- The General Court Establishes clear criteria for access
- The Commission adopted a new package of rules on services of general economic interest
1. The General Court Establishes clear criteria for access to a cartel file
Background of the Case
The present case1 concerns an action for annulment brought by CDCHydrogene Peroxide Cartel Damage Claims (CDC)2 against a Commission Decision that refuses access to the statement of contents of the administrative file relating to a cartel proceeding.
The Commission rejected the application on the grounds that the disclosure of the statement of contents undermines protection of the purpose of the investigation activities referred to in the third indent of Article 4(2) of Regulation No 1049/20013 and undermines protection of the commercial interests of the undertakings which took part in the cartel referred to in the first indent of Article 4(2) of Regulation No 1049/2001.
On 15 December 2011, the General Court handed down its judgment and annulled the Commission's decision to refuse access to the statement of contents. It concludes that the Commission failed to establish to the requisite legal standard that access to the statement of contents is likely, specifically and effectively to undermine the protection of commercial interests and protection of the purpose of investigation activities.
Findings of the Court:
Undermining the commercial interests of undertakings
The General Court recalls that access to the documents held by the institutions is a right subject to certain exceptions on grounds of public and private interest provided for in Article 4 of Regulation No 1049/2001 and, if the Commission refuses access to a document, it must, in principle, explain how disclosure of that document could specifically and effectively undermine those interests.
The Commission contends that undertakings, victims of the cartel, might consider that certain documents listed in the statement of contents could contain further incriminating evidence and therefore, could bring actions for damages. It believes that the disclosure of this index would affect the commercial interests of the undertakings involved in the cartel. First, the General Court points out that it would be irrelevant to consider the content of the listed documents since the applicant is only seeking access to the index of the administrative file in the cartel case. Secondly, according to case law “it is not possible to regard all information concerning a company and its business relations as requiring the protection which must be guaranteed to commercial interests”.
In addition, the General Court observes that the Commission’s considerations concern solely the risk that, as a result of disclosure of the index, the companies involved in the cartel could face actions for damages. The General Court refuses to regard the interest of a company to avoid high costs caused by actions for damages as a commercial interest. It states that such an interest does not deserve protection “having regard, in particular, to the fact that any individual has the right to claim damages for loss caused to him by conduct which is liable to restrict or distort competition.”
The General Court concludes that the Commission has not established, to the requisite legal standard, that access to the statement of contents is likely, specifically and effectively, to undermine the commercial interests of undertakings which took part in the cartel.
Undermining the protection of the purpose of the investigation
As regards the risk of undermining “the protection of the purpose of the investigation”, the General Court observes that is clear from the wording of the third indent of Article 4(2) of Regulation No 1049/2001, that the aim of this exception “is not the protection of the investigation as such but rather the protection of the purpose, which, in competition cases, is to determine whether an infringement of Article 81 EC or Article 82 EC has taken place and to penalize the companies responsible. It is for this reason that documents relating to an investigation may remain covered by the exception in question so long as that goal has not been attained, even if the particular investigation or inspection which gave rise to the document to which access is sought has been completed”.
At the date of the adoption of the contested decision, the Commission had already adopted the hydrogen peroxide decision. Consequently, on that date, there was no investigation in progress to prove the existence of the infringements in question, which could have been jeopardized by the disclosure of the requested documents.
Even if actions against the hydrogen peroxide decision were pending before the Court, the General Court holds that “the investigation in a given case must be regarded as closed once the final decision is adopted, irrespective of whether that decision might subsequently be annulled by the courts, because it is at that moment that the institution in question itself considers that the procedure has been completed.” Furthermore, the General Court notes that to accept that the various documents relating to investigations are covered by the exception until all possible legal procedures have been decided would make access to documents dependent on uncertain events.
The General Court concludes that the disclosure of the statement of contents was not likely to undermine the protection of the purpose of the investigations as regards the procedure before the Commission concerning the hydrogen peroxide cartel.
However, the Commission maintains that the exception must be interpreted in a way as to refuse the disclosure of any document likely to undermine the Commission’s cartel policies and in particular its leniency programme.
The General Court refuses to extend the scope of “the concept of the purpose of the investigation activities” such as to include all of the Commission’s policy in regard to punishment and prevention of cartels. The General Court observes that such a broad interpretation of the concept of investigation activities is incompatible with the principle guaranteeing the widest possible public access to documents emanating from the institutions. The exceptions laid down in that Regulation must be interpreted and applied strictly. In addition, the General Court notes that the Commission wishes by a broad application of the exception to prevent the access to the statement of contents; a document which was not submitted for leniency and contains no information likely in itself to damage the interests of the companies which applied for leniency.
Then, the General Court stresses that nothing in Regulation No 1049/2001 leads to interpret the concept of the ‘purpose of the investigation activities’ differently in the context of competition policy than in other EU policies.”
Finally, such as in the Pfleiderer Case4, the General Court emphasizes that a leniency programme is not the only means of ensuring compliance with EU Competition law. Actions for damage before national courts can also make significant contribution to the maintenance of effective competition in the EU.
This judgment is interesting since:
- The General Court firmly stresses that the exceptions provided for in Article 4 of Regulation 1049/2001 have to be interpreted strictly.
- The General Court develops a clear interpretation of the exception based on “the protection of the purpose of the investigation”. The General Court affirms that such protection is valid as long as a procedure to prove the existence of anti-competitive behaviour is on-going and that the disclosure of documents could jeopardise that procedure. Also, the General Court refuses to make access to documents dependent on uncertain events. Thus, it is not accepted that documents remain covered by this exception until all pending actions before the Court are decided. The General Court considers that once the Commission has attained the goal which is to determine the existence of infringement, “the protection of the purpose of the investigation” is obsolete.
- The General Court refuses to extend the scope of “the concept of the purpose of the investigation activities” so as to allow the Commission to refuse the disclosure of a document in a competition case merely because of a possible adverse impact on its leniency programme.
- Finally, the General Court provides the possibility for private damage claimants to access one precise document, namely the statement of contents of the administrative files. It is not a document containing business secrets requiring the protection of commercial interest.
2. The Commission adopted a new package of rules of general economic interest (SGEI)
The reform package includes5:
- A revised Decision on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest. The Decision replaces Decision 2005/842/EC6and specifies the conditions under which compensation to companies entrusted with the provision of public services is compatible with the EU state aid rules and exempt from the requirement of notification laid down in Article 108(3) TFEU.
- A new Communication on the application of the EU State aid rules to compensation granted for the provision of services of general economic interest. This Communication provides a comprehensive and practical overview of the EU state aid requirements applicable to compensation granted for the provision of SGEI. The Communication summarizes key cases of the Court of Justice of the EU and of the Commission to facilitate the application of state aid rules.
- A revised Framework for State aid in the form of public service compensation. The framework defines the conditions under which compensation not covered by the decision is compatible with EU state aid rules.
- A proposal for a de minimis Regulation. The Commission is consulting on the proposed Regulation that exempts small subsidies from the obligation to notify in advance to the Commission for clearance under the EU state aid rules. The Commission expects to adopt the Regulation in spring 2012.
The Decision and Framework will replace the existing 2005 Commission Decision and Framework7 on SGEI from 31 January 2012, subject to certain transitional rules.
The revised package introduced new rules for the following points:
The revised Decision introduces a new threshold for greater scrutiny. The exemption will concern compensation not exceeding an annual amount of EUR 15 million (formerly EUR 30 million) for the provision of SGEIs in areas other than transport and transport infrastructure. This Decision only applies where the period for which the undertaking is entrusted with the operation of the SGEI does not exceed 10 years (formerly 5 years).
The Commission extends the scope of the exemption from the notification obligation to social services. The Commission notes the specific characteristics of hospitals and undertakings in charge of social services. In particular, it considers that social services may require an amount of aid beyond the threshold indicated in the Decision to compensation for the public service costs. In addition, a larger amount of compensation for the provision of social services does not necessarily produce a greater risk of distortions of competition. Consequently, the Commission extends the exemption provided for social services to social housing for disadvantaged citizens, hospitals providing medical care including emergency services and ancillary services directly related to their main activities in particular in the field of research.
However, in order to benefit from the notification exemption, the social services must be clearly identified as being services meeting social needs such as health, long term care, childcare, access or reintegration to the labour market, social housing and social inclusion of vulnerable people.
The Commission changes the exemption of notification for airports to promote small regional airports. The new decision exempts from notification public service compensation for airports with average annual traffic during the two financial years preceding that in which the service of general economic interest was assigned not exceeding 200 000 passengers instead of the previous 1 million passengers.
The act of entrustment
The revised Decision requires further details in the act of entrustment. Thus, the act of entrustment must include a clear description of the compensation mechanism and it must refer to the Commission Decision.
When the compensation granted to an undertaking which also has activities outside the scope of the SGEI is above EUR 15 million, the Member State concerned shall publish (i) the entrustment act or a summary and (ii) the amounts of aid granted to the undertaking on a yearly basis on the internet or by other appropriate means.
The amount of compensation
In order to avoid unjustified distortions of competition, the amount of compensation for the service operated should not exceed what is necessary to cover the net cost incurred by the undertaking in operating the service, including a reasonable profit.
The Framework introduces new methodologies to calculate the net cost necessary to discharge the public service obligations. The net cost should be calculated as the difference between the cost incurred in operating the SGEI and the revenue earned from the SGEI according to the Methodology based on cost allocation or, alternatively, as the difference between the net cost of operating with the public service obligation and the net cost or profit operating without the public service obligation according to the Net Avoided Cost Methodology.
The revenue to be taken into account must include at least the entire revenue earned from the SGEI and the excessive profits generated from special or exclusive rights.
The reasonable profit should be taken to mean the rate of return on capital that would be required by a typical company considering whether or not to provide the service of general economic interest for the whole duration of the period of entrustment, taking into account the degree of risk incurred.
The notion of quality service
The Commission emphasizes the quality service criteria. Thus, to determine the reasonable profit of the undertaking in operating the service, the revised Decision requires the Member States, when it feasible or appropriate, to introduce incentive criteria relating to the quality of service provided and gains in productive efficiency (efficiency gains should not reduce the quality of the service provided).
Efficiency incentives can be designed in different ways to best suit the specificity of each case or sector. Member States can define productive efficiency targets in the entrustment act. If the undertaking does not meet the objectives, the compensation should be reduced following a calculation method specified in the entrustment act. In contrast, if the undertaking exceeds the objectives, the compensation should be increased following a method specified in the entrustment act.
The Commission decided to remove the thresholds which provided exemption from the notification obligation to a company with an average annual turnover before tax, all activities included, of less than EUR 100 million during the two financial years preceding that in which the service of general economic interest was assigned.
Closer scrutiny on serious competition distortions
The Framework indicates that where an SGEI measure has the potential to create serious distortions of competition, the Commission will carry out an in-depth assessment of its impact on competition. In such cases, the Commission will examine whether such distortions can be mitigated by requiring conditions or requesting commitments from the Member State.
The Commission will also pay attention to situations where the aid allows the undertaking to finance the creation or use of an infrastructure that is not replicable and enables it to foreclose the market where the SGEI is provided or related relevant markets.
Proposal for a de minimis Regulation
The Commission will set out the conditions under which small amounts of public service compensation should be deemed not to affect trade between Member States and/or not to distort or threaten to distort competition. In those circumstances, compensation is not caught by Article 107(1) TFEU and consequently does not fall under the notification procedure provided for in Article 108(3) TFEU.
The Member States must submit the first report in the implementation of this decision and the Framework by 30 June 2014.
The Decision and Framework will replace the existing 2005 Commission Decision and Framework on SGEI from 31 January 2012, subject to certain transitional rules.
The Framework requires Member States to publish their list of existing aid schemes regarding public service compensation that have to be brought into line with the Framework by 31 January 2013, and to bring those aid schemes into line with the Framework by 31 January 2014.
Individual aid put into effect before the entry into force of the revised Decision and which complies with the 2005 Decision continue to be compatible for a further period of two years.
Individual aid that was granted before the entry into force of the revised Decision and was incompatible with the 2005 Decision, but fulfils the conditions of the revised Decision, is compatible aid.
- Case T‑437/08 - CDC Hydrogene Peroxide Cartel Damage Claims v Commission - ECR II-0000.12 December 2011.
- CDC is an organisation bringing damages actions on behalf of undertakings harmed by the bleaching chemicals cartel.
- Regulation (EC) No 1049/2001 of 30 May 2001 regarding public access to European Parliament, Council and Commission documents -  OJ L145/43 31 May 2001.
- C-360/09 Pfleiderer AG v Bundeskartellamt  ECR I-0000, 14 June 2011.
- New SGEI Package adopted on 20 December 2011-  OJ L7/3 and  OJ C 8/4-27 11 January 2012
- Commission Decision 2005/842/EC of 28 November 2005 –  OJ L312/67 29 November 2005
- Community framework for State aid in the form of public service compensation-  OJ C 297/4 29 November 2005