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Archive for May 11th, 2022

The Role of the EU Courts- A View from the Bar

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A few weeks ago I participated at the Global Competition Law Centre’s Annual Conference, on a panel devoted to discussing the role of the EU Courts in competition cases together with General Court President Marc van der Woude and Judge Ingeborg Simonsson. My task was to talk about the role of EU Courts and judges from the point of view of lawyers. I guess this was much more comfortable than listening to what judges think about lawyers…

As I explained then, my views on this subject are necessarily informed and deformed by my own experience in quite a few cases before the EU Courts, both challenging and defending Commission decisions. Since the GCLC will be editing a book with speaker contributions, I thought it could make sense to post a summary of my general thoughts so that I can gather and incorporate additional feedback from the readers of this blog. So here they are.

In many ways, the view of lawyers about the role and the performance of Courts is quite straightforward: If we win a case, it’s our merit and the Court only fulfilled its role. And if we lose, then it’s the Court’s fault for failing to play its role.

That is only partly a joke, because we lawyers, but also other stakeholders, including in academia and in the press, tend to assess the performance of the EU Courts in quantitative terms. Too often we associate effective or thorough judicial review with annulments or with other observable metrics (number of cases decided, number of cases annulled, amount of fines confirmed or annulled, or average duration of cases). But all those are very superficial ways to measure performance.

So the key question that we should be asking is what is really the role of the Courts, and what can we reasonably expect from them? Once we have identified this benchmark, we can then enquire as to their performance and discuss the challenges they face.

A. What is the role that we expect the EU Courts to play in the field of competition law, and what are the hallmarks of effective judicial review?

In my view, the first and most important task of the EU Courts is to preserve the rule of law and the legitimacy of the EU competition enforcement system. Competition law is not only about policy, or economics or outcomes; it is primarily law, and it is for the Courts to ensure that its interpretation and enforcement are in line with fundamental rights and general principles of law that also apply in other domains. There are certain principles like, for example, the presumption of innocence, the rules on the burden of proof, or the principle of proportionality, that cannot be bypassed or sacrificed at the altar of expediency, because they are core rule of law requirements, and because there is too much at stake.

The second task of the Courts, very much linked to the first, is to contribute to a stable, consistent and predictable legal framework. The rule of law also requires legal certainty: to play by the rules, you need to know what the rules are. As much as we might enjoy the dynamic nature of competition law, and the case-by-case discussion, we need to build on a common and stable analytical framework that we can anticipate. This is important for companies required to self-assess their conduct, but also for repeat players like the European Commission, which needs to base its decisions on a clear and established analytical framework. It is of course desirable for the law to move and evolve, but wide pendulum swings do not benefit anyone.

At the same time, we also need to be realistic. We lawyers expect the Courts to state what the law is, but we often fail to realize that the Courts do not always have this possibility, as Courts are subject to their own constraints: they are called to decide on specific cases, on the basis of the arguments raised by the parties either under a review of legality or in reply to questions crafted by a national court in the context of a specific controversy.

The EU Court’s third main task, in my opinion, is to constrain administrative discretion while enabling effective enforcement. Courts do not only need to protect general principles of law and fundamental rights and lay down a stable and predictable framework, they also have the complex duty of doing this while not preventing sound and effective enforcement. In other words, the application of the law must not be arbitrary, discretional and based on mere hypothesis, but constraints need to be reasonable.

B. Measured against those benchmarks, how have the EU Courts fared so far?

First, there can be little doubt that the EU Courts have preserved the rule of law and the legitimacy of the EU competition enforcement system. Regardless of whether we as lawyers win or lose, the system does work.

I believe that there is a general feeling that, subject perhaps to exceptions, judicial review at the EU level has become more thorough and meaningful. Regardless of outcomes, the EU Courts have (i) recalibrated the standard of review following KME/Chalkor, marginalizing marginal review; (ii) placed a renewed emphasis on the right allocation of the burden of proof and the presumption of innocence (cases like Intel or Apple); and (iii) been acutely aware of the need to protect fundamental rights (I have in mind the very recent case law on ne bis in idem, Consob on the protection against self-incrimination, many cases, like Casino, on the right to a private domicile, or the Order in Facebook Ireland in relation to the right to privacy. Speed-Pro is perhaps a highlight in this trend).

EU Courts have also seen their role evolve as competition law became increasingly more about negotiations with the surge in settlement, cooperation and commitment decisions and the consequent decrease of litigation. In my view, the Courts have been up to the task, paying particular attention to new procedural questions regarding the presumption of innocence (ICAP, Pometon), non-discrimination (Timab), third parties’ rights and the principle of proportionality (Canal +), or the need to balance rights of defence and other considerations (Lantmännen Agroetanol). The Courts have made clear that negotiated solutions need to be guided, and can only be overridden, by procedural considerations and general principles of law.

Second, have the EU Courts contributed to a stable and predictable legal framework? I think we have made significant progress, particularly in the areas where preliminary references have been more common, but also in those where annulment proceedings have been more frequent in recent years, like State aid.

Absolute legal certainty may not be a reasonable aspiration, but I believe that there has been a meaningful incremental evolution in our understanding of some key notions. We now have a better idea, or a clearer framework to determine what is or what is not a restriction by object (Cartes Bancaires or Budapest Bank), what is not a SIEC (CK Telecoms), the criteria that are relevant to assess foreclosure in unilateral cases (Intel, Post Danmark cases). Preliminary rulings have also been particularly helpful (think of Slovak Telecom, Budapest Bank, Generics, Sumal, Volvo, bpost and Nordzucker).

There remains, in my view, room for improvement. We can currently more or less connect the dots across different cases, but we still lack a coherent and systematic framework in some respects, particularly in the field of Article 102, where some fundamental issues remain in dispute. At the same time, again, we need to be realistic; progress is incremental, and this is a good thing; if it were not, we would risk pendulum swings, which is precisely what we need to avoid.

Third, have the EU Courts succeeded at constraining discretion while enabling effective enforcement? In the past, many lawyers complained that judicial deference towards the Commission made it impossible for companies to successfully appeal Commission decisions in certain areas. Many practitioners will disagree with me, but I never bought that. Today, even if the ratio of annulments remains low, some commentators have argued that a few recent annulments would pretty much make competition enforcement impossible. I personally do not buy that either. I guess this position might make me unpopular on both sides, which is probably also how the Court must feel most of the time.

The one remarkable trend that I see in judicial review in recent years is the emphasis on the need to take the burden of proof and the principle of presumption of innocence seriously and avoid shortcuts. This is how I read Cartes Bancaires, and Budapest Bank on the “by object” shortcut, or the Court of Justice’s Judgment in Intel (which I believe is in many ways their equivalent for Article 102), Servier in relation to market definition, or the Starbucks, Apple and Amazon State aid cases when it comes to the criterion of advantage in State aid. The most recent General Court Intel Judgment raised some important issues in this regard. I will expand on those in a separate blog post.

C. What are the new generation challenges for the EU Courts in the field of competition law?

Challenges to the rule of law. Unfortunately, we live at a time when challenges to the rule of law are becoming common. There is perhaps a feeling that the law places uncomfortable constraints that ties our hands when facing certain problems. Sometimes we see a temptation to avoid constraints to pursue a certain view of the public good, including proposals to reverse the burden of proof, stretch legal bases, shield some decisions from judicial review or “take antitrust away from judges”. In my view, we need to remain vigilant here. The law is about constraints, and constraints are uncomfortable, but they are the wise restraints that make us free. There are a few vital red lines that we should not cross.

Keeping the law relevant in the DMA world. Under the DMA we will not need to be concerned about market definition, market power, counterfactuals, effects, efficiencies, proportionality, the competitive process and consumer welfare. It will all be about remedy design and outcomes. At first sight this does not leave much room for the law, lawyers and Courts. Creating a regulatory system from scratch is not easy, and it will be a challenge for Courts to keep the law relevant and make this system compatible with general principles of law and draw the necessary limits to administrative discretion.

Maintaining predictability and consistency in an increasingly fragmented landscape. A major challenge for the future will be to offer a stable EU law framework in an increasingly decentralized and fragmented landscape, at a time when much of what we knew is in dispute, where several Member States are experimenting with new theories, and where politicians are increasingly interested in competition law. While some degree of experimentation may be positive, major substantive divergences threaten the very idea of the internal market. As I have explained before, the problem here is that the Court’s current reactive tools are rather limited and, absent some changes, may not be sufficient.

Consistency. It might be important to make an extra effort to ensure consistency across competition law provisions, across time, between Courts (for example, between preliminary rulings and Judgments in annulment cases) and within Courts (frequent customers of the Courts, including some Commission lawyers, feel frustrated when they feel they receive different messages from different Chambers).

Evidence requirements. Evidential requirements on both the Commission and private parties need to be realistic and proportionate to the information that can be available to each party depending on their means and powers of investigation at their disposal. In my mind, the helpful clarifications on the allocation burden that one can see in recital 166 of the recent General Court Intel judgment (along the lines of the proof proximity principle) are also a step in the right direction.

Need for speed. Commentators frequently complain that it takes too long to find out what the law is. I can see how this is an issue, but at the same time it takes a while to go through all the motions of a case giving all parties sufficient time to make their case, study, organize and digest a hearing, write a thorough Judgment and translate it. Discovering the law often takes time and I, for one, much prefer thorough judicial review over quick and hasty review. There is, however, scope to strike a better balance, and the Courts are making an effort, even awarding damages in cases where judicial proceedings take too long. I have little doubts that the situation will continue to improve.

Written by Alfonso Lamadrid

11 May 2022 at 6:21 pm

Posted in Uncategorized