EFTA Surveillance Authority (ESA) & Court

 

Author Definition

 

Definition

The EEA Agreement is a multilateral treaty based on a two pillar model concluded by the EU and its Member States and the EFTA States Iceland, Norway and Liechtenstein. The EFTA Surveillance Authority (“ESA”) and the European Commission apply EEA competition law. In state aid law, ESA has sole jurisdiction in the EFTA pillar. The EFTA Court hears nullity actions against decisions of ESA and renders preliminary rulings on references from national courts. ESA has so far issued three fining decisions for abuse of a dominant position (Norway Post, Color Line and Telenor). Significant EFTA Court competition law rulings are Norway Post on the scope of judicial review of fining decisions, LO and Holship on the relationship between EEA competition law and collective bargaining, Abelia on the right of audience of in-house counsel and DB Schenker I on access to documents. In Husbanken II, the EFTA Court opted for full judicial review of ESA’s State aid decisions. The EFTA Court is the only court of general jurisdiction which is referred to by the ECJ when interpreting EU law.

 

Commentary

General

The EEA Agreement is a multilateral treaty concluded by the EU and its Member States and the participating EFTA States. Its goal is to extend the EU single market to those EFTA States. The agreement is based on a two pillar model. Originally planned for seven EFTA States, the EFTA pillar has since 1 May 1995 consisted of Iceland, Liechtenstein and Norway.

EEA law originates in the EU pillar and is incorporated by way of decision of the EEA Joint Committee. The EEA/EFTA States have no right of co-decision, but a right of co-determination (Art. 99 et seq. EEA). Importantly, they have their own independent Surveillance Authority (“ESA”) which operates in parallel to the European Commission as well as their own independent Court which acts in parallel to the Court of Justice of the European Union (“ECJ”). There is no Court of First Instance; thus the EFTA Court is also a court of fact.

The types of procedure in the EFTA pillar are essentially identical in substance to the ones in the EU pillar with certain differences in the preliminary ruling procedure (no written obligation on courts of last resort to refer; rulings of sui generis character). The Commission and ESA have the right to participate in proceedings before each other’s courts.

The first basic principle of the EEA Agreement is homogeneity which comes in several forms. The written rules on judicial homogeneity oblige the EFTA Court to follow relevant ECJ case law which predates the signature of the EEA Agreement and take into account relevant subsequent ECJ case law. However, as experience shows, this does not exclude a certain degree of systemic competition. The EFTA Court has upheld liberal EFTA values even in cases where ECJ case law was to the contrary. Moreover, it has to resolve novel legal questions in the majority of its cases. The dispute settlement mechanism (Article 105 EEA) has never been applied. In practice, conflicts are resolved through judicial dialogue (AG Trstenjak, C-300/10 Marques Almeida, fn. 25). Through this process, both courts have occasionally given way. The EFTA Court is the only court of general jurisdiction which is regularly referred to by the ECJ when interpreting EU law.

The second basic principle of the EEA Agreement is reciprocity. The EEA States in both pillars must grant citizens and economic operators the same rights to do business. However, reciprocity also has a procedural dimension. It gives citizens and economic operators in both EEA pillars rights which can be enforced in court (AG Kokott in C-431/11 UK v Council, pt. 42). The EFTA Court has recognised general principles, i.a. State liability and conform interpretation, but not direct effect or primacy. It has also acknowledged fundamental rights. The ECHR and the case law of the European Court of Human Rights are relevant in the latter regard (E-15/10 Posten Norge, para. 100; E-14/15 Holship, paras. 88-91). The ECtHR has for its part made reference to EFTA Court case law (Ástráðsson v. Iceland, no. 26374/18, paras. 75, 80, 140 et seq.).

Written law

Articles 53 and 54 EEA reproduce the cartel prohibition and the abuse prohibition of Articles 101 and 102 TFEU. According to Article 55 EEA, Articles 53 and 54 EEA are enforced by the Commission and ESA. According to the allocation of competences in Article 56 EEA, the Commission is responsible in most cases. In Articles 61 to 64 EEA, the State aid rules of EU law have been taken over.

Competition practice and case law

In 26 years, ESA has issued three decisions imposing fines for violation of Article 54 EEA. (1) In Norway Post, the fine for abuse of a dominant position in the business-to-consumer parcel delivery market in Norway was reduced by the EFTA Court from EUR 12.89 million to EUR 11.11 million due to the excessive length of the administrative procedure. (2) Color Line concerned the operation of a long-term exclusive harbour agreement concluded with the Municipality of Strömstad in Sweden. The fine of EUR 18.81 million was not challenged. (3) In Telenor, ESA on 30 June 2020 imposed a fine of EUR 112 million on Telenor for abuse of a dominant position by a pricing strategy that resulted in rivals making a loss when selling residential mobile broadband services on tablets and laptops. It appears that the case would have been statute barred on 1 July 2020. It is currently pending before the EFTA Court (E-12/20).

The most significant competition law judgment is E-15/10 Norway Post where the EFTA Court held that ESA could not be granted a margin of discretion regarding complex economic appraisals and that competition law decisions that impose fines must be subject to full judicial review. In E-3/16 Ski taxi, the EFTA Court, unlike the ECJ in C-67/13 P Cartes Bancaires, adopted AG Wahl’s proposition that only conduct whose harmful nature is proven and easily identifiable, in the light of experience and economics, should be regarded as a restriction of competition by object (para. 61, see AG Wahl, pt. 56). In E-29/15 Sorpa, the Court found that municipal bodies are capable of abuse of dominance within the meaning of Article 54 EEA.

In C-67/96 Albany, the ECJ held that collective agreements aimed to improve the working conditions and thus were beyond the scope of European competition law. The limits of such immunity were not examined. AG Jacobs had concluded that in virtually all legal systems, including US law, collective agreements were to some extent sheltered from competition law, but that such immunity was not unlimited. The ECJ did not follow Jacobs’ opinion, but the EFTA Court chose to base its E-8/00 LO ruling on it. It held that provisions of collective agreements prima facie fall outside the scope of Article 53 EEA. If, however, the national court finds that they do not, in fact, pursue the apparent objectives, “they may, in the light of the objectives actually pursued, fall within the scope of Article 53 EEA” (para. 75).

In E-14/15 Holship, the EFTA Court in essence declared dockworkers’ priority right to load and unload vessels in Norwegian ports illegal because it was incompatible with EEA competition law and infringed the right of freedom of establishment. The Court pointed to the negative freedom of association and referenced the Sørensen and Rasmussen judgment of the ECtHR (Case nos 52562/99 and 52620/99). In C-407/19 Katoen Natie Bulk and C-471/19 Middlegate Europe which were referred by the Council of State and the Constitutional Court of Belgium, the ECJ’s Grand Chamber found a closed shop system for Belgian dockworkers to be incompatible with EU law. The Council of State had referred to EFTA Court’s Holship ruling in its order for reference.

The EFTA Court has rendered important competition law decisions that do not directly relate to Articles 53 and 54 EEA. E-18/14 Wow Air was about the interpretation of Regulation EEC 95/93 on common rules for the allocation of slots at EEA airports. The President granted the accelerated preliminary reference procedure stating that “[t]o guarantee fair and effective competition is one of the most important goals of the EEA Agreement. Effective competition benefits both consumers and competitors and contributes to the common good. In the case at hand, Iceland’s special geographic situation must be taken into account with Keflavík essentially being the only international airport in the country.” (Para. 7.)

In E-8/13 Abelia the EFTA Court held that an in-house counsel cannot generally be denied the right of audience. It must be assessed on a case by case basis whether they are independent or not. In doing so, the EFTA Ct. deliberately deviated from ECJ C-422/11 P and C-423/11 P Prezes. In C-515/17 P and C-561/17 P Uniwersytet Wrocławski, the ECJ’s Grand Chamber held on 4 February 2020 that a lecturer who legally represents a university with which he or she is associated is an independent legal counsel.

The EFTA Court has rendered a series of judgments on access to documents in the DB Schenker cases. In E-14/11 DB Schenker I, it restricted the presumption underlying the ECJ’s case law that access to documents is not to be granted in antitrust, merger and State aid cases, to the latter two. In the same case, the Court held at para. 132 that “specific policy considerations arise in requests for access to documents as part of follow-on damages cases brought before national courts concerning Articles 53 and 54 EEA. The private enforcement of these provisions ought to be encouraged, as it can make a significant contribution to the maintenance of effective competition in the EEA [...] ESA’s and the Commission’s view that follow-on damages claims in competition law cases only serve the purpose of defending the plaintiff’s private interests cannot be maintained. While pursuing his private interest, a plaintiff in such proceedings contributes at the same time to the protection of the public interest.”

State aid practice and case law

ESA and the EFTA Court have generally followed the Commission’s practice and the case law of the General Court and the ECJ. Two points may be mentioned:

(1) As regards locus standi of a beneficiary of aid or a competitor of a beneficiary to challenge a State aid decision by ESA, the EFTA Court was quite liberal in the early years (E-2/94 Scottish Salmon Growers). However, this approach was not sustained. In view of the development of the “Snøhvit field” in the Barents Sea, Norwegian legislation included favourable depreciation rates for large-scale liquefied natural gas projects. The EFTA Court deduced from the homogeneity principle that the “Plaumann formula” of the ECJ (25/62) also applied in the EFTA pillar of the EEA and denied Bellona, an environmental foundation, locus standi (E-2/02). The EFTA Court stuck to this approach in later cases (E-1/17 Konkurrenten II).

(2) Regarding the substance of State aid law, the EFTA Court held in E-4/97 Husbanken II that the financing of the Norwegian State Housing bank was an undertaking. Importantly, the EFTA Court basically opted for full judicial review of ESA’s decision.

 

Bibliography

Eric Barbier de la Serre A lesson on judicial review from the other European Court in Luxembourg, Kluwer Competition Law Blog 27 April, 2012.

Carl Baudenbacher, Judicial Independence. Memoirs of a European Judge, Springer 2019, Chapters 3, 16, 17, 21.

Michael-James Clifton, Applying Competition Law and the View Ahead: 25 Years of the EFTA Court, in: Five Years of the Treaty on the Eurasian Economic Union: the role of the Court. International Conference (19-20 September 2019, Minsk) A. Bugaeva (Ed.) Minsk, Medison, 2020, 144 et seq.

Philipp Speitler, Judicial Homogeneity as a Fundamental Principle of the EEA, in: Carl Baudenbacher, Ed., The Fundamental Principles of EEA Law: EEA-ities, Springer, 2017.

John Temple Lang, Competition Law: The Brussels Perspective, in: Baudenbacher, Ed., The Handbook of EEA Law, Springer, 2016, 523 et seq.

This article is being reviewed by the Editors of the Dictionary.

Author

Quotation

Carl Baudenbacher, EFTA Surveillance Authority (ESA) & Court , Global Dictionary of Competition Law, Concurrences, Art. N° 101604

Visites 152

Publisher Concurrences

Date 1 January 1900

Number of pages 500

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