Seminar 8: TheECJ and Regulation 1 (28 November 2013)

The reading this week is a spate of judgments where certain aspects of Regulation 1 have been considered. The first case (Walt Wilhelm) looks at the relationship between national and EU competition law; the ECJ returns to this in Toshiba, has anything changed, should it have? Then VEBIC, Tele 2 and Schenker all consider the design and operation of national laws. Consider how far these judgments might be perceived on the basis of the perspective considered the previous week.

Case 14/68 Walt Wlihelm v. Bundeskartellamt [1969] ECR 1.

Case C-439/08 VEBIC [2010] ECR I-12471

Case C-375/09 Prezes Urzędu Ochrony Konkurencji i Konsumentów v. Tele2 Polska sp. z o.o., devenue Netia SA [2011] ECR I-3055

Case C-17/10 Toshiba, Judgment of 14 February 2012

10 comments on “Seminar 8: TheECJ and Regulation 1 (28 November 2013)

  1. Karin Fløistad says:

    The CJEU’s ruling in Toshiba concerned the parallel enforcement of national and EU competition law. It was the first time, the Court had to discuss the relationship between national and EU competition policy in the context of the decentralised enforcement system introduced by Regulation 1/2003. The case law on the system of shared competences between the Commission and the NCAs has been guided by the principles established in Walt Wilhelm. Walt Wilhelm recognised that national and EU competition rules can be enforced in parallel since they protect different legal interests so long as the ne bis in idem principle is safeguarded. In the judgment the principle of ne bis idem is referred to as the principle of natural justice, see para 11 of the judgment.

    The ne bis in idem means of course that the same person cannot be prosecuted and/or sanctioned more than once for a single unlawful course of conduct. The principle is recognised in various instruments of international law and in many jurisdictions around the world. The fine imposed by a competition authority on an undertaking involved in a cartel activity has the nature of a criminal sanction, and thus the ne bis in idem principle is fully applicable in competition law. The principle is included in article 50 of the EU Charter of Fundamental Rights. Besides being a basic principle of human rights protection, the ne bis in idem principle has decreased the risk of double sanctions within the multilevel enforcement system of EU competition policy. Hence, the same undertaking cannot be sanctioned twice, either by different NCAs or by the European Commission and an NCA, owing to the same competition law infringement.

    Considering the desentralisation of competition law by Regulation 2003 the question is if the Walt Wilhelm case must be considered as outdated. The Walt Wilhelm case was delivered at a time when few national competition law systems existed in Europe and thus, de facto, no conflict of jurisdiction would arise if national and EU competition rules were applied in parallel. It might be argued that this reality is now changed and that there was a need for a revised position on the earlier view of parallel enforcement by national and EU competiton law. But the Court’s ruling in Toshiba more or less seems to confirm the validity of the judgment in Walt Wilhelm. The opening of investigations by the Commission does not permanently and definitively remove the national competition authorities’ power to apply national legislation on competition matters. The interpretation of Article 11(6) of the Regulation is that it does not as such prohibit the adoption of a decision by an NCA based on national competition law once the Commission closes its investigations based on EU law. Possible inconsistencies in decisions adopted by the Commission and the NCAs are according to the Court avoided by article 16(2). Under this provision, an NCA cannot take decisions which would contradict the decision adopted by the Commission. In view of these considerations, the Court concluded that in the case pending before the Regional Court, the Czech NCA could sanction the cartel infringement on the basis of Czech competition law and in relation to the period before the accession of the Czech Republic to the European Union.

  2. Marita Szreder says:

    I think that VEBIC, UOKiK v Tele 2 and Toshiba all show how much the approach to the relationship between EU competition policy and national competition laws has changed since Walt Wilhelm case. Regulation 1/2003 which introduced a decentralised system of enforcement of EU competition law, significantly altered the power balance between the Commission and national authorities inter alia through greater involvement of the former in the shape of national competition systems.

    In one of the last week’s articles it was argued that the Commission has actually strengthened its position by giving away some of its powers to the national competition authorities. This week’s reading shows that this is not only a result of its monitoring powers and being first among equals in the European Competition Network. It is also a direct consequence of the application article 3 regulating the relationship between articles 101 and 102 of the Treaty on the one hand, and national competition law systems on the other, as well as the imposition of a duty of close cooperation in article 11 of the Regulation.

    National competition law systems that were previously free to develop in parallel with EU competition law, subject only to the condition that “the application of national law must not prejudice the full and uniform application of Community law or the effects of measures taken or to be taken to implement it” (Walt Wilhelm case) are now constrained by the application of article 3 of the Regulation 1/2003. While there might be good reasons for the resulting alignment, it signifies a change in power balance between NCAs and the Commission.

    Greater intrusiveness of the central EU system following the coming into force of Regulation 1/2003 is also visible at the procedural level, as VEBIC case illustrates. While respecting the principle of national procedural autonomy, the Court relied on the Regulation and the specific obligation it imposes on national courts to ensure “effective” application of articles 101 and 102 to get involved in matters which were previously within the domestic law domain. I do not believe that Toshiba case negates the theory of the departure from the “hands-off” approach under Walt Wilhelm. The result of that case can be explained by the context of Czech accession to the EU and the complexities accompanying that fact. This meant that the Regulation did not bite with its full strength. The analysis performed by the Court, however, reveals a changed environment in which the Court is operating and a changed approach to national competition law systems.

    Toshiba case can also be interesting for the Court’s careful analysis of various Regulation articles and their implications to support its conclusion. The Court was forced to apply this form of analysis because the Regulation does not directly deal with the problem presented by the case. Given the timing of the introduction of the Regulation (almost coinciding with the big EU expansion) one would have thought that its writers would consider conflicts of this sort, since they could be considered as naturally coming into light at the time. Should it suggest that the Regulation is ill-prepared to deal with conflict situations and leaves many questions re the relation between national and EU competition law unanswered? A few of the articles we read last week raised some doubt in that respect, even if the authors agreed that the Regulation has been largely a success so far.

  3. Mariajo says:

    I find it very interesting how only reading case-law without academic commentary on it can lead to more diversified opinions. After having read the cases I came to two conclusions, which are the total opposite of Karin’s and Marita’s comments (maybe I am just seeing ghosts, though):

    1) Regulation 1/2003 is actually empowering national competition authorities.

    2) In general, not much has changed between pre- and post-Regulation 1/2003.

    I found VEBIC and Tele2 Polska to be actually a form of empowering national competition authorities. If I understood the VEBIC case correctly, the Belgian national competition enforcers did not have the power to intervene before the national court reviewing their decisions. The CJEU read Article 35 (1) of the Regulation as giving NCAs the right to intervene in court proceedings in which their own decisions are challenged. Of course this is all only for the sake of ensuring the effectiveness of competition enforcement, but still. I think it could be considered as an empowerment of the NCA. In the Tele2 Polska case, the Polish NCA issued a decision not to further prosecute the telecom undertaking, without holding that there was no infringement of Article 102, which would have been something quite comforting for the undertaking (and would conflict with the exclusive powers of the COM). The Polish court annulled the decision, because it found that the PCA would have needed to make such a negative statement in order to issue a valid decision. The CJEU made clear in turn that the PCA was not allowed to do so without infringing the COM’s exclusive power under Art. 10 of the regulation. Furthermore, the Court held that under Article 5 of the Regulation the PCA had the right to issue a decision not to continue with the proceedings without declaring that there was no infringement of competition rules. This effectively gave the PCA a competence, which it did not possess according to the Polish court.

    In respect of how things have changed from Walt Wilhelm (pre) to Toshiba (post Reg 1/2003), I cannot see that much of a difference. If I understood correctly, the CJEU held in Walt Wilhelm, that NCAs are free to apply their national competition rules and may take action “against an agreement in accordance with their national law, even when an examination of the agreement from the point of view of its compatibility with Community law is pending before the Commission, subject however to the condition that the application of national law may not prejudice the full and uniform application of Community law or the effects of measures taken or to be taken to implement it”(para. 9). In Toshiba the Court says: “In accordance with settled case-law, EU law and national law on competition apply in parallel. Competition rules at European and at national level view restrictions on competition from different angles and their areas of application do not coincide. That situation has not been changed by the enactment of Regulation No 1/2003 (paras 81 and 82). The Court actually cites Walt Wilhelm here.

  4. Jonas von Kalben says:

    I agree with Marita that the cases show that, on the one hand, Regulation 1/2003 grants the Commission a strong position within the decentralized system of competition law enforcement but, on the other hand, many questions arise concerning the relationship between the different competition law jurisdictions and the different competition authorities. I would say the central question concerns the level and the design of decentralisation within the EU.

    The “Tele 2 Polska”-case, where the court held that NCA’s are not – neither when applying Art. 102 TFEU nor when applying corresponding national law – entitled to take a “negative” decision (stating that the law was not infringed), strengthens the position of the Commission. It was argued that the Commission should not be prevented (on the grounds of ne bis in idem) from finding subsequently that the practice in question amounts to a breach of the provisions of EU law and therefore the NCA’s should be limited to the adoption of a decision stating that there are no grounds for action (paras. 28, 30). This shows that the level of decentralisation is limited. The question arises to which degree this centralized auditing function of the Commission is necessary and whether a higher level of decentralisation could be reached to enhance the effectiveness of competition law enforcement. This is linked to the question in how far NCA’s should be entrusted to decide whether or not EU competition law has been infringed and to take effective decisions concerning the whole internal market.

    The “VEBIC”-case shows how decentralisation of competition law (procedure) is restrained by requirements safeguarding its effective application. The court held that Art. 35 of Regulation 1/2003 precludes national rules which do not allow NCA’s to participate in proceedings against a decision it has taken. The principle of procedural autonomy is limited to the right to designate the body/bodies of NCA’s that may participate (para. 65). This minimum degree of central requirements regarding the national procedure seems justifiable with a view to the effective application of EU competition law. The NCA as an agent of the public interest in undistorted competition should be involved in the legal proceedings in case of an appeal. I agree with Maria that this strengthens the NCA’s, however not towards the Commission but towards national courts and the undertakings involved. Again, the question arises in how far competition law procedure can be decentralized and autonomous in the member states and in how far the requirement of effective application of EU law demands the compliance with centralized prerequisites.

  5. Sara Perez says:

    Toshiba provided the Court with the opportunity to clarify the principle of ne bis in idem, the law against prosecuting and punishing a party again after they have already been tried for the same cause of action. After the implementation of the Regulation 1/2003, the Commission’s decentralized competition policy, it seems appropriate to define when the Commission and national competition authorities of Member States’ may bring a cause of action against the same cartel for anticompetitive behavior. In Toshiba, the Czech competition authority argued that Walt Wilhelm allowed EU competition law and national competition law to be applied in parallel to the same cartel. Therefore, the Commission, at the EU level, and the Czech NCA, at the national level could both initiate parallel proceedings against the same cartel. While the Commission implemented proceedings for conduct against the cartel after initiated after the Czech Republic joined the EU, the Czech NCA implemented proceedings against the cartel for conduct initiated before accession to the EU. The Court agreed with the national competition authority and allowed the Czech NCA to retroactively apply national competition law for conduct within Czech territory prior to accession to the EU.
    I thought the Toshiba decision granted national competition authorities more power by making the broad statement that Regulation 1/2003 does not prevent the NCAs from applying national competition law to cartel behavior dated before the Member States’ accession to the EU. Further, I don’t believe this violates the principle of ne bis in idem. The EU and the Czech NCA did not sanction the cartel for the exact same behavior. Rather, the Czech NCA only sanctioned the cartel for anticompetitive crimes committed prior to the date of accession to the EU, while the EU sanctioned the cartel for crimes committed post-accession. However, while I thought the difference mainly centered on the timing of the crimes, the Court also seemed to discuss the territoriality of the crimes (i.e. anticompetitive behavior initiated within the Czech Republic vs. anticompetitive behavior initiated within the EU). Either way, it appears that this could turn into an administrative nightmare when multiple national competition authorities are retroactively sanctioning the same cartel for antitrust behavior initiated within their respective territories, before their respective accession to the EU.

  6. Samantha Palladino says:

    I would have expected the decision in Toshiba to be different from that issued in Walt Wilhelm because of the big changes introduced by Regulation 1/2003, namely, having national competition authorities apply EU competition law. I would have thought that they court would have to reformulate their seminal case on the question of the relationship between national and EU competition law. However, actually, based on the facts of the Toshiba case, I now realize that actually I think that it makes perfect sense, and in fact is not weird that Toshiba cited Walt Wilhelm. The decision in Toshiba was limited to the specific instance where the conduct prosecuted by the national authority was different in time and scope from that handled by the Commission, so the ne bis in idem principle remains in tact. Normally, I think, the period or behavior would align and then the Commission’s prosecution would take precedence or otherwise the ne bis in idem principle would be violated if the national courts also prosecuted the same behavior.

    Regarding the holding in Prezes v. Tele2, I think I may be missing something. If a national competition authority cannot take a decision stating that there has been no breach of Article 102, and cannot therefore say that there are no grounds for action on its part for that reason, what is it meant to do when, after it examines a case, it is of the opinion that there has been no breach of Article 102? Because the Commission is uniquely entitled to make that declaration under Article 10 (according to the court), would a national court refer a case over to the Commission, or logistically, what does it do?

  7. Delphine Defossez says:

    It is only in 2010 that the CJEU had to look at the relationship between national and EU competition policy in accordance with the Regulation 1/2003. Although parallel proceedings at EU and national level have already been discussed in Walt Wilhelm, Toshiba case illustrates the problems that Regulation 1/2003 can cause, namely what is the relationship between national and EU competition policy? The CJEU interpreted Regulation 1/2003 relatively broadly, which seems logical. It would have been weird, at least for my point of view, if the Court would have decided differently. We cannot prevent a NCA to file a suit and apply national competition law to cartel behaviour before the Member State has accessed to the Union.
    One striking fact is that Vebic, Toshiba and Tele2 all seem to suggest that the Walt Wilhelm approach is no more reflecting the reality. This is mostly due to the fact that Regulation 1/2003 introduce a decentralized system of EU competition law. But above all, as have been argued above, those cases show that the Commission has, in a sense, super-power with regard to competition law. It seems that everybody follows the approach the Commission is taken. The Commission has strengthen this position by including article 3 in Regulation 1/2003. Therefore, even in a decentralized system, the Commission is the major player.
    It has been established that parallel proceedings are allowed as long as the principle of ne bis in idem is respected. This seems rather logical as proceedings at EU level and at national level do not cover the same interests. But then the problem is how can 2 proceedings about the same issue with the same parties not infringe this principle? Probably at the time of the judgment it was not much of an issue, but nowadays this might cause lots of problems.

  8. Haukur says:

    The first case establishes supremacy of EU competition law over national competition law within a regime of a single supreme enforcer. The last case, Toshiba, also deal with supremacy and the boundaries of that principle within a regime of delegated enforcement powers. The court refers to a three point criteria to mark the jurisdictional boundaries of the Commission, outside of which the national courts are free to apply national competition laws and EU laws as well.

    The most interesting point from the other two cases, for my taste, was the question about the right of enforcers to defend their decisions upon appeal in front of another decision body. I must admit that I had never thought of this before as a potential problem. This highlights the dual nature of many competition law enforcers as both prosecutors and judges in the same case.

    I think that the Court is mistaken in talking about rights in this context. There may be an issue of attaining balance in the representation of arguments in a case if only one side argues. That has however nothing to do with rights of the enforcement agency, especially not when the same agency was the judge in the decision that is being appealed. In its capacity as a judge, the enforcer has unlimited opportunities to express its arguments upon which the decision is based in the actual decision. As such the decision should speak for itself, just like the judgements of lower courts that end in higher courts. The lower court usually does not have any right to address the higher court to explain or argue in favour of its ruling. Rights talk in this context is thus mistaken in my opinion.

  9. Theodosia Stavroulaki says:

    After reviewing the material I reached the conclusion that one of the major challenges regarding the application of Regulation 1/2003 is to create the appropriate balance between the application of national competition law and European competition law as well as between the application of national competition law and the effectiveness of European competition law. As it is stated in case C 17/10, in accordance with settled case law, EU law and national law on competition apply in parallel since competition rules at European and at national level view restrictions on competition from different angles and their areas of application do not coincide. However I am not actually convinced by this argument taking into account the following issues:
    -The objectives of national competition law coincide with the objectives of European competition law since in both fields the main objective is the protection of consumer welfare. As a result it is hard to accept the argument that national and European competition rules view the restrictions of competition from different angles.
    – European competition law applies when there is “effect on trade between Member States”. An effect on trade exists in particular where national markets are partitioned or the structure of competition within the common market is affected. Anti-competitive agreements or conduct which have no effect on trade, therefore, fall outside the scope of EU competition rules and may only be dealt with by national legislation. However it is supported by case law that an abusive practice carried on in single member state or only a part of the State, provided it constitutes a substantial part of the common market, may affect trade between Member States if it serves to protect the national or regional market against competition from other parts of the Community. In Michelin I for example the Court of Justice stated that “when the holder of the dominant position obstructs access to the market by competitors, it makes no difference whether such conduct is confined to a single Member State as long as it is capable of affecting patterns of trade and competition in the common market”. Taking also into account that the notion of “effect on trade between Member States” is widely interpreted by case law there might be a considerable number of cases where although an abusive practice carried on in a single member state, it might infringe article 102 TFEU and national competition law in parallel. Especially in this case I am not actually convinced why both national and European competition law should apply. Furthermore, if we accept that due to competition policy considerations both national and European competition law should apply how and to what extent the ne bis in idem principle should apply? To what extent the parallel application of national and European competition law in a case should affect the final decision concerning the calculation of the fine?
    Furthermore after reviewing Case C-439/08 I found particularly interesting the following Court’s statement (para 58): “In that regard, as the Advocate General has remarked in point 74 of his Opinion, if the national competition authority is not afforded rights as a party to proceedings and is thus prevented from defending a decision that it has adopted in the general interest, there is a risk that the court before which the proceedings have been brought might be wholly ‘captive’ to the pleas in law and arguments put forward by the undertaking(s) bringing the proceedings. In a field such as that of establishing infringements of the competition rules and imposing fines, which involves complex legal and economic assessments, the very existence of such a risk is likely to compromise the exercise of the specific obligation on national competition authorities under the Regulation to ensure the effective application of Articles 101 TFEU and 102 TFEU.” I consider that such a statement shows that the Court has considerable doubts whether national courts are capable of conducting complex legal and economic assessments when applying European competition law. I find this lack of trust contradictory with the general objective and scope of regulation 1/2003 to promote the application of European competition law not only by NCAs but also by national courts in the context of private enforcement of European competition law.

  10. Sylvi says:

    While at first I was surprised that the decisions in Walt Wilhelm and Toshiba were so similar, I actually think that Toshiba does indicate that Regulation 1/2003 had an impact on the relationship between national competition policy and EU competition law. After all, although Toshiba relies on Walt Wilhelm in support of the claim that EU law and national law apply in parallel, even explicitly stating that “that situation has not been changed by the enactment of Regulation No 1/2003,” I think it is clear from the court’s ensuing discussion that the Regulation MIGHT have affected the relationship differently under different circumstances. The court cites Wilhelm for the proposition that “competition rules at European and at national level view restrictions on competition from different angles and their areas of application do not coincide,” yet it then goes on to conduct a lengthy analysis that, to me, indicates that just because Regulation 1/2003 did not affect the Wilhelm decision in this situation, does not mean it might not have under different circumstances. I think it is impossible to write off Regulation 1/2003 as irrelevant to the relationship between national competition law and EU competition policy.

    I did, however, find the court’s treatment of the ne be is idem principle confusing in that I did not feel it really adequately expressed how the case failed to satisfy the conditions that (1) the facts be the same, (2) the offender the same and (3) the legal interest protected the same. I am not sure whether this supports my initial reaction to the case – that Toshiba construes Regulation 1/2003 to grant NCAs broader authority – or whether it simply reinforces the Commission’s influence. Either way, I guess I was just confused as to how the facts were sufficiently different so as to not violate the principle.

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