Chillin'Competition

This is a big one and, I believe, a satisfactory judgment.

The VEBIC ruling, handed down today by the ECJ (Plenary Session) promotes an extensive interpretation of how far Member States must go to ensure the effet utile of Regulation 1 (although the principle was not quoted). The Court’s ruling might trigger a legislative change in Belgium or simply prompt the review courts to open proceedings to the Belgian competition council (the judgment says “precluding national rules“).

The case concerned the Belgian competition statute. This piece of legislation institutes a Belgian Competition Council as the NCA. Yet, it does not explicitly entrust the Council with the ability to appear before the competent review court when its decisions are challenged.

In the context of national litigation against a decision of the Belgian Competition Council (under national competition rules!), it was argued that the NCAs could possibly rely on Article 15 of Regulation 1/2003 to submit ex officio observations before national courts. Yet,  some doubts existed as to whether  (i) this applied to review courts ; (ii) this was a sufficient mechanism (oral observations must be authorized by the court).

More generally, this triggered a debate on wether the loophole in the Belgian legislation was compatible with Regulation 1/2003, and in particular Articles 2, 15(3) and 35(1).  The review court referred four questions to the ECJ.

In its judgment, the ECJ quickly excludes that Articles 2 and 15 enshrine any obligation, let alone  prerogative, on the part of the NCA, to participate in review proceedings against its decisions.

In contrast, Article 35  requests MS to appoint effective NCAs (§56). This provision reflects the underlying purpose of  Regulation 1, which is to ensure that Articles 101 TFEU and 102 TFEU are applied effectively by NCAs.

The practical uphsot of this is to entrust NCAs with the ability to appear in review courts when their decisions are challenged. Otherwise, “there is a risk that the court before which the proceedings have been brought might be wholly ‘captive’ to the pleas in law and arguments put forward by the undertaking(s) bringing the proceedings” (§58).

Hence,  Regulation 1 requires Member States to entitle their NCA to participate to review proceedings (§59). In addition, whilst NCAs are under no obligation to use this prerogative sytematically, “if a NCA consistently fails to enter an appearance in such judicial proceedings, the effectiveness of Articles 101 TFEU and 102 TFEU is jeopardised“.

Here’s the full quote:

Article 35 of the Regulation must be interpreted as precluding national rules which do not allow a national competition authority to participate, as a defendant or respondent, in judicial proceedings brought against a decision that the authority itself has taken. It is for the national competition authorities to gauge the extent to which their intervention is necessary and useful having regard to the effective application of EU competition law. However, if the national competition authority consistently fails to enter an appearance in such judicial proceedings, the effectiveness of Articles 101 TFEU and 102 TFEU is jeopardised. In the absence of EU rules, the Member States remain competent, in accordance with the principle of procedural autonomy, to designate the body or bodies of the national competition authority which may participate, as a defendant or respondent, in proceedings brought before a national court against a decision that the authority itself has taken, while at the same time ensuring that fundamental rights are observed and that EU competition law is fully effective.

In going through Damien Neven’s latest paper entitled “Economics at DG COMP” (with M. de La Mano, see link hereafter), it seems now clear that the tough, negative enforcement paradigm that prevailed under Aricle 102 TFEU in the Kroes years is over.

In recent years, the Commission has dumped several cases for lack of convincing evidence. The Qualcomm excessive pricing case and the Velux rebates case  provide good illustrations of this.

In other cases, the Commission has renounced to follow a hard line, and negotiated a settlement with the parties.  Rambus and Microsoft II (Browser) are the main cases here.

The tone of the new Almunia administration is far less agressive, and it seems that the adoption of prohibition decisions is no longer an enforcement priority. Interestingly, and contrary to what was argued by the former senior staff at the Commission, cases like Port of Helsingborg (rejection of complaints re. excessive and discriminatory pricing ) bring almost as much guidance as prohibition decisions.

The only area where I disagree with D. Neven and M. de La Mano’s paper is judicial review. The authors seem to consider that the General Court is ready to undertake serious economic assessments. The thing is, Judge Wahl told us the contrary a month ago at the GCLC annual conference. Plus this may be true in the area of merger control (Ryan Air v. Commission, and before Airtours, Tetra Laval, etc.), but is certainly less obious in other areas (Article 102 TFEU).

Neven & de la Mano 2010