Companies confronted with antitrust investigations and fines may find safeguard behind the rules governing limitation periods (often termed ‘statutes of limitation’). However, two preliminary rulings by the European Court of Justice (ECJ) show that those rules are not necessarily set in stone.
According to the ECJ, national time limits relating to the imposition of antitrust fines may require deactivation if these limits result in a ‘systemic risk’ that antitrust infringements may go unpunished.
At the same time, the duration of an infringement period should not be ‘artificially extended’ to allow prosecution. For example, for an alleged single continuous infringement involving bid rigging, the period of infringement ends on the date of signature of the contract with the contracting authority; this may therefore time-bar enforcement by the competition authority. Vigilance as to when, how and why time limits apply is, therefore, key.
Limitation periods posing a systemic risk to antitrust enforcement
On 21 January 2021, the ECJ issued a preliminary ruling on a question posed by the Romanian Supreme Court regarding the five-year time limit for the Romanian competition authority to impose a fine for an antitrust infringement. According to this national law – which has since been amended – the time limit starts to run on the day the antitrust infringement ceases, and can be interrupted only by the Romanian competition authority opening an investigation; no subsequent actions in the investigation are capable of having the same interrupting effect. As a result, the fine imposed on Whiteland (a grocery distributor) by the Romanian competition authority for infringement of EU and national competition law (due to alleged price-fixing) was deemed out of time.
The ECJ found that national rules governing limitation periods should strike a balance between providing companies under investigation with legal certainty on the one hand, and safeguarding the effective and efficient application of the EU competition rules on the other. Given that EU competition law cases generally require a complex factual and economic analysis, the duration of investigations is often extended. It would therefore go against the effective application of EU competition law if national competition authorities were unable to interrupt a limitation period by means of actions taken during the course of the investigation. Such a strict interpretation could present a systemic risk that violations of EU competition law may go unpunished. It is now up to the Romanian Supreme Court to verify whether this is indeed the case.
No ‘artificial’ extending of an infringement period
On 14 January 2021, the ECJ handed down a preliminary ruling regarding a question by the Finnish Supreme Court on the starting point for the five-year limitation period for the Finish competition authority to submit its fining decision to the Market Court. The Market Court had considered as time-barred the Finish competition authority’s application to impose a fine for an alleged single continuous infringement involving bid rigging.
The ECJ reiterated that the objective pursued by the EU competition rules requires that an infringement of the cartel prohibition (laid down in Article 101(1) TFEU) must be held to last “as long as the restriction of competition resulting from the conduct concerned persist”. In the case of bid rigging, the restrictive effects on competition disappear, in principle, at the time when the essential characteristics of the contract, and particularly the overall price, have been definitively determined by the conclusion of a contract between the winning bidder and the contracting authority. As a result, the infringement period corresponds to the period up to the date of signature of the contract. It is for the Finnish Supreme Court to ascertain when this took place.
The ECJ dismissed the point raised by the Finnish competition authority (amongst others) that adopting too short an infringement period would be contrary to the obligation to give full effect to Article 101 TFEU, as this would mean that a higher number of infringements would remain unpunished. According to the ECJ, the effective implementation of Article 101 TFEU “cannot justify artificially extending the duration of the infringement period in order to allow its prosecution”.
These preliminary rulings by the ECJ rulings show that the application of limitation periods involves a careful balancing act between the protection of the rights of the companies under investigation, and safeguarding the effective application of EU competition law by national competition authorities. Companies should keep this balance in mind when confronted with antitrust investigations.
This article was published in the Competition Newsletter of February 2021. Other articles in this newsletter: