LYUBOMIR TALEV

I INTRODUCTION

In almost 50 years, EU competition law has acquired a prominent position in the daily life of European law and has been the source of many important developments of general EU law. This achievement is even more remarkable when one considers that in the period immediately after the Second World War competition law was virtually non-existent in Europe. It is rightly considered that the EU competition law has been a success.

Despite of the recent modernization of the EU competition law and the proclaimed decentralization of the EU competition enforcement the European Commission still plays a central role in EU competition enforcement. It has the right, along with the competition authorities of the Member States (hereafter the NCAs) to apply Arts 101 and 102 of the TFEU. The leading role of the Commission in this process is underlined inter alia by the fact that the initiation by the Commission of proceedings for the adoption of a decision shall relieve the competition authorities of the Member States of their competence to apply Articles 101 and 102 and that it is allowed where the Community public interest relating to the application of Articles 101 and 102 of the TFEU so requires, to find by decision that Article 101 is not applicable to an agreement, a decision by an association of undertakings or a concerted practice, either because the conditions of Article 101(1) are not fulfilled, or because the conditions of Article 101(3) are satisfied. In the area of Merger control the Commission enjoys an “exclusive competence” to apply the EU Merger Regulation. 

In order to fulfill its task the Commission is granted with broad investigative and decision-making powers and can impose substantial fines amounting at up to 10 % of the undertaking’s total turnover in the preceding business year. This inevitably invokes an extensive public scrutiny over the EU competition enforcement regime. Amongst the most frequent criticisms is the (lack of) compatibility of this regime with the rights enshrined in the European Convention on Human Rights and Fundamental Freedoms (hereafter ECHR or the Convention) and particularly with the right of fair trial under Article 6 ECHR. The dispute as to whether (and to what extent) the rights under the ECHR are guaranteed in the EU competition procedures has been responsible for the accumulation of considerable literature as well as jurisprudence of the EU Courts. The relevance of the topic has been highlighted by the ever increasing fines imposed by the Commission for breaches of the competition rules as well as by the fact that according to the Lisbon Treaty the EU shall accede to the ECHR. These developments justify a further research in the area.

When one considers the topic of this paper the first question to be answered is whether the right of fair trial is applicable at all to the administrative procedures under the EU competition law directed mainly against undertakings – legal persons. If the answer is in the affirmative, the alleged problems are to be examined. Having regard to the European Court of Human Rights (hereafter the ECtHR)’ composite approach both the procedures before the Commission and before the EU Courts need examination.

Section II of this paper therefore contains a discussion regarding the applicability of the concept of fair trial to the EU competition procedures. Section III examines the existing ECHR implications at the procedures before the Commission. Section IV then takes a look at the judicial proceedings before the EU Courts from the perspective of the right of fair trial. Section V considers the possibilities for the undertakings concerned to obtain a judicial redress in case of violation of their ECHR rights. In its final part the paper provides the author’s conclusions on the questions raised above.

II EU COMPETITION ENFORCEMENT AND THE RIGHT TO A FAIR TRIAL

As outlined above the first question to be answered when analyzing the issue of the ECHR implications in the EU competition enforcement, is whether the concept of fair trial as enshrined in Article 6 of the Convention is applicable to the EU competition procedures. An important issues in that regard is whether these procedures can be qualified as having criminal or civil procedures for the purposes of Article 6 ECHR as well as whether undertakings have “human rights”. An examination of the level of protection of the undertakings’ rights enjoyed under the jurisprudence of the EU Courts is also needed. Once it has been established that the right of fair trial is applicable to the EU competition procedures as well as that legal persons are entitled to fair trial as well, it should be considered whether the Commission’s combined role of “prosecutor and judge” is compatible with Article 6 of the Convention. These issues are considered in the following subsections. 

A. EU COMPETITION PROCEDURES AND THE EU CONCEPT OF FUNDAMENTAL RIGHTS 

There is a well-known line of EU case-law rejecting arguments based on alleged violations of ECHR when examining the legality of the actions of the Commission simply because the Courts found that the Commission cannot be classed as a tribunal within the meaning of Article 6 of the ECHR and held that for that reason the said provision was inapplicable. 

It is respectfully submitted that this seems a dubious position to have adopted. Article 6 of the ECHR explicitly indicates that its provisions should be observed in any procedure relating to “the determination of his civil rights and obligations or of any criminal charge”. Its applicability depends therefore on the nature of the procedure concerned, rather than on whether it is in practice a “tribunal” or an administrative body that investigates the case in question. In the case of procedures involving the determination of civil rights or of any criminal charge, any party should be “entitled to” be heard “by an independent and impartial tribunal”. Therefore, the mere fact that the Commission is not a “tribunal” within the meaning of Article 6(1) should not mean as such that Article 6(1) is not applicable to the proceedings concerned. On the contrary, the very fact that, as recognized by the Court of Justice, “the Commission cannot be described as a tribunal within the meaning of Article 6 of the ECHR” raises precisely the question whether the parties should not have been entitled to having their case decided by a true “tribunal”. In that respect, as stated by the ECtHR; “[t]he first issue to be resolved in the applicability of Article 6(1)… [is]… whether the case involved a ‘determination’ either of a ‘civil right’ or of a ‘criminal charge’”.

In the same time however, from the late 1960s the EU Courts started developing fundamental rights jurisprudence as part of the general principles of EU law. In its judgment in Nold II the Court of Justice held that, in addition to Member States’ constitutions, international conventions could also supply guidelines which could be taken into consideration by the Court on matters concerning claims to fundamental rights. The ECHR was first specifically referred to by the Court in 1975 in Rutili and has since been quoted by the Court on numerous occasions as having a special significance as a source of guidance.

The importance of the ECHR has been confirmed by the fact that it has been explicitly referred to in the Joint Declaration on Human Rights of the Commission, Council and the European Parliament as well as in the Preamble of the Charter of Fundamental Rights of The European Union. According to the new version of Article 6 EU introduced by the Treaty of Lisbon the Charter of Fundamental Rights shall have the same legal value as the Treaties and the Union shall accede to the ECHR.

Thus, according to the case-law of the EU Courts, rather than being directly applicable, the ECHR serves as a benchmark for assessment of the observation of fundamental rights within the Community legal order. This position is probably best summed by the CFI’s ruling in AC-Treuhand v Commission where the Court held that:

“[T]he Court has no jurisdiction to assess the lawfulness of an investigation under competition law in the light of provisions of the ECHR, inasmuch as those provisions do not as such form part of Community law. That said, the fact remains that the Community judicature is called upon to ensure the observance of the fundamental rights which form an integral part of the general principles of law and, for that purpose, it draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international instruments for the protection of human rights, on which the Member States have collaborated and to which they are signatories. In that regard, the ECHR has special significance, as confirmed by Article 6(2) EU […]. That has also been reaffirmed in the fifth recital in the preamble to the Charter of Fundamental Rights of the European Union and Articles 52(3) and 53 thereof.”

B. THE NATURE OF EU COMPETITION PROCEDURES FOR THE PURPOSES OF ARTICLE 6 OF THE ECHR

As already mentioned according to the case-law of the ECtHR the first issue to be resolved in the applicability of Article 6(1) ECHR is whether the case involved a “determination” either of a “civil right” or of a “criminal charge”. This subsection therefore examines the nature first of the procedures under Regulation 1/2003 (concerning the application of Articles 101 and 102 of the TFEU) and then the procedure under the ECMR. It is submitted that the former has a “criminal” nature whereas the latter has a “civil” nature and therefore Article 6(1) ECHR is applicable in both cases.

1. The procedure for the application of Articles 101 and 102 TFEU 

According to Article 23(5) of the Modernization Regulation fines imposed by the Commission for violations of Articles 101 and 102 of the TFEU “shall not be of a criminal law nature”. This provision has been described in the literature as “a doomed attempt” to avoid the issue of the compatibility of EU competition procedures with ECHR and even as a “fiction”. Indeed, the ECtHR has held in Engel v Netherlands that the definition of a criminal charge, for the purposes of the Convention, is autonomous. It argued that to have permitted the Contracting States to provide definitions of criminal, regulatory and disciplinary law, and to have obliged the Court to follow such definitions, would result in the undermining of the objective and purpose of the Convention. The ECtHR then set out the criteria for the autonomous definition of “criminal charge” under the Convention. It identified three core criteria: the classification of the offence under national law, the nature of the offense and the severity of the penalty.

The application of the Engel criteria in a regulatory context is demonstrated by Bendenoun v France. In that case the Court held that the French national procedures in which tax surcharges were imposed were of criminal nature for the purposes of Article 6(1) ECHR. The Court emphasized first, the nature of the offense. It was of general application, as it covered all citizens in their capacity of tax payers and not a given group with a particular status. In addition the tax surcharges were intended not as pecuniary compensation for damage, but essentially as punishment to deter re-offending. Furthermore, the penalties were imposed under a general rule, whose purpose was both deterrent and punitive. Secondly, in respect of the severity the penalty, the surcharges were very substantial, amounting to FrF 422,534 in respect of Mr. Bendenoun personally and FrF 570,398 in respect of his company. 

Having weighed the various factors in the case, the ECtHR noted the predominance of those which had a criminal connotation. None of them was decisive on its own, but taken together made the nature of the “charge” in question a criminal one within the meaning of Article 6(1) ECHR.

Applying these criteria “the inescapable conclusion is that, for the purposes of ECHR the [EU competition] procedures and penalties are criminal in nature.” First, competition law is imposed as a general rule applicable to all. The aim of competition law is “to prevent competition from being distorted to the detriment of the public interest, individual undertakings and consumers.” Second, non-compliance with the procedure leads to the imposition of financial sanctions. Third, as the Commission guideline has outlined,this penalty is intended to deter and punish the perpetrators. Fourth, the Commission can impose anything up to 10% of the company’s turnover. In Societe Stenuit the former European Commission on Human Rights (hereafter CHR) considered the fact that the French Minister of Economic and Financial Affairs could have imposed a fine for a breach of the national competition law up to 5% of the company’s takeover which was intended to act as a deterrent, substantial enough to classify the fine as a criminal sanction. Nor has the Commission hesitated to exercise its right to impose such sanctions. It has imposed fines for cartel activity amounting at EUR 2 271 million in 2008 alone. The Commission imposed the highest fine per cartel case to date of EUR 1 383 million in the Car Glass case The biggest fine imposed on single undertaking so far has been at the amount of EUR 1.06 billion  imposed on Intel for violation of Article 102 TFEU. It could also be argued that the trend towards criminalization of the violation of competition rules in some Member States, the adoption of Leniency Programs both at EU and at Member States level, the publicity of enforcement activity and the rhetoric deployed by public authorities in relation to cartels and other serious infringements of competition law all signal for increased intolerance towards anticompetitive behavior and therefore reinforce the “criminal” element of the prohibitions thereof. 

Furthermore, with respect of national competition rules, the ECtHR held in Deweer v Belgium that a prohibition on price fixing could be criminal in nature for the purposes of the Convention.

Finally, it should be noted that in the M&Co case the CHR has held that “it can be assumed that the [EU] anti-trust proceedings in question would fall under Article 6 had they been conducted by German and not by European judicial authorities.”

Although the ECtHR has never had the chance to rule directly on the issue whether the Commission’s procedures in applying Articles 101 and 102 are of criminal nature it is submitted that the analysis of the case-law discussed above reveals emphatically that these procedures are indeed “criminal” for the purpose of Article 6 ECHR.

2. The procedure under the EUMR

Just like in the case of “criminal charge”, the ECtHR has held that for the purposes of the Convention “civil rights and obligations” is an autonomous concept which is not interpreted solely by reference to the categorization of rights or obligations in domestic law. 

A parallel can be drawn between the EU merger procedure and the proceedings provided by the laws of certain contracting states to the ECHR and aimed at the authorization of land transactions. The ECtHR has held with respect of such proceedings that they fall within the scope of Article 6(1) ECHR, being concerned with the determination of civil rights and obligations and “decisive for the relations in civil law” between the applicant and his counterpart in the transaction.

There are thus strong arguments that Article 6(1) ECHR should apply to the procedure under EUMR, as it is decisive for the parties’ right to merge or make an acquisition and thus – to carry on their business. However, while Article 6(1) ECHR will apply to merger proceedings, it should be stressed that the second and the third paragraphs of Article 6 would only be applicable in cases where fines are imposed since they protect only persons who are charged with criminal offense.

C. DO UNDERTAKINGS HAVE “HUMAN RIGHTS”?

Both the CHR and the ECtHR have held on many occasions that the answer of this question is in the affirmative. It is now a settled case-law of the ECtHR that the ECHR applies to undertakings and individuals alike. While it is noted that “not all of the Convention’s safeguards are equally applicable to business entities: rules enshrining, for instance, the right to protection against torture or arbitrary detention or the right to respect for one’s family right are clearly designed only for human beings” the consistent jurisprudence of the ECtHR shows that this is certainly not the case with the right of fair trial under Article 6 ECHR.

D. THE COMBINED INVESTIGATIVE, PROSECUTORIAL AND DECISION-MAKING POWERS OF THE COMMISSION 

If one reaches the (as this paper submits – correct) conclusion that the parties to the EU competition procedures are entitled to a “fair trial” in accordance with Article 6 ECHR, perhaps the most logical question is how is the combined role of the Commission as an investigator, prosecutor and judge compatible with the right to be heard by an “independent and impartial tribunal”. Indeed, the ECtHR has recognized that administrative bodies may come “within the concept of a ‘tribunal’ in the substantive sense of this expression”, provided that their “function is to determine matters within its competence on the basis of rules of law, following proceedings conducted in a prescribed manner.” 

Nevertheless, the functional characteristics listed above do not suffice for the administrative proceedings to comply with the requirements of Article 6(1) ECHR: the authority in question must also meet guarantees of independence of the executive and impartiality of its members, in consideration of its composition, manner of appointment, duration of office and guarantees against bias. Admittedly, this is not the case of many administrative authorities and bodies. This is certainly not the case with the Commission either, as the EU Courts had explicitly confirmed. Thus the problem arises as to “how to accommodate the relative inflexibility of Article 6 with the realities of administrative decision-making”.

In that regard it must be recalled that the ECtHR has held that “demands of flexibility and efficiency […] may justify the prior intervention of administrative or professional bodies […] which do not satisfy the said requirements [for independent tribunal] in every respect.” Nonetheless:

“[T]he Convention calls at least for one of the two following systems: either the [administrative] organs themselves comply with the requirements of Article 6(1) or they do not comply but are subject to subsequent control by a judicial body that has full jurisdiction and does provide the guarantees of Article 6(1).”

The ECtHR has thus adopted a composite approach according to which the conformity with ECHR of certain procedures must be assessed with regard both of its administrative and judicial phases. It should be noted that EU competition proceedings have been explicitly found by the EU Courts to comply with the requirements of Article 6 ECHR. In its decision in Aristrain the CFI held that:

“[E]ven supposing that the fines imposed under Article 65 of the [ECSC] Treaty have the nature of penal fines, the applicant’s complaint can be upheld only if the Commission’s decisions imposing those fines cannot form the subject matter of an appeal to a judicial authority with unlimited jurisdiction, within the meaning of ECHR.”

The CFI held that since it was an independent and impartial tribunal with unlimited jurisdiction to review the penalty in conjunction, where necessary, with the review of the legality of the other elements of the decision, it is such an authority and therefore the competition procedure in consistent with the principle enshrined in Article 6(1) of the ECHR.

It can thus be argued that Article 6(1) ECHR guarantees access to independent and impartial tribunal at some stage of the procedure, but not necessarily from the outset, particularly because competition law “differs from the hard core of criminal law”. However, it must be taken into account that the ECtrHR has accepted such a two-tier judicial review system on an exceptional basis in cases concerning civil rights and obligations, for “disciplinary cases”, involving the military, and for criminal cases involving “minor offenses”. Apart from these, rather narrowly-tailored exceptions, “as a general rule, criminal law proceedings should be heard at first instance by a tribunal respecting all the requirements of that provision [Article 6 ECHR]”. It is therefore highly dubious the ECtHR would approve the two-tier judicial review system with respect of the procedures for application of Articles 101 and 102 TFEU to which a significant public stigma is attached and within which the largest fines in the West for any civil or criminal offense are being imposed.

Moreover, even if it is accepted that the two-tier judicial review in EU competition procedures meets the Article 6 criteria, it should not be forgotten that according to the Imbroscia judgment:

“Certainly the primary purpose of Article 6 as far as criminal matters are concerned is to ensure a fair trial by a ‘tribunal’ competent to determine ‘any criminal charge’, but it does not follow that the Article has no application to pretrial proceedings.”

Indeed, if the guarantees enshrined in Article 6 are not observed at the pretrial stage there is a risk that equitable character of the entire proceedings will be gravely compromised. Therefore, even if one accepts that CFI’s ascertaining that it is in fact a judicial authority with unlimited jurisdiction, within the meaning of ECHR, the observation of the rights of the parties involved in EU competition procedures at the administrative stage of the proceedings still needs to be monitored. 

E. EU COMPETITION ENFORCEMENT AND THE RIGHT TO A FAIR TRIAL – CONCLUSIONS

This Section has shown that the procedure for the application of Articles 101 and 102 TFEU is of criminal law nature whereas the procedure under the EUMR has the character of determination of civil rights and obligations and therefore Article 6 ECHR applies to both procedures (the difference being that paragraphs 2 and 3 of Article 6 are not applicable with respect of the latter procedure). 

It has also been shown that while the EU Courts have rejected the direct applicability of Article 6 ECHR to Competition procedures (on the grounds that the EU is not a party to the Convention and – perhaps more puzzling – that the Commission is not a “tribunal” within the meaning of Article 6), they have developed their own fundamental rights jurisprudence, drawing inspiration, inter alia, from the Convention. Given the fact that the Charter of Fundamental Rights of The European Union explicitly refers to the ECHR, and that Regulation 1/2003 states that it “respects the fundamental rights and observes the principles recognized in particular by the Charter of Fundamental Rights of the European Union” one would expect that the Commission is equally “inspired” by the ECHR when applying the competition rules. It is however open to discussion whether the inspiration of both the Commission and the EU Courts has been sufficient to secure the observance of fundamental rights enshrined in ECHR at the administrative stage of the EU competition procedures in all cases. The next Section deals with this issue.

III ECHR PROBLEMS AT THE ADMINISTRATIVE STAGE OF THE EU COMPETITION PROCEDURES

A. THE INVESTIGATIVE POWERS OF THE COMMISSION UNDER REGULATION 1/2003

1. Dawn raids and the rights to privacy (Article 8 ECHR)

1.1 Overview of the Commission’s powers

It has been argued that the Commission enjoyed “wide-ranging” investigative powers already under the predecessor of Regulation 1/2003 – Regulation 17/1962. The Modernization Regulation has broadened these powers even further and “transformed the system into a more repressive [one] than in the past”.

Under Article 20 of Regultaion 1/2003 the Commission has the power to “conduct all necessary inspections of undertakings and associations of undertakings”. The Commission can conduct these inspections in one of two ways: either on the basis of an authorization or pursuant to a decision. 

On the basis of an authorization, the undertaking has the right to refuse the inspection without threat of financial sanction. Where pursuant to a decision, the undertaking is required to submit to inspections and could incur a fine of 1% of its total turnover if it refuses to do so. Further, the Commission could impose a penalty payment up to 5% of the average daily turnover to compel it to submit to an inspection that has been ordered by a decision.

The powers of inspection, either pursuant to an authorization or a decision, empower the Commission to:

enter business premises;

examine and copy business records;

1. seal business premises and records for a period and to the extent necessary for the inspection; and 
2. ask any staff member on-the-spot questions. Failure to answer correctly, truthfully or to respond at all on nay facts relating to the subject matter can lead to the imposition of a fine not exceeding 1% of the total turnover.

Where an undertaking opposes an inspection to which it is required to submit, the Member State at whose territory the inspection is to take place “shall afford [the Commission officials] the necessary assistance, requesting where appropriate the assistance of the police or of an equivalent enforcement authority, so as to enable them to conduct their inspection.” If judicial authorization is required for such “assistance” under national law, then it must be applied for.

Article 20(8) which codifies the Roquette Freres judgment sets out the scope of the review that a national court can undertake in authorizing the assistance. It entitled the court to verify that the Commission’s decision is authentic and that the coercive measures envisaged are neither arbitrary nor excessive. In order to ensure proportionality the national court may ask the Commission for its reasons for suspecting a breach of competition law, the seriousness of the infringement and the nature of the undertaking’s involvement. However, it may neither question the necessity for the inspection nor demand the information in the Commission’s file. Only the ECJ can review the legality of the Commission’s decision.

Article 21(1) provides that the Commission may enter “any other premises, land and means of transport, including the homes of directors, managers and other members of staff of the undertakings and associations of undertakings concerned”. The Commission can do so only if it has a reasonable suspicion exists that books or other records related to the business and to the subject-matter of the inspection, which may be relevant to prove a serious violation of Article 101 or Article 102, are being kept in those premises. The Commission does not have powers equivalent to those when conducting investigations on business premises. Whilst it can enter private premises, examine the records and make copies, it cannot seal the premises or ask on-the-spot questions. Entering private premises must be based on a decision which can only be made after NCAs have been consulted. The Commission cannot execute decision without the prior authorization of the national judicial authority.

1.2. The right to privacy

1.2.1. Business premises

When first faced with the issue whether Article 8 ECHR could extend to business premises in Hoechst the ECJ held that Article 8 did not apply to business premises, only private dwellings or natural persons. Furthermore the ECJ refused to extend the protection to business because there was no ECHR case-law on the matter.

Subsequent development of the Jurisprudence of the ECtHR has overtaken this analysis. In Niemitz the Court held that:

“[R]espect for private life must also comprise to a certain degree the right to establish and develop relationships with other human beings […] there appears, furthermore, to be no reason of principle why this understanding of this notion of ‘private life’ should be taken to exclude activities of a professional or business nature since it is, after all, in the course of their working lives that the majority of people have a significant, if not the greatest opportunity of developing relationships with the outside world. This view is supported by the fact that […] it is not always possible to distinguish clearly which of an individual’s activities form part of his professional or business life and which do not.”

The ECtHR confirmed that Niemitz also applied to legal persons in Societe Colas Est. According to the Court, the Convention is a “living instrument” and must be given a “dynamic interpretation”. On this basis, the Court concluded that “the time has come to hold that in certain circumstances the rights guaranteed by Article 8 of the Convention may be construed as including the right to respect for a company’s registered office, branches or other premises”. It then held that the French NCA (DGCCRF), which undertook dawn raids on 56 companies and seized thousands of documents under French legislation allowing them to do so without any judicial authorization, breached Article 8(1).

As a result, the Court had to decide whether the interference was justified. First, the Court concluded that, as the DGCCRF was granted its power under the French legislation, the interference was in accordance with the law as it has “some basis in domestic law”. Secondly, the DGCCRF was pursuing the legitimate aim of “the economic well-being of the country” and “the prevention of crime”. However, the Court could not be persuaded that the DGCCRF dawn raid procedure was necessary in a democratic society, as it did not provide for adequate and effective safeguards against abuse. This was because “the relevant authorities had very wide powers which, pursuant to the 1945 ordinance, gave them exclusive competence to determine the expediency, number, length and scale of inspections. Moreover, the inspections in issue took place without any prior warrant being issued by a judge and without a senior police officer being present”.

The argument that Article 8 does not apply to business premises is no longer tenable. Following Niemitz and Societe Colas Est, an exercise of the Commission’s power to enter premises under Article 20 of Regulation 1/2003 would be an infringement of Article 8(1) ECHR. The crux of the matter is whether the dawn raid procedure is justifiable under the criteria of Article 8(2) and more centrally, whether it can be said to be proportionate within the meaning of its being necessary in a democratic society.

1.2.1.1. Is it in accordance with the law?

Under Article 8(2) the EU dawn raid procedure must pass a three-part test: (i) the measure must have some basis in domestic law; (ii) it must refer to the quality of law; and (iii) its consequences must be foreseeable and compatible with the rule of law. Applying the criteria to the dawn raid procedure the following can be concluded:

a) The procedure is in accordance with the law as it is “carried out on the basis of [Article 101 TFEU] […] and on the basis of the Regulation”. Whilst this test is formulated with “domestic law” in mind, given that the EU law forms part of domestic law and is constitutionally supreme, the EU law can be said to fit into that category. This has been confirmed in Bosphorus Airways where the ECtHR held that an EU Regulation is law for these purposes as it is “generally applicable” and “binding in its entirety” on the Member States.

b) Both the Regulation and the Case-law of the EU are published in the Official Journal of the EU, which is accessible to all.

c) The test for foreseeability requires that the law be “Sufficiently clear to give citizens an adequate indication as to the circumstances in and the conditions on which public authorities were empowered to resort to such measures”. A clear reading of the Regulation shows the clarity of when and where the Commission can act.

1.2.1.2. Does it pursue a legitimate aim?

The procedure pursues the legitimate aim of protecting free competition in the European Union. As in Colas, this falls within the public interest exception of “economic well-being of the country”.

1.2.1.3. Is it necessary in a democratic society?

It is submitted that is here where the EU dawn-raid procedure falls foul from the requirements of Article 8(2) ECHR. The similarities with the condemned national procedure in Colas are obvious. Like the DGCCRF in that case, the Commission is an administrative body that grants itself an authorization under Articles 20(3) without a prior judicial warrant. Proponents of the Commission’s powers have argued that this is not a problem because (i) the undertakings can refuse to submit to an inspection based on simple authorization and then national judicial authorization is required and (ii) the EU Courts can, nonetheless, review the legality of the Commission’s decision, permitting down-raid.

The first point does not appreciate that, up to and until the point where the undertaking does not oppose the dawn raid, the Commission’s inspection remains invalid due to its not being authorized by an independent judicial authority. In addition, as Article 20(8) of Regulation 1/2003 provides, the national court authorizing a judicial warrant cannot call into question the legality of the Commission’s decision; it should rather concern itself with whether the Commission’s decision is “authentic” and the coercive measures are neither arbitrary nor excessive. This clearly is not a true grant of a real judicial authorization. To that point it should be noted that in Niemitz the ECtHR was unable to justify interference, even where the authorities were granted a warrant pursuant to a prior judicial authorization, because:

“[T]he warrant was drawn in broad terms, in that it ordered a search for and seizure of ‘documents’, without any limitation, revealing the identity of the applicant […] The search impinged on professional secrecy to an extent that appears disproportionate in the circumstances”.

The limited judicial control exercised by the national courts under Article 20(8) is suspiciously similar to the one that was found wanted in Niemitz and therefore does not fulfill the last criterion of Article 8(2) ECHR. Furthermore it should be noted that under the existing EU case-law challenges of Commission decisions do not have suspensory effect. An undertaking can seek a suspension of a decision until final judgment. However, in order to obtain such a suspension it would have to make an application to the General Court under Article 278 TFEU. In order to succeed a plaintiff should prove that serious and irreparable damage would occur if the suspension were not granted. It is difficult to see how an undertaking would be able to provide proof of serious and irreparable damage simply by permitting entry to Commission inspectors. Furthermore, it is doubtful as a practical matter whether in the circumstances of an unannounced inspection a challenge under Article 263 TFEU together with an application for suspension could be effected in time to prevent the inspection decision being implemented.

The second point seems to neglect the fact that EU Courts can only review the legality of the inspection after the search takes place. This is contrary to the judgment in Colas where the ECtHR stated that prior judicial warrant is required. Finally, whilst of the relevant NCA may accompany the Commission, this does not equate to having a senior police officer present. 

It thus follows that both the inspections performed under authorization and under decision are at odds with Article 8(2) ECHR.

1.2.2. Private dwellings

Although the safeguards with respect of private premises laid down in Regulation 1/2003 (the need for existence of reasonable suspicion that documents related to the inspection are kept in these premises; the more limited powers of the Commission’s inspectors and the need for a prior authorization from national judicial authority in each case) are noted and welcomed it still remains the case that the prior authorization from a national court is subject to the same limitations as the authorization for inspections of business premises and therefore cannot be considered as sufficient in the light of the Niemitz case-law whereas the fact that the control from the EU Courts takes place only after the inspection is contrary to the judgment of ECtHR in Colas. Therefore everything said with respect of the (lack of) compliance of Commission’s inspections of business premises with Article 8 applies with respect of the inspection of private premises as well.

2. The power to require information and the privilege against self-incrimination

2.1. Overview of the Commission’s powers

Under Article 18 of Regulation 1/2003 the Commission may require undertakings and associations of undertakings to provide all necessary information or written answers to their questions. The Commission may do this either by a simple request or by a decision. Where the Commission chooses to send a simple request, the undertaking is under no obligation to respond. The undertaking comes under an obligation not to provide incorrect or misleading information if and when it voluntarily submits to such a request. Failure to uphold this obligation could lead to the imposition of a fine not exceeding 1% of the total turnover in the preceding year.

Where a request is made by a decision undertakings have an obligation to respond to it. The Commission may impose a fine not exceeding 1% of the total turnover where the undertaking, intentionally or negligently, supplies incorrect, incomplete or misleading information or where it refuses to answer the questions. Furthermore, the Commission may impose a penalty payment not exceeding 5% of the average daily turnover “in order to compel them” to supply complete and correct information.

2.2. The privilege against self-incrimination

The privilege against self-incrimination, which provides for a right to silence and a right not to incriminate oneself, lies at the heart of a fair criminal procedure and underlies the legal principle that a person is innocent until proven guilty.

2.2.1. Early EU case-law 

Like in the case of the right to privacy, the ECJ was the first who had the chance to rule whether the privilege extends to undertakings. In Orkem the ECJ held that the privilege was available “only to a natural person charged with an offense in criminal proceedings” as opposed to “legal persons on economic sphere”. Furthermore, the ECJ ruled that:

“[A]ltough it [Article 6 ECHR] may be relied upon by an undertaking subject to an investigation relating to competition law, it must be observed that neither the wording of that article nor the decisions of the [ECtHR] indicate that it upholds the right not to give evidence against oneself.”

The ECJ did, however, develop a limited form of the privilege against self-incrimination. A distinction was made between compulsion to provide factual information and compulsion to directly admitting a violation of competition law. With respect to the former, the ECJ held that the Commission could “compel an undertaking to provide all necessary information concerning such facts as may be known to it and to disclose to it, even if the latter may be used to establish, against it or another undertaking, the existence of anti-competitive conduct” (factual/indirect incrimination). The ECJ concluded that “the Commission may not compel an undertaking to provide it with answers which might involve an admission on its part of the existence of an infringement” (direct incrimination). As Professor Riley put it “the Commission cannot ask the antitrust equivalent of ‘when did you stop beating your wife?’ But it does permit the Commission to ask for a close examination of her bruises and the instruments by which they were inflicted.”

2.2.2. The case-law of the ECtHR

Like in the case of the right to privacy again, the analysis of the ECJ has been overtaken by the jurisprudence of the ECtHR. In Funke French customs officers, having raided the applicant’s domicile, asked the applicant to produce further documents. The French authorities imposed a fine for failure to do so. The ECtHR found that Article 6(1) ECHR did include a rule against self-incrimination and the customs authorities’ demand for information, backed by the penal powers of the customs code, amounted to a violation of that rule. It held that:

“The special features of customs law cannot justify such an infringement of the right of anyone charged with a criminal offense within the ordinary meaning of this expression of Article 6, to remain silent and not to contribute to incriminate itself.”

The ECtHR further elaborated on the scope of the privilege in Saunders which concerned a takeover investigation by the Department of Trade and Industry (DTI). In deciding the case, the Court noted that, even though it is not explicitly mentioned in Article 6 ECHR, “the right to silence and the right not to incriminate oneself are generally recognized international standards that lie at the heart of the notion of fair procedure under Article 6.” This was because it protected the accused against improper compulsion and miscarriages of justice, and it was for the prosecution to prove its case against the accused without resorting to finding evidence through the use of compulsion and oppression in criminal cases.

The ECtHR held that the applicant had been subject to compulsion to give evidence because, had he refused to answer the questions, he would either have been fined or sanctioned to two years’ imprisonment. In addition, the Court stated that the right not to incriminate oneself:

“[C]annot reasonably be confined to statements of admission of wrong doing or to remarks which are directly incriminating. Testimony obtained under compulsion which appears on its face to be of non-incriminating nature – such as exculpatory remarks or mere information on questions of fact – may later be deployed in criminal proceedings in support of the prosecution case, for example to contradict or cast doubt upon other statements of the accused or evidence given by him during the trial or to otherwise undermine his credibility.”

This is a clear rejection of the Orkem principle. Orkem established that only direct incrimination was unlawful; questions concerning facts that could establish an infringement were permissible. Saunders rejects this proposition.

In Saunders the ECtHR went on argued that the right not to incriminate oneself is primarily concerned with respecting the will of an accused person to remain silent. It took the view however that the right does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which had an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood and urine samples and bodily tissue for the purpose of DNA testing.

The ECtHR confirmed that the Saunders principle applied equally to documents as to oral explanations in JB v Switzerland. In that case, the tax authorities had compelled the applicant, with the threat of a criminal sanction, to submit certain tax documents. The Court held that this infringed the applicant’s privilege under Article 6 ECHR. This would not be the case if the information coerced had an existence independent of the individual involved.

2.2.3. EU case-law subsequent to ECHR developments

In 1989, the ECJ in Orkem could be forgiven for taking the view that there was neither a right to silence nor a privilege against self-incrimination. At that time neither Funke, nor Saunders nor JB had been delivered. Consequently, if the ECJ continued to apply the Orkem principle, this would imply acceptance of a situation that is not compatible with the ECHR.

The CFI in 2001 was asked to rectify the conflict that existed between the two institutions in Mannesmannrobren-Werke. But rather than relying on the ECtHR case-law under Article 6, as Orkem implicitly said it could, the CFI denied itself the jurisdiction to apply the ECHR when reviewing investigations under competition law on the grounds that “the Convention is not part of the Community law”. As commentators have noted, “the CFI has moved the goalposts: before the ECtHR held that Article 6 conferred a right of silence in Funke and Saunders, the ECJ was prepared to concede that Article 6 applied to competition proceedings; once the ECtHR held Article 6 to include that right, the CFI held that Article 6 did not apply.”

Overall, the EU standard of protection is not equivalent to the ECHR and it is submitted that it should be. In spite of such objections, the ECJ finally confirmed its approach in SGL Carbon. 

It has been claimed that the ECtHR’s standard of protection would constitute “an unjustified hindrance” to the Commission’s powers of investigation. This argument however, fails to take into account the the ECtHR’s jurisprudence. The privilege, contrary to what the EU Courts believe, is not absolute. As Saunders pointed out, an individual can be compelled to hand over documents if they are requested under a warrant.

The problem at the moment is that a Commission decision is not a warrant, as it is not granted by judicial authorization. The Commission, not being a court, grants itself a decision. Therefore, the “unjustified hindrance” would no longer exist if the EU was to change its system so that the Commission’s decision was pre-authorized by a judicial court granting it a warrant.

2.3. Article 20(2)(e) of Regulation 1/2003 and oral questions

As already pointed out during an investigation the Commission can ask questions to staff members of the undertaking or association being investigated. According to Professor Wills this fact does not appear relevant, given that the Regulation does not allow any penalty to be imposed on such staff members. On its face, this approach seems correct: as the individual does not incur a pecuniary sanction, no element of compulsion exists. However, it fails to account for the intricate relationship between the individual and the company. A better view is that, where individuals are “authorized to speak” on behalf of undertakings, their acts can then be “imputable to the undertaking”, so when an individual responds a question, it is as though the undertaking is “speaking”. Where a fine is imposed on the undertaking for refusing to “speak”, the undertaking should avail itself of the privilege. Saunders makes it clear that its principles equally apply to oral remarks. In that case, Article 20(2)(e) is another example of the Commission’s powers being contrary to the ECHR.

3. The EU Leniency program and Article 6(3)(d) ECHR 

Under the EU Leniency program cartel participants are encouraged to disclose the existence and the details of cartel activity in which they were involved in exchange of immunity from fines or reduction of fines. The current EU leniency policy is set out in the EU 2006 Leniency Notice. It builds on the achievements of the EU 2002 Leniency Notice which replaced the less successful 1996 Leniency Notice. Both the 2002 and the 2006 Notices have been highly successful. Philip Lowe, Director General of DG Competition called the 2002 Notice a “tremendous success”.

The Commission’s use of the instrument of leniency has been approved by the ECJ which has held that:

“Article 15(2) of Regulation No 17 does not lay down an exhaustive list of the criteria which the Commission must take into account when fixing the amount of the fine. […] The conduct of the undertaking during the administrative procedure may therefore be one of the factors to be taken into account when fixing that fine […] Moreover, the Commission cannot be criticized for having adopted guidelines to direct the exercise of its discretion concerning the fixing of fines, and for thus better ensuring equal treatment of the undertakings concerned.”

The ECJ has rejected the argument that the use of the instrument of leniency would be contrary to fundamental rights:

“Nor […] can the complaint of infringement of rights of the defense be upheld. An undertaking which, when challenging the Commission’s stance, limits its cooperation to that which is required under Regulation No 17 will not, on that ground, have an increased fine imposed on it. If the Commission considers that it has proved the existence of an infringement and that the infringement can be imputed on the undertaking, the undertaking will be fined in accordance with criteria which may lawfully be taken into account and which are subject to review by the Court of First Instance and by the Court of Justice.”

The use of leniency does not raise any objections either with regard to the privilege against self-incrimination as recognized by the ECtHR. Indeed: “Persons are always free to incriminate themselves if in doing so they are exercising their own will.” Nor does legal professional privilege stand in the way of lawyer-client communications being produced in the framework of leniency, since “the principle of confidentiality does not prevent a lawyer’s client from disclosing the written communications between them if it considers that it is in his interest to do so”.

Yet, a tension appears to exist between the right of the leniency applicants to provide oral corporate statements and the right of the accused to have examined witnesses against himself under Article 6(3)(d) ECHR. The possibility for submission of oral statements has been introduced in the 2006 Leniency Notice as a way to frustrate attempts by private litigants to seek discovery of written statements provided to the Commission and thus –as a further incentive for leniency applicants. However, it fails to take into account the case-law of the ECtHR.

In Unterpertinger the ECtHR held that the conviction of Mr. Unterpertinger mainly on the basis of statements made to the police by members of his family and read out at the court hearing after the latter had exercised their right under national law to refuse to give evidence meant that he was convicted on the basis of “testimony” in respect of which his defense rights were appreciably restricted. That being so, Mr. Unterpertinger did not have a fair trial and there was a breach of paragraph (1) of Article 6 of the Convention, taken together with the principles inherent in paragraph (3)(d). The Court also went on to say that the possibility to put the witnesses’ credibility in doubt was an essential part of Mr. Unterpertinger’s right of fair trial which could not be exercised absent these witnesses from the court proceeding and that this omission could not be compensated by the mere fact that he was able to submit his comments freely during the hearing. 

The analysis of the current EU procedure regarding the acceptance of oral statements shows that it runs directly against the ECtHR’s judgment in Unterpertinger. According to para 33 of the 2006 Leniency Notice the addressees of a statement of objections can have access to the corporate statements and therefore they could submit their comments during the oral hearing under Article 12 of Commission Regulation № 773/2004 (hereafter “the Implementing Regulation”). However, neither the Implementing Regulation, nor the 2006 Notice itself provide for the person who has made the oral statement to be cross-examined at the oral hearing from the defendant undertakings with the view of putting his credibility in doubt. Moreover, given the clandestine nature of the cartels and the fact that they either do not produce much documents related to their activity or are quick to destroy them, one could envisage that prohibition decisions will often rely mainly on such – uncontested – oral statements, just like in the Unterpertinger case.

4. Legal Professional Privilege

The confidentiality of communications between a lawyer and his or her client has been granted legal recognition both at international and at domestic level. Its effective safeguard was considered to be an “auxiliary principle serving to buttress the cardinal principles of unimpeded access to the courts and to legal advice”. By affecting “the ability of the one to seek and the other to give legal advice in confidence”, legal professional privilege (hereafter LPP) has been regarded as “much more than an ordinary rule of evidence”, and rather as “a functional condition on which the administration of justice as a whole rests”.

The application of Articles 6, 8, and to a more limited extent, 10 of the ECHR has guaranteed a high level of protection to the privilege. In this respect, the ECtHR regarded “an accused’s right to communicate with his advocate out of hearing of a third person” as “part of the basic requirement of a fair trial in a democratic society”. It is therefore important to understand whether the Community concept of LPP is compatible with the level of protection granted by the ECtHR. 

4.1. The EU concept of LPP

At the EU level, the concept of LPP is a judicial creation; it was established a developed by the Community Courts. Regulation No 17 did not provide explicitly for right of lawyer-client confidentiality. However, in the seminal AM&S case the ECJ found common ground in the national laws of Member States to the extent that they protect the confidentiality of written communications between lawyer and client provided that, on the one hand, such communications are made for the purposes and in the interests of the client’s rights of defense and, on the other hand, they emanate from independent lawyers who are not bound to the client by a relationship of employment.

The ECJ further specified that (i) the confidentiality covered all written communications exchanged after the initiation of the Commission’s procedure as well as earlier written communications having a relationship to the subject-matter of that procedure; and (ii) the independent lawyer involved could be any lawyer entitled to practice his or her profession in one of the Member States.

Eight years later, in Hilti the CFI slightly broadened the scope of LPP by making it clear that in view of its purpose the principle must be regarded as extending also to “the internal notes which are confined to reporting the text or the content” of written communications between lawyer and client.

This rather narrow scope of the EU principle of LPP which excludes in-house lawyers from the privilege has been subject if vigorous debates ever since the ruling in AM&S. Proponents of a broader LPP have argued that the AM&S judgment recognizes no exceptions, even where in-house lawyers have privilege at a national level. It has been pointed out that “there is no evidence whatsoever of the implied accusation that in-house counsel act as stooges for management plotting to break the law. In 40 years of EU decision practice, the Commission can cite no case where this happened.” It has been further stressed that given the abolishment of the notification procedure by the Modernization regulation and the increased role of self-assessment of economic behavior the refusal to grant LPP to in-house lawyers could potentially have a chilling effect on competition as companies would be discouraged from seeking legal advise. In spite of such objections, the CFI finally confirmed its approach in SGL Carbon and upheld the privilege as defined in AM&S.

4.2. The scope of the EU LPP and the case-law of ECtHR

The limited scope of the LPP under the EU case-law appears to be at odds with the jurisprudence of ECtHR. In AB v Netherlands the search and seizure by the prison authorities from a prisoner’s cell of correspondence between the applicant and his representative – a former inmate – was held to violate Articles 8 and 10 ECHR. The Court emphasized that “neither the Convention nor the Rules of procedure of the European Commission of Human Rights at the material time required the representatives of applicants to be practicing lawyers”.

It thus appears that allegiance to the national Bar or Law Society does not seem to be considered by the ECtHR as an essential condition for the protection of the “special status” conferred to the lawyer in a democratic society. The Court held in Nikula v Finland that the primary duty of counsel should be “to defend their clients’ interests zealously”. Accordingly, their “special status” and particularly their freedom of expression in the court room, should be protected in any case, regardless of the circumstance that they are not members of the local Bar or Law society.

In reaching those conclusions, the ECtHR regarded as relevant the fact that although the applicant was not subject to the disciplinary powers of the Bar Council, she was nevertheless subject to the supervision of the trial court. The Nikula judgment seems therefore to suggest that, although allegiance to the national Bar or Law Society is not considered as an essential condition for the protection of his or her “special status”, a certain degree of control should nonetheless be exercised on the lawyer to ensure the integrity of his or her function as auxiliary to the proper administration of justice.

Accordingly, it cannot be excluded that the “special status” of lawyers in a democratic society, so strongly advocated by the ECtHR, cannot attach to an employed legal adviser, provided that, as it was suggested in the CFI Order in AKZO, the latter is “bound by strict rules of professional conduct, which where necessary require that he observe the particular duties commensurate with his status”. 

It may therefore be concluded, that in order to ensure consistency between the EU and the ECHR standards regarding the LPP, “the AM&S test should perhaps be replaced with a more flexible set of conditions allowing for a consideration of whether, in the particular circumstances of the case, the lawyer, notwithstanding his or her relation of employment with the client, is subject to binding rules which preserve his integrity and independence”. If the need for uniform application of Articles 101 and 102 TFEU in all Member States is a concern, then this concern could be resolved via the EU-wide harmonization of the position of in-house lawyers, including a satisfactory, EU-wide definition of in-house lawyer and a satisfactory code of professional ethics, backed up by a credible disciplinary mechanism, advocated by Faull.

4.3. The exchange of information within the European Competition Network and LPP

A significant threat to the confidentiality of lawyer-client communications is posed by the creation of the European Competition Network (hereafter ECN) and in particular from the provision for the exchange of information between the Commission and the NCAs and among the NCAs themselves, due to the lack of a common definition of privilege across the EU and to the absence in Regulation 1/2003 of any rule governing the use in evidence of the information obtained as a result of that exchange.

The exchange of information within the ECN was regarded by the Council as an essential factor to ensure that the Commission and the NCAs apply “the Community competition rules in close cooperation”. In this respect, the Commission viewed “the power of all the competition authorities to exchange and use information […] collected by them for the purpose of applying [Article 101 or Article 102 TFEU]” as “a precondition for efficient and effective allocation and handling of cases”.

Accordingly, Article 12(1) of the Modernization Regulation authorizes “the Commission and the competition authorities of the Member States […] to provide one another with and use in evidence any matter of fact or of law, including confidential information” in proceedings enforcing [Article 101 or Article 102 TFEU]. Paragraph 2 further establishes that evidence so obtained can be deployed as evidence only “for the purpose of applying [Article 101 or Article 102 TFEU] and in respect of the subject-matter for which it was collected by the transmitting authority”. An exception to that rule is provided by paragraph 2 in fine, according to which exchanged information may be used by the receiving authority in order to enforce national competition law when the latter is applied in parallel with the EU rules and does not “lead to a different outcome”.

Article 12, even though it creates a legal basis for the exchange of any information within the Network, does not provide any rule governing the use of the evidence obtained. In particular, it is not clear whether the receiving NCA could use in evidence information obtained as a result of the application of Article 12 which it could not have collected itself, because that information was protected from disclosure during the investigation proceedings.On the point, the Commission stated in its Network Notice that “[t]he question whether information was gathered in a legal manner by the transmitting authority is governed on the basis of the law applicable to this authority”.

The position of the Commission therefore seems to support the view that, once the information has been lawfully gathered by the transmitting authority, and constituted admissible evidence in this jurisdiction, then the receiving authority should be empowered to deploy it in the course of its own proceedings, although the rules applicable in the latter’s jurisdiction may differ, and especially may be more protective as regards the question of the admissibility of that information as evidence.

The obvious consequence of such broad interpretation of the use of the information exchanged through the ECN is that the country granting the lowest degree of protection would impose its standard across the whole EU and the erosion of the fundamental rights available in the receiving jurisdiction.

The Council has attempted to avoid such criticisms by declaring that “[t]he rights of defence enjoyed by undertakings in the various systems can be considered as sufficiently equivalent”. However, this is manifestly not the case with respect of the LPP and in particular whether it extends to in-house lawyers. Indeed, “the protection of confidentiality of lawyer-client communication remains uneven across the European Union”.

To that point it is recalled that the OFT has already stated that:

“Whilst UK privilege rules would apply to cases being investigated in the UK by the OFT on its own behalf under national and EC law, the OFT could be sent the communications of in-house lawyers by a NCA from another Member State where the communication of in-house lawyers is not privileged. Under those circumstances, the OFT may use the documentation received from the other NCA in its investigation.”

There are two possible arguments if one seeks to justify the position expressed by both the Commission in its Network Notice and the OFT in its Guidelines. The first is to claim, as Professor Wils does, that “[t]he ‘eroded fundamental rights’ can […] only be rights of legal persons which are recognized neither in the case-law of the European Court of Human Rights, nor in the fundamental rights case-law of the Court of Justice”. 

It is true that with respect to LPP, no ruling has been handed down to date as regards communications between lawyer and a corporate client. However, it is worth noting that the CHR declared admissible a complaint brought by a Swedish company and concerning the seizure of documents exchanged between the applicant and its lawyers and stored in the office of the law firm. Although the case was settled out o court, Andreangeli points out that “the CHR’s report constitutes a clear indication that the protection of the confidentiality of lawyer-client correspondence enshrined, inter alia, in Article 8 ECHR also extends to cases where the client is not a natural person”. This combined with the principles laid down by the ECtHR as regards the protection of the “special status of lawyers” in the interest of both the sound administration of justice and the right of individuals and undertakings to receive legal advice and assistance, in accordance with Article 6 ECHR, renders the first arguments inoperable.

The second argument would be that once undertakings are aware of the fact that communications with their in-house lawyer are not protected in the jurisdiction where they are likely to be collected, they should not be entitled to expect that, in the event of documents being transmitted to another NCA, the higher standards for the protection of privilege available in the receiving authority’s jurisdiction would apply.

However, this argument seems misconceived, since it appears to disregard the circumstance that to allow that use of the exchanged evidence would place the undertakings concerned at a significant disadvantage vis-à-vis other firms affected by competition proceedings before the receiving NCA the evidence against which was not located outside the authority’s jurisdiction. Whereas the latter could successfully claim privilege on the communications with their legal adviser, the former would not be able to do so, although proceedings are carried out in the same jurisdiction and by the same NCA, and therefore the position of the two groups of undertakings can be considered comparable.  Accordingly, it could be argued that this hypothetical scenario would constitute a violation of the right against discrimination in the enjoyment of fundamental rights to privacy and fair procedure as enshrined, inter alia, in respectively, Articles 6, 8 and 14 ECHR.

It thus follows from the analysis of Article 12 of the Modernization Regulation on the circulation and use in evidence of information covered by LPP that there are serious issues regarding the fairness of the proceedings before the receiving NCA and in particular a clear risk that the protection of LPP may be “watered down”, to the detriment of the right of the undertaking concerned to receive legal assistance. 

There are two possible solutions for this problem. The first is the EU-wide harmonization of the status of in-house lawyers and the concomitant broadening of the scope of the EU LPP advocated above. The second is the adoption of a procedure similar to the one set out by the ECJ in the AKZO Chemie judgment, under which if the undertakings claim LPP they are entitled to a reasoned decision for exchange of information within the ECN from the transmitting authority open to judicial review. While the importance of securing the useful effect of the Modernization Regulation is noted, it is equally important to safeguard the rights of defense and the struck the right balance between the two. It is respectfully submitted that the proposed measures will achieve this aim.

5. Commission’s investigative powers and ECHR: towards a reform of the Modernization Regulation?

This Section has analyzed the investigative powers of the Commission and has argued that many of them are at odds with ECHR. Subsection 4 has already suggested the way the problems related to LPP could be addressed. As to the other issues outlined above, Professor Riley has proposed a reform of the Commission’s procedure which would bring it in line with the case-law of the ECtHR without hampering the Commission’s ability to detect and punish violations of Articles 101 and 102 TFEU. This new procedure would include obtaining of an investigation warrant from the General Court permitting telephone tapping and sophisticated electronic surveillance against the suspected undertaking. Following evidence obtained under the investigation warrant the Commission could then decide to proceed to an unannounced on-the-spot investigation, having again obtained warrant from the General Court. Having assessed the collected evidence, the Commission could decide to prosecute the suspect undertaking before an independent competition tribunal or the General Court. In the hearing before the independent competition tribunal or the General Court the Commission would be able to ask the representatives of undertakings questions, if the representatives refused to answer, inferences could be drawn from their silence. And if deliberately untruthfulanswers were given the representatives could be charged with perjury. Proceedings before and independent judicial authority would also allow for cross-examination of the authors of oral leniency statements (if the need be, at in camera hearings, so that their identity remains secret for private litigants) in order to ensure compliance of the 2006 Leniency Notice with Article 6(3)(d) ECHR. 

As Riley explains, every new power for the Commission outlined above is compatible with the ECtHR’s case-law. Telephone tapping and electronic surveillance powers are permitted under the Convention. As long as such powers are set out in a legal instrument that is accessible to the public, is clear in its terms as to categories of persons to whom it applies and provides for independent supervision, it is unlikely to be the subject of a successful ECHR challenge. The ruling of ECtHR in Niemitz has indicated and the judgment in Colas Est has confirmed that Article 8 ECHR applies to business premises. However, the Colas Est ruling also indicates that so long as a judicial warrant is obtained then the interference is likely to be justified under Article 8(2) ECHR, as providing adequate safeguards. The ECHR case-law, following the ruling in John Murray v United Kingdom permits interferences to be drawn from a refusal to answer questions under certain conditions. Furthermore, if evidence were taken on oath any deliberately false answers could result in criminal prosecution.

B. NE BIS IN IDEM AND RECIDIVISM

This subsection analyses the two closely related concepts of ne bis in idem (or non bis in idem) and recidivism and their application in the EU antitrust enforcement. The principle of ne bis in idem, which is the European equivalent of the double jeopardy clause in the United States, restricts the possibility of a defendant being prosecuted or punished several times for the same offense. Article 4 of Protocol No 7 to the ECHR reads as follows:

“1 No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.

2 The provisions of the preceding paragraph shall not prevent the reopening of the case in accordance with the law and penal procedure of the State concerned, if there is evidence of new or newly discovered facts, or if there has been a fundamental defect in the previous proceedings, which could affect the outcome of the case.”

Article 50 of the Charter of Fundamental Rights of the EU provides that:

“No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.”

Thus, the scope of Article 50 of the Charter is wider that that of Article 4 of Protocol No 7 ECHR, since the latter article prohibits a second trial or a second punishment only within the jurisdiction of one and the same State, whereas the former prohibits such a trial or punishment in any State of the EU. Apart from this aspect, Article 50 has the same meaning and the same scope as Article 4 of Protocol No 7, in accordance with Article 52(3) of the Charter.

1. The ne bis in idem principle in EU competition enforcement

Several issues arise with respect of the application of the ne bis in idem principle in EC competition enforcement. These are discussed below.

1.1. Can participants in a world-wide cartel be fined in both EU and another jurisdiction outside the EU?

The ECJ has encountered this issue in the Boehringer case. The Court held, on the facts, that the agreements that were the subject-matter of the criminal prosecution in US were different in “their object and their geographical emphasis” to the cartel investigated by the Commission. As a consequence, no issue of ne bis in idem arose.

It is submitted that the approach of the ECJ is correct. Indeed, as we have seen, there is currently no world-wide principle of ne bis in idem recognized. Article 4 of Protocol No 7 ECHR limits the application of the principle to a single State, whereas Article 50 of the European Charter extends its scope only within the EU.

1.2. Can the Commission re-adopt its decision quashed due to procedural irregularities?

The ECJ has held in the PVC (No 2) case that: 

“The application of that principle […] presupposes that a ruling has been given on the question whether the offense has in fact been committed or that the legality of the assessment thereof has been reviewed. Thus, the principle of non bis in idem merely prohibits a fresh assessment in depth of the alleged commission of an offense which would result in the imposition of either a second penalty, in addition to the first, in the event the liability is established for a second time, or a first penalty in the event that liability not established by the first decision is established by the second.”

It thus follows that where a Commission’s decision has been annulled merely due to procedural breaches it can be re-adopted with the Commission observing the safeguards for the right of defense. Such approach appears consistent with the wording of Article 4(2) of Protocol No 7 ECHR.

1.3. Can an undertaking be fined twice for the same offense by different competition authorities within the EU? 

The PVC (No 2) case was concerned by subsequent proceedings brought by the same authority. The problem is further complicated because the same agreement or conduct may give rise to liability under different legal systems with the EU. EU law and national law may both apply to the same anti-competitive agreement or conduct. The principle of double jeopardy comes into play where the same undertaking is subject to fines for the same or substantially the same facts albeit under different legal provisions in different legal systems.

The ECJ has held in Walt Wilhelm that parallel proceedings under EU and national competition laws are not contrary to the ne bis in idem principle, given the differences between the two laws, notably because the EU law focuses on the effect on trade between Member States. That Court did however add that “if […] the possibility of two procedures being conducted separately were to lead to the imposition of consecutive sanctions, a general requirement of natural justice […] demands that any previous punitive decision must be taken into account in determining any sanction which is to be imposed”. 

Following the 2001 judgment of the ECtHR in Franz Fischer v Austria, it has become highly doubtful whether one can still consider that there is no violation of the ne bis in idem principle in the case of double prosecutions under Articles 101 and 102 TFEU and under national competition law because of EU law’s specific focus on the effect of trade between Member States. In that casethe ECtHR has held that:

“[T]he wording of Article 4 of Protocol No 7 does not refer to ‘the same offense’ but rather to trial and punishment ‘again’ for an offense for which the applicant has already been finally acquitted or convicted. Thus, while it is true that the mere fact that a single act constitutes more than one offense is not contrary to this Article, the Court must no limit itself to finding that the applicant was, on the basis of one act, tried or punished for nominally different offenses. The Court […] notes that there are cases where one act, at fist sight, appears to constitute more than one offense, whereas a closer examination shows that only one offense should be prosecuted because it encompasses all the wrongs contained in the others […] An obvious example would be an act which constitutes two offenses, one of which contains precisely the same elements as the other plus an additional one. There may be other cases where the offenses only slightly overlap. Thus, where different offenses based on the same act are prosecuted consecutively, one after the final decision of the other, the Court has to examine whether or not such offenses have the same essential elements.”

Indeed, whereas Articles 101 and 102 TFEU contain an element not embraced by the national law, namely the effect on trade between Member States, the essential elements of national competition laws would appear to cover the same ground as Article 101 and 102.

It also follows from Franz Fischer that violation of the principle of ne bis in idem cannot be avoided by reducing the amount of the second punishment by the amount of the first punishment but also double prosecution.

As already mentioned, the problem stems not only from the text of Article 4 of Protocol No 7 ECHR, which only prohibits double prosecution within one State, but also from Article 50 of the European Charter of Fundamental Rights which makes this prohibition EU-wide. This, combined with the provision of Article 52(3) of the Charter, means that the judgment in Walt Wilhelm is no longer a good law.

It has been argued that “[t]he system of Regulation No 1/2003 is built on the assumption that there is only an issue of ne bis is idem where a competition authority has already imposed a fine on a give territory [of a Member State] for a certain infringement” and that following the approach of the ECtHR in Franz Fischer would lead either to “systematic under-punishment” of the competition violators, or to “preemptive prosecution” of favored defendants from the NCAs as well as of “forum-shopping” in applying for leniency in the jurisdiction with more lucrative leniency program. These concerns, however, can and must be addressed via the mechanisms set out in Regulation 1/2003 as well as via the harmonization of the fines imposed by the NCAs and of the national leniency programs, rather than through the violation of fundamental rights as guaranteed by the ECHR and the jurisprudence of the ECtHR.

1.4. Can a subsequent investigation from an NCA be barred by a Commission decision accepting commitments under Art 5 of Regulation 1?

Dekeyser and Gauer argue that the answer to that question should be negative since “these decisions take a position neither on the existence of an infringement prior to the commitments, nor on the absence of infringement after the commitments”. This, however, appears to be at odds with the ECJ’s ruling in Criminal proceedings against Husein Gozutok and Klauss Brugge. 

Criminal proceedings for breach of the Convention Implementing the Shengen Agreement (which in Chapter 3 of Title III, provided for the application of the ne bis in idem principle), against Mr. Gozutok in the Netherelands had been discontinued following acceptance by Mr. Gozutok to pay a sum of money determined by the prosecution. The German authorities wanted to prosecute Mr. Gozutok for the same offense. Proceedings against Mr. Brugge raised the same question. The Court held that where the prosecution is discontinued by decision of the prosecuting authority and on condition that the accused performs obligations determined by the prosecution, further proceedings are precluded. However, the Court clarified that e relevant fact in reaching this conclusion was that under national law a further prosecution was definitely barred. Therefore, the consequences of discontinuing proceedings under national law were material to the decision as to whether the discontinuance was a final disposal of the case. The Court also stated that what matters is not the procedure per se, e.g. whether the discontinuance of proceedings is embodied in a formal judicial decision, but the effect of discontinuing proceedings.

2. Commission’s policy towards recidivism 

The substance of the institute of recidivism is that previously committed offenses are taken into account as an aggravating factor when determining the fine of the offender. Because recidivism constitutes a second penalty based on the existence of a past infringement that has already been subject of penalty, it constitutes an exception to the principle of non bis in idem. While the Commission rightly considers recidivism to be a very serious issue, certain aspects of its policy appear to be at odds with the ECHR standards.

2.1. The principles of No Punishment without Law and No Retroactive Application of Unfavorable Law

Article 7(1) ECHR provides that:

“No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.”

This Article reflects the generally recognized fundamental principle of nullum crimen, nulla poena sine lege, i.e. only the law can define and prescribe a penalty. In LRAF the CFI has explicitly held that the principle of non-retroactivity of fines is applicable in EC competition procedures.

There is a general uncertainty as to the legal basis for determining recidivism as an aggravating circumstance in the Commission’s procedures. The Commission itself claims that the legal basis is provided by Regulations 17/1962 and 1/2003 which both state that “[i]n fixing the amount of the fine, regard shall be had both to the gravity and to the duration of the infringement.”

It is, however, not clear that applying recidivism as an aggravating factor follows from the obligation in the Regulations to consider the “gravity” and the “duration” of the infringement. First, neither the TFEU, nor the Regulations contain an explicit reference to the possibility of increasing fines based on recidivism. Secondly, recidivism is based on the characteristic of the recidivist, i.e. the legal person which infringed the competition rules, and has nothing to do with the nature of the infringement, its duration or gravity. Arguably, therefore, the Regulations do not provide the necessary clear and unambiguous legal basis for recidivism.

Indeed, the first explicit mention of recidivism as an aggravating factor has been made in Commission’s 1998 Fining Guidelines. It is questionable whether Guidelines alone could constitute a sufficient legal basis for recidivism. Guidelines are not formally legally binding and serve only to explain in more detail the Commission’s practical implementation of the framework for imposing fines provided for by the Regulations and the TFEU. If the Regulations do not provide a legal basis for recidivism, then arguably the Guidelines go beyond the scope of the Commission’s discretion pursuant to the Regulations and are invalid on this point.

Even if one considers that the Guidelines do provide a sufficient legal basis for recidivism, the fact remains that such basis was not provided for until 1998 and therefore no infringements committed before that date should be taken into account as aggravating circumstances. In Anchour v France the ECtHR has explicitly held that the relevant legal basis must be assessed at the time of the first, infringement, because the first and second offenses, which constitute the basis for recidivism, must be seen as “forming an indivisible whole” and “[i]t would be pointless to set up an opposition between the components of recidivism, […] and to take only one into account or minimize the significance of one in relation to the other”.

In its practice so far, however, the Commission has used as aggravating circumstances infringements committed well before 1998 in contradiction with the ECtHR’s judgment in Anchour.

2.2. The principles of proportionality and legal certainty

2.2.1. Proportionality

It is a fundamental principle of EU law the means used by the Union must be in proportion to their purpose.Article 5(4) TEU provides that “the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties”. The Fining Guidelines do not provide for limitation period after which previous infringement cannot be considered as aggravating circumstance. As Nordlander argues, the Commission’s insistence to impose increased fines based on infringement which occurred several decades ago equates EU competition law infringements with the most serious crimes which is hardly proportional.

2.2.2. Legal certainty

All legal systems are based on the principle that the application of the law to a specific situation must be predictable. The principle of non-retroactivity discussed above aims to ensure legal certainty. Time limits and periods of limitation also serve to ensure legal certainty. In the Dyestuff Cases the ECJ invoked a limitation period as a general principle of law:

“[T]he fundamental requirement of legal certainty has the effect of preventing the Commission from indefinitely delaying the exercise of its power to impose fines.”

Under the Commission’s current policy an infringement of EU competition rules at any point back in time, anywhere in the world, with respect to any product market, by any entity within the same economic unit could potentially lead to an increased fine which clearly contradicts the principle of legal certainty.

C. ACCEESS TO THE FILE AND THE RIGHT TO A FAIR HEARING

The right of the undertakings concerned to access the Commission’s file is one of the most important elements of the right to be heard and therefore – of the right of defense. The evolution of this right is another example of the positive development of EU law. While in Hercules the CFI found that “there are no provisions which require the Commission the divulge the contents of its files to the parties concerned” and that access to the file should be granted solely on the basis of legal certainty, as the Commission may not depart from its self-imposed rules, in its Soda-ash judgment the Court held that the right was based on the fundamental right of defense. The development of this case-law has been reflected in the Modernization Regulation as well as in the Commission’s Notice on the access to the file. However, certain concerns regarding that right remain unanswered. These are considered below.

1. The limitations of the right of access

According to both Regulation 1/2003 and the Notice the parties shall not have access to internal documents, business secrets of other undertakings, or other confidential information. 

Neither the TFEU, nor any of the implementing regulations, defines the concept of business secret or list the sort of matters it could cover. This omission is probably intentional. The Postbank judgment defines business secrets as information about an undertaking’s activity, whose disclosure could result in a serious harm to the same undertaking. This clearly calls for a case-by-case approach. The Commission has given as example information relating to undertaking’s know-how, methods of assessing costs, production secrets and processes, supply sources, quantities produced and sold, market shares, customer and distributor lists, marketing plans, cost and price structure and sales strategy.

The main drawback in the notion of business secrets is the fact that it has no true definition. Since business secrets must be considered an important limitation of the right of access to the file, this constitutes a huge source of legal uncertainty for undertakings. It could be argued that due to this lack of definition, in combination with the fact that there exists no consensus on a EU level as to what the concept implies, the Commission is allowed too much discretion in deciding the issue. The same goes for the concept of “other confidential information”.

The Commission has given as examples of internal documents drafts, opinions, memos or notes from the Commission departments or other public authorities concerned. The refusal to grant access to such documents has been justified with the notion that internal documents lack evidentiary value and that the Commission cannot rely on them when assessing the case. Such notion, however, disregards the cases where there exist doubts whether the Commission’s decision has been lawfully adopted, or to the real motives of the decision. It therefore appears that the Commission enjoys an unjustified discretion to declare such documents devoid of evidentiary value.

2. The definition of “file”

According to the Notice, the “file” consists of all documents which have been obtained, produced and/or assembled by the Commission Directorate for Competition (hereafter DG COMP), during the investigation. It has been argued that this definition is too narrow and that the principle of equality of arms dictates that the “file” should include at least all documents in the possession of DG COMP, i.e. also documents primarily relating to other alleged infringements or indeed all relevant documents in the possession of the Commission as a whole and not those in the hands of DG COMP. This is particularly important since the final decision is an act of the Commission as a collective body.

It is submitted that such broader definition of the “file” is supported by the judgment of CFI in Solvay v Commission that in certain circumstances documents obtained throughout the course of one investigation can be important for the defense of an undertaking in other case and that by not providing access to such evidence the Commission has infringed the applicant’s rights of defense. 

The Notice further states that following a “more detailed examination” of the documents collected by the Commission it may find that some of these documents are unrelated to the subject-matter of the case in question and to return them to the undertaking from which they have been obtained. Upon return, these documents will no longer constitute part of the file. As Erlandson notes, such an approach invites arguments to the effect that “the documents that were returned must have left some traces on the mind of the case handler” or “the Commission seeks to dispose of documents unhelpful to its case”. One way to solve this problem would be to work out, according to good administrative practice and with the help of information technology, a system of registration of in- and outgoing documents for every file, just as documents are recorded in official registers at the courts and other official authorities in the Member States.

3. Time of granting of access to the file

According to the Notice, access is granted following the notification of the Commission’s statement of objections (hereafter SO). The point of time for allowing access has been criticized as too late. The argument is that since years often elapse between the Commission’s fact-finding investigations and the release of the SO, it may become increasingly difficult to verify or refute certain assertions of fact. The danger also exists that in the meantime, more Commission officials will have built their conviction on elements which the inspector may have misunderstood, but which the defendant has been unable to “nip in the bud”. It has been therefore argued that the earlier access to file is given, the fewer misunderstanding about the facts will result.

4. “Non-confidential” versions of documents

Throughout the competition procedure, the Commission must balance between the obligation to safeguard the undertakings’ right of defense and the confidentiality of the information obtained. The method of doing so encouraged by the CFI in Soda-ash and adopted by the Notice is to provide non-confidential versions of confidential documents. 

This problem, however, is far from being perfect. In an anti-dumping case AG Darmon rejected such a solution as “inadequate” where figures are involved. Inevitably, after having deleted all confidential information in a document, the document will in most cases be of no use for the defendant undertaking. This is either because it then no longer contains any information useful for the defense or because the way in which the Commission has described the document is too succinct or inadequate for the defendant to be able to assess the relevance of the document for its defense.

Thus, the method is one-sided: it protects the interest of the owner of the information but does not protect the interest of the defendant undertaking, whereas it is submitted that the primary position should always be that confidentiality can never deny a defendant the right to defend himself.

5. The lack of judicial control over the Hearing Officer’s decision whether to grant access to confidential information

The Commission has introduced and further strengthened the figure of the Hearing Officer as a “neutral chair” to the hearing with the aim of increasing the transparency and fairness of its procedure. According to the Notice if a party considers that, after having access to the file, it requires knowledge of specific non-accessible information for its defense it may submit a reasoned request to that end to the Commission. If the DG COMP refuses the request the party may refer the issue to the Hearing Officer.

The Notice, however, does not provide for a right to appeal the decision of the Hearing Officer. This opportunity was rejected by the CFI in Cimenteries. While acknowledging the importance of access to file as a means by which undertakings exercise the rights of defense, the Court held that:

“Commission measures refusing access produce in principle only limited effects, characteristic of preparatory measure forming part of a preliminary administrative procedure. Only measures immediately and irreversibly affecting the legal situation of the undertakings concerned would be of such of nature as to justify, before completion of the administrative procedure, the admissibility of an action for annulment.”

This approach is in contrast with the one concerning the protection of confidential information. In AKZO Chemie the CFI held that where the Commission intents to disclose protected information over the objection of the owner, adoption of a formal decision to that effect is required, subject to an interlocutory appeal before the Court. This seems to be another example of how the Court is putting the interest of the owner of confidential information over the rights of defense of the accused undertaking.

6. Third parties’ access to the file

The ECJ has held in Re: FEDETAB case that complainants enjoyed only “a right to be heard and not a right to receive confidential information”. Consequently, the Commission could “communicate to such a party certain information covered by the obligation of professional secrecy”, but only “in so far as it is necessary to do so for the proper conduct of investigation”. It follows that, although the right of access to the file by third parties is clearly linked to the need to ensure a meaningful exercise of their right to be heard, its scope is by no means equivalent to that enjoyed by investigated undertakings. Moreover, any such access must be granted only upon the procedure set out in paragraph 29 of the AKZO Chemie judgment.

Joshua has argued that, as a result of that ruling, the Commission will probably decide in the future to do entirely without the complainant input on the documentary evidence, rather than risking undue delay. He has been proven right – the Notice states that “complainants cannot claim a right of access to the file as established for parties” and that they will be only provided with access to documents on which the Commission has based its provisional assessment in case the latter intents to reject the complaint, but, nonetheless, “[c]omplainants do not have a right of access to business secrets or other confidential confirmation”.

This policy has been criticized on the main grounds: (i) that it unduly restricts the right of third parties, whose interests have been affected by the alleged anticompetitive behavior, to be heard; and (ii) that it runs counter to the interest of a more intense fact-finding procedure.

7. The right of access to file and ECHR – conclusions

This subsection has argued that there are still many problems regarding the access to file in Competition procedures. They all apparently stem form two major factors: (i) that the Commission still enjoys wide discretion regarding the composition and granting access to file; and (ii) that currently the balance between the interests of the owners of (allegedly) confidential information and the other participants in the proceedings seeking to exercise their right to be heard is heavily tipped in favor of the former.

As to the first problem, there are two possible solutions: either the decision of the Hearing Officer, refusing access to “sensitive information” should be subjected to interlocutory appeal before the General Court, or the investigative and decision-making powers should be separated between the Commission and an independent judicial body (the General Court or a special competition tribunal) in which case all decision regarding the access to the file will be taken by that body. Adoption of either of those solutions appears to be only way to make access to file compatible with the case-law of the ECtHR which has emphasized that the constant review of the trial judgment over the circumstances concerning disclosure of evidence in criminal procedure is essential to protect the rights of the accused.

As to the second problem, it is recalled that the US practice has shown that there are numerous way to safeguard “sensitive information” without compromising the other parties’ right to be heard such as protection orders, in camera hearings, sealing the records and ordering those involved in the litigation not to disclose an alleged trade secret without prior judicial approval. The Commission and the EU Courts are respectfully advised to embrace them.

D. DECENTRALIZED APPLICATION OF COMPETITION RULES AND THE LEGALITY OF SANCTIONS

One of the main features of the Modernization of EU Competition law is the decentralization, that is, the EU Competition rules are to be applied both by the Commission and by the NCAs and national courts. There is, however, a potential conflict between such decentralized enforcement and the principle of legality of sanctions, enshrined in Article 7 ECHR, which not only prohibits the retrospective application of more severe sanctions, but also requires “predictability” or “foreseeability” (that is, offenses should be clearly defined by the law). This condition is satisfied when an individual is in a position to know in advance how the courts will interpret the acts and/or omissions that can make him liable for infringing the law.

Thus, according to the ECtHR:

“[W]hen speaking of law, Article 7 alludes to […] a concept which comprises statutory law as well as case-law and implies qualitative requirements, notably those of accessibility and foreseeability.”

As Waelbroeck argues, it is difficult to explain these requirements are being met in a system where 28 competition authorities impose different sanctions, apply different national procedures and may well reach different conclusions with respect of the same type of economic behavior. Such uncertainty is likely to persist until the establishment of clear case-allocation criteria and mutual recognition of the decisions of the different competition authorities within the NCA, as well as of harmonization of the procedural laws and the fines imposed by them.

IV THE COMPATIBILITY OF THE JUDICIAL PROCEEDINGS BEFORE THE EU COURTS WITH ARTICLE 6 ECHR

It has already been explained that Article 6 ECHR impliedly protects the right to a court at some point of the procedure where an individual or an undertaking faces charges of criminal matter or a determination of his or hers civil rights. Any study of the ECHR implications of the EU competition enforcement therefore necessitates an analysis of the proceedings before the EU Courts. 

A. LOCUS STANDI

As the ECtHR held in Golder v United Kigdom, “[it] must be established that the degree of access […] was sufficient to secure the individual’s ‘right to a court’, having regard to a rule of law in a democratic society”. Indeed, the breadth of judicial review counts for little if one is deprived from access to a court. It is therefore important to understand first whether the persons affected by the Commission’s decision have a sufficient access to EU Courts.

Under Article 263(4) TFEU non-privileged applicants can bring review proceedings (i) where there is a decision addressed to the applicant; (ii) where there is a decision, addressed to another person, but of “direct and individual concern of him”; or (iii) where there is a decision in the form of regulation and the applicant claims that it is of direct and individual concern of him or her.

It is clear from the existing case-law that under the first hypothesis undertakings to whom the Commission’s antitrust or merger decisions are addressed, have the right to have these decisions reviewed by the EU Courts.

As for the standing of interested third parties, it clearly falls under the second hypothesis depends on the EU Courts’ interpretation of “direct and individual concern”. While the EU Courts have traditionally given extremely restrictive interpretation of that concept, commentators have noted that the case-law with respect of competition decisions has been “more liberal”. Thus, in the Metro I case the applicant, seeking to annul Commission’s decision addressed to SABA, was accorded standing. Two factors were particularly important in reaching that conclusion. On the one hand, Metro was the firm which was being excluded from the SABA distribution system. On the other hand, it was also the undertaking which has initiated the complaint under Article 3(2)(b) of Regulation 17, which allowed private parties to bring such matters to the Commission’s attention. Commentators have noted that under the Plaumann test Metro would not have been given standing. 

The more recent EU case-law has gone further, by taking into consideration not only whether the applicant has participated in the administrative proceedings before the Commission, but also its market position vis-à-vis the addressees of the impugned decision, whether or not, in cases of selective distribution agreements, the applicant had been refused access to the system and the fact that the applicant had already initiated damages proceedings before the competent national court.

This “more flexible approach” when it comes to granting standing of third parties in antitrust proceeding ha prompted Andreangeli to argue that the EU Courts’ position appears to be “by and large consistent with the ECHR”. 

Specific problems do exist, however, in the area of merger control. While the general trend of EU case-law is towards broad standing similar to the one in antitrust cases, the same does not hold true with respect of the minority shareholders and the recognized representatives of the employees of the merging undertakings. Regarding the former, the CFI held in Zunis Holding that the impugned decision was “not of such nature as by itself to affect the substance or extent of the rights or the ability to participate in the company management conferred on them by such rights”. 

Regarding the latter, the CFI ruled in Grandes Sources that: 

“[O]nly a decision which may have an effect on the status of the employees’ representative organizations or on the exercise of the prerogatives and duties given them by the legislation in force can affect such organizations’ own interests. That cannot be the case with a decision authorizing a concentration.”

The organizations in question were therefore granted limited standing only for the purposes of examining whether their right to be heard before the Commission as recognized by the 1989 Merger Regulation has been infringed. This solution was criticized as “wholly inappropriate” and inconsistent with the case-law concerning the standing requirements of third parties in the field of merger control.

B. THE SCOPE OF THE REVIEW

A further essential issue is whether the scope of judicial control exercised by the EU Courts is in conformity with the ECtHR’s requirement for “full jurisdiction” of the reviewing independent tribunal.

Under Regulation 1/2003 the EU Courts have “unlimited jurisdiction to review decisions whereby the Commission has fixed a fine or periodic penalty payment”.As to the other elements of the antitrust decisions Article 263(2) TFEU limits the scope of the review to four grounds for annulment: (i) lack of competence; (ii) infringement of an essential procedural requirement; (iii) infringement of the Treaty or of any rule of law relating to its application; and (iv) misuse of powers. Consequently, the Court cannot substitute its own assessment to the economic and legal appraisal contained in the decision. Its jurisdiction will be limited to ensuring that the Commission did not overstep the limit of its discretion and did not commit any error of law or of fact in the assessment of the evidence before it.

It could be argued that this type of review complies with the requirements of Article 6 ECHR, given the fact the judgment of the ECtHR in Zumtobel appears to give preference to the interpretation of the concept of “full jurisdiction” as implying only a “full review of legality” rather than implying the “power to remake entirely the decision”.

It should be stressed, however, that according to the Belilos judgment a tribunal will only meet the requirement of Article 6(1) ECHR when it is able not only to control fully the objective legality of an act but at least also to review fully the facts upon which a decision is based. This is clearly not the case with the Court’s self-imposed restraint regarding when faced with “complex economic assessments”. Thus in Matra Hachette the CFI held that:

“[W]here complex economic facts are involved judicial review of the legal characterization of the facts is limited to the possibility of the Commission having committed a manifest error of assessment…”

Such approach is undoubtedly open to criticism. As AG Jacobs has stated, “the technical nature of a case should not cause the Court to forsake its duty […] to ensure that the law is observed”. Thus, there is no intellectual reason why the Court cannot review the accuracy of the Commission’s economic and market analysis and the correctness of its legal conclusions. One difficulty of this approach is that it is not always clear when the analysis is sufficiently complex and thus when judicial review ought to be limited, to the detriment of legal certainty. 

Finally, this approach is contrary to the standards of judicial review in merger cases where the EU Courts have shown much more willingness to scrutinize the economic assessments of the Commission. Such a contradiction is paradoxical: EU Courts apply stricter standards of review in merger cases, which are involved with determination of civil rights and obligations, than in antitrust cases, which concern charges of criminal nature. 

The EU Courts’ self-imposed restraint in the review of “complex economic assessments” in antitrust cases therefore casts a major shadow over the compatibility of the EU judicial procedure with Article 6 ECHR.

V CAN UNDERTAKINGS OBTAIN EFFECTIVE REDRESS FOR THE VIOLATION OF THEIR RIGHTS?

Section III of this paper has highlighted the existing incompatibilities between the Commission’s competition procedures and the ECHR standards whereas Section IV has argued that certain aspects of the EU Courts’ case-law governing the standing and the scope of judicial control do not satisfy the criteria for full jurisdiction under Article 6(1). It is therefore important to understand whether the parties affected by EU competition procedures can claim remedy for their violated rights. Since the European judicatory is “a three-tier tightly woven structure of national, supranational and international legal systems”, it is necessary to examine the view of all the systems involved. 

A. THE VIEW OF THE ECTHR

It is a settled case-law that applications against the EU are inadmissible ratione personae insofar the EU is not party to the ECHR. Members, in contrast, have been held in M & Co to be “responsible for all acts and omissions of their domestic organs allegedly violating the Convention regardless of whether the act or omission in question is a consequence of domestic law or regulations or of the necessity to comply with international obligations.” 

In the same decision, however, the CHR severely limited the application of the Convention case-law to the EU legal order, by holding that “the transfer of powers to an international organization is not incompatible with the Convention provided that within that organization fundamental rights will receive an equivalent protection”, and by finding that “the legal system of the European Communities not only secures fundamental rights but also provides for control of their observance”. In order to reach that conclusion, the CHR relied on Joint Declaration on Human Rights of the Commission, Council and the European Parliament which underscored the importance of the ECHR as well as on the case-law of the EU Courts concerning the protection of fundamental rights. M & Co’s application was therefore rejected as inadmissible.

The case of Matthews was heralded as “a significant development” of the Strasbourg case-law. The applicant claimed a violation by the United Kingdom of her right to participate in free elections, by virtue of the fact that, as British national resident in Gibraltar, she was unable to vote in the 1994 elections to the European Parliament. Despite of the fact that the European Parliament, together with the Council, enacted legislation which applied to Gibraltar, Annex II the Act Concerning the Election of the Representatives of the European Parliament by Direct Universal Suffrage of 20 September 1976 (the 1976 Act) which was attached to the Council Decision 76/787 (“the Council Decision”) did not provide for the Gibraltar residents to vote in these elections. The ECthR reaffirmed the position that Member States’ responsibility continues even after the transfer of competences to the EC

The Court also stated that:

“[T]he Convention is a living instrument which must be interpreted in the light of present-day conditions […]. The mere fact that a body was not envisaged by the drafters of the Convention cannot prevent that body from falling within the scope of the Convention. To the extent that Contracting States organise common constitutional or parliamentary structures by international treaties, the Court must take these mutually agreed structural changes into account in interpreting the Convention and its Protocols.”

On the merits, the Court found that Ms. Matthews’ right to vote was denied, and therefore there was a breach of Article 3 of Protocol No. 1 to the ECHR.

The judgment in Matthews was hailed by commentators for the “tightening of language” compared to the judgment in M & Co and particularly for the fact that it insisted on the need the Convention rights to be “secured” rather than seeking “equivalent protection.” It has been suggested that this judgment was a sign that the ECtHR was now more willing to assert its jurisdiction over the EU legal order. It has been also argued that there is no reason why the concept of the “living instrument” could not be applied to the entire acquis Communitaire which did not exist at the time of the adoption of the Convention either.

However, the explanation for the sympathetic stance of the Court towards the applicant might well lay in the specific circumstances of that case. The acts from which the violation flawed – the Council Decision, the 1976 Act and the Maastricht Treaty, which amended the powers of the European Parliament, – all constituted international agreements that were freely entered into by the UK. As an international agreement and not an act adopted by the Community institutions, the 1976 Act could not be challenged before the Community judicature. It has been therefore argued that the fact that the ECtHR believed that Ms. Matthews had not effective remedy may have had a decisive influence on the outcome of the judgment.

The latter interpretations of the Matthews judgment appear to be confirmed by the more recent Bosphorus judgment. In that case the applicant had alleged that the impoundment by the Irish authorities of an aircraft belonging to the national airline company of the Federal Republic of Yugoslavia, imposed to fulfill the obligations on Ireland as a result of the Council Regulation enacted to give effect to the UN Resolution imposing economic sanctions on former Yugoslavia, violated its rights to enjoy property peacefully. The Court confirmed the principle of continuing Convention liability in respect of treaty commitments subsequent to the entry into force of the Convention.

On the merits, however, the Court found no violation of the Convention. First, it returned to the “equivalence” standard from the M & Co judgment and specified that: 

“By ‘equivalent’ the Court means ‘comparable’; any requirement that the organisation’s protection be ‘identical’ could run counter to the interest of international cooperation.”

The ECtHR then held that the effectiveness of the substantive guarantees of fundamental rights “depends on the mechanisms of control in place to ensure their observance” and found that “the protection of fundamental rights by Community law can be considered to be, and to have been at the relevant time, ‘equivalent’ […] to that of the Convention system”. In reaching this conclusion, the Court emphasized on the substantive content of the EC general principles of law, as developed by the ECJ and the role played by the ECHR in that context.

The ECtHR held that:

“If such equivalent protection is considered to be provided by the organisation, the presumption will be that a State has not departed from the requirements of the Convention when it does no more than implement legal obligations flowing from its membership of the organisation.

However, any such presumption can be rebutted if, in the circumstances of a particular case, it is considered that the protection of Convention rights was manifestly deficient. In such cases, the interest of international cooperation would be outweighed by the Convention’s role as a ‘constitutional instrument of European public order’ in the field of human rights.”

As for the judgment in Matthews, the Court stated that it could be distinguished from the case in question: the acts for which the United Kingdom was found responsible were “international instruments which were freely entered into” by it as opposed to acts of organization to whom the State has transferred part of its sovereignty.

The Bosphorus judgment has been widely criticized both in the concurring opinions on the case and in the literature as creating double standards of protection of fundamental rights, leading “tacitly to substitution, in the field of Community law, of Convention standards by Community standards”, and ultimately – for introducing such a high standard for cases concerning EU law than those are virtually excluded from a review in Strasbourg.

The concept of “manifest deficiency” contained in judgment should be particularly alarming for undertakings willing to invoke the breach of their fundamental rights in EU competition procedures before the ECtHR. What this means is unclear. No guidelines were given by the Court. If “manifestly deficient” is taken to mean that the EU must apply substantially the same standards of human rights as enshrined in the ECHR then Sections III of this papers contains abundant evidence of manifest deficiency. However, if “manifest deficiency” is understood to mean simply lack of procedural mechanism of control, as the joint reading of Matthews and Bosphorus tends to suggest, then undertakings cannot hope for any success in Strasbourg. The same holds true even taking into account the shortcomings of the EU judicial procedures, outlined in Section IV, given the abstract approach in Bosphorus where the ECtHR was happy to examine the overall state of these procedures, rather than busying itself with the particular details which might rebut the presumption of equivalent protection. 

Given this jurisprudence of the ECtHR it is even more important to understand whether one can obtain effective remedy from the EU Courts or from the courts of the Member States.

B. THE VIEW OF EU COURTS 

As already pointed out the EU Courts’ case-law has undergone a significant development from denying applicability of ECHR in EU legal order to holding that EU Courts are called to observe the protection of fundamental rights and acknowledging  the “special significance” of the ECHR in that respect.In some more recent judgment the EU Courts have even applied provisions of the ECHR directly without transposing them into “general principles of law”. 

Against this background one should expect the EU Courts to provide at least the same level of protection of the undertakings’ rights as the one provided by the ECtHR. Such expectation is reinforced by the text of Article 52(3) of the Charter of Fundamental Rights of the European Union, according to which:

“In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection.”

As the argument goes, EU Courts “would almost certainly take the view that the Strasbourg case law determined authoritatively ‘the meaning and scope’ of the rights guaranteed by the ECHR” and therefore further convergence between the EU and the ECtHR case-law is to be expected. Or, in alternative, “[the] notion of same meaning and scope may well be used by undertakings to argue that a similar approach should be used in respect of fundamental rights in the general principles of [EU] law”.

Yet serious questions have been raised as to whether the EU judicature is “taking [fundamental] rights seriously”. It has been widely acknowledged that ECJ’s early case-law embraced the concept of fundamental rights in order to secure the supremacy of EU law against the objections of the courts of Germany and Italy who were concerned by the lack of fundamental rights protection. More recently references have being made by the EU Courts in order to extend their jurisdiction into areas previously reserved to Member States’ Courts and to expand the influence of the EU over the activities of the Member States. It has been further argued that in each case involving fundamental rights issues the EU Courts have “manipulated the usage of fundamental rights principles with just enough significance in Community terms to allow for the triumph of the Community will”.

When one looks, for instance, at the EU judicature’s approach to the privilege against self-incrimination it is hard to disagree with such conclusion. Before the ECtHR held that Article 6 ECHR conferred a right of silence in Funke and Saunders, the ECJ was prepared to concede that Article 6 applied to competition proceedings; once the ECtHR held Article 6 to include that right, the CFI held that Article 6 did not apply. As commentators have suggested (and the CFI has explicitly confirmed in para 66 of the Mannesmannrobren-Werke judgment) the only reasonable explanation for such a puzzling “moving of the goalposts” was that the Court has “made a conscious policy decision not to extend to Commission investigations the safeguards against self-incrimination provided by Article 6 of the ECHR” fearing that this would “constitute an unjustified hindrance” to the Commission’s powers of investigation.

Therefore undertakings would be best advised not to be overly enthusiastic about the possibility to receive from the EU Courts protection of their fundamental rights similar to the one granted by the ECtHR – particularly where, in the Courts’ view, such protection might jeopardize the exercise of Commission’s competences.

C. THE ROLE OF THE NATIONAL COURTS 

It has been argued that proceedings before the National Courts of the Member States could be used by the defendant undertakings to trump the powers of the Commission with the international obligations of the Member States set out in ECHR. The basis for this is provided by two important rules. 

First, according to Article 351 TFEU:

“The rights and obligations arising from agreements concluded before 1 January 1958 or, for acceding States, before the date of their accession, between one or more Member States on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this Treaty.

To the extent that such agreements are not compatible with this Treaty, the Member State or States concerned shall take all appropriate steps to eliminate the incompatibilities established. Member States shall, where necessary, assist each other to this end and shall, where appropriate, adopt a common attitude.”

Since most of the Member States have acceded to the ECHR prior to joining the EU, they remain bound by the higher standards of protection provided by the ECtHR as long as they have not denounced the Convention, which seems rather impossible from political point. Given the fact that under Article 299 TFEU enforcement of Commission decisions imposing fines or periodic penalty payments is sought by National Courts, the application of EU competition law decisions may be successfully resisted on the grounds that they require a Member State to violate its pre-existing obligations to third parties under the ECHR. It also enables National Courts to exercise real judicial control when authorizing Commission’s inspections, despite of the delimitations set out in Article 20(8) of Regulations 1/2003.

Secondly, Article 53 ECHR provides that:

“Nothing in this Convention shall be construed as limiting or derogating from any of the human rights and fundamental freedoms which may be ensured under the laws of any High Contracting Party or under any other agreement to which it is a Party.”

It is clear for the very wording of this provision that it only permits national fundamental rights provisions offering higher human rights standards to be applied in place of the ECHR. Since this paper has shown that on many occasions the EU standards are in fact lower than the Convention ones, this provision also allows Commission’s procedures to be questioned on the basis of ECHR before National Courts.

While these arguments are undoubtedly correct, whether the National Courts would have the courage to go against the doctrine of EU law supremacy, even armed with Article 351 TFEU and Article 53 ECHR, is another matter. As commentators note, a State acting in this matter is “arguably acting in breach of Community law (and may conceivably open up the governments to claims of Francovich damages)”.

VI CONCLUSIONS

This paper has argued that number of inconsistencies between the EU competition enforcement and the ECHR exist and has discussed the ways to remedy this. It is unfortunate that although it is possible to reconcile the competition procedures with the Convention without jeopardizing the Commission’s powers to enforce competition rules to the benefit of consumer welfare (and arguably, by even reinforcing these powers), the Council and the Commission have been reluctant to do so. To that extent they have been authorized by the EU Courts who have in practice refused to apply the Convention standards as well as by the ECtHR itself who has turned the proverbial blind eye on the Community legal order as long as there is a possibility to appeal before the EU Courts.

It has often been argued that the only way to ensure the observance of human rights in the Union as a whole as well as in the EU competition procedure in particular is the accession of the EU to the ECHR – a view which is very much supported by the author of this paper. The sooner the accession provided for by the Lisbon Treaty occurs, the better.

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