Co-Operation Between National Competition Agencies in the Enforcement of Ec Competition Law »

In May 2004, the enforcement of the EC competition rules changed radically. Under Regulation 1/2003, the national competition authorities (NCAs) of all 27 Member States are called upon to actively participate, together with the European Commission, in the enforcement of Articles 81 and 82 EC. In order to ensure the efficient and consistent application of the law, Regulation 1/2003 provides for a number of co-operation mechanisms at the heart of which lies the European Competition Network (ECN). The ECN acts as a common forum for information exchange, co-ordination and discussion. This book provides an in-depth analysis of the rules governing co-operation within the ECN. It is a valuable source for all working in the field of EC competition law: practitioners, company lawyers, competition authority officials and academics.

The author focuses on horizontal co-operation between the NCAs of different Member States. She starts by looking at the arrangements for case allocation, discusses the rules on information exchange and also deals with the consultation procedure prior to the adoption of final NCA decisions. The existing rules are assessed not only in the light of their purpose, ensuring efficiency and consistency in the application of the law, but also reviewed against the requirements of the EU Charter and the European Convention on Human Rights. Particular attention is devoted to issues arising in the event of parallel procedures by several NCAs. This includes the applicability of the ne bis in idem principle and the question which duties of the NCAs result from the loyalty obligation enshrined in Article 10 EC. Finally, the author explores whether the ECN concept ofco-operation and networking could be applied more broadly in the context of European integration.

Acknowledgements vii

Table of Cases xix

Table of Legislation xxxv

Table of Conventions and Agreements li

Introduction 1

1 Overview of the Decentralised Enforcement of EC Competition Law 5

I Background to the Reform-History of the Reform Process, Principal Objectives and Main Criticism of the Reform Proposal 5

A The Previous Enforcement System-Overview, Justification, Drawbacks 6

1 Regulation 17 6

2 Major Deficiencies of the Centralised System under Regulation 17 9

B The Reform 13

1 Main Objectives of the Reform 13

2 Development of the Reform Process 15

C Résumé of Criticism 17

1 Compatibility 17

2 Effectiveness 19

3 Efficiency 20

4 Legal Certainty 22

5 Coherence and Consistency 25

6 Alternative Solutions 28

II The New Sharing of Competences under Regulation 1/2003-A Brief Overview 30

A The Commission's Role 31

1 Enforcement 32

a Decisional Powers 32

(1) Prohibition Decisions-Article 7 of Regulation 1/2003 32

(2) Positive Decisions-Article 10 of Regulation 1/2003 33

(3) Commitment Decisions-Article 9 of Regulation 1/2003 35

b Supervisory and Interventionary Powers 40

(1) Supervision of NCAs 40

(2) Intervention in NCA Proceedings 41

(3) Co-operation with National Courts of the Member States 45

c Handling of Complaints 48

2 Competition Policy 50

3 The Commission's Role in the Network of Competition Authorities 52

B The Competences of the National Competition Authorities 53

1 Rights and Duties of NCAs under Regulation 1/2003 53

a The Rights to Apply Article 81(3) 53

b The Obligation to Apply Articles 81 and 82 EC and the Effect-on-trade Concept 54

(1) Mandatory Application of EC Competition Law 55

(2)The Effect-on-trade Criterion-Double Dilemma and Parallel Application 57

c The Duty to Avoid Conflicting Decisions 60

d Types of NCA Decisions-Old and New Instruments 63

(1) Negative Decisions and Non-action Decisions 64

(2) Commitment Decisions 67

(3) Suspension of Proceedings 68

2 The Relation Between National and Community Competition Law 69

a Background 69

b Scope of the Convergence Rule 70

3 Co-operation with Other Competition Authorities in the ECN 76

a General 76

b Information at the Beginning of the Procedure (Case Allocation)-Article 11(3) of Regulation 1/2003 77

c Consultation Before Final Decision Taking-Article 11(4) of Regulation 1/2003 79

d Administrative Assistance (Co-operation in Fact-finding) 81

4 Co-operation Between NCAs and the National Judiciary 83

C The Position of the National Courts 85

1 The Role of National Courts under Regulation 17 86

2 The Enhanced Role of National Courts in the New System 86

3 Assistance Offered to National Courts 89

a Assistance from the Commission 89

b Assistance from NCAs 91

c Preliminary References to the ECJ 92

4 New Duties for National Courts 97

a Information Duties 97

b Admission of Observations 98

5 Review of the Commission's Inspection Decisions 100

D New Tasks for the Advisory Committee 104

III Summary 108

2 Creating a Framework for Co-Operation Between Competition Authorities In The EU 111

I What is the Network? 111

A Institutional Architecture of Competition Law in the Member States 112

1 The Integrated Agency Model 113

2 The Bifurcated Model 117

B Which National Bodies Can and Should Participate in the Network? 122

1 Administrative Agencies versus Courts 123

2 Designation of the Competition Authorities by the Member States 125

a Member States with Integrated Authorities 126

b Member States with Dual Enforcement Systems 126

(1) Involvement of Several Bodies 127

(2) Co-operation and Impartiality of the Judiciary 130

C The ECN in Practice 134

1 ECN Plenary and Sub-/Working Groups 135

2 Exchange of Officials 136

II The Legal Framework for Co-operation 137

A The Previous Situation-Information Exchange under Regulation 17 138

B Co-operation under Regulation 1/2003 140

1 Vertical Flow of Information 140

2 Horizontal Flow of Information 141

3 Limits 143

III Conclusion 147

3 Information Exchange at the Outset-The Issue of Case Allocation 149

I Case Allocation 149

A Lack of Formal Allocation Criteria in Regulation 1/2003 150

B Case Allocation under the Network Notice 153

1 General 154

2 Allocation Criteria and the Concept of the 'Well Placed Authority' 155

3 Initial Allocation Period 160

II The Exchange of the Relevant Information 161

A Who will be Informed? 161

B What Kind of Information will be Exchanged? 162

1 Essentials Known at the Outset 162

2 Risk of a Material Change of Facts 164

3 National Cases 165

C When must the Information be Furnished? 167

D How is the Information Circulated? 169

E Confidentiality 171

III Deficiencies of the Allocation System 174

A Conflicts of Jurisdiction 175

1 Positive Conflicts of Jurisdiction 175

a No Formal Remedy 175

b An Academic Problem? 177

2 Negative Conflicts of Jurisdiction-Enforcement Lacunae 180

a Lack of Resources and National Bias 180

b Rejection of Complaints and National Cases 182

c Conclusion 183

B Forum Shopping 183

C Leniency Applications 186

1 Paragraph 39 of the Network Notice and Outside Information 187

2 Exposure of Leniency Applicants 188

3 Consequences of an Abuse of Leniency Information 196

D Unpredictability of Sanctions 197

1 Applicability of the ECHR in Community Law Matters 198

2 Article 7 ECHR, Article 49(1) EU Charter and the Indetermination of Sanctions for Breaches of EC Competition Law 204

E Lack of Transparency and Judicial Control 212

1 Case Allocation and the Position of Defendants and Complainants 213

a Internal Character of Allocation Discussions 213

b No Challengeable Act 216

2 Judicial Review of Article 11(6) 'Decisions'? 217

a No Formal Act of Referral or Pre-emption 219

b No Exclusive Competences 220

c Initiation of Proceedings by the Commission 221

(1) The Position of Defendants and Complainants 221

(2) The Position of Member States 223

d Conclusion 227

IV Evaluation 228

4 Information Exchange and Administrative Assistance in the Course of an Investigation-The Free Movement of Evidence 231

I The Legal Framework 231

A Right to Share Information-Article 12(1) of Regulation 1/2003 232

1 Free Circulation of Information 232

2 Administrative Assistance-Article 22(1) of Regulation 1/2003 233

B Limitations on the Use of Information-Article 12(2) and (3) of Regulation 1/2003 234

1 Application of (National) Competition Law-Article 12(2) of Regulation 1/2003 235

2 Terms of the Original Mandate-Article 12(2) of Regulation 1/2003 237

3 Particular Safeguards for Individuals-Article 12(3) of Regulation 1/2003 239

a Rationale 239

b Use of Exchanged Information Against Individuals-Article 12(3) of Regulation 1/2003 241

(1) First Alternative-Symmetry of Sanctions 241

(2) Second Alternative-Equivalence of Protection 243

C Protection of Confidential Information 257

1 Legal Standard 258

a The Obligation of Professional Secrecy 258

b Information Covered by the Secrecy Obligation 259

(1) Business Secrets 261

(2) (Other) Confidential Documents 262

(3) Internal Documents 262

(4) Relevance for National Proceedings 265

c Relation to Other Provisions 267

2 Procedure 269

3 Leniency Applications 269

II Areas of Concern 272

A Transparency 273

1 Transfer of a (Complete) Case File 274

2 Transmission of Confidential Information 275

a The SEP Scenario 276

b The 'Country-of-destination' Principle 277

B Judicial Control of Information Gathering 282

1 The 'Country-of-origin' Principle 283

2 Five Unwritten Basic Safeguards 286

C Differences in Procedural Rights and Guarantees 290

1 The Problem 290

a Divergent Standards of Protection 291

(1) Legal Professional Privilege 291

(2) Privilege against Self-incrimination 297

(3) Inviolability of the Home 301

b The Resulting Concern 306

(1) The Risk of Erosion 306

(2) The Human Rights Dimension of Procedural Divergency 309

(3) Perceived Discrimination 316

2 Possible Solutions 318

III Conclusion 322

5 Consultation Prior to Final Decision Taking 325

I The Principles 325

A NCA Decisions Subject to Prior Consultation 325

1 The Relevant Types of Final Decisions 325

2 Decisions on Fines 327

B The Stance of the Commission-'Qui tacit. . .' 328

II The Information Procedure 330

A What is Transmitted to the Commission? 330

B How is the Information Circulated in the ECN? 331

III The Position of Parties and Complainants 334

A The Problem-Secrecy of Network Correspondence 334

B The Impact of Article 6 ECHR-The Right to Adversarial Proceedings 335

1 Submissions of Third Parties 336

2 Distinction between Non-judicial Bodies and 'Courts of the Classic Kind' 339

3 Avoidance of Disclosure of the Commission's Observations 341

IV Conclusion 342

6 Particular Issues of Parallel Proceedings 343

I The Principle of Ne Bis In Idem 344

A The Concept 344

1 Article 4 of Protocol No 7 345

a Scope of the Principle 345

b Penal Character of Competition Law Proceedings 346

2 EU Charter of Fundamental Rights 354

B Rationale 355

C Relevant Case Law on the Application of Ne Bis in Idem 356

1 Interpretation of the Principle by the Court of Human Rights 356

2 (Non)-Application of the Principle by the Community Courts in International Cartel Matters 358

a Walt Wilhelm: Emergence of the Setting-off Rule 358

b Double Prosecution by the Commission: The PVC II Case 360

c Concurrent Sanctioning by the Community and Third Countries 361

D Applicability of the Ne Bis in Idem Principle to Multiple National Proceedings under Article 81 or 82 EC 363

1 The EU Charter 364

2 Article 54 Schengen Convention 370

3 'Old' Case Law of the Community Courts-New Situation under Regulation 1/2003 374

a The PVC II Case 374

b The Judgment in Walt Wilhelm 374

c The Lysine and Graphite Electrodes Cases 378

4 HR Convention-Construing Article 4 Protocol No 7 383

a Identity of the Offender 383

b Identity of the Subject Matter-The Idem 385

(1) Identity of Facts 385

(2) Significance of the Legal Qualification 386

c Single State or Jurisdiction Requirement 391

(1) Dynamic Interpretation 391

(2) Unity of the EU Legal Order and the Wording of the ECHR 397

5 Ne Bis in Idem as a 'Propriae Naturae' Principle Within Community Law 400

a The Basic Idea 401

b The Features of the New Enforcement System under Regulation 1/2003 403

6 Types of Decisions that Bar Further Proceedings 408

a Decisions Imposing Fines 409

b Mere Prohibitions 409

c Article 13 Decisions 410

d Positive Decisions 411

e Non-action Decisions 412

f Commitment Decisions 413

7 The Position of Complainants 414

E Conclusion 418

II NCA Decisions and the Duty of Loyalty 419

A Article 10 EC-The Principle of Loyalty 420

1 General Duties under Article 10 EC 421

2 Specific Duties in the Field of Competition Law 423

a The Complementary Nature of Article 10 EC 423

b The Subsidiary Nature of Article 10 EC 425

B Duty to Recognise the Legal Force of Foreign NCA Decisions on a Case-by-case Basis 426

C Duty to Avoid Conflicting Decisions 429

1 Duty to Pay Deference to Foreign NCA Decisions 430

2 Types of Foreign NCA Decisions that Require Deference 436

D Duty to Apply Sanctions also for Extraterritorial Effects of an Infringement 437

1 National Implementation and the Problem of 'Underfining' 437

2 Effectiveness, Uniformity and Proportionality 439

a Full Effectiveness of Community Law and National Sanctions 439

b Uniformity of Community Law, Equal Treatment and National Sanctions 443

c Proportionality of National Sanctions 445

d No Lack of Powers of NCAs 447

3 Sovereignty and Extraterritoriality 450

a No Extraterritoriality Sensu Stricto 451

b The Permissive Rule 454

4 Exclusion of Purely 'National' Sanctions 457

E Conclusion 458

7 Conclusions-Is The ECN a Supermodel or an 'Anti-Example'? 461

I Recapitulation of the above Analysis and Conclusions 462

A General 462

1 Concurrent Jurisdiction-A Unique Form of 'Joint' Administrative Execution 462

2 Flexibility and Pragmatism 464

B Intranet Relations 466

1 The Preeminent Role of the Commission 467

2 Increased Complexity 468

C External Relations-The Position of Defendants and Complainants 471

1 Initiation of Proceedings 471

2 Collaboration in the Course of an Investigation 472

a Confidentiality 473

(1) The Standard 473

(2) The Procedure 474

b Human Rights Issues 475

(1) Background 475

(2) Concerns 476

c Judicial Control of Information Gathering 478

3 Termination Proceedings 480

4 Parallel Proceedings 481

a Parallel Proceedings and the Issue of Ne Bis In Idem 481

b Parallel Proceedings and the Loyalty Obligation 484

(1) Duty to Remedy Extraterritorial Effects 484

(2) Duty to Recognise and Respect Foreign NCA Decisions 485

II Have the Rights of Undertakings been Sacrificed? 486

III Final Conclusion 488

Epilogue: Perspectives for Network Convergence and IUS Commune 491

I The Network Phenomenon 491

A Introduction 491

B The Consumer Protection Enforcement Network (CPEN) 492

1 Background 492

2 Main Features of the CPEN 494

C Other Fields and Means of Co-Operation 496

D A Brief Evaluation 500

1 Common and Diverging Features of ECN and CPEN-Is the ECN Really the Blueprint? 500

2 Problems Resulting from the Multiplication of Networks 504

a Overlap of Responsibilities 504

b Multiple Membership 505

E Conclusion 506

II Harmonisation v Gradual Convergence 507

A Gradual Administrative Convergence 508

B Desirability of Harmonising Measures 512

1 General 512

2 Example: the Green Paper on Damages Actions 516

C Conclusion 523

Index 527