1. The Court of Justice allows the Commission to rely on general presumptions in refusing access to cartel files
On 27 February 2014, the Court of Justice ruled in Case C-365/12P (Commission v. EnBW Energie Baden-Württemberg AG and Others) that the Commission is allowed to rely on general presumptions in refusing access to cartel files. This judgment annulled a previous ruling by the General Court ("GC").
The case concerned a request by EnBW on the basis of the Transparency Regulation (Regulation 1049/2001) for access to all documents in the Commission's Gas Insulated Switchgear file (Case COMP/F/38.899) . The Commission had rejected that request by relying on the exceptions provided for in the Transparency Regulation. Specifically, the Commission stated that access to the documents (i) would undermine the protection of the purpose of inspections, investigations and audits and, for part of the documents, (ii) would seriously undermine its decision-making process. EnBW appealed this decision and the GC subsequently ruled in Case T-344/08 that the Commission was not entitled to presume, without conducting a specific analysis of each document, that all the documents requested were covered by the exceptions.
Contrary to the GC, and in line with earlier judgments in state aid and merger control cases, the Court of Justice decided that in cartel cases, general presumptions may be applied by the Commission to requests for access to a set of documents. While the Transparency Regulation is designed to confer as wide a right of access as possible to documents of the institutions, the exceptions to this right of access cannot be interpreted without taking account of the specific rules on access to documents in cartel cases (Regulations 1/2003 and 773/2004) which, inter alia, ensure compliance with the duty of professional secrecy.
In cartel proceedings, third parties, with the exception of complainants, do not have any right of access to the documents in the Commission's file. If these parties were able to obtain access to documents on the basis of the Transparency Regulation, the specific access system in cartel cases would be undermined. Therefore, generalized access on the basis of the Transparency Regulation would jeopardize the balance which the EU legislature sought, and the Commission is entitled to presume that disclosure of documents in cartel files would, in principle, undermine the protection of the commercial interests of the undertakings involved and the purpose of the investigations relating to the proceeding. A proceeding may only be regarded as completed when a decision adopted by the Commission has become final.
This general presumption does not exclude the possibility that a claimant is able to demonstrate that a specific document, disclosure of which has been requested, is not covered by that presumption or that there is an overriding public interest in such disclosure. In this case, however, the presumption was not rebutted by EnBW and the Commission was right in denying EnBW's request.
This case makes it much easier for the Commission to deny access to cartel files compared to the approach favored by the GC which levied a burdensome task on the Commission to weigh the interest of access with the interest of confidentiality for each and every document in its cartel files (which usually contain thousands of documents). Parties seeking access to the Commission's cartel files for instituting damage claims will now have to establish that it is necessary for them to be granted access to specific documents, and that they do not have any other way of obtaining evidence, in order to rebut the presumptions on which the Commission may rely.
2. The General Court dismissed appeals in the heat stabilizers cartel
On 6 February 2014, the General Court ("GC") dismissed the appeals brought in the heat stabilizers cartel by AC-Treuhand AG, Arkema France and CECA SA, and Elf Aquitaine against the Commission. The Commission had fined 24 companies a total of almost EUR 174 million for conduct such as price fixing, allocating markets, and exchanging sensitive commercial information. Below is a brief synopsis of the relevant points in these judgments.
The Commission decision had dealt with two separate cartels involving tin stabilizers and ESBO/esters. On appeal in case T-27/10, the GC confirmed the Commission findings and dismissed AC-Treuhand’s allegations that there was a single cartel infringement and that therefore the total fine exceeded 10% of its annual turnover and was a violation of Article 23(2) Regulation 1/2003. However, given that there were two separate cartels and each fine was under the 10% limit, the GC upheld the findings and the fine.
In reaching its decision, the GC looked at whether the Commission erred in finding that there were two separate cartel infringements. The GC looked at whether there had been a single objective and concluded that this was not the case since not all undertakings participated in the meetings for both sectors, and when they did, they were not represented by the same individuals. The GC furthermore concluded on the basis of the separate meetings that there could not have been a single product market for tin stabilisers and ESBO/ester. The GC finally moved on to analyse whether the two infringements were complementary. The GC held that this was not the case given that some undertakings in the tin stablizers cartel would have suffered negative consequences from the agreements in the ESBO/ester sector.
It is noteworthy that some of these characteristics, for example, different representatives and separate meetings, have actually been rejected in other cases where applicants sought to establish that the infringements were separate. However, in this case it appears sufficient for the GC to find that there were two separate infringements.
Regarding the fine, AC-Treuhand had been a previous addressee in 2003 of a Commission decision in the Organic Peroxides cartel. In that decision, the Commission had imposed only a symbolic fine given its role as facilitator. This time around, AC-Treuhand alleged that in failing to impose another symbolic fine, the Commission had committed error. The GC promptly dismissed the argument, stating that the previous symbolic fine should not create any legitimate expectations or set any precedent.
Arkema France and CECA
The GC also dismissed in its entirety the appeals (Joined Cases T-23/10 and T-24/10) brought by Arkema France and CECA (together the "Applicants").
The Applicants claimed that the Commission had infringed Article 7(1) of Regulation 1/2003 by finding that the Applicants participated in an infringement on the tin stabilisers market between March 1994 and March 1996. According to the last sentence of Article 7(1) of Regulation No 1/2003, the Commission may only find that an undertaking committed an infringement in the past if it has a legitimate interest for doing so. In its decision, the Commission explained the inclusion of the earlier infringement by stating that the Applicants at a later point in time returned to the same cartel. Furthermore, the finding was included to discourage repeat infringements of the Applicants and to enable injured parties to bring matters before national civil courts. The GC found the Commission's first reason in itself a sufficient legitimate interest for including the earlier infringement in the decision. According to the General Court, the Commission could have confined itself to a general assertion in this regard. Therefore, the Commission did not act in violation of Article 7(1) of Regulation No 1/2003.
In dismissing the appeal brought by Elf Aquitaine against the Commission's decision, the GC held (T-40/10) that Elf Aquitaine’s rights of defense had not been infringed for the sole reason that it was not informed of the investigation as from the first investigation towards its subsidiary.
The GC recalled that provided that the entity to which a statement of objections is addressed is put in a position to submit its views effectively during the administrative phase, the rights of defense do not require the Commission as a matter of principle to address a measure of investigation to that entity before issuing the statement of objections. However, the GC recognized that in some circumstances, some information on the object and purpose of the instruction may have to be given earlier, but Elf Aquitaine did not indicate sufficiently how its rights of defense were violated in concreto.
In addition, the GC held that the Commission had not erred in attributing liability to Elf Aquitaine as the ultimate parent of Arkema and CECA because it did not prove sufficiently and in concreto that it had no decisive influence on the commercial policy of these subsidiaries. The legal or economic autonomy of a company under national law are not relevant for this assessment. Finally, the GC found that it was permissible for the Commission to impose a separate fine on Elf Aquitaine and on Arkema (its subsidiary at the time of the infringement) and could increase the amount of the fine imposed on Elf Aquitaine only (and not for Arkema which was no longer part of the Elf group) in order to ensure that it had a sufficiently deterrent effect.
3. Dutch government seeks higher fines for cartel infringements
On 11 February 2014 the Dutch minister of economic affairs announced that the government would submit legislative proposals in the fall of 2014 to enable the Netherlands Authority for Consumers & Markets ("ACM") to impose higher fines for cartel infringements. Under the current rules, the ACM determines the amount of a fine on the basis of its fining policy rules. Within this framework, the fine that is ultimately imposed by the ACM can never be higher than the legally permitted maximum amount of the fine. The ACM is further obliged to lower the amount of the fine if the continued existence of the undertaking is in danger as a result of the imposed fine.
Stemming from a government-commissioned study carried out by the Dutch consulting firm Strategies in Regulated Markets, the Dutch Minister of Economic Affairs announced three proposals in order to increase the deterrent effect of cartel fines.
The first proposal by the Minister involves amending the legally permitted maximum amount of the fine. Currently, the maximum amount of the fine is EUR 450.000 or, if this is higher, 10 percent of the yearly turnover of an undertaking that is involved in the cartel infringement. The Minister proposes to change the base amount for calculating the fine from ten percent of the turnover for one year to 10 percent of the combined turnover during the years that the cartel was in place. The Minister suggests however that the number of years that are taken into account must be limited to a maximum of 4 years, as this corresponds to the average duration of a cartel.
The second proposal entails doubling the legally permitted maximum amount of the fine in case of recidivism of an undertaking. Thirdly, the Minister announced that the possibility of introducing a payment arrangement in order to pay an ACM-imposed fine will be examined. According to the Minister, such a payment arrangement could reduce the need to decrease a fine on the basis of an undertaking’s lack of financial capacity and would increase the deterrent effect of the other two proposals.
4. ACM adopts new guidelines on investigations into digital and privileged data
The Netherlands Authority for Consumers & Markets ("ACM") has published its "2014 ACM Guidelines on investigations into digital data" (ACM Werkwijze voor onderzoek in digitale gegevens 2014; "WODG") and its "2014 ACM Guidelines on legal professional privilege" (ACM Werkwijze geheimhoudingsprivilege advocaat 2014; "WGA"). These guidelines entered into force on 11 February 2014. The guidelines describe how the ACM will treat digital and privileged data, both digital and analogue, collected during investigations into possible competition law infringements or other infringements supervised by the ACM. They replace the guidelines of the three supervisors that merged into the ACM. The guidelines have been adopted after a public consultation
The WODG prescribes the legal safeguards that must be provided to the undertakings investigated by ACM. The procedural steps for investigations of digital data will be decided and communicated by the ACM on a case by case basis. Under the WODG, the principle of on-site investigation of digital data is abandoned. Digital data will be secured at the premises of the undertakings involved and will subsequently be searched at the premises of the ACM. If the data are searched with the use of search terms, neither the undertaking involved nor its lawyers are allowed to be present at the search. Subsequently, the search terms will be provided to the undertakings involved in order to enable them to comment on the search terms. Another important element of the WODG is the prescription of retention periods after which the ACM has to destroy the digital data that it collected.
The WGA includes a detailed description of the different procedural steps that have to be followed if data is claimed as legally privileged. Contrary to the old system, digital data will not be searched by the ACM until the undertakings involved have been given the opportunity to claim legal professional privilege and these claims have been assessed by a "Legal Professional Privilege Officer" that is not involved in ACM investigations in any other way. The WGA stipulates that communications with both external and in-house lawyers are privileged, provided that these lawyers are members of a professional bar association, irrespective of the field of law to which the communications relate.
5. ACM decreased fine LHV and repealed fines for individual board members
At the end of 2011, the Netherlands Authority for Consumers and Markets ("ACM") imposed a fine on the National Association for General Practitioners (Landelijke Huisartsen Vereniging, "LHV") for infringing the Dutch Competition Act. Additionally, the ACM also fined two board members of LHV in relation to the infringement for de facto leading the infringement. LHV appealed the decision. The ACM rendered its decision on appeal on 3 February 2014.
In its 2011 decision leading to the fine, the ACM held that LHV restricted competition by adopting recommendations relating to the establishment of new general practitioners in which it advised its members to examine (i) whether a demand for new general practitioners exists and (ii) whether the amount of patients required the opening of a new family practice. Subsequently, new general practitioners had to be selected by means of an application procedure. The recommendations were qualified as decisions by an association of undertakings which have as their object the restriction of competition on the market for general practitioners.
On appeal, the ACM confirmed that LHV's behaviour constitutes a quantitative restriction of competition, because it directly affects the supply of goods and/or services on the market. Consequently, the patient's freedom of choice is restricted. The application procedure further restricts market entry, because it aims at conforming new general practitioners to the practice of the current general practitioners. The mere fact that some general practitioners have proven to be able to freely establish themselves, does not mean that competition is not unlawfully restricted.
As regards the fines imposed on the board members of LHV for de facto leading the infringing behaviour, the ACM firstly states that the adoption and publication of the recommendations took place over a long period of time. During this period, several people within LHV dealt with the topic of the establishment policy (vestigingsbeleid) in different ways and to a different extent. Therefore, the ACM considers it less appropriate that two natural persons are being held liable in addition to LHV. The ACM repealed the fines imposed on LHV's board members. As a result, the initial 5% increase of LHV's fine for standing surety for the board members' fines was abandoned.
Lastly, the ACM decided to decrease the severity factor from 2.5 to 2.0. The ACM considered that in view of the fines imposed in previous health care cases, adjustment of the severity factor in the present case is appropriate. Furthermore, the ACM states that the role of health insurers must be taken into account, for they could have been more watchful with respect to the competition restricting conduct of the general practitioners. Eventually, LHV's fine was decreased from EUR 7.719.000 to EUR 5.907.000.
6. Dutch Supreme Court confirmed that decisions by associations of undertakings concerning other markets can infringe the cartel prohibition
On 24 January 2014 the Dutch Supreme Court ruled
in the case between the Dutch Association of Brokers (Nederlandse Vereniging van Makelaars o.g. en Vastgoeddeskundigen, "NVM") and the curator in the bankruptcy of HPC Hard & Software services ("HPC"). The Dutch Supreme Court held that a decision by an association such as the NVM can fall under the scope of Article 6 of the Dutch Competition Act ("DCA"), even if the decision does not directly relate to the brokers' economic activity.
HPC was a software developer that had established an information exchange system for the supply and demand of real estate. In addition, HPC had developed software for the computerization of brokers' offices. NVM had also created an information exchange system, which had a separate module that contained computerization features. Members of the NVM were required to use the NVM exchange system and the separate module.
After the bankruptcy of HPC in 2004, the curator held NVM liable for damages due to unlawful conduct, including a breach of Article 6 DCA. In this respect, NVM argued that it did not infringe Article 6 DCA as the decision which required the members to use a specific system and module concerned a market upon which its members were not active.
The Dutch Supreme Court dismissed NVM's argument, by referring to the wording of Article 6 DCA and the case law of the European Court of Justice (Case C-1/12
Ordem dos Técnicos Oficiais de Contas). The Dutch Supreme Court held that a decision by an association of undertakings can also infringe Article 6 DCA if the decision, although not concerning a market on which the members practice their profession, prevents, restricts or distorts competition on a market on which the professional association itself has an economic activity.
7. Advocate General advised European Court of Justice to allow umbrella claims
In the case Kone and others
before the European Court of Justice following a preliminary reference by the Austrian Supreme Court, Advocate General Kokott advised the Court that customers should be able to seek damages from alleged cartel members for “umbrella sales”. The theory behind umbrella claims is that higher prices charged by non-cartel members can be caused by the general higher price level resulting from a cartel.
According to the referring Austrian Supreme Court, the alleged loss resulting from purchases from non-cartel members would, under Austrian law, not fulfill the requirement of an adequate causal link between a cartel and this alleged loss. Furthermore, the Austrian Supreme Court considered that the loss alleged would not be covered by the protective purpose of the competition rules. However, the Supreme Court had doubts as to whether rejecting the claim on this basis would be in line with the EU principle of effectiveness, specifically the effectiveness of the cartel provision of Article 101 TFEU.
Contrary to the view of most scholars and practitioners, Kokott noted first of all that causality is a matter of EU law. She stated that not so much the existence of claims for compensation is dictated by national law as, rather, the details such as jurisdiction, procedure, time-limits and the standard of proof of application of such claims.
Kokott considers that the causality criterion for liability under EU law should be a “sufficiently direct causal nexus". For this direct causal nexus it would be required that (i) the harm is foreseeable; and (ii) compensation of the loss should be consistent with the objectives of the provision of law which is infringed.
In this case, according to Kokott, it was anything but unforeseeable or surprising that parties not involved in the actual cartel set their prices with an eye to the market behavior of the undertakings being part of a cartel, and therefore, at a higher level than they would have absent the cartel. Moreover, Kokott considered that the competition rules clearly have the purpose of protecting against harm caused by umbrella pricing.
Consequently, Kokott concludes that EU law precludes national law which categorically excludes civil liability for umbrella claims. It will always be necessary to carry out a comprehensive assessment of all the relevant circumstances in order to determine whether the cartel in the case in question has given rise to umbrella pricing.
If the Court of Justice were to follow Kokott's opinion this may have far-reaching consequences for competition law damage cases. However, it remains to be seen whether the Court of Justice will side with the Advocate General's opinion.