Archive for the ‘Case-Law’ Category
More on AG Wahl and restrictions by object: ‘pay-for-delay’ settlements as a case study
A while ago I wrote a post and engaged in some follow-up comments on the issue of restrictions by object. But since Alfonso is busy these days and has shown some persistence in chasing me to have me write another guest post, I thought it a good idea to add a few more thoughts on the matter. I see value in doing so given that the discussion in the preceding post remained (to my regret) overly abstract. I tell myself that if I illustrate my points by relating them to some on-going disputes/investigations, they may become clearer, and might even spark more discussion.
I explained back in March that the ECJ does not see the notion of restriction by object as a presumption of the likely effects of the agreement. I know this is a very popular understanding of Article 101(1) TFEU, but I see a clear difference – and so does the Court, may I add – between understanding what the agreement is all about (Article 101 TFEU refers explicitly to its ‘object’) and establishing its likely (negative) effects on the market. A ‘naked’ price-fixing agreement between competitors is prohibited irrespective of whether collusion can realistically be sustained on the relevant market (that is, irrespective of whether there are reasons to believe that the parties will ever be credibly committed to restricting competition). When reading the case law, it is pretty clear to me that the real question is whether the agreement is a plausible source of efficiency gains (there are myriad examples where this approach has been followed, some of which I mentioned in the other post). Put differently, the true issue is whether it is realistic to expect pro-competitive effects from the agreement in light of the context in which it is implemented.
Allow me to illustrate these ideas by reference to the on-going debates around ‘pay-for-delay’ settlements (Alfonso already wrote about this some time ago). It is fairly clear that a ‘naked’ (and the word ‘naked’ cannot be emphasised enough) agreement between two competitors whereby one of them agrees to delay the launch of a product amounts to a restriction by object within the meaning of Article 101(1) TFEU. The question is whether the agreements at stake in cases like Lundbeck can be likened to such ‘naked’ restrictions. Addressing this issue requires understanding, first and foremost, the point of these agreements in their context. What becomes immediately apparent in this sense is that they cannot be said to be ‘naked’. There is something else to these agreements, namely a background dispute between the parties relating to the validity or to the infringement of a patent. From this perspective, the question could be rephrased as one of whether putting an end to such a dispute by means of a settlement can be likened to a cartel agreement.
To me, the answer is a clear no. Nobody would deny that out-of-court settlements are an efficient way to deal with disputes. In paragraph 235 of the recently issued Guidelines on technology transfer agreements, the Commission is very explicit in this regard. If this is so, and to the extent that there is genuine uncertainty about the ability of a generic producer to enter the market, the applicable case law suggests that Lundbeck-like settlements should only be deemed to restrict competition after a careful assessment of their effects under Article 101(1) TFEU. By the same token, the ‘object’ category would only be appropriate where it is clear beyond doubt that the generic producer would have been able to enter the market without infringing the patent(s) in question or it is clear beyond doubt that the said patent(s) are invalid. Only then would it be justified to assess them in the same way cartels are (in such a scenario, the restraints would in reality be ‘naked’, as there would be no actual dispute to settle).
A comment on Case T-79/12 Cisco Systems and Messagenet v European Commission (Microsoft/Skype)
On 15 February 2012, Cisco Systems and Messagenet appealed the Commission’s decision authorizing the purchase of Skype by Microsoft. On 11 December 2013, the General Court rendered its Judgment dismissing the application for annulment.
As many readers of this blog will know, I was one of the lawyers representing the applicants, and was personally very involved in the judicial phase of the case, which I very much enjoyed. For the past 5 months I’ve read some succinct comments about and I think that there are many genuinely interesting things about it that might so far have been overlooked.
Whereas I –biased as I am- have issues with most of what’s in the Judgment (and particularly with what isn’t there), I’ve decided to try to get rid of any bitterness (some irony will be inevitable, I’m afraid) and approach it in a hopefully constructive way, leaving a myriad factual case-specific issues aside, and focusing only on selected matters of general relevance to any competition lawyer.
So instead of re-arguing the case –which would be of little use at this time- my intention is to shed light on some aspects of the Judgment which otherwise not attract the attention they deserve. I’ll touch on 6 selected issues, and will offer some personal views as a conclusion.
Needless to say, my opinions are, aside from non-objective, exclusively attributable to myself, not to anyone else, notably clients and colleagues, and neither Cisco nor Messagenet have anything to do with this post.
1) The Court ruled that the standards of proof and review applicable to Phase I (Art.6) decisions are identical to those applicable to Phase II (Art. 8) decisions
Whereas we argued that the merger should be annulled regardless of how the Court interpreted the applicable standards of proof and review, we also claimed that the standard of proof must necessarily be higher in the case of Phase I decisions because the Commission has to prove that the case couldn’t objectively give rise to “serious doubts” (which is the applicable legal test according to Art 6 of Regulation 139).
This interpretation, now held wrong, was fairly uncontroverted in academia (see e.g. the contributions EUI’s 2009 workshop on standard of proof in competition law), and had been formulated previous cases. In her Opinion in Impala AG Kokott went even further and explained that a “beyond reasonable doubt” standard applied to Phase I decisions “to compensate for the fact that at that stage the investigation of a concentration is merely a summary one” (…) “[a]t that stage, serious doubts as to the compatibility of a concentration with the common market will only prevented its being cleared to quickly and force the Commission to make a more extensive investigation in a formal procedure”. A test of absence of doubts also governs the initiation of in-depth reviews in the State aid domain, and the Court has established in that context that this test requires a review that “will, by nature, go beyond simple consideration of whether or not there has been a manifest error of assessment” on the Commission’s part (for more on this see, e.g. cases T-73/98, para 47 and T-119/02, para 77).
The Judgment in this case nonetheless states that “the standard of proof is no higher for decisions adopted under Article 6 of Regulation 139/2004 than those adopted under Article 8 of that regulation” (para 46). The Court then goes on to explain that even if we correctly argued that the Commission has no discretion as regards the initiation of Phase II whenever it has serious doubts, the Institution “enjoys a certain margin of discretion” to carry out the “complex economic assessments” required in merger cases (para. 49), and that therefore the standard of review for both Phase I and Phase II is the same: that applied to complex economic assessments (limited judicial review).
What the Court is effectively saying in paras 46 to 49 is that even if the notion of serious doubts is an objective one, the Commission has discretion to have doubts or not. In my mind, this would mean that the alleged objectivity of the concept is meaningless, but perhaps there’s a different reading, which I don’t yet grasp. Even if the standard of review is the same for Phase I and Phase II decisions, it seemed intuitive to me that what has to be proved in one case (no serious doubts) and the other (compatibility or incompatibility with the internal market) is different. By rejecting this previously uncontroversial interpretation I think the Court has importantly -rightly or wrongly- expanded the Commission’s margin of discretion in merger cases.
2) Unless I’m missing something in para. 67 the Court explains that competitive assessments in most Phase I decisions are not to be taken seriously because they do not assess the “real” relevant market.
“The applicants therefore base their complaint relating to market power held by the new entity on an incorrect assumption, in so far as the Commission did not define the existence of a specific market for consumer video communications on Windows based PCs. The Commission did not therefore establish in the contested decision that operators present on the narrow market could act independently of the competitive pressure from other means of consumer communications, such as services offered on other platforms or other operating systems. In addition, the applicants did not themselves submit any evidence or study to support the conclusion of the existence of such a narrow market. By contrast, they merely criticised the factors put forward in the contested decision in order to qualify the significance of market shares”.
What this paragraph says isthat the fact that the Commission chose to assess the market for video communications on Windows based PCs was irrelevant, and that we could only have challenged this assessment if we proved that the market was the real one (!). This is quite astonishing may perhaps be a bit surprising to some, because what we were challenging was precisely the conclusion that “the proposed transaction does not give rise to any competition concerns even on the narrowest possible definition of the relevant product market”. The market might have been hypothetical, but its assessment was the only one contained in the decision and therefore the only one that could be appealed.
Unless I’m wrong (again, let me know if you see it differently) what this means that from now onwards any party wishing to appeal a Phase I merger decision should not challenge the assessment actually carried out by the Commission, but will need to prove that the assessment of the “narrowest possible market” corresponds to a real market, which will almost never be the case! In other words, from now onwards the Commission could get immunity from Court review by carrying out assessments of markets whose definition is left open.
3) On the irrelevance of market shares in dynamic markets
The few paragraphs that have so far received public attention are the ones concerning the irrelevance of high market shares. In para 69 the Judgment states that “the consumer communications sector is a recent and fast‑growing sector which is characterised by short innovation cycles in which large market shares may turn out to be ephemeral. In such a dynamic context, high market shares are not necessarily indicative of market power”.
In fact, I agree with this statement. Market shares in these markets are “not necessarily indicative of market power”; they provide an indication which may be disproved by other factors. My problem with this is they do provide an indication, and even if it can be disproved by looking at countervailing factors, I still struggle to see those here.
In any event, there are a few paras in this section (mainly paras 79 to 84) that that are potentially quite troublesome for enforcement, particularly in technology and communication markets. No wonder these will from now onwards be cited by any company with large market shares.
4) On the irrelevance of network effects in a non-interoperable communications market
Paragraph 76 also marks –in my view- a change in the way network effects are assessed in EU competition law by stating that “the existence of network effects does not necessarily procure a competitive advantage for the new entity”.
This may seem at odds with all past Commission precedents, mainstream economics, regulation of other communication markets, the Commission’s soft law on market definition, 102 and mergers, as well as with Skype’s own repeated statements in official public submissions claiming that “the scale, global distribution and growth of our user base provide us with powerful network effects, whereby Skype becomes more valuable as more people use it, thereby creating an incentive for existing users to encourage new users to join. We believe that these network effects help us attract new users and provide significant competitive advantages”.
You may recall that the Decision’s argument to rebut the role of network effects was that users “make the majority of their voice and video calls to the small number of family and friends that make up their so called “inner cicle” (4-6 people) and that “it is not difficult for these groups to move between communication services”. This peculiar argument was endorsed by the Court. As I’ve repeatedly said over the past two years, I may well Skype the most with my wife, girlfriend (J), mother and best friend, but I would assume that my best friend has in turn a different mother, girlfriend and wife (or so I’d like to think…); in other words, groups of people are interconnected and do not communicate in movable autarkic nodules. On this point, the Judgment simply repeats (thereby endorsing) the Commission’s argument at the end of para 52 (“the network effects to which the concentration might give rise would be diluted by the fact that users tend to communicate in small restricted circles and use a range of operators. Those factors demonstrate the ease with which user groups switch to other communications services”). [On multi-homing, note that the “range of operators” meant the two merging parties –otherwise they couldn’t have a 90% market share- as openly acknowledged in footnote 52 of the decision].
4) On the identification of competitive constraints.
A paragraph that could also prove important for various markets where companies rely on others’ technology (and for private label products) is para. 72, which dismisses the claim that Facebook (the second largest player with an overwhelming 10% of the market, whose video call service runs on Skype, which has Microsoft as a shareholder and which interoperates with Skype) would not be an effective competitor with this reasoning.
“The only factor that they put forward in support of that argument is that Facebook is a licensee and strategic ally of Skype, which cannot use Skype’s software to offer services in competition with the paid services of Skype, called SkypeOut, which make it possible to, inter alia, call fixed or mobile telephone numbers and to conduct video calls involving more than two persons. However, they do not submit that that agreement prevents Facebook from offering its video communications services to consumers who might decide to switch away from the new entity if it decided to exert any market power.
So, being a “strategic ally”, using the same technology and the existence of a non-compete agreement do not indicate mitigated competitive vigor. Note taken.
5) On switching, statement of reasons and the comparison with the Microsoft (and Google) abuse cases
[Click here to continue reading]
Intel Judgment: Coming out soon
It has been reported (I learnt it thanks to MLex) that the Intel Judgment will be delivered on 12 June.
If you want to freshen up your recollection of the legal issues at stake, here is the summary of the arguments at stake elaborated by the Court itself: Intel Report Hearing
Even if I think the General Court would like to have an opportunity to make a point on judicial review by quashing an Art. 102 decision, my guess is that this won’t be the occassion. My knowledge of the case is limited, but my impression is that the Commission’s work was particularly thorough and that it stands on solid ground, even more so after the ECJ’s Judgment in Tomra.
You may nevertheless recall that a year and a half ago Nicolas made a similar (controversially rumour-based) forecast although accompanied by an anticipated criticism.
Even though the Intel case has understandably been the focus of all attention (the 1.06 billion fine surely caught the attention of the media), it’s not the only the most potentially legally relevant rebates case pending before EU Courts.
The General Court on the scope of the Commission’s powers to request information
On Friday 14 March the General Court issued seven Judgments in cases T-292/11, T-293/11, T-296/11, T-297/11, T-302/11M T-305/11 and T-306/11. We represented one of the seven applicants (needless to say, the opinions below are exclusively my own, and in no way can be attributed to my client or my colleagues).
I had already anticipated those Judgments noting that -irrespective of who the prevailing parties were- they would be of great interest and procedural relevance. [The Judgments came out while I was lecturing on competition procedure at the Brussels School of Competition, so I discussed them almost live].
The cases concerned seven appeals lodged by cement companies against massive -arguably unprecedented- requests for information, and they are important because the Court was asked to clarify whether there are any real limitations to the Commission’s investigative powers.
There have been two groups of Judgments:
-In six cases the applicants grounded their appeal on the lack of motivation of the information request. In those cases the GC has ruled (a) that although “it is true that “the presumed infringements [were] set out in very general terms which might well have been made more precise”, they have the minimum degree of clarity in order to be able to be considered to be consistent with the requirements of EU law; and (b) that even if “the size of the workload caused by the volume of information and the very high degree of precision in the response format imposed by the Commission cannot be reasonably disputed”, that workload was not disproportionate in the light of the necessities of the enquiry and the extent of the presumed infringements.
[Intermission: Too often, when the Court decides to dismiss an application it practically denies any reason to every argument made by the applicant). This wasn’t the case here, and the Court was objective and transparent enough to acknowledge that there could be problems, but that they were overridden by effectiveness considerations. I like it better this way].
-The content of the Judgment in the seventh case (T-296/11 in which we acted for the applicant) is different, as explained in the Court’s press release http://curia.europa.eu/jcms/upload/docs/application/pdf/2014-03/cp140035en.pdf
Instead of focusing our arguments on lack of motivation (which we thought would at most have only given us a temporary victory), we had posited that the criterion of “necessity” in Art. 18 of Regulation 1/2003 should be interpreted not in light of what the Commission intends or hopes to find, but in the light of the elements that the Commission has and that raise the suspicion triggering the investigation. We claimed that otherwise the criterion of necessity would be devoid of any practical significance.
The GC has accepted the theory (as it did in Prysmian and Nexans -now pending before the ECJ- regarding inspections). According to the GC, the Commission is not obliged to disclose to the companies the preliminary evidence at its disposal, but it must have enough evidence to justify the information request (paras. 38-40).
In this particular case, and since the Court acknowledges we had “put forward factors capable of casting doubt on the sufficiently serious nature of the evidence concerned”, the Commission was very exceptionally asked to produce a summary of its file. Luis Ortiz Blanco and myself were asked to go to Luxembourg to access it and make observations without being allowed to disclose anything not even to our client [I’m not disclosing anything confidential because this is all explained in paras. 23-26 of the Judgment]. This is what explains that a great part of the Judgment is redacted as confidential.
Obviously I can’t say or even hint at anything that’s not been disclosed in the non-confidential version of the Judgment. Essentially, the Court explains that in the light of the Commission’s file the Institution could have validly addressed the exhaustive and exhausting information request to the applicant. The reasoning (mainly contained in para 59) is that even if we did offer an alternative interpretation of the elements in the file, the Commission cannot be asked at a preliminary stage to have evidence so consistent as to be sufficient to establish an infringement; it’s enough to have evidence that -at a preliminary stage and absent third party contextualization- would have arouse a reasonable suspicion.
The lines of what’s reasonable are of course blurry, and the Court’s approach is -rightly or wrongly- deferential to the Commission and to the need of safeguarding the effectiveness of its investigations, particularly at an early stage. Some may fear that if Courts started annulling requests for information (or Phase I clearance decisions, to pick a “random” example) then the floodgates would open. However, failing to annul those categories of decisions systematically and regardless of their merits or lack thereof those may also be akin to conferring carte blanche on the Commission, and that (regardless of the unquestionable good intentions of the Institution) might also have drawbacks.
Restrictions of competition by object under Article 101(1) TFEU: chapeau bas, Prof Wahl!
Note by Alfonso: Advocate General Wahl’s Opinion in Groupement de Cartes Bancaires out on Friday, and its take at clarifying the object-effect conundrum is remarkable. Pablo Ibañez Colomo offers his views on the Opinion below:
Advocate General Wahl’s opinion in Groupement des Cartes Bancaires v Commission (published last Friday, and available in French and in Greek only for the time being) is a model of lucidity and flexible thinking. It is also very much in line with an article of mine on the subject, but that is plain irrelevant. What matters, and what makes this opinion remarkable, is that it manages to capture the logic underlying the existing case law addressing the boundaries between restrictions by object and by effect. Many commentators and some advocates general have tried in the past few years to identify the elusive factors that should be considered when establishing whether an agreement restricts competition ‘by its very nature’. Paragraph 56 of the opinion sets out a formula that is, in my view, more accurate and elegant than any previous attempt (the fact that I am forced to read it in French for the moment probably adds to the latter):
‘Ne devraient donc être considérés comme restrictifs de concurrence par objet que les comportements dont le caractère nocif est, au vu de l’expérience acquise et de la science économique, avéré et facilement décelable, et non les accords qui, au vu du contexte dans lequel ils s’insèrent, présentent des effets ambivalents sur le marché ou qui sont porteurs d’effets restrictifs accessoires nécessaires à la poursuite d’un objectif principal non restrictif de concurrence’.
In other words, what really matters is whether, given the context in which it is concluded, an agreement is a plausible source of efficiency gains. Thus only those agreements that have no credible redeeming virtues are understood to restrict competition by object. A careful reading of the relevant case law shows, in my view, that this is the ‘default methodology’ (which is the expression I use in my article) – or, if one prefers, ‘l’appréciation plus standardisée’ (as Advocate General Wahl writes in his opinion) – followed by the ECJ when it examines the nature of agreements under Article 101(1) TFE. The methodology changes, and rightly so, when market integration as an objective is directly at stake in a case (as is true of agreements restricting parallel trade).
From Societe Technique Miniere to Pronuptia and Delimitis, and from Remia to Wouters and Asnef-Equifax (to mention just a few landmark rulings), the ECJ has followed the same approach, which revolves around an analysis of the rationale behind the agreement. The Court typically seeks to identify the reasons why two or more firms would introduce some restraints in an agreement. If it appears that such restraints are a plausible means to achieve legitimate business objectives, it concludes that the agreement does not restrict competition by its very nature. In Groupement des Cartes Bancaires, the parties to the agreement claimed that it was intended to address free-riding issues and therefore that it did not have a restrictive object. In light of the relevant case law, the question in these proceedings is whether this story is a credible one given the nature of the agreement and the context in which it was concluded.
The opinion is notable for other reasons, of which I mention a couple:
– It is sometimes claimed that the category of ‘object restrictions’ captures those agreements that can be presumed to have anticompetitive effects (the famous speed-limit analogy and variations thereof). This interpretation of the notion is problematic insofar as it sits at odds with the principle, well established in the case law, whereby an agreement may restrict competition by its very nature irrespective of the effects it produces. Advocate General Wahl emphasises, in this same vein, the importance of distinguishing between the analysis of the nature of the agreement and the analysis of its effects. If the question of whether an agreement restricts competition by object depends on its presumed effects, the two would be confused. The rulings mentioned above indeed confirm that the two are separate steps and that the Court has been careful not to mix them (and has rightly reacted when the General Court has done so, as in Glaxo Spain – also discussed in the opinion).
– The opinion shows that, when confined to its role, the use of economic analysis can be very useful and, more importantly, wholly uncontroversial. Advocate General Wahl does not rely on economic analysis for normative purposes (that is, to state how the law should be, or to claim that the case law is misguided), but as a tool (among others) to make sense of a legal issue. Economics is used in the opinion, in other words, as a guide – a code – to decipher a complex reality. I hope this opinion contributes to a more fluid dialogue between disciplines. I was pleased and surprised to even find a reference to Rochet and Tirole’s ground-breaking work on two-sided markets – which, as you all know by now from Alfonso’s last post, is ‘the single most important and fascinating subject in contemporary antitrust (and beyond)’.
Lastly, I will also mention that writing this post brings very good memories of a great seminar (and even better post-seminar!) to which Luis Ortiz Blanco and Alfonso invited me last year and in which I had the chance to discuss these questions with some luminaries from the Commission.
Antitrust quote of the day and the evolution of the law on refusal to supply
In 1989 late Philip Areeda (picture above) wrote one of the most influential and cited antitrust pieces in the history of the discipline: Essential Facilities: An Epithet in Need of Limiting Principles, 58 Antitrust L.J. 841. I recall my first reading of this article as student at the College of Europe and how I truly enjoyed it (at roughly the same time I remember having felt the same about Joseph Weiler’s The Transformation of Europe) (yes, those were two good indicators of geekishness). From time to time I’ve gone back to that piece from Areeda, and as a fan of pendulum-based evolutional/historical theories, I’ve quite often cited one particular excerpt therein; here it is:
“As with most instances of judging by catch-phrase, the law evolves in three stages: (1) An extreme case arises to which a court responds. (2) The language of the response is then applied -often mechanically, sometimes cleverly- to expand the application. With too few judges experienced enough with the subject to resist, the doctrine expands to the limits of its language, with little regard to policy. (3) Such expansions ultimately become ridiculous, and the process of cutting back begins“.
I think this captures the evolutionary process of the law in many other areas of law in general and of competition law in particular. To mention only one among many possible examples, I used it some days ago to explain the evolution of the notion of the “single and continuous infringement” under Art. 101 TFEU.
There’s an interesting additional thought in relation to this quote. A few years after this piece was published the ECJ ruled on Magill, and I think it’s not at all unreasonable to say that Areeda’s piece was pondered by the Judges in that case (see, and cast your vote, here). Now, if you think about it, Areeda in many ways anticipated how the evolution of the law on refusal to supply would discur in Europe:
(1) Magill was a extreme case to which the Court responsed with a reasoning that was very much tailored to the facts at issue (a point often forgotten); (2) The language of the response was then applied -possibly mechanically, as an illustration of judidicial inertia (not to be confused with stare decisis)- to other factual settings and, with too few judges experienced enough with the subject to dare to nuance it (?), the Magill criteria consolidated in cases like Bronner and IMS. (3) Their consolidation as the sole relevant criteria ultimately became perhaps unreasonable and inconvenient, which led to an attempt to nuance them [the Commission’s -in my view very reasonable- claim in the first Microsoft Decision that “there is no persuasiveness to an approach that would advocate the existence of an exhaustive checklist of exceptional circumstances and would have the Commission disregard a limine other circumstances of exceptional character that may deserve to be taken into account when assessing a refusal to supply.” (para. 555)].
As you know the the General Court did not follow the Commission on that particular point, not because it disagreed, it just didn’t need to rule on that point because it thought the Magill criteria were in any event fulfilled. That was done with the aim of minimizing the chances of getting quashed in an appeal and at the cost of some legal contortionism. In my view, it would have been desirable for the Court to assess whether all “extraordinary circumstances” to identify a refusal to suppy could or not be subsumed within the Magill criteria. Instead the Court gave a practical illustration of how its hammer can make square pegs fit round holes (an exercise that was repeated a few months later in BUPA re the Altmark criteria).
For a most interesting discussion on the legal contortions in Microsoft featuring some of the people who were actually associated to the case see the 16 comments to Nicolas’ post on The Magill-IMS Re-animator.
On information requests and their limits
The latest entry in 21st Century Competition (Kevin Coates’ very good blog; btw, pictured above is a capture of his work keyboard) explains that the Commission has improved its habits regarding information requests and that there may still be some margin for further improvement.
Kevin’s views are, as always, sensible and well explained [he also has good taste for recommending other people’s writings; see here in relation to the ongoing Android investigation]. They also bring a thought to mind: is self-restraint the only limitation -other than the general principle of proportionality- that the Commission faces in relation to its powers to gather information?
Together with my colleagues Luis Ortiz and Napoleón Ruiz (no kiddin’) I am arguing in a case that is currently pending before the General Court (T-296/11) that this shouldn’t be the case [btw, I’m not disclosing anything not public given that an interim measures order was already published].
Article 18 of Regulation 1/2003 provides that the Commission may require undertakings “to provide all necessary information“. In our view, however, this provision should not be interpreted as granting the Commission absolute discretion.
If our interpretation is correct and the Commission does not enjoy carte blanche in this regard, then the criterion of necessity in Article 18 should be interpreted in an objective manner; otherwise it would be rendered meaningless, with the ensuing risk of fishing investigations. We posit that the objective element of reference could only be given by the indications of the existence of an infringement that are already in the Commission’s power, and not just by reference to the subject-matter and purpose of the investigation. The recent and most interesting Prysmian and Nexans Judgments (in relation to inspections) would seem to lend support to this idea.
This interesting question, however, won’t remain open for long. The General Court is set to deliver its Judgments on a few parallel cases on 14 March (with the exception of ours, which had a very interesting post-hearing procedural peculiarity on which I can’t yet comment). We’ll provide you with our views on these Judgments as soon as they’re out.
Oops! Anecdotal evidence on the assessment of evidence
As I mentioned on a previous post, for quite some time now I have been attempting (or rather planning) to finish a lengthy piece about evidence in cartel cases. Any of you weird enough to also find these things interesting –or who are otherwise obliged to follow the developments in this area- might have also noticed an increased willingness on the part of EU Courts to engage in a critical analysis of factual elements regarding evidence.
One illustration of this intermittent but commendable approach can be seen in a recent Judgment in case T-379/10. The Judgment concluded that the Commission did not have sufficient and reliable evidence to find that there had been a particular infringement (an agreement on minimum prices for low end ceramic products for the French market in 2004 by the members of an association –AFICS-).
In paras. 110-121 of the Judgment the Court motivates its conclusion, assessing one by one each of the four items of evidence put forward by the Commission. In a nutshell, it rules that (i) a third party’s reply to the SO wasn’t valid evidence because it had not been disclosed during the administrative procedure; (ii) that leniency statements by another party, given that they are contested, are not “on their own” sufficient proof of the infringement; (iii) that a chart provided together with a leniency application wasn’t enough, because it was “undated and contains nothing that might link it to the AFICS meeting of 25 February 2004 or to any anti-competitive discussions (…) In particular, the chart does not mention the names of competitors or any minimum or maximum prices which those competitors should apply”; and (iv) that yet another party’s leniency application, despite confirming exchanges of minimum prices within AFICS during 2002-2004, disputed the recollection of facts related to the specific meeting of February 2004. [Keep this last bit in mind; we’ll come back to it in a sec].
Few national Courts would have engaged in a similar assessment. The easy way out would’ve been to say that (ii) and (iv) corroborated each other and were moreover corroborated by (iii), and possibly also by (i). Since the appraisal of factual evidence is not a matter of law (however malleable this may be), that assessment would have most likely not been appealed before the ECJ. The GC nevertheless did not take this safe shortcut, and it should be commended for that rigorous approach. I wish all Courts did the same.
There is a problem, though. This sort of assessment occurs in some cases but not in others. For the most extreme example possible (I’m not aware that this has ever happened before), see…. the very same infringement!! Yep, in two other parallel Judgments issued on the same day, by the same Judges and in relation to the same facts (case T-373/10, paras. 286-296; and T-364/10, para 324), the General Court declares that that very same alleged infringement (really, the same one, the agreement on minimum prices at the meeting of February 24 2004) had been properly found by the Commission.
And the reasoning to do so resorts pretty much to the shortcut I described above; i.e. that (ii) and (iv) corroborated each other. What is more, the party that made the leniency statements that I referred to above as item (iv) actually received a 6% fine reduction for having contributed to proving that infringement (yes, the one that had not been proved in the parallel case!).
So we have two different solutions to the same exact issue. Not sure about how this gets fixed now (I understand there are pending appeals against these Judgment).
I have some friends who like to claim that no one reads Judgments anymore, but I thought that was only endemic outside the Court itself… 😉 In the Court’s defense, however, I guess this -among other things- is what may happen when the workload is very significant and Member States don’t agree on increasing resources (i.e. the number of Judges).
Have a great weekend!
Thought of the day
The Law and judicial review would improve significantly if Court submissions were public.
AG Wathelet’s Opinion in the Greek lignite case
The Opinion of Advocate General Wathelet in the very interesting Greek lignite case came out yesterday. This is the second time in recent weeks that the AG’s Opinion makes an impact in the competition scene with a tightly argued proposal (the previous one was his Opinion in Teléfonica).
You might remember that sometime ago we held our first and so far only ménage à trois debate precisely in relation to the General Court’s Judgment in the Greek lignite case:
For the moment, the AG’s Opinion essentialy sides with what José Luis Buendía wrote in his contribution to this debate a year ago (see here), and criticizes the solution adopted by the General Court.
There are however other very valid contrarian arguments, all brilliantly outlined in the pieces we published from Marixenia Davilla (part I ), and Assimakis Komninos (part III).
Chillin'Competition 