forming part of the assessment of its seriousness.92

2.  The principle of observance of the right to a fair hearing93

1.28  The right to a fair hearing includes different aspects and notably comprises the threefold right of individuals:

  • •  To be assisted by lawyers and enjoy confidentiality in respect of correspondence with them.94 Article 6 ECHR grants the right of the accused to participate in an effective manner in a criminal or administrative-sanctions procedure. It includes not only the right to be physically present but also the right to be assisted by a lawyer.95 The ECJ has recognized the role of the lawyer as collaborating in the administration of justice by the courts and as being required to provide, on a fully independent basis and without constraints, the legal assistance that the client needs.96 In competition cases, lawyers may assist their clients in answering written requests for information.97 They may also be present when an interview is carried out in accordance with Article 19 of Regulation 1/2003. Legal assistance during inspections pursuant to Article 20 of Regulation 1/2003 is not regulated either in Regulation 1/2003 or in Regulation 773/2004. It is, however, consistent Commission practice to allow undertakings to consult their lawyer and to ask them to be present, although the presence of a lawyer is not a legal condition for the validity of the inspection.

  • (p. 21) •  To be allowed the same knowledge of the file used in the Commission’s proceedings as the Commission itself, which presupposes that in a competition case the knowledge which the undertaking concerned has of the file used in the proceeding is the same as that of the Commission, including both the incriminating and potentially exculpatory documents (principle of ‘equality of arms’). The Commission must give the undertaking concerned the opportunity to examine all the documents in the investigation file that may be relevant for its defence.98 Access to the file is one of the procedural safeguards intended to protect the rights of the defence. These principles imply that all parties involved in a case are awarded the same knowledge in order to secure the observance of their defence rights.99 The ECtHR has emphasized the need to respect the right to adversarial procedure, noting that this entails the parties’ right to have knowledge of and comment on all evidence adduced or observations filed.100 Recognizing these procedural safeguards, the ECJ has indicated that nonetheless the ECtHR has held that, just like the observance of the other procedural safeguards enshrined in Article 6(1) of the ECHR, compliance with the adversarial principle relates only to judicial proceedings before a ‘tribunal’ and that there is no general, abstract principle that the parties must in all instances have the opportunity to attend the interviews carried out or to receive copies of all the documents taken into account in the case of other persons.101 The failure to communicate a document would constitute a breach of the rights of the defence only if the undertaking concerned shows, first, that the Commission relied on that document to support its objection concerning the existence of an infringement.102 If there were other documentary evidence of which the parties were aware during the administrative procedure that specifically supported the Commission’s findings, the fact that an incriminating document not communicated to the person concerned was inadmissible as evidence would not affect the validity of the objections upheld in the contested decision.103 The principle of access to the file was established in the Soda Ash cases, which related to a concerted practice between Solvay and ICI and abuses of a dominant position by the two companies.104(p. 22) The GC ruled that in the case of illegal non-disclosure of exculpatory documents the only remedy is for the decision as a whole to be annulled, since it cannot be known what the result of the proceedings would have been, had such documents been disclosed to the companies.105 The GC stated that the Commission had failed to respect the rights of the defence by not allowing the companies to have access to specific documents. In particular, the Commission had not prepared a list of all of the documents in the Soda Ash file because it considered this to be of no use in this case106 and had not shown to ICI and Solvay certain allegedly confidential documents belonging to the other party.107 Nor did the Commission provide the companies with a non-confidential summary of such documents because it considered that this was not possible in this case.108 However, the GC took the view that by deleting their confidential parts, or by summarizing them, all documents, including both incriminating evidence and exculpatory evidence, could have been made available to the other party and it was not for the Commission to decide which documents were useful for the defence. In Hercules, the GC defined the limits of access to the file stating that ‘the Commission has an obligation to make available to the companies involved in Article 101(1) proceedings all documents, whether in their favour or otherwise, which it has obtained during the course of the investigation, save where the business secrets of other undertakings, the internal documents of the Commission or other confidential information are involved’.109 In Cimenteries CBR, the GC dismissed an application brought against the refusal of the Commission to disclose certain documents of the statement of objections, stating that, before the decision on the existence of an infringement, the Commission can still rectify procedural irregularities by granting access to the file but also emphasized that the infringement of a right of full access can lead to the annulment of the Commission’s contested decision.110 It would seem that access to the file is an integral part of the right to be heard and not a right in itself.111 The right of access to the file is set out in Article 27(2) of Regulation 1/2003 and expanded (p. 23) upon in Articles 15 and 16 of Regulation 773/2004112 and also included in the EU Charter of Fundamental Rights of the EU.113

  • •  To be granted a hearing and make submissions before any public authority takes measures which might affect their interests; a person against whom the Commission has initiated administrative proceedings must have been afforded the opportunity, during those proceedings, to make known his or her views on the truth and relevance of the facts and circumstances alleged and on the documents used by the Commission to support its claim that there has been an infringement of EU law.114 Observance of the right to be heard in all proceedings in which sanctions, in particular fines or penalty payments, may be imposed constitutes a fundamental principle of EU law which must be respected even if the proceedings in question are administrative proceedings.115 The right to be heard is normally exercised in writing by way of reply containing observations on the accuracy of the facts and the validity of the arguments. The undertaking may also adduce evidence of its own in support of its defence. In this respect, in Transocean Marine Paint Association v Commission, the ECJ reiterated the general principle of EU law which requires that a person whose interests are appreciably affected by a decision taken by a public authority must be given the opportunity to make his point of view known.116 This requirement also applies where the relevant regulation does not explicitly provide for this opportunity.117

1.29  For its part, the ECtHR has interpreted the right to a fair hearing before an independent and impartial tribunal in a liberal manner,118 regardless of whether the matter is to be classified as civil or criminal. The provision is applicable to administrative procedures as well as to disciplinary procedures.119 Article 6 ECHR is applied in a more or less strict fashion depending on (p. 24) whether the offence is of a criminal or non-criminal nature.120 Although national law may not necessarily classify a matter as ‘criminal’, the ECtHR may do so, taking into account the nature of the offence and the severity of the penalty. Where a penalty is liable to be imposed on all persons infringing a rule and is imposed to deter and to punish infringements, and where those penalties are substantial, the matter would be classified as criminal.121 The fact that Regulation 1/2003 states the fines being imposed ‘shall not be of a criminal law nature’ would not bind the ECtHR.122 In Societé Stenuit v France the ECtHR considered a matter of French administrative law which concerned the imposition of a fine under French competition law for participation in a cartel as a criminal proceedings, notwithstanding the non-criminal charge of the penalty under French law.123 The Union courts have accepted this interpretation and do not seem to contest the criminal nature of the Commission’s decisions in which it imposes fines.124

3.  The principle of presumption of innocence125

1.30  This principle means that any accused person is presumed innocent until proven guilty, therefore prohibiting any formal finding of responsibility for a person charged with an offence without that person having had the benefit of all guarantees inherent in the exercise of the rights of the defence.126 The indictment or formal charge against any person is not evidence of guilt. The law does not require a person to prove his innocence or produce (p. 25) any evidence at all. The prosecution has the burden of proving a person guilty beyond a reasonable doubt, and if it fails to do so the person is (so far as the law is concerned) not guilty.127 The ECtHR states that Article 6(2) ECHR, which enshrines the presumption of innocence, governs criminal proceedings in their entirety, irrespective of the outcome of the prosecution. In its case law, the presumption of innocence is violated if, without the accused having previously been proved guilty according to law and, notably, without having had the opportunity of exercising his or her rights to a fair defence, a judicial decision concerning him or her reflects a guilty verdict.128 Given the nature of the infringements in question and the nature and degree of severity of the ensuing penalties, the principle of the presumption of innocence applies to the procedures relating to infringements of the competition rules that may result in the imposition of fines or periodic penalty payments.129 Under this principle, the Commission is required to produce sufficiently precise and consistent evidence to support the firm conviction that the alleged competition infringement has taken place.130 However, it is important to emphasize that it is not necessary for every item of evidence produced by the Commission to satisfy those criteria in relation to every aspect of the infringement. It is sufficient if the body of evidence relied on by the institution, viewed as a whole, meets that requirement.131 In this respect, this principle is closely connected with that of in dubio pro reo and with the duty to comply with the legally required standard to demonstrate the existence of the circumstances constituting an infringement.132 The Court examines whether ‘the (p. 26) Commission gathered sufficiently precise and consistent evidence to give grounds for a firm conviction that the alleged infringement took place’.133 The Court is expected not to conclude that the Commission has established the existence of the infringement at issue to the requisite legal standard if it still entertains doubts on whether the evidence and other information relied on by the Commission are sufficient to establish the existence of the alleged infringement, in particular in proceedings for the annulment of a decision imposing a fine.134