Introduction on the procedural challenges in the enforcement of European competition law
The effectiveness of Articles 101 and 102 of the Treaty on the Functioning of the European Union relies upon the public enforcement of these provisions by the European Commission. It also depends on enforcement by national competition authorities and on private enforcement, but these aspects are beyond the scope of this paper.
The enforcement regime brought about by the Council Regulation (EC) No 1/2003 - on the implementation of the rules on competition - is nevertheless questionable when observed from a fundamental human rights perspective.
There is a risk of multiple proceedings against the same undertaking for the same infringement, which may give rise to violations of the ne bis in idem principle, which essentially refers to the prohibition of double jeopardy (Klip, 2016, p.285). However, this principle of law is guaranteed by the European Charter of Fundamental Rights, the European Convention on Human Rights (ECHR), and the general principles of EU law (Slot and Farley, 2017, p. 221). As such, ne bis in idem.
Ne bis in idem – scope of application
The applicability of the ne bis in idem principle is determined by the powers of the Commission to impose fines for its purposes (Nazzini, 2016, p. 132). Applying the so-called “Engel test”, the European Court of Human Rights (ECtHR) gave an autonomous meaning to the notion of “criminal charge” under Article 6 of the ECHR. It stated that administrative proceedings under Community law can be considered criminal in nature (Slater et al, 2015, p. 98).
Taking account of (i) the aim of competition law, (the protection of the economic public order), (ii) the nature of the penalty (with concurrent preventive and repressive effect, without an element of indemnification), and (iii) the severity of the sanction (high financial burden), competition proceedings should be covered by Article 6 ECHR (Rosiak, 2012, p. 117). Thus, competition law fines can, under certain conditions, be regarded as criminal in nature for the purpose of the ne bis in idem principle.
Procedural safeguards under European competition law
The lack of protection against the violation of ne bis in idem comes from multiple factors (Nazzini, 2016, p. 132). First, under Regulation 1/2003, the Commission and the National Competition Authorities (NCA) have concurrent jurisdiction to apply Articles 101 and 102 of the TFEU. NCA do not have the competence to make final non-infringement decisions. Furthermore, there is no provision in Regulation 1/2003 to prohibit parallel proceedings by the Commission under EU law and the NCA under their respective national law.
If an infringement had been found and fines were imposed upon an undertaking, further proceedings are not barred if the previous decision is annulled by a court on procedural grounds. This point is especially problematic in my opinion as there is no safeguard against abusive administration of the cases and double jeopardy. The Commission can make serious procedural errors affecting the validity of an infringement decision without losing the power to resume the proceedings after the decision has been set aside by the Court (Nazzini, 2016, p. 134).
One may notice that the EU competition law enforcement system is designed in a way that involves multiple and parallel proceedings (Rosiak, 2012, p. 123), a feature which might give rise to abuses. Gross abuse has been avoided by means of allocation of cases through the European Competition Network (ECN), however, this is not a sufficient safeguard as the Commission and the NCA still enjoy discretion in allocating cases, defining the scope of the investigation (Nazzini, 2016, p. 138) and launching second parallel inquires.
Moreover, there is no mechanism within the ECN to bar a second investigation once the first is closed and there is also an obvious risk of consequent penalties, since Article 12 (3) of Regulation 1/2003 only limits the possibility of the NCA to use evidence obtained by the Commission to natural persons and not undertakings.
Challenges regarding the meaning of ne bis in idem
Another issue is defining the “idem element” or what constitutes the same offence. There is a three-folded test applied (Rosiak, 2012, p. 128) to assess whether there is an identity of the offence, requiring (i) the identity of the facts, (ii) the offender and (iii) the protected legal interest. The third requirement contradicts the Court’s case law in other areas of EU law where the Court set one requirement, the identity of the facts. This was underlined by the AG’s Opinion given in the Toshiba case that urged the Court to adopt a “factual idem” interpretation, in line with its previous case law.
The requirement of the identity of the protected legal interest reduces the scope of protection of ne bis in idem and goes against the interpretation and broader protection set forth by the ECtHR. Due to this requisite, the whole ne bis in idem principle is fundamentally undermined, because each sovereign state has its own legal definition of offences. Thus, the legal interest protected by prohibiting a certain conduct might differ from state to state. There is very little harmonization of substantive criminal law on the EU level, so the need for a “factual idem” interpretation is even stronger, especially considering the internal market principles, the freedom of movement and the freedom of establishment.
The “bis element” is also subject to debate. The case law requires that there must be a first decision that either exonerates or penalizes an undertaking which is no longer amenable (Rosiak, 2012, p. 120) to challenge. If the Commission considers that there are insufficient grounds for acting on a complaint it shall reject it. Nevertheless, since the rejection does not establish that no infringement has been committed, the decision is not considered final. Consequently, the ne bis in idem rules do not come into play if further proceedings are reopened.
Nonetheless, the ECJ has ruled that a final decision on acquitting the defendant due to a lack of evidence precludes further proceedings, because such a decision is based on a determination of the merits of the case. Similarly, it has been stated that the ne bis in idem principle should come into play when a defendant “has de facto (in reality) been placed in jeopardy (…) and the criminal proceedings have involved any significant consideration of the merits of the case”. From an ECtHR perspective, it has been stated that when it comes to ne bis in idem, the inquiry should be on what the real nature of the decision is. Any verdict based on a lack of evidence is necessarily a final decision. Consequently, it cannot be accepted that complaint rejections by the Commission where there are no grounds for action do not bar subsequent proceedings. This would be a formal interpretation, while an efficient protection of the rights safeguarded by European law and the ECHR demand an effective interpretation of these rights.
Final findings on the issue
As a conclusion, I take the view that the need for the effective enforcement of competition law has to be put in a fair balance with the effectiveness of the fundamental rights.
EU law and its institutions should not impose obligations upon any entities without conferring correspondent effective rights and safeguards against abuse. Accordingly, the functioning of the ne bis in idem principle in European competition law should be reconsidered in more efficient terms, especially considering the future accession of the EU to the ECHR.
By Maria Nestiut
This material was published in Lawyr.it Vol. 5 Ed. 3, September 2018, available only online.
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Case C-150/05, Jean Leon Van Straaten v. Staat der Nederlanden and RepubliekItalië.
Case C-17/10, Toshiba Corporation v. Úřad pro ochranuhospodářskésoutěže.
Case C-235/92 P, Montecatini Spa v. Commission.
Case C-288/05 P, Criminal proceedings against Jürgen Kretzinger.
Case C-375/09, PrezesUrzęduOchronyKonkurencjiiKonsumentów v. Tele2 Polska sp. z o.o., now Netia SA.
Case C-436/04, Criminal proceedings against Leopold Henri Van Esbroeck.
Case T-224/00, Archer Daniels Midland v. Commission.
Case T-24/07, ThyssenKrupp Stainless AG v. Commission.
Case T-39/06, TranscatabSpA v. Commission.
Case T-64/12, Henkel AG & Co KGaA v. Commission.
Joined Cases C-238/99 P, C-244/99 P, C-245/99 P, C-247/99 P, C-250/99 P to C-252/99 P and C-254/99 P, Limburgse Vinyl Maatschappij NV (LVM) v. Commission (PVC No 2)
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Sievert v. Germany, 19 July 2012 (Appl. No. 29881/07), dissenting opinion of Judge Zupančič.
Zolotukhin v. Russia, 7 June 2007 (Appl. No. 14939/03).