Judicial review & Anticompetitive agreements: An overview of EU and national case law

Introduction

The COVID-19 public health crisis has stunned economies across the globe, mercilessly exposing the shortcomings of the global supply chain model, and national competition agencies have struggled to provide quick and adequate solutions in the wake of uncertainty. Without doubt, the impact of the virus on the global and domestic economies has been unprecedented. Nonetheless, this exogenous shock is by no means the first acid test for competition law. The policy responses to the current emergency overlap with a series of other ongoing developments. Some of them led to an abrupt overhaul of law and enforcement, while other reforms have been unfolding gradually, inconspicuously transforming the European competition enterprise over the past decades. Competition law is, and has always been, on the move.

A glance back into history shows that ever since its inception, EU competition law has been hit from time to time by tidal waves of change. In the last two decades before the turn of the millennium, the Union began to liberalize traditionally state-regulated sectors, exposing them to competition law as a way to unify the market. In many instances, the process of de-monopolization triggered the complete or partial privatization of former state monopolies. This radically transformed the organization of national markets [1] and with that, reconfigured labor relations and the identity of the working-class. Before this first wave of change had subsided, the next one descended upon the competition landscape, this time striking its procedural system with full force. With the completion of the Single Market, focus was redirected to the effort of decentralization from the mid-1990s to the early 2000s. The centralized enforcement system was replaced with one that fostered closer cooperation with national competition authorities ("NCAs") and courts. This procedural modernization process coincided with a substantive process of bringing competition law and enforcement more in line with mainstream economic thinking, better known as the ‘more-economic approach’ or ‘MEA’. Many of the changes the MEA sought to address are still unfolding, but in the light of the rise of big data and multi-sided platform markets in the digital economy, EU competition law yet again finds itself amidst another rapid transition. Born out of the realization that competition law must keep pace with technological progress, the European Commission (“the Commission”) launched several initiatives. The amendments to its Horizontal Guidelines and Horizontal Block Exemption Regulations [2] as well as the legislative proposal to the Digital Markets Act (“DMA”) are some of the most recent responses to this development. [3] The need to update existing theories of harm and legal tests to respond to these developments is already acute. The COVID-19 pandemic has further precipitated the ongoing transition toward the digital economy, marginalizing more traditional market players, many on the brink of bankruptcy due to inefficiency and a perceived lack of innovativeness. [4]

Despite the unpredictable and disruptive nature of many of these developments, it is remarkable that the Treaty provisions on competition have stood their ground without a need for legislative reforms. [5] This apparent ability of competition law to accommodate exigent circumstances is hard-wired into the discipline which operates with capaciously written provisions. The open-textured framing was both a political compromise reminiscent of the early days of European integration [6], as well as a practical necessity, given that competition law is a facts- and evidence-based discipline. Competition law needs to operate with provisions that can be applied to a broad range of factual scenarios. The downside is that the open-ended framing gives individual adjudicators with diverging agendas and levels of expertise ample room for discretion. While some reckon that this would “foster diversity” [7] others fear that differences across legal traditions and national enforcement cultures could possibly lead to a “fragmented application” [8]. These characteristics have led scholars to draw greater attention to the structural features of competition law. Some even likened it to a "sponge" [9] ready to absorb broader legal and economic, as well as institutional, political, and social aspects into competition analysis. The absorbent characteristics of the law make it a flexible, but also resilient instrument even in the face of exogenous shocks.

The topic guiding this contribution is most easily described by the catchphrase “legal change”. It seeks to shed light on the interplay between courts and competition agencies and how they respond to changes in the environment while further developing the case law in an incremental manner. This article is an update of the survey published one year ago by Concurrences [10] and discusses recent developments in cartel law from 2020 to 2021, both on a national and European level. Judicial review, for these purposes, refers to appeals against administrative decisions in cartel cases. The focus on a relatively short period of time should not obscure the numerous challenges to effective and secure judicial review which have emerged over the course of the past two years. The survey is structured as follows: Section I focuses on short-term regulatory responses of the European Commission and NCAs to the COVID-19 crisis and briefly recalls why judicial review is particularly necessary in the context of emergency. Section II analyses slow-moving changes in the jurisprudence of the Court of Justice of the European Union (“CJEU”) [11] and on the national level. Section III puts particular emphasis on recent cases that touch upon fundamental rights issues. Lastly, section IV discusses how commitment decisions can become a flexible tool for securing swift changes to the market to restore and reshape the economy.

I. Short-Term Changes in Competition Law Enforcement

1. Regulatory Responses at the EU and National Level

Unsurprisingly, the immediate responses to dampen the effect of market disruptions stemming from the COVID-19 outbreak were regulatory: To “save” the economy by ensuring the financial viability of business players to maintain the stability of markets, a variety of measures was taken. [12] These measures range from suspending antitrust enforcement, [13] to allowing otherwise impermissible cooperations or granting exemptions from the antitrust laws. The present section briefly discusses the Commission’s Communication entitled “Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak” (“the Framework”). [14]

The point of departure is the observation that the pandemic caused profound asymmetries of demand. [15] While some sectors have experienced a sharp decline in demand due to government restrictions, demand has skyrocketed for suppliers and providers of scarce and essential products and services. Such asymmetries could leave those undertakings active in low-demand sectors with no other choice but to diversify or reconfigure their business profiles. Acknowledging that undertakings can play a “crucial role” in overcoming the adverse effects of this crisis [16], the Commission announced its readiness to permit more cooperation in the medical sector between suppliers active in essential products and service industries. The Framework distinguishes between conduct that does not raise competition concerns even in “normal” times [17] and activities that may harm competition but are necessary under the present circumstances. In particular, it might be necessary for undertakings to exchange commercially sensitive information or coordinate to a greater degree. Such cooperation is permissible if it is proportionate, meaning that it is objectively necessary for increasing output in the most efficient way to avoid supply shortages, temporary in nature, and does not go beyond what is necessary to attain the legitimate objective. [18] Similar developments could also be observed on the national level. For example, the Commission’s temporary framework was echoed by the Italian competition authority in its Communication on cooperation agreements in the context of the COVID-19 emergency. [19] Meanwhile in the UK, a different approach was taken. Based on Schedule 3, paragraph 7 of the Competition Act 1998, the British Government issued several Orders [20] that temporarily waive certain competition laws in designated sectors. In the grocery sector, for instance, retailers may exchange certain types of commercial information, collaborate to ensure that stores remain open or share distribution systems. [21] Such statutory exclusions ensure greater legal certainty as bright line prohibitions make it easier for undertakings to assess which types of cooperation are unlawful. [22]

2. Judicial Review in Times of Crisis

“Desperate times call for desperate measures” [23] – there seems to be a general recognition that in times of emergency, the mandate of the executive should be expanded as it is best equipped to find fixes for restoring market conditions to ensure a fast economic recovery in alignment with the public interest. Nonetheless, executive discretion cannot be unlimited, as there is a heightened risk of overreach in times of crisis as the level of executive discretion is increased. As noted above, broad and capaciously written antitrust provisions not only render the law more resilient to outward influences and irritants; it also makes an enforcement system potentially more conducive to capture and lobbying. [24] If these risks are present during normal times, judicial oversight of the executive is even more necessary in emergencies to ensure proper checks and balances. [25]

This is all the more true when considering that the Commission’s proposed Framework suffers from a lack of clarity. As the Commission notes, the coming into force of Regulation 1/2003 marked the end of the notification system. Undertakings are themselves responsible for assessing their practices with the aid of clear rules. [26] The Commission mentions the many soft law instruments in place, and further refers to the procedure for offering ad hoc guidance in the form of comfort letters [27] to help undertakings navigate the pandemic. Nonetheless, as some experts have pointed out, it remains unclear which specific provision will form the legal basis for examining business conduct. [28] One possible route would be to exclude particular types of cooperation from the ambit of Article 101(1) TFEU by refusing to subsume them under the notion of a “restrictive or anticompetitive” agreement. [29] As an alternative, the Commission could apply Article 101(3) TFEU and allow cooperation to benefit from an exemption. Another possibility would be a reformulation of the Commission’s enforcement priorities with the result that such cooperation would not be the primary target of the enforcer. What seems clear is that the Commission’s silence on the exact legal basis may make it difficult for undertakings to self-assess, despite guidance offered by soft law instruments and comfort letters.

As a counterweight to the broad discretion enjoyed by the Commission, judicial review must remain effective and vigorous. However, courts worldwide have experienced the disruptive effects of COVID-19 close up. Many courts struggled to function remotely and failed to morph into virtual courtrooms. Consequently, judicial review has been restricted. Of course, public interest reasons sometimes require courts to loosen their grip during emergencies by, for instance, carefully avoiding in-depth judicial scrutiny. However, in terms of an open-ended crisis like the COVID-19 health emergency, it is questionable for how long courts can and should sustain such a modus operandi without risking the erosion of their institutional legitimacy. Courts can easily become the object of very fierce backlash and it becomes evident that uncertainty is not a carte blanche for suspending judicial review. [30] Rather, a stable mode for judicial review and administrative effectiveness to co-exist must be found, without the former disappearing or being curtailed to an excessive extent. This task must not be put off any longer, as the way in which courts and competition authorities grapple with momentous issues sets the tone for future trials and can leave a “long term legacy” [31] on the development of the case law.

II. Slow-Moving Changes in the Jurisprudence of EU and national courts

Crises and shocks can have considerable effects on the evolution of competition law in the long-term. However, they will rarely trigger immediate legislative responses. In fact, the lion’s share of legal change is likely to unravel in slow-moving processes which in some instances will be hard to perceive. Courts as institutions have a natural proclivity toward stability [32] as legal stability and predictability are considered “part of what people mean by the Rule of Law”. [33] The attraction of seeking change incrementally is that this approach manages to aim for seamless transitions while preserving consistency within the case law. [34] The following section reviews the past year, highlighting the most important developments in the jurisprudence of the CJEU as well as in the case law of national courts.

1. Clarifications on the Object/Effect Divide

Before many of the broad open-ended concepts of competition law become operational, an intermediary step is necessary to bestow further meaning upon them by formulating concrete judge-made [35] legal tests. In doing so, judicial actors can choose between rules and standards. [36] Courts and enforcers are constantly concerned about striking the right balance between rules and standards. This distinction between rules and standards resonates strongly with the logic of EU competition law, which differentiates between by-object and by-effects restrictions. The following judgments provide welcome clarification regarding the object/effects divide.

A. Budapest Bank and its French and German Cousins

One noteworthy case relating to ‘object’ and ‘effects’ that drew much commentary was the preliminary reference made by Hungary’s peak court in Budapest Bank. [37] At the heart of the dispute was an agreement between a group of Hungarian banks which had agreed on uniform fixed multilateral interchange fees (“MIFs”) for the credit card systems of Visa and MasterCard which lasted from 1996 to 2018. Credit card networks Visa and MasterCard were not present in the meeting, but they received a copy of the agreement. To gain a better understanding of this problem area, it is useful to take a brief look at how credit card transactions function. Credit card payments take place on a platform-based market which enables consumers to interact with merchants. In total, four stakeholders are involved: the cardholder and the bank that issued the card (card-issuing bank) on the one side as well as the merchant and the merchant’s bank (acquiring bank) on the other. When a consumer makes a purchase, the merchant will request a payment from the acquiring bank. The acquiring bank will demand payment from the credit card system (e.g., MasterCard) which in turn will request payment from the card-issuing bank (e.g., Deutsche Dank). Deutsche Bank will pay MasterCard but will deduct the MIF, as well as the merchant service charge (“MSC”) from the purchase price. As the interchange fee also determines the level of the MSC to a large extent, anticompetitive concerns arise if MIFs artificially raise the cost base of MSCs. [38] The Hungarian competition authority imposed a fine amounting to EUR 5 million on Visa, MasterCard and seven banks, holding that the MIF agreement restricted competition by object and by effect. This classification of the agreement was challenged before the Budapest High Court, which held that such a dual classification was not possible. The case went up to the Kúria, the Hungarian Supreme Court, which made a reference to the ECJ. The ECJ confirmed that it is possible for an agreement to restrict competition both by object and by effect, and it is entirely up to the competition authority to decide whether it wishes to carry out an effects analysis on top of determining whether the agreement restricts competition by object. [39] Moreover, the Court reaffirmed its strict interpretive approach to the by-object category as laid out in Cartes Bancaires [40] and MasterCard. [41] It seems to have taken Advocate General (“AG”) Bobek’s elaborate and insightful clarifications on the object/effects divide as a “roadmap” to follow. [42] The AG split his analysis into two steps. The first step is an examination of the content and objectives of the agreement to ascertain whether it falls into that category of agreements whose harmful nature is, in the light of consistent and sufficient experience, commonly accepted as easily identifiable. This means that an agreement can only be presumed to be anticompetitive if there is “sufficiently robust and reliable experience” pointing towards its anticompetitive nature. [43] If the answer to the first question is affirmative, the second step ensues, which AG Bobek labelled a “basic reality check”. [44] This step consists of checking whether there is some element of the legal and economic context which would call the presumed anti-competitive nature of the agreement into question. In case such elements are present, e.g., in the form of procompetitive effects that are prima facie evident, a fully-fledged effects-analysis must be conducted. By following this two-step framework, the ECJ confirmed that a restriction by object can never be established in abstracto – a reasoning that entrenches its Cartes Bancaires judgment in which it had advocated a narrow interpretation of the by-object category. [45] While the judgment will certainly not be the last word on the matter, the Court provided a list of elements that would cast doubt on the classification of an agreement as restricting competition by its object under Article 101(1) TFEU. [46] This includes aspects such as the parties’ intent, the nature of the service or product in question and the actual structure of the market. Another element to factor in is the presence of procompetitive effects, which not only gain relevance under the exemption of Article 101(3), but also within the scope of the assessment under Article 101(1) TFEU. In addition, the Court affirmed that, just like in the case of restrictions by effect, there is room for a counterfactual analysis for by-object assessments, with the only difference being the applicable evidential standard. Depending on the characterization of the agreement, the Commission can be required to meet different levels of probability thresholds for establishing that a sufficient degree of harm to competition can be expected. To prove that an agreement restricts competition by its effects, the competition authority must show that the conduct is likely to have such effects, while the by-object test only requires plausibility.

Similar developments could also be observed on the national level. Another case specific to the context of platform-based payments was decided in France on 29 January 2020. [47] The Cour de Cassation annulled the fines which the French Competition Authority (“FCA”) had imposed on several banks for concluding an agreement in which they adopted unjustified interbank fees. The FCA’s decision, adopted in 2010, was appealed before the Paris Court of Appeal (“PCA”) which rendered its decision in 2017. The appeal resulted in a reduction of the fine from a total of EUR 384.9 million to EUR 211 million. The PCA had ruled that the agreement restricted competition by its object. The Supreme Court disagreed, and its ruling confirms the principle set out in Cartes Bancaires, according to which by-object restrictions must be interpreted restrictively. As the appeals court had not established that the agreement harmed competition to a sufficient degree, the Supreme Court vacated the judgment, which now will be re-examined by the lower court. The exact opposite happened in Germany when the German Federal Court of Justice (“FCJ”) issued its decision in Deutsche Kreditwirtschaft [48], upholding the decision of the Higher Regional Court of Düsseldorf (“HRC”) from January 2019 which backed the decision of the Federal Cartel Office (“FCO”). The FCO had finalized its administrative proceedings against Deutsche Kreditwirtschaft and several banking associations (so-called “Spitzenverbände”) in 2016, finding that some of the general terms and conditions on online banking they had agreed upon put third-party payment systems at a disadvantage. These clauses hindered online-banking customers from using their PIN and TAN codes as personalized verification methods when using non-bank online payment systems such as Sofortüberweisung. [49] On 30 January 2019, this decision was upheld by the HRC, which found that the contested clauses restricted competition by object since the main intention behind their adoption was the obstruction of non-bank payment systems. [50] On appeal, the FCJ credited the HRC for its in-depth probe of the agreement before concluding that it amounted to a by-object restriction, which it noted was in line with the principles postulated in Cartes Bancaires. In particular, the HRC had demonstrated that the agreement would harm competition to a sufficient degree. On these grounds the FCJ dismissed the appeal.

B. Pay-for-Delay Agreements in the Pharmaceutical Sector

The differentiation between anticompetitive object and effects was also much deliberated upon in the ECJ case in Generics (UK) and Others (“Generics”). [51] The dispute at the origin of the case arose in the pharmaceutical sector where GlaxoSmithKline (“GSK”), the originator company, held patents on paroxetine, an antidepressant drug. GSK and generic companies had conspired to enter into so-called pay-for-delay agreements [52]. Originator companies are innovative undertakings that develop new drugs or sublimate existing ones. Once the drug is released, the originator cannot rely on its patent anymore, and generic companies that often try to exert downward pressure on prices will seek to enter the market with their cheaper alternatives. In order to prevent generic manufacturers from entering the market, originator companies can make payments for delaying market entry. The ECJ in Generics touched upon the conditions under which these agreements can either constitute by-object or by-effects restrictions. Generics is very similar to the above-mentioned judgment in Budapest Bank in terms of approach and reasoning. In both cases, the Court can be seen adopting a negative definition of when an agreement does not restrict competition by object, listing several indicators that would cast doubt on the existence of anticompetitive object. In Generics, the Court put forward a restrictive interpretation of anticompetitive object, arguing that merely “fictitious” agreements that pursue the only goal of partitioning or excluding from the relevant market can be deemed to fall into this category. The Court pointed out that only if the agreement “cannot have any explanation other than the commercial interest of both the holder of the patent and the party allegedly infringing the patent not to engage in competition on the merits” [53] would it restrict competition by object. The mere fact that pay-for-delay agreements involve a transfer of value by requiring generic manufacturers to pay for their delayed entrance into the market does not mean that the agreement automatically amounts to a by-object restriction. Rather, there is room for a balancing exercise under Article 101(3) TFEU [54], but it is for the undertaking to prove that possible countervailing effects are not only relevant, but also specifically linked to the agreement in question. [55] If the court arrives at the conclusion that the agreement does not qualify as an object restriction, it still has to examine whether it falls into the by-effects category.

Very similar facts are at the heart of the judgment in Lundbeck, which is a continuation and confirmation of the ECJ’s case law on pay-for-delay agreements. Lundbeck, the originator company, had engaged in a practice by which it entered into agreements with generic manufacturers of the antidepressant citalopram. Upon market entry, its compound patent expired and Lundbeck was left with only secondary patents. Lundbeck then concluded pay-for-delay agreements with generic manufacturers, with the sums approximately amounting to the profit generic manufacturers would have made, had they entered the market. The ECJ held that the conduct in question amounted to a restriction of competition by object. However, this conclusion is reached only after an assessment of the actual circumstances on a case-by-case basis. It repeated the formula applied in Generics, recalling that there can be a restriction by object only “when it is plain from the examination of the settlement agreement concerned that the transfers of value […] cannot have any explanation other than the commercial interest of both the holder of the patent […] and the party allegedly infringing the patent not to engage in competition on the merits”. [56] The Court also clarified that the strength of the patent in question is no indicator of whether an agreement restricts competition by object. After assessing the legal and economic context of the agreement, the ECJ nevertheless arrived at the conclusion that the agreement amounted to a restriction by object. It found that it was not the existence of process patents, but the net gain from the value transfers made by Lundbeck that induced generic drug firms to abstain from entering the market. [57] In this case, the agreements had no other aim than eliminating competition on the merits.

C. Pay-TV and Captive Banks

In Italy, litigation arose that concerned the pay-TV service sector, and more-specifically, broadcasting rights in relation to the 2015-2018 soccer seasons of the Lega Serie, a professional league competition for top-level clubs of the Italian football league system. As the last instance of appeal, the Supreme Administrative Court (“Consiglio di Stato”) upheld the first-instance judgment by the Regional Administrative Tribunal of Lazio (“TAR Lazio”). The TAR Lazio had annulled the Italian Competition Authority’s (“AGCM”) decision which had imposed a fine totaling EUR 66 million on RTI-Mediaset and Sky Italia, as well as the marketing agency Infront for rigging an auction to allocate broadcasting rights with respect to football matches. The Legislative Decree n° 9/2008 regulates the allocation of such bidding rights and requires bid procedures to be organized by the entity that owns the rights and is the principal point of contact for communications operators and interdependent intermediaries. [58] Moreover, Article 9 of the Decree stipulates that the packages of TV rights may not be allocated in their entirety to a single operator. When Lega organized a bid in 2014, it soon found itself in a situation in which it would go against the said provision, as Sky Italia made the best bid. [59] For this reason, Lega assigned the packages to both Sky and RTI-Mediaset, which was the second main operator for pay-TV services. Upon request made by Lega, RTI-Mediaset agreed to sub-license a package to Sky. The AGCM found that this understanding between the League and the two broadcasters constituted an “agreement” in the sense of Article 101 TFEU and restricted competition by object by posing barriers to entry to potential competitors. This decision was annulled by the first-instance tribunal, which denied the finding of a cartel or any collusive strategy. It argued that the broadcasters’ motivation behind the alleged agreement was to preserve the spirit of the law and legislative intent behind the decree, which ultimately seeks to prevent excessive concentration. [60] The Consiglio di Stato reiterated and approved of this line of argumentation in its judgment of 28 December 2020. The judgment illustrates the need to pay due attention to sector-specific regulation as well as the particularities of the market when establishing whether conduct can be classified under the “by-object” category. [61]

Car Finance [62] is another case originating in Italy that exemplifies the current trend toward more in-depth review in cartel cases, even for establishing that a given conduct amounts to a “by-object” restriction. On 21 October 2020, the TAR Lazio annulled the AGCM’s decision to sanction several car manufacturers together with their “captive banks” for participating in a cartel relating to auto financing products such as leases or car loans. The involved financial institutions were “captive” in that they were wholly owned subsidiaries of the car manufacturers. Prompted by a leniency application, the AGCM imposed its highest fine to date amounting to a total of EUR 678 million. The Italian enforcer considered that the automakers had exchanged information and thereby fixed the conditions for the financing of new vehicles in Italy. The case was annulled on both procedural and substantive grounds. First, the TAR Lazio held that the AGCM had unreasonably delayed the proceedings by not instigating the investigation for three years although it already had access to all the relevant documents obtained from the leniency applicants. Second, the TAR Lazio expressed doubts regarding whether the AGCM had sufficiently demonstrated that the conduct of the captive banks was capable of distorting competition, as it could not rule out other possible factors, such as the characteristics of the car or the price, that could influence consumer choice. As it could not establish that it was their conduct that mainly contributed to the distortion of competition, the tribunal concluded that the evidence relied on by the AGCM was insufficient.

2. Proportionality Review

Closely related to the question of when conduct can be classified as a restriction by object is the issue of proportionality. In the International Skating Union case [63], the GC inferred from the disproportionality of the practice that it constituted a by-object restriction. The case concerns eligibility criteria imposed on speed skaters by the International Skating Union (“ISU”). The ISU is the only international sports federation that has been recognized by the International Olympic Committee for the purpose of managing and administering figure and speed skating. The ISU fulfils a dual role in that it is an active organizer of sporting events and a regulating body at the same time. [64] In its function as a regulator, it introduced eligibility criteria within the framework of its pre-authorization system. Among other things, these rules include severe penalties such as year-long suspensions or even lifetime bans for skaters who participate in unauthorized events organized by third parties. Two Dutch skaters brought complaints against the ISU’s pre-authorization system after severe penalties were imposed on them for participating in a skating competition in Abu Dhabi, organized by Korean company Icederby International Co. [65] The Commission decided [66] that the eligibility rules restricted market access and prevented other competing organizers from setting up sporting events, contrary to Article 101 TFEU. The Commission further pronounced itself on the legality of ISU’s compulsory arbitration mechanism. It considered that the designation of the Court of Arbitration for Sports (“CAS”) in Lausanne as the sole arbiter with exclusive jurisdiction aggravated the restrictive nature of the eligibility rules, as it prevented athletes from seeking redress before an EU court. The Commission did not impose a fine, but insisted that the ISU should cease to infringe competition law and change its rules – to no avail, as the ISU challenged the decision before the GC. [67] The GC upheld the decision in its essence, but not in its entirety. It did not find fault with the exclusive jurisdiction of the CAS and held that it may be justified by interests linked to the special nature of the sport. Recognizing the unique role of sporting associations, the GC reaffirmed the principle set out in Meca-Medina. [68] In this judgment, the Court had ruled that sports federations may restrict the organization of third-party events under the condition that the restrictive effects must be inherent to the pursuit of a legitimate objective. Moreover, they must not go beyond what is necessary to attain that objective. In particular, the principle requires authorization criteria to be “clearly defined, transparent, non-discriminatory and reviewable and capable of ensuring the organisers of events effective access to the relevant market”. [69] The GC first remarked that the aim of protecting the integrity of sports as recognized by Article 165 TFEU was a legitimate objective. Nonetheless, the court found that the ISU had fallen short of the Meca-Medina conditions, basing its findings on two considerations. Firstly, the eligibility rules only referred to a few, non-exhaustive authorization criteria which had been in place since 2015. Under these circumstances, the ISU enjoyed broad discretion to refuse to authorize third-party events while speed skaters were left in the dark about how to distinguish between different types of infringements. Secondly, the penalties imposed by the ISU in case of infringement were disproportionate. In light of the fact that the average speed skater’s career will only last eight years, lifetime bans or year-long suspensions were considered too severe. This would deter athletes from participating in third-party events even if there were no legitimate reasons for refusing to authorize the competition. From this, the GC concluded that the eligibility rules hindered access to the market and restricted worldwide competition by their object.

3. The Concept of Potential Competition

The concept of potential competition has gained momentum thanks to the above-mentioned judgments in Generics and Lundbeck. In these recent judgments, the Court implicitly expressed a willingness to take into account not only actual competitors when defining the relevant product market, but also those who are yet to enter. The main difficulty consisted in spelling out the conditions under which an undertaking can be qualified as a potential competitor. In Generics, the Court examined whether generic drug manufacturers Generics UK (“GUK”) and Alpharma had “real and concrete possibilities of […] joining that market and competing” with the originator company. [70] The same formula was reiterated in Lundbeck with a direct reference to Generics. [71] The ECJ pushed for an approach that required potential competitors to create an effective counterbalance to incumbents. This was held to be the case where generic drug firms have an “inherent ability to enter” in the near future, meaning that they have already undertaken preparatory steps that indicated potential market entry. [72] While the analysis should not become an exercise that merely consists of canvassing hypothetical or speculative scenarios, the Commission cannot be required to establish certainty of entry. [73] Some commentators propose a legal test that requires likely anticompetitive effects. [74] The second condition is that there must be no “insurmountable barriers to entry”. [75] The ECJ adopted a very strict interpretation of this criterion, indicating that, in order to deny potential competition, entry must be nearly impossible. In sum, the ECJ’s assessment can be narrowed down to three cumulative criteria: the probability of a generic manufacturer entering the market (i), the timeframe in which entry could be expected (ii) and lastly, the existence of relevant barriers to entry (iii). In both cases the ECJ arrived at the same result, ruling that the existence of process patents [76] or the possibility of the originator company prevailing at the end of a pending patent infringement litigation “cannot, as such, be regarded as an insurmountable barrier”. [77] As not even a pending intellectual property dispute poses an insurmountable barrier, it seems that the ECJ has widened the notion of competition to encompass both lawful and unlawful competition. [78] The ECJ even went so far as to qualify the existence of such disputes as “evidence of the existence of a potential competitive relationship”. [79] From the perspective of intellectual property rights, this result is remarkable, as it penalizes the originator company for trying to protect its patent. Paradoxically, the existence of such litigation would only feed into the finding that generic manufacturers are potential competitors.

4. Partitioning the Single Market – A Genuine European Theory of Harm

The Commission enjoys great freedom when it comes to case prioritization. At the same time, the regulator reacts to the needs of the economy and strives to set its priorities according to which interventions are most needed. The digital transformation of the economy has caused an exponential growth in revenues from online sales as more and more consumers are purchasing goods and services directly over the Internet. However, sellers may engage in “geo-blocking”, a term that describes the direct or indirect discrimination between consumers by online traders based on their nationality, or country of residence or establishment. The growing concern about geo-blocking has led to the adoption of the EU Geo-Blocking Regulation [80], and the Commission has also regulated E-commerce to establish a “Single Digital Market”. [81]

While the following case does not directly concern cartels, it vividly illustrates the negative effects of geo-blocking for consumers. It is also an example of how vertical restraints, which often have welfare-enhancing effects, can be employed to support and sustain collusion. Exactly three years after launching its investigation into the hotel accommodation sector, the Commission fined Spanish hotel group Meliá a total of EUR 6.7 million on 21 February 2020. Meliá had included restrictive clauses in its hotel accommodation agreements concluded with four of the largest tour operators in Europe. [82] The clauses led to a difference in treatment based on the country of residence and nationality of consumers, eventually restricting cross-border sales. Commission Executive Vice-President Margrethe Vestager condemned the practice as illegal on the ground that the clauses partitioned the Single Market and prevented tour operators from offering their hotel accommodation services across all countries in the European Economic Area (“EEA”). [83] Eventually, consumers were deprived of their right to choose the best offer at the best prices because they could not access the full list of available hotel rooms: some offers were not visible to them if they resided outside the designated territory. This led the Commission to declare that the practice led to a fragmentation of the Single Market and thus infringed Article 101 TFEU. The decision highlights the role of competition law in ensuring that consumers continue to benefit from the Single Market by being able to exercise their freedom of choice. A distinctive consequence of the response to the COVID-19 health emergency is, as some scholars have pointed out, the partitioning of the internal market. [84] It can therefore be expected that the Commission and the Courts will rely on this theory of harm more frequently in cases to come.

5. A Few Issues Relating to Parental Liability

During the past years, the GC had the occasion to broaden its approach to parental liability and the notion of presumption of decisive influence for attributing liability to the parent company for the conduct of its subsidiaries. In AKZO, the ECJ had established the principle that decisive influence of the parent company can be assumed if it held all or almost all of the subsidiary’s capital. [85] The onus is on the parent company to rebut this presumption of liability, which is a high hurdle. In the aftermath of the Power Cables case, numerous cartelists flocked to the Court of Justice. [86] The facts are well-established: In 2014, the power cables cartel became publicly known when the Commission imposed a EUR 302 million fine on 11 European, Japanese and Korean producers of underground and submarine high-voltage power cables for their participation in a cartel from 1999 to 2009. [87] Not only did the Commission fine those companies that were directly involved in these activities, it also fined the (parent) companies that took part in joint ventures indirectly tied to the cartelists. The Goldman Sachs Group (“Goldman Sachs”) and Pirelli & C. SpA (“Pirelli”) were held jointly and severally liable for the conduct of Italian cable manufacturer Prysmian SpA (“Prysmian”), which had directly participated in the power cables cartel from 2005 to 2009. Pirelli had owned Prysmian from 1999 to 2005 before it sold the business to Goldman Sachs. Both Goldman Sachs and Pirelli launched appeals to the GC. In Pirelli [88], the applicant sought to rebut the presumption by alluding to the fact that it was merely a holding company controlling over more than 100 subsidiaries alongside Prysmian. Thereby, it argued that its influence was limited to technical and financial aspects. It further noted that the change in ownership seemingly had little effect on Prysmian, which continued its participation in the cartel irrespective of whether its parent was Pirelli or Goldman Sachs. The GC however stated that these arguments were not enough to rebut the presumption of decisive influence and dismissed the appeal.

The Court of Justice then went a step further in Goldman Sachs. [89] Compared to Pirelli, which had held 98.75% of Prysmian’s capital, the level of Goldman Sachs’ holdings was lower. Goldman Sachs had been an indirect parent company of Prysmian, initially holding 100% of the shares. Gradually, the shares decreased after two divestments in September 2005 and July 2006, initially to 91.1% and then to 84.4% until May 2017 when some of the shares of Prysmian were offered to the public in an initial public offering. Nevertheless, the ECJ expanded the AKZO presumption to voting rights and declared that it was sufficient for establishing liability that the parent company was able to exercise all voting rights in combination with a very high majority stake in the share capital of a subsidiary. Goldman Sachs had the ability to appoint and revoke board members of Prysmian and could call shareholders’ meetings. [90] According to the Court, even if the parent company is (virtually or factually) not the sole shareholder in terms of capital, the presumption of liability still holds because it can be assumed that a parent company that controls all voting rights is in a position to steer the economic and commercial strategy of the subsidiary. These two judgments have significantly expanded the doctrine of parental liability and it remains to be seen how far the Courts might stretch the concept. [91]

6. Public Distancing in Cartel Cases

On the national level, the French Supreme Court issued a ruling that penalized an undertaking for failing to publicly distance itself from a cartel. The Goodmills Deutschland case concerned a price-fixing scheme in the sector for packaged flour. German and French companies had concluded a non-compete agreement that enabled them to steer and manage the import of packaged flour between Germany and France while ensuring that export levels to other countries remained at a fixed level. [92] Moreover, the companies agreed to establish joint ventures which would lead to market foreclosure. During the period of the non-compete agreement from 2002 to 2008, the companies organized twelve meetings in total. In 2012, the FCA imposed a EUR 242.2 million fine on the cartelists, which was reduced by the PCA in 2014. This decision was overturned by the Cour de Cassation, which held that the participation of Goodmills Deutschland (then VK-Mühlen) should be reexamined, thus referring the case back to the PCA. This time, the PCA arrived at the conclusion that the duration of the infringement by Goodmills was shorter than it had initially assumed, although not as short as Goodmills Deutschland would have liked it to be. The company wanted to limit its participation to the sixth meeting, which was the only meeting it attended. The appeals court disagreed by stressing that Goodmills had failed to publicly distance itself and continued to give the other participants the impression that it endorsed the practice, which is why it was later invited to the seventh and tenth meetings. The court therefore held that the duration of the infringement lasted from the sixth meeting until the eleventh meeting, to which Goodmills was no longer invited – a finding that would be upheld by the Cour de Cassation on 10 February 2021.

7. Changes in the Commission’s Method of Calculating Fines

The Commission’s duty to state reasons is even more pronounced when it wishes to depart from its standard fining methodology. In recent cases like Icap [93] and HSBC [94] the EU Courts showed great willingness to closely review whether the Commission had sufficiently explained its decision to deviate from its standard methodology. Against this backdrop, it might come as a surprise that the GC charted a different direction with its judgment in Campine [95], which upheld the Commission decision in Car battery recycling. [96] In this judgment, the court granted the Commission a vast amount of discretion when imposing fines for infringements that cannot be readily subsumed under its standard methodology based on the “value of sales”. The GC rejected Campine’s appeal against the EUR 8.16 million fine imposed on it for having participated in a cartel coordinating purchase prices for scrap lead-acid car batteries in order to increase profit margins. [97] When calculating the fines, the Commission concluded that taking the value of sales as a basis when the cartel in question is coordinating purchases would lead to untenable results. While the value of sales will increase the more successful a sales cartel is, the exact opposite can be said about purchase cartels. Here, the amount of the value of purchases will be lower the more successful the cartel is. This led the Commission to depart from the fining methodology laid out in its Fining Guidelines by increasing the fines by 10%.

The Commission used the same reasoning to justify its 10% uplift in Ethylene [98], a settlement case involving another purchasing cartel in the ethylene purchasing market. In this case, four ethylene purchasers had exchanged sensitive information and coordinated their price negotiation tactics with a view to lowering the industry benchmark for ethylene to eventually manipulate ethylene purchasing prices. [99] What catches the eye in this case is why the uplift was set at exactly 10% and not any other percentage – a choice for which the Commission did not provide any reasons. In Campine, the GC granted broad discretion to the Commission and found that the absence of any justification was warranted due to the “fact that this is the first time the Commission has imposed an increase in a case concerning a purchaser cartel”. [100] This lack of justification provided a welcome point for litigants to latch onto. Therefore, it did not come as a surprise when Clariant appealed [101] against the Commission decision in Ethylene, which will give the GC another opportunity to either solidify or revise this line of reasoning.

The Commission’s duty to give reasons for departing from its fining methodology was also one of the contentious issues in the ECJ judgment in Pometon. [102] At the behest of Ervin, the leniency applicant, the Commission launched its probe into the steel abrasives sector in 2010. Four years later, it found that the suspected companies Ervin, Winoa, Metalltechnik Schmidt (MTS) and Eisenwerk Würth had participated in a cartel and fined them a total of EUR 30 million. Pometon S.p.A. (“Pometon”), a non-settling cartel participant was the subject of a separate infringement decision issued in 2016 by which it was fined a total of EUR 6.1 million. Pometon appealed against the infringement decision before the GC, claiming that the Commission had failed to give sufficient reasons for its decision to reduce the fine by 10%. On 28 March 2019, the GC decided that Pometon’s fine should have been reduced by 75%, the same rate of reduction the Commission had applied to Winoa, another cartelist. In its judgment in March 2021, the ECJ held that, in accordance with the principle of equal treatment, applying the same rate of reduction was inappropriate, as Winoa’s role in the cartel was more pronounced than Pometon’s participation. This led the ECJ to further reduce the fine to EUR 2.6 million by applying a reduction rate of 83%, as had been suggested by AG Hogan in his Opinion. [103]

8. Issues Relating to Fine Reductions and Reimbursement

One of the first concrete traces COVID-19 left on national case law became visible when the Rotterdam District Court reduced a fine that the Netherlands Authority for Consumers and Markets (“ACM”) had imposed on an unidentified undertaking by 99%, causing the fine to plummet from EUR 1 million to EUR 10,000. [104] The undertaking had urged the competition agency to reduce the fine amidst exceptional circumstances surrounding the COVID-19 outbreak. The undertaking disclosed that it was unable to pay its defence and that the amount of the fine was disproportionate due to the changing circumstances. The Dutch Trade and Industry Appeals Tribunal had imposed a fine amounting to EUR 2,798,000 which had been reduced to EUR 1,935,000. The District Court further reduced that fine, alluding to “exceptional circumstances” which consisted in the fact that due to ongoing proceedings involving the parent company, it was not possible to hasten the proceedings. Consequently, the appellant would have had to wait too long before it could obtain any certainty regarding the amount of the final fine. [105] In addition, the COVID-19 crisis and the current financial situation of the appellant were taken into consideration. The ACM was obligated to pay back EUR 990.000 to the undertaking. This proved to be a Pyrrhic victory, however. In exchange for the reduction of the fine and in the interest of speeding up the procedure, it agreed to give up all grounds of appeal other than the alleged disproportionality of the measure. [106] The ACM’s decision, and its finding of a cartel, became irrevocable and legally effective. The company may have escaped bankruptcy in the short-term, but it was exposed to risks stemming from possible future damages claims from third parties.

One noteworthy case on the EU level that merits further commentary is the ECJ judgment in Printeos [107], which was also addressed in the last Concurrences survey of this subject in 2019. This case touched upon the issue of whether the Commission is under an obligation to pay default interest on reimbursed fines. The ECJ upheld the GC judgment and answered that question in the affirmative, providing clarifications with respect to several sub-issues. Regarding the Commission’s general duty to reimburse in case of unduly paid antitrust fines, the Court referred to Article 266(1) TFEU, according to which an EU institution whose act has been declared void or whose failure to act has been declared contrary to the Treaties shall be required to take the necessary measures to comply with the judgment of the ECJ. This means restoration of the original situation that existed before the contentious decision was adopted (restitutio in integrum). The Court declared that this principle also encompasses the possibility of compound [108] default interest added on top of the amount the Commission failed to pay. Regarding the issue of which interest rate should be applied, the Court referred to Article 83 of Delegated Regulation 1268/2012, according to which the default interest rate is one that is set by the ECB, plus 3.5 percentage points. Printeos, however, had asked for a lower interest rate, namely the interest rate set by the ECB plus only 2 percentage points. Following the principle of ne ultra petita – meaning “not beyond request“ – the Court refused to grant a higher rate than the one claimed.

The Commission’s decision in the above-mentioned Car battery recycling case was also challenged by Recyclex, which turned to the ECJ after its appeal was dismissed by the GC in 2019. [109] This case provided the ECJ with an opportunity to illuminate another interesting aspect relating to leniency reductions. [110] Recyclex believed a fine reduction by 30% was not enough, as it had cooperated with the Commission by providing information which allowed the Commission to determine the geographic reach and duration of the cartel with greater certainty. The Commission answered that it already had been aware and in possession of evidence pointing toward the extended scope of the cartel. Recyclex’s additional information was of a supporting nature and only strengthened already existing findings. Emphasizing that the wording of point 26 of the 2006 Leniency Notice does not explicitly require leniency applicants to provide novel evidence, Recyclex insisted on a reduction. The ECJ rejected the appeal, pointing out that the rationale behind the Leniency Notice is to reward leniency applicants with immunity for coming forward with previously unknown evidence that substantially increases the scope or duration of the conduct. [111]

9. Judicial Review of Cartel Settlement Decisions

Given that undertakings take the decision to settle on a voluntary basis, appeals against settlement decisions are a rare occurrence. This does not mean, however, that settling parties will never proceed to appeal before the courts after a settlement is reached. The first successful appeal brought by a former settling party was Printeos [112], which was decided in 2016. The above-mentioned case in Ethylene, now pending before the GC, is another example. A notable decision at the national level was the liability claim against public officials (Amtshaftungsklage) made by agriculture protection producer BayWa against the FCO. Andreas Mundt, President of the FCO, was surprised when BayWa claimed damages, stating that the agency had violated its procedural rights by infringing the principle of equal treatment. [113] The claim was dismissed by the Regional Court of Bonn on 2 December 2020. The facts of the case were also quite unusual. The FCO had received an anonymous tip-off, naming BayWa as the ringleader of a cartel. The informant did not specify any other participants to the cartel. The responsible FCO department for the chemicals sector did not further inquire into the matter, as it deemed the information insufficient to launch an investigation. However, one specific case handler from the department took the matter into his own hands. The case handler contacted three companies in the crop protection sector, alleging there was not only a hunch, but a substantiated suspicion. Consequently, the companies were led to believe that investigations would be carried out and suggested to the companies to file for leniency. Two of the companies followed this advice, with the first one doing so on the same day it was called by the case handler. Based on the information provided by the leniency applicants, the FCO carried out dawn raids and BayWa filed for leniency. A total fine amounting to EUR 154.6 million was imposed on seven producers of agriculture protection products. All participants to the cartel cooperated during the investigation and agreed to settle. The first-mover company benefited from complete immunity while BayWa, as the ringleader, had to pay a fine of EUR 68.6 million. BayWa proceeded to file a damages suit before the Regional Court, seeking to establish official liability on the part of the FCO and claiming roughly EUR 73 million. BayWa argued that the case handler’s choice to contact the three companies it had called was arbitrary and that in the name of equal treatment, none or all should have been informed and given the opportunity to respond. This argument was dismissed on the ground that there was no violation of an official duty by the FCO. The Court rejected the claim, considering that BayWa, as the ringleader of the cartel, would have obstructed the investigation instead of cooperating. German competition law enforcement does not grant ringleaders the possibility to apply for immunity from fines. [114] The appeal was dismissed in its entirety.

III. Effective judicial protection: procedural guarantees

The length of this section is relatively short, mainly due to the fact that during the past year, several competition authorities temporarily suspended their activities to prevent the spread of the highly contagious COVID-19 virus. For obvious reasons the outbreak of the pandemic severely curbed the Commission’s ability to carry out unannounced dawn raids at suspected companies’ premises. On 22 June 2021, the Commission announced that it would ’take it up a notch’ and try to carry out many more investigations in order to address its backlog. [115] The Commission laid its intentions bare after it concluded its first post-hiatus dawn raid on the business site of a German company active in the sector for the production and selling of clothing. A glance at the national level reveals a similar picture. The German authority even announced its plan to conduct several dawn raids over the summer of 2021. In the Netherlands, the ACM stopped carrying out surprise on-site investigations and public hearings in March 2020 but announced it would resume its activities three months later. Similar statements were made by the competition authorities of Greece, Spain and Portugal. [116] These enforcement interruptions also explain why the origins of all cases that will be addressed in this section arose from investigations the Commission and national authorities conducted before the outbreak of the coronavirus.

1. The Scope of Investigative Measures

A delicate balance must be struck between ensuring the effectiveness of investigations and the undertakings’ rights of defence. Recent judgments at the EU and national levels attest to the willingness of courts to closely scrutinize whether competition authorities have stayed within the boundaries prescribed by the European Convention on Human Rights (“ECHR”) and the EU Charter of Fundamental Rights (“CFR”). The GC judgments in the related cases T-249/17 (Casino, Guichard-Perrachon and Achats Marchandises Casino SAS (AMC) v Commission), T-254/17 (Intermarché Casino Achats v Commission) and T-255/17 (Les Mousquetaires and ITM Entreprises v Commission), hereinafter referred to as the Casino judgments, are illuminating in terms of the content and scope of procedural guarantees. In February 2017, the Commission adopted several inspection decisions after it learned about information exchanges between several French undertakings and associations of undertakings in the retail grocery sector. [117] The information was sensitive in that it touched upon the retail chains’ business strategy regarding rebates they obtained from suppliers, the price of commercial services sold to suppliers, as well as future commercial strategies. With assistance from the FCA, the Commission raided the premises of the undertakings in May 2019 and made copies of their communications and computer files. The Commission opened a formal investigation on 3 November 2019, alleging potential collusion between the retailers in the downstream market through the joint purchasing alliance Intermarché-Casino Achats. [118] Later, the Commission’s inspection decisions faced challenges by some of the inspected undertakings, who based their claims on several pleas of illegality. One of the points of contention was the alleged breach of the Commission’s duty to give reasons, which encompasses the obligation to disclose the grounds on which it decided to carry out inspections. All three supermarket chains claimed a breach of the principle of equality of arms, as they did not have equal access to the evidence available to the Commission. The GC did not hesitate to reject this claim by recalling that, at the preliminary stage of investigations, the Commission is under no obligation to specifically indicate which evidence served to justify its decision to investigate. [119] The court clarified that at the investigation stage, the balance is tilted in favour of the goal to ensure the efficiency of investigations. Thus, undertakings merely have the right to inquire about the conduct under suspicion; the right to know the exact nature of the evidence is only granted after the Commission has issued its Statement of Objections. [120]

Illustrative in this regard is also the Spanish ANT [121] case. This litigation originated in the Spanish Competition Authority’s (“CNMC”) decision to fine dealers of Land Rovers in Madrid for establishing a cartel that fixed the maximum amount of rebates to be applied to prices. Apart from the Land Rover dealers, the consultancy firm ANT Servicalidad was also held liable for providing its consultancy services to make sure that the agreement was complied with. At around the same time, ANT Servicalidad offered the same kind of services to other dealers of automobiles who had participated in similar cartels. In both instances, the Spanish competition agency reasoned that ANT had acted as a facilitator of the cartels. ANT raised objections against this decision, invoking a breach of the principle of ne bis in idem and the agency’s failure to give reasons that justified the dawn raids. The Spanish High Court rejected the appeal on 27 July 2020 and upheld the fine. Although ANT was penalized twice for the provision of the same kind of services, the court held that it could not rely on the doctrine of ne bis in idem. It reasoned that the conduct related to two distinct cartels and therefore did not share the same cause of action. ANT further challenged the inspection order, stating that it did not single out the conduct of Land Rover dealers but only referred to dealers of other brands such as Audi or Seat. The Spanish High Court relied on the principle of incidental evidence and arrived at the conclusion that there were sufficient indicia pointing toward an infringement.

2. Evidence and the Right to Privacy

The Commission is under an obligation to provide sufficient evidence before adopting the decision to initiate dawn raids. In connection with the above-mentioned Casino judgments, the GC had an opportunity to elaborate on the question of when evidence can be considered sufficient. The three French supermarket chains contended that the Commission had based its investigation decision on insufficient evidence. As a matter of principle, investigations carried out on the basis of insufficient evidence must be annulled. [122] The appellants criticized the Commission for relying on unrecorded interviews containing third-party testimonies. The GC dismissed these claims, holding that informally collected evidence does not have to meet the same conditions as evidence gathered in the context of formal investigations. One of the appellants, Les Mousquetaires, also objected to the Commission’s seizing of personal data and its refusal to delete the evidence. The right to privacy is a general principle of EU law, codified in Article 7 CFR and Article 8 ECHR. [123] The GC agreed that undertakings must be given the possibility to protect their employees’ private lives by refusing to grant the Commission access to sensitive data. However, the GC took an alternative route to dismiss Les Mousquetaire’s claim. As the company had not requested the Commission to refrain from seizing private data during the inspections, there was no formal finding in the form of a decision against which it could now turn. On these grounds, the GC found that the appeal was inadmissible.

Another case concerning the Commission’s investigative powers and the issue of evidence is Nexans. [124] Nexans was one of the many participants in the power cables cartel. The Commission raided its premises and made copies of hard drives of its employees’ computers to examine the documents later in Brussels. Nexans claimed that this examination procedure was overly intrusive. It argued that the Commission should have first examined the nature of the documents to single out those relevant to the investigation instead of taking the entire contents stored on the hardware and in email inboxes to its own premises. The ECJ sided with the Commission, referring to the wording of Article 20(2) (b) of Regulation No 1/2003 which grants the Commission the right to examine “books and other records related to the business, irrespective of the medium on which they are stored”. [125] The Court inferred that this right also extends to the creation of copies of hard drives and email inboxes without skimming through the contents beforehand. Furthermore, the Court clarified that the provision does not require the examination of documents to be carried out on-site. [126] The Court upheld the justification put forward by the Commission, which claimed to have acted in the interest of the inspected undertaking, as it did not want to interfere excessively with its operations. [127] Similar issues arose in relation to the Italian cable producer Prysmian. [128] On 24 September 2020, the ECJ confirmed its approach taken in Nexans and dismissed the power cables appeal in its entirety.

Even though these appeals have been dismissed in both cases, it can be expected that COVID-19 will pose its own set of challenges. The approach taken in Nexans is also acceptable in the light of the present circumstances and could be indicative of how the Commission is likely to operate in the near future. [129] Due to safety concerns which limit the time public officials can be present at the premises of investigated undertakings, it may be expected that inspectors will continue making electronic copies of the contents of computers to assess them at its offices in Brussels. As for the right to privacy, the prevalence of working from home highlights a new potential concern for undertakings: an increased risk of dawn raids in the private homes of employees. [130] Such measures are particularly intrusive and may harbour great potential for violating the rights of the suspected undertakings as well of individuals.

3. Obstructions during Inspections

During inspections, undertakings are under a legal obligation to cooperate with the inspectors, and a failure to do so can give rise to substantive fines. In two recent cases at the national level, national competition authorities have embraced an attitude of zero tolerance regarding the failure to cooperate as well as the deliberate destruction of evidence by individuals. In Poland, the CEO of a gym operator, Platinum Wells, changed his email password during a dawn raid in 2017. [131] By refusing to grant access to the mailbox, the CEO hindered the officials from gathering evidence that could have been crucial in establishing the existence of a market-sharing cartel among gym operators. For obstructing the inspections, the Polish competition authority fined the company roughly PLN 150,000 (EUR 33,500) and imposed a separate fine on the CEO amounting to PLN 500,000 (EUR 673,000). A similar case arose in the Netherlands in December 2019, when the ACM imposed a EUR 1,84 million fine on a company whose identity will be disclosed upon completion of the investigations. [132] In the course of the dawn raid, several employees of the company had left group chats on WhatsApp and deleted entire chat conversations. As the company condemned these practices and went out of its way to ensure full cooperation with the inspectors, it was awarded a fine reduction of 20%. Lastly, a Czech undertaking was sanctioned by the national competition agency for breaking its promise to ensure the presence of its manager during inspections, thereby denying the inspectors access to information contained in electronic devices. [133]

4. Presumption of Innocence

The presumption of innocence, which is established in Article 48(1) CFR and is also a general principle of EU law, played an important role in recent cases relating to ‘hybrid’ settlement procedures, i.e. settlements where only some of the members of a cartel decide to settle while others continue to contest the allegations against them. The staggered proceeding can bring about procedural problems, as the Commission must be careful not to interfere with the presumption of innocence with respect to the non-settling party while sufficiently describing the infringement in the settlement decision. In this spirit, the GC had quashed the Commission’s decision in Icap, as we discussed in our previous survey. [134] The above-mentioned Pometon case is special in that it is the first judgment of the ECJ in which the Commission’s use of hybrid settlement procedures was upheld. In its appeal against the Commission’s 2016 infringement decision, Pometon also alleged that the Commission had failed to safeguard the presumption of innocence by making textual references to it in its settlement decision. Both the GC and the ECJ dismissed this claim, reasoning that the Commission had taken appropriate precautions to uphold the presumption of innocence. In particular, the ECJ stressed that the settlement decision explicitly stated that the finding of infringement only related to the settling parties and not to Pometon. The Court adopted a standard of necessity and concluded that the Commission had met this test by only disclosing information related to Pometon that was “indispensable”. [135]

The Brenntag case [136], decided by the Paris Court of Appeal on 3 December 2020, also offered some clarifications regarding the general presumption of innocence in this context. The case concerned the FCA’s 2013 decision in which it fined Brenntag and its former mother company Deutsche Bahn for participating in a single and continuous infringement by engaging in customer allocation and coordination of tariffs in the French chemical commodities sector. Brenntag, which also had become notorious for being the first company to be fined by the FCA for obstructing investigations [137], chose not to settle and challenged the FCA’s decision before the PCA. With regard to the penalties imposed by the Authority, the appeals court essentially confirmed the fines. Nevertheless, the reasoning put forward by the court bolstered the rights of defence of non-settling parties. The FCA had relied on the French Supreme Court judgment in the Manpower [138] case decided in 2011. According to this case, there was no need for the FCA to establish the existence of an infringement separately for the non-cooperating parties. The finding of liability established during the settlement procedure would thus apply to all participants, regardless of whether they chose to settle or not. The court of appeals deviated from this line of case law. It held that inferring the liability of non-cooperating parties from the facts established during settlement negotiations would go against the presumption of innocence and deprive them of the possibility to challenge the objections raised against them. It remains to be seen whether this reasoning will withstand future challenges, which is not a matter of course as it overturns an established line of case law that had been in place for a decade without drawing major criticism.

5. Witness Hearings before the EU Courts

It goes without saying that effective judicial protection does not end with the completion of the investigation but continues in the courtroom. Given the broad investigatory and prosecutorial powers of the Commission, the Courts must safeguard the protection of the defendants’ right to a fair trial, as enshrined in Article 6 ECHR. On 22 October 2020, the ECJ rendered its judgment in Silver Plastics [139], further defining the contours of this fundamental right. The case concerned a cartel in the retail food packaging sector. The Commission imposed a EUR 115 million fine on the cartelists, condemning their price-fixing and customer allocation practices. Silver Plastics, one of the eight manufacturers of food packaging trays, appealed before the GC. The GC discarded the arguments and established Silver Plastics’ involvement in a single and continuous infringement from 2000 to 2008. [140] On appeal, Silver Plastics complained that the GC had violated its right to a fair trial, and in particular, the principle of equality of arms as well as the right to an “examination in person”. [141] The company claimed a violation of its rights by the court’s refusal to hear five witnesses and cross-examine “Mr. W”, a former employee of leniency applicant Linpac. The ECJ confirmed that the GC had not erred in law, as the GC has unencumbered discretion in determining which witnesses to summon. It noted that the GC had met the requisite standard of proof: hearing those witnesses would not have furthered or changed the outcome of the case, as Silver Plastics’ involvement in the cartel had already been established. The issue of witness hearings was also raised in SA-Capital Oy v Finland, where the ECtHR decided that hearing witnesses was unnecessary since the procedure sufficiently protected the applicant’s rights of defence. [142] Silver Plastics is another example attesting to the willingness of the ECJ to foster convergence with the case law of the ECtHR.

IV. Commitment Decisions Between Law and Regulation

Commitment decisions are legal instruments with a distinct regulatory flavour. On the one hand, they can be adopted to advance regulatory fixes, and are conducive to introducing change “behind the scenes”. On the other hand, once a commitment decision is appealed before the courts, judicial review takes place “in the shadow” of the Treaty articles and the Court’s case law. The following considerations explain why the need to strike the right balance between effective regulatory intervention and sufficient judicial control is particularly obvious in the context of commitment decisions. [143] The advantages Article 9 decisions offer are manifold and provide strong incentives for the Commission as well as for the undertakings to conclude decisions based on binding commitments. [144] From the perspective of the undertaking, voluntarily offering a commitment could be a way out from massive fines and negative publicity. While prohibition decisions state that the undertaking has committed an infringement, commitment decisions adopt a much softer terminology, merely referring to “concerns expressed by the Commission”. [145] From the Commission’s standpoint, commitment decisions provide a “swift and efficient tool for restoring undistorted conditions of competition in markets”. [146] They are an agile and cheaper alternative to infringement decisions, marking the end of costly investigations and equipping the Commission with vast discretionary powers. Commitment decisions permit the Commission and national authorities to work under what could be called a “provisional mode of operation” of competition law enforcement. If necessary, the Commission can decide to re-open proceedings and revise commitment decisions. For these reasons, commitment decisions are particularly apt to deal with uncertainties quickly and efficiently – advantageous features in times of urgency. The immense potential of commitment decisions has been recognized in the context of fast-paced and innovative markets in the digital sphere, an environment that is characterized by limitations in expertise and knowledge as well as high levels of uncertainty. [147] These concerns can be readily transposed to the context of the current pandemic. [148] However, commitment decisions come with their own set of challenges. The most common point of criticism is that commitments could undermine the rule of law. To use the words of AG Pitruzzella, there is a “regulatory temptation to accept commitments in order not so much to remedy anti-competitive behavior as to shape economic relations in the market.” [149] Another concern is that an increased reliance on commitments would deprive courts of opportunities to develop the case law, inevitably leading to a “paucity of precedent”. [150] As commitments are proposed by the suspected undertakings voluntarily, it is highly unlikely that undertakings agreeing to make commitments will later go on to challenge the decision in court. This might lead to the ossification of regulatory choices without giving courts the chance to set the record straight, so to speak. The absence of a formal finding also means less legal certainty and predictability for stakeholders. [151] Thus, some commentators have underlined the need to intersperse commitment decisions with infringement decisions [152] to obtain a healthy mix. In combination with strict ex post review in the interest of legal certainty, commitment decisions are clearly an important asset in the Commission’s toolkit that may help it to overcome market disruptions and failures associated with the pandemic.

One step toward more legal certainty was made in the ECJ judgment in the Groupe Canal+ case. [153] Paramount Pictures and its parent company Viacom Inc. (hereinafter “Paramount”) had concluded a series of licensing agreements with other central players in the market for pay-TV broadcasters across Europe. The Commission launched a probe into the sector on 13 January 2014 and sent Paramount a Statement of Objections in which it outlined its concerns as to two related clauses in the licencing agreements it had concluded with Sky UK Ltd. (“Sky”) which led to absolute territorial exclusivity and were capable of restricting competition by object. The licensing agreements had the effect of excluding or at least limiting Sky’s freedom to respond to unsolicited requests made by consumers residing within the EEA, but outside of the UK and Ireland. Sky was also obliged to insert a clause into the agreements it concluded with broadcasters in relation to such requests coming from consumers residing in the UK or Ireland. To alleviate these concerns, Paramount offered commitments. Accepting the commitments, the Commission issued a binding decision on 26 July 2016. This decision was challenged before the GC by Groupe Canal+ which based its claims on an alleged misuse of powers on the Commission’s part, arguing that it bypassed the EU legislative process that specifically addressed geo-blocking. [154] It further contended that geographic exclusivity would foster cultural diversity and creativity, and claimed the commitments were disproportionate. The court dismissed the action in its entirety. Most importantly, it held that the exception of Article 101(3) TFEU bore no significance for Article 9 decisions, which by their very nature leave no room for any balancing exercise. Commitment decisions only seek to dispel concerns of anti-competitiveness and call for a superficial engagement with the facts and the legal substance. On the other hand, the GC stated that potential procompetitive effects should be considered under Article 101(3) TFEU to determine whether an exemption is warranted. AG Pitruzzella, who gave the opinion in the judgment under appeal, did not agree with the GC on this point. The AG reasoned that even with respect to commitment decisions, a balancing under Article 101(3) should be carried out. A different solution would lead to the solidification of undesirable outcomes such as the prohibition of agreements that restrict competition on the surface but ultimately lead to an enhancement of welfare (i.e., Type I errors). [155] Furthermore, the AG stated that the prohibition of Article 101(1) can be dissociated from the exception of Article 101(3) TFEU. According to the AG, an exemption under Article 101(3) could be carried out even if there was no restriction contrary to Article 101(1). The ECJ sided with the GC, viewing Article 101(3) as part of the overall prohibition. [156] Therefore, it viewed the balancing exercise under Article 101(3) as foreign to the very nature of commitment decisions. Another point on which the AG and GC diverged was the issue of proportionality. Most importantly, the AG shed light on the strictness of the proportionality test in commitment decisions after the infamous Alrosa judgment. [157] The AG clarified that while judicial review in commitment decisions is limited to checking whether the Commission has committed manifest errors, meaning that the proportionality test cannot be required to match the same degree of strictness as in infringement decisions, it is still necessary to ensure that third parties are not entirely deprived of their contractual rights. [158] The AG submitted that the failure of the Commission to take into account the potential impact of the Paramount commitments on third-party rights was disproportionate. The ECJ concurred with the AG and held that the GC had committed an error of law and annulled the GC decision. The analysis of the Groupe Canal+ case shows that, even if considerable differences between commitments and infringement decisions exist, the reference point for judicial review of commitment decisions will have to be the legal framework of Articles 101 and 102 TFEU. The ECJ did not hesitate to render a bold judgment when it was afforded with an opportunity to clarify its jurisprudence with respect to commitment decisions. Especially, the Opinion of the AG clears up a decade-old misunderstanding, providing guidance for future challenges to commitment decisions.