ECHR IMPLICATIONS IN THE EU COMPETITION ENFORCEMENT

LYUBOMIR TALEV[*]

I INTRODUCTION

In almost 50 years, EU competition law has acquired a prominent position in the daily life of European law and has been the source of many important developments of general EU law. This achievement is even more remarkable when one considers that in the period immediately after the Second World War competition law was virtually non-existent in Europe.[1] It is rightly considered that the EU competition law has been a success.[2]

Despite of the recent modernization of the EU competition law[3] and the proclaimed decentralization of the EU competition enforcement[4] the European Commission still plays a central role in EU competition enforcement.[5] It has the right, along with the competition authorities of the Member States (hereafter the NCAs) to apply Arts 101 and 102 of the TFEU.[6] The leading role of the Commission in this process is underlined inter alia by the fact that the initiation by the Commission of proceedings for the adoption of a decision shall relieve the competition authorities of the Member States of their competence to apply Articles 101 and 102[7] and that it is allowed where the Community public interest relating to the application of Articles 101 and 102 of the TFEU so requires, to find by decision that Article 101 is not applicable to an agreement, a decision by an association of undertakings or a concerted practice, either because the conditions of Article 101(1) are not fulfilled, or because the conditions of Article 101(3) are satisfied.[8] In the area of Merger control the Commission enjoys an “exclusive competence” to apply the EU Merger Regulation.[9]

In order to fulfill its task the Commission is granted with broad investigative and decision-making powers[10] and can impose substantial fines amounting at up to 10 % of the undertaking’s total turnover in the preceding business year.[11] This inevitably invokes an extensive public scrutiny over the EU competition enforcement regime. Amongst the most frequent criticisms is the (lack of) compatibility of this regime with the rights enshrined in the European Convention on Human Rights and Fundamental Freedoms (hereafter ECHR or the Convention) and particularly with the right of fair trial under Article 6 ECHR[12]. The dispute as to whether (and to what extent) the rights under the ECHR are guaranteed in the EU competition procedures has been responsible for the accumulation of considerable literature[13] as well as jurisprudence of the EU Courts.[14] The relevance of the topic has been highlighted by the ever increasing fines imposed by the Commission for breaches of the competition rules as well as by the fact that according to the Lisbon Treaty the EU shall accede to the ECHR.[15] These developments justify a further research in the area.

When one considers the topic of this paper the first question to be answered is whether the right of fair trial is applicable at all to the administrative procedures under the EU competition law directed mainly against undertakings – legal persons[16]. If the answer is in the affirmative, the alleged problems are to be examined. Having regard to the European Court of Human Rights (hereafter the ECtHR)’ composite approach[17] both the procedures before the Commission and before the EU Courts need examination.

Section II of this paper therefore contains a discussion regarding the applicability of the concept of fair trial to the EU competition procedures. Section III examines the existing ECHR implications at the procedures before the Commission.[18] Section IV then takes a look at the judicial proceedings before the EU Courts from the perspective of the right of fair trial. Section V considers the possibilities for the undertakings concerned to obtain a judicial redress in case of violation of their ECHR rights. In its final part the paper provides the author’s conclusions on the questions raised above.

II EU COMPETITION ENFORCEMENT AND THE RIGHT TO A FAIR TRIAL

As outlined above[19] the first question to be answered when analyzing the issue of the ECHR implications in the EU competition enforcement, is whether the concept of fair trial as enshrined in Article 6 of the Convention is applicable to the EU competition procedures. An important issues in that regard is whether these procedures can be qualified as having criminal or civil procedures for the purposes of Article 6 ECHR as well as whether undertakings have “human rights”. An examination of the level of protection of the undertakings’ rights enjoyed under the jurisprudence of the EU Courts is also needed. Once it has been established that the right of fair trial is applicable to the EU competition procedures as well as that legal persons are entitled to fair trial as well, it should be considered whether the Commission’s combined role of “prosecutor and judge” is compatible with Article 6 of the Convention. These issues are considered in the following subsections.

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

There is a well-known line of EU case-law rejecting arguments based on alleged violations of ECHR when examining the legality of the actions of the Commission simply because the Courts found that the Commission cannot be classed as a tribunal within the meaning of Article 6 of the ECHR and held that for that reason the said provision was inapplicable.[20]

It is respectfully submitted that this seems a dubious position to have adopted. Article 6 of the ECHR explicitly indicates that its provisions should be observed in any procedure relating to “the determination of his civil rights and obligations or of any criminal charge”.[21] Its applicability depends therefore on the nature of the procedure concerned, rather than on whether it is in practice a “tribunal” or an administrative body that investigates the case in question. In the case of procedures involving the determination of civil rights or of any criminal charge, any party should be “entitled to” be heard “by an independent and impartial tribunal”. Therefore, the mere fact that the Commission is not a “tribunal” within the meaning of Article 6(1) should not mean as such that Article 6(1) is not applicable to the proceedings concerned. On the contrary, the very fact that, as recognized by the Court of Justice, “the Commission cannot be described as a tribunal within the meaning of Article 6 of the ECHR” raises precisely the question whether the parties should not have been entitled to having their case decided by a true “tribunal”. In that respect, as stated by the ECtHR; “[t]he first issue to be resolved in the applicability of Article 6(1)… [is]… whether the case involved a ‘determination’ either of a ‘civil right’ or of a ‘criminal charge’”.[22]

In the same time however, from the late 1960s the EU Courts started developing fundamental rights jurisprudence as part of the general principles of EU law.[23] In its judgment in Nold II[24] the Court of Justice held that, in addition to Member States’ constitutions, international conventions could also supply guidelines which could be taken into consideration by the Court on matters concerning claims to fundamental rights.[25] The ECHR was first specifically referred to by the Court in 1975 in Rutili[26] and has since been quoted by the Court on numerous occasions as having a special significance as a source of guidance.[27]

The importance of the ECHR has been confirmed by the fact that it has been explicitly referred to in the Joint Declaration on Human Rights of the Commission, Council and the European Parliament[28] as well as in the Preamble of the Charter of Fundamental Rights of The European Union.[29] According to the new version of Article 6 EU introduced by the Treaty of Lisbon[30] the Charter of Fundamental Rights shall have the same legal value as the Treaties[31] and the Union shall accede to the ECHR.[32]

Thus, according to the case-law of the EU Courts, rather than being directly applicable, the ECHR serves as a benchmark for assessment of the observation of fundamental rights within the Community legal order. This position is probably best summed by the CFI’s ruling in AC-Treuhand v Commission[33] where the Court held that:

“[T]he Court has no jurisdiction to assess the lawfulness of an investigation under competition law in the light of provisions of the ECHR, inasmuch as those provisions do not as such form part of Community law. That said, the fact remains that the Community judicature is called upon to ensure the observance of the fundamental rights which form an integral part of the general principles of law and, for that purpose, it draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international instruments for the protection of human rights, on which the Member States have collaborated and to which they are signatories. In that regard, the ECHR has special significance, as confirmed by Article 6(2) EU […]. That has also been reaffirmed in the fifth recital in the preamble to the Charter of Fundamental Rights of the European Union and Articles 52(3) and 53 thereof.”[34]

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

As already mentioned[35] according to the case-law of the ECtHR the first issue to be resolved in the applicability of Article 6(1) ECHR is whether the case involved a “determination” either of a “civil right” or of a “criminal charge”. This subsection therefore examines the nature first of the procedures under Regulation 1/2003 (concerning the application of Articles 101 and 102 of the TFEU) and then the procedure under the ECMR. It is submitted that the former has a “criminal” nature whereas the latter has a “civil” nature and therefore Article 6(1) ECHR is applicable in both cases.

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

According to Article 23(5) of the Modernization Regulation fines imposed by the Commission for violations of Articles 101 and 102 of the TFEU “shall not be of a criminal law nature”. This provision has been described in the literature as “a doomed attempt” to avoid the issue of the compatibility of EU competition procedures with ECHR and even as a “fiction”.[36] Indeed, the ECtHR has held in Engel v Netherlands[37] that the definition of a criminal charge, for the purposes of the Convention, is autonomous. It argued that to have permitted the Contracting States to provide definitions of criminal, regulatory and disciplinary law, and to have obliged the Court to follow such definitions, would result in the undermining of the objective and purpose of the Convention.[38] The ECtHR then set out the criteria for the autonomous definition of “criminal charge” under the Convention. It identified three core criteria: the classification of the offence under national law, the nature of the offense and the severity of the penalty.[39]

The application of the Engel criteria in a regulatory context is demonstrated by Bendenoun v France.[40] In that case the Court held that the French national procedures in which tax surcharges were imposed were of criminal nature for the purposes of Article 6(1) ECHR. The Court emphasized first, the nature of the offense. It was of general application, as it covered all citizens in their capacity of tax payers and not a given group with a particular status. In addition the tax surcharges were intended not as pecuniary compensation for damage, but essentially as punishment to deter re-offending. Furthermore, the penalties were imposed under a general rule, whose purpose was both deterrent and punitive. Secondly, in respect of the severity the penalty, the surcharges were very substantial, amounting to FrF 422,534 in respect of Mr. Bendenoun personally and FrF 570,398 in respect of his company.

Having weighed the various factors in the case, the ECtHR noted the predominance of those which had a criminal connotation. None of them was decisive on its own, but taken together made the nature of the “charge” in question a criminal one within the meaning of Article 6(1) ECHR.[41]

Applying these criteria “the inescapable conclusion is that, for the purposes of ECHR the [EU competition] procedures and penalties are criminal in nature.”[42] First, competition law is imposed as a general rule applicable to all.[43] The aim of competition law is “to prevent competition from being distorted to the detriment of the public interest, individual undertakings and consumers.”[44] Second, non-compliance with the procedure leads to the imposition of financial sanctions. Third, as the Commission guideline has outlined,[45]this penalty is intended to deter and punish the perpetrators.[46] Fourth, the Commission can impose anything up to 10% of the company’s turnover. In Societe Stenuit[47] the former European Commission on Human Rights (hereafter CHR) considered the fact that the French Minister of Economic and Financial Affairs could have imposed a fine for a breach of the national competition law up to 5% of the company’s takeover which was intended to act as a deterrent, substantial enough to classify the fine as a criminal sanction.[48] Nor has the Commission hesitated to exercise its right to impose such sanctions. It has imposed fines for cartel activity amounting at EUR 2 271 million in 2008 alone. The Commission imposed the highest fine per cartel case to date of EUR 1 383 million in the Car Glass case[49] The biggest fine imposed on single undertaking so far has been at the amount of EUR 1.06 billion imposed on Intel for violation of Article 102 TFEU.[50] It could also be argued that the trend towards criminalization of the violation of competition rules in some Member States,[51] the adoption of Leniency Programs both at EU and at Member States level, the publicity of enforcement activity and the rhetoric deployed by public authorities in relation to cartels and other serious infringements of competition law all signal for increased intolerance towards anticompetitive behavior and therefore reinforce the “criminal” element of the prohibitions thereof.[52]