The Standard of Judicial Review in EU Competition Law Enforcement and Its Compatibility with the Right to a Fair Trial Under the EU Charter of Fundamental Rights

Abstract

During the last decade, the evolution of the competition law enforcement has reinvigorated the debate concerning the compatibility of the EU enforcement regime with fundamental rights. In particular, two factors have increased the relevance of the protection of fundamental rights in the context of competition law enforcement: the entry into force of the Lisbon Treaty (incorporating the EU Charter of Fundamental Rights) and the progressive criminalization of competition law enforcement. One of the tensions between competition law enforcement and the protection of fundamental rights concerns the right to a fair trial included in Article 6 of the European Convention of Human Rights (ECHR), as well as in Article 47(2) EU Charter. Due to the technical nature of competition law analysis, the EU and national courts have traditionally granted a certain margin of discretion to the competition authorities. In the aftermath of the Menarini judgment of the European Court of Human Rights (ECtHR), the question is whether such margin of discretion still complies with the requirement of full judicial review introduced in Menarini. This chapter reviews the ongoing debate on compatibility of EU competition law enforcement with the fundamental rights enshrined in the EU Charter (Sect.1), discusses the requirement of full judicial review introduced by the ECtHR in Menarini (Sect. 2), and analyzes the compatibility of the requirement of full judicial review with the standard applied by the Court of Justice of European Union (CJEU) in antitrust cases (Sect. 3). While in its recent jurisprudence the CJEU confirms the compatibility of its standard of judicial review with Article 47 of the EU Charter, it remains unclear whether the ECtHR would achieve the same conclusion in relation to Article 6 ECHR. The issue of compatibility of judicial review with the requirements of fair trial remains open at the national level where the courts often continue to limit their review to the procedural aspects of the competition authority’s decisions.

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1 Introduction

1.1 The Growing Relevance of Fundamental Rights Protection in Competition Law Enforcement

When the EU founding fathers included competition rules in the Treaty of Rome, they were probably not aware of the potential link between the enforcement of competition law and fundamental rights protection. By sanctioning the anticompetitive practices by private undertakings that represented invisible barriers to trade, competition rules aimed at completing the free movement rules were included in the Treaty of Rome.¹ Competition law, therefore, aimed at achieving the establishment of the common market rather than at safeguarding the protection of fundamental rights in Europe. Moreover, the EU founding fathers opted for an administrative rather than a criminal system of competition law enforcement. Under Regulation 17/62,² in fact, the European Commission was the sole administrative authority at EU level in charge of enforcing Articles 101 and 102 of the Treaty of Functioning of the European Union (TFEU).³ For a number of decades, the main function carried out by Directorate General (DG) for Competition of the EU Commission was to review the compatibility of the agreements notified by private undertakings with Article 101 TFEU.⁴ On the other hand, the EU Commission devoted limited resources to the investigations on secret cartels, and thus the number of fines imposed on private undertakings due to serious competition law infringements was negligible.⁵ Within this context, few commentators argued that the EU Commission was bound to comply with the additional procedural guarantees that characterize criminal proceedings (i.e., right of defense, equality of arms, presumption of innocence).⁶

During the last decade, the system of competition law enforcement has radically changed and the debate concerning the compatibility of its enforcement regime with fundamental rights has gained momentum. In particular, two factors have increased the relevance of the protection of fundamental rights in the context of competition law enforcement: the entry into force of the Lisbon Treaty and the progressive criminalization of competition law enforcement. Under Article 6(1) of the Treaty on European Union (TEU),⁷ the EU Charter of Fundamental Rights (hereinafter EU Charter) has become binding for the EU institutions and the EU Member States (MS) when they “implement” EU law.⁸ Consequently, when the EU Commission conducts competition law investigations, it is bound to comply with the fundamental rights included in the Charter. Furthermore, Article 6(2) TFEU requires the EU to accede to the European Convention of Human Rights (ECHR).⁹ Although the provisions included in the EU Charter mirror those ones included in the ECHR,¹⁰ the EU accession to the ECHR would have important consequences in the current framework of competition law enforcement. In particular, a private undertaking sanctioned by the EU Commission for a competition law infringement could appeal to the European Court of Human Rights (ECtHR) after having “exhausted the domestic remedies” (i.e., after having appealed the EU Commission decision before the EU General Court and the Court of Justice of the European Union).¹¹

The criminalization of competition law enforcement is linked to the growing relevance of cartel investigations within the enforcement activities of DG Competition. By introducing a leniency policy¹² and by focusing its investigations on anticompetitive practices that have the object of harming the consumers’ welfare,¹³ DG Competition has progressively increased the number of cartel investigations during the last decade.¹⁴ At the same time, DG Competition has constantly increased the amount of fines imposed on the sanctioned undertakings, claiming that the main objective of higher fines was to ensure deterrence against possible future infringements.¹⁵ Nowadays, the fines imposed by DG Competition do not simply aim at compensating the damage caused by the anticompetitive practice but also at punishing the sanctioned undertaking in order to ensure that the latter will not repeat the same violation in the future. Under the case law of the ECtHR, sanctions that aim at punishing the infringer are criminal sanctions, irrespective of their definition under national law.¹⁶ Therefore, although Article 23(5) of the Regulation 1/2003 states that the fines imposed by the EU Commission do not have “a criminal law nature”,¹⁷ it is now commonly accepted that the fines imposed by DG Competition should be considered as criminal sanctions under the ECtHR case law.¹⁸ Consequently, the additional procedural guarantees that characterize criminal proceedings would be applicable in the context of the enforcement of EU competition rules.

The relevance of the debate concerning the compatibility of competition law enforcement with basic fundamental rights is not limited to the EU competition rules. Regulation 1/2003, which has replaced Regulation 17/72, has decentralized the enforcement of competition law in Europe. Under the old enforcement regime, the national competition authorities (NCAs) and national courts of the EU MS could apply Articles 101(1) and 102 TFEU, while the EU Commission had the exclusive power to exempt notified agreements under Article 101(3) TFEU.¹⁹ Some EU MS decided autonomously to establish an NCA (i.e., Germany, France, Italy); Regulation 17/62, in fact, did not bind EU MS to establish an NCA; Regulation 1/2003, on the other hand, has mandated every EU MS to establish an NCA in charge of enforcing both national and EU substantive competition rules (i.e., Articles 101 and 102 TFEU).²⁰ Regulation 1/2003 did not harmonize the national procedural rules of enforcement of substantive competition rules.²¹ However, most of the EU MS that established an NCA after the entry into force of Regulation 1/2003 established an NCA taking DG Competition as an example of an independent administrative authority. Countries from Central and Eastern Europe (CEE)²² and Southeast Europe (SEE)²³ have established their NCAs in the context of the EU enlargement process. On the other hand, “old” EU MS have “spontaneously” reformed the structure of enforcement of their national competition laws in order to progressively align it to the EU best practices.²⁴ In particular, following the example of DG Competition, the NCAs of the EU MS have increasingly focused their enforcement activities on detecting cartels and imposing fines that have a deterrent effect.²⁵ Therefore, the criminalization of competition law enforcement is not a trend that concerns exclusively EU competition law; it is a common trend in almost every EU MS. Since all the EU MS are Contracting Parties to the ECHR, they should ensure the compliance with fundamental rights in the context of competition law investigations. However, as we will see in the following sections, since the EU MS have structured their NCAs taking DG Competition as a reference point, the tensions between the competition law enforcement and fundamental rights protection that characterize the enforcement of EU competition law become evident at the national level as well. Therefore, the emerging debate on the compatibility of fundamental rights with competition law enforcement does not concern exclusively the EU competition law; such debate also affects the EU MS and candidate countries.

1.2 The Debate Concerning the Compatibility of EU Competition Law Enforcement with the Right to a Fair Trial

One of the tensions between competition law enforcement and the protection of fundamental rights concerns the right to a fair trial included in Article 6 ECHR, as well as in Article 47(2) EU Charter. Article 6(1) ECHR provides that each person involved in criminal or civil proceedings is entitled to fair and public hearings, as well as to a public trial. On the other hand, Article 6(2)(3) ECHR includes additional procedural guarantees in relation to criminal proceedings, such as the principle of presumption of innocence and the right of defense. The determination of whether competition law investigations have an administrative or a criminal nature has thus important repercussions on the application of the basic procedural guarantees provided by Article 6(1) ECHR vis-a-vis the additional guarantees provided by Article 6(2)(3) ECHR.²⁶

For a number of years, the compatibility of the EU competition law proceedings with the principle of fair trial has been the subject of an ongoing discussion in academic and professional circles. In particular, two opposite approaches emerged in this discussion. On the one hand, a number of practitioners argued that the enforcement structure of EU competition law does not comply with the principle of “fair trial”.²⁷ In particular, the fact that DG Competition both conducts the investigations and later adopts the decision sanctioning the undertaking subject of the investigations does not comply with Article 6 ECHR (i.e., EU Commission acts both as a prosecutor and as a judge). Although DG Competition has tried to separate these functions through the introduction of Hearing Officers,²⁸ the latter do not have real adjudicative powers; the final decision to impose a fine is taken by the College of the Commissioners on the basis of the recommendation put forward by the team investigating the case. In the light of the progressive criminalization of competition law enforcement, the administrative system of EU competition law enforcement does not comply with the additional guarantees required by Article 6(2)(3) ECHR. For example, Bronckers and Vallery have argued that the lack of a separate adjudicative body in charge of examining the conclusions of the team in charge of the investigations within DG Competition undermines the principle of presumption of innocence enshrined in Article 6(2) ECHR.²⁹

Representatives of the EU Commission, on the other hand, have defended the current system of EU competition law enforcement. In particular, by referring to the ECtHR judgment in Jussila,³⁰ Wils has argued that competition law fines should be considered as minor rather than hard-core criminal sanctions.³¹ According to the ECtHR’s ruling in Jussila, minor criminal sanctions could be imposed by an administrative authority rather than by a judicial body, provided that the administrative decision could be subject to full judicial review on appeal in front of an independent court.³² Similarly, Castillo de la Torre has rejected the argument concerning the criminalization of competition law enforcement due to the alleged increase of the amount of fines imposed by DG Competition during the last years.³³ According to the author, “the fines imposed in the earliest cartel cases were considered just as heavy as they are today”.³⁴ According to Castillo de la Torre, the argument concerning the recent criminalization of competition law enforcement is unfounded: the alleged increase of the fines, in fact concerned the overall number of the fines imposed by DG Competition rather than the proportion of fines in comparison to the annual turnover of the sanctioned undertakings.

Until quite recently, the debate summarized in the previous paragraphs took place at a largely theoretical level.³⁵ Only in September 2011, the ECtHR recognized in Menarini that an NCA could impose a fine due to a competition law violation, despite the lack of separation between prosecution and judicial functions within the NCA.³⁶ Nevertheless, in order to comply with the principle of fair trial, the administrative decision of the NCA had to be subject to a full judicial review on appeal. Following the Menarini judgment, the debate concerning the compatibility of the competition law enforcement system has thus shifted from the institutional structure of enforcement of competition law to the standard of judicial review applied by the court that has to review on appeal the decision of the NCA.

This chapter aims at contributing to the ongoing debate concerning the compatibility of EU competition law enforcement with the right to a fair trial by analyzing the scope of judicial review of the EU Commission decisions exercised by the Court of Justice of the European Union (CJEU). In particular, the question discussed in the following pages concerns the compatibility of the standard of judicial review developed by the General Court (GC) and by the CJEU in the field of competition law with the requirement of full judicial review introduced by the ECtHR in Menarini. In order to answer to this question, the Menarini judgment will be analyzed in the following section, followed by an analysis of the standard of review developed by the CJEU in the field of EU competition law.

2 Menarini: Testing the Compatibility of the National Competition Law with the Right to a Fair Trial

2.1 Facts and Ruling

Menarini Diagnostic was an Italian pharmaceutical company fined by the Italian NCA (AGCM)³⁷ for participation in a cartel of pharmaceutical companies aimed at fixing the sale price of diabetes diagnostic tests. The cartel was prohibited under the national equivalent of Article 101 TFEU.³⁸ The sanctioned undertaking challenged the administrative decision before the Regional Administrative Tribunal of Lazio (TAR)³⁹ and later before the Council of State (Consiglio di Stato).⁴⁰ Both administrative courts rejected appeal, and thus “after having exhausted the domestic remedies” Menarini appealed to the ECtHR.

Menarini argued that the deterrent and punitive nature of the fine imposed by the AGCM represented a clear criminal sanction, and thus the additional procedural guarantees provided by Article 6(2)(3) ECHR were applicable.⁴¹ In addition, TAR and Council of State exercised only a limited judicial control of the AGCM decision⁴²: the two administrative courts reviewed the legality of the AGCM decision, but they could not replace the AGCM assessment of facts with their own assessment. In the absence of separation between investigative and adjudicative functions within the AGCM, and due to the fact that both TAR and Council of State exercised only a limited judicial review, the Italian administrative system of competition law enforcement breached the principle of fair trial.

In its ruling, the ECtHR confirmed that a competition law fine had the features of a criminal sanction due to its punitive and deterrent character.⁴³ However, such fines were minor criminal sanctions, which could be imposed by an administrative authority like the AGCM.⁴⁴ Nevertheless, the ECtHR pointed out that the sanction should be subject to a full judicial review on appeal by an independent court.⁴⁵

In the present case, the ECtHR recognized that both TAR and the Council of State satisfied the independence criterion.⁴⁶ In addition, the two administrative courts carried out a full judicial review⁴⁷: they controlled the proportionality and the reliability of the evidence put forward by the AGCM to justify the fine imposed. In view of these considerations, the ECtHR rejected the claim concerning the infringement of Article 6 ECHR.⁴⁸

2.2 The Relevance of Menarini

In Menarini, the ECtHR upheld the position previously emerged in the literature (i.e., Wils)⁴⁹ concerning the compatibility of an administrative system of competition law enforcement with the right to a fair trial due to the minor criminal character of the sanctions imposed thereunder. Nevertheless, through its ruling, the ECtHR has opened a new debate concerning the scope of judicial review. On the one hand, the ECtHR introduced in Menarini a higher threshold of judicial review to justify an administrative system of competition law enforcement (i.e., full judicial review of the NCA decision). On the other hand, the ECtHR upheld the judicial review exercised by TAR and by the Council of State without analyzing in detail the type of review carried out by the two Italian administrative courts.⁵⁰ In particular, the Italian courts have always left a certain margin of discretion to the AGCM in carrying out the economic analysis required in competition law investigations, thus limiting their review to the proportionality and the plausibility of the AGCM’s findings.⁵¹

This apparent inconsistency between the standard of judicial review developed by the ECtHR and its application in the present case has been strongly criticized by the ECtHR judge Pinto de Albuquerque in its dissenting opinion in Menarini.⁵² The Portuguese judge noted that in the course of the national proceedings, both TAR and the Council of State had constantly referred to paragraphs of the AGCM decision.⁵³ According to Pinto de Albuquerque, TAR and Council of State had not carried a careful technical assessment of the AGCM decision; their judicial review was thus not full. ⁵⁴ The diverging views of the ECtHR judges highlighted the difficulties of the application of the principle of full judicial review in individual cases.

The relevance of the Menarini judgment goes beyond the compatibility of the Italian system of competition law enforcement with Article 6 ECHR. In fact, as mentioned in the introduction, most of the EU MS share a similar administrative system of competition law enforcement. Moreover, like most of the national courts reviewing NCA decisions, the standard of review developed by TAR and by the Council of State is quite close to the one exercised by the GC and by the CJEU in relation to the decisions of the EU Commission in the field of EU competition law. As we shall demonstrate in the following section, due to the technical nature of competition law analysis, EU and national courts have generally granted a certain margin of discretion to the competition authorities. In the aftermath of the Menarini judgment, the question is whether such margin of discretion still complies with the criterion of full judicial review introduced by the ECtHR in Menarini.

3 CJEU Standard of Review in EU Competition Law and Its Compatibility with the Right to a Fair Trial

3.1 Intensity of Judicial Review

The standard of judicial review is inherently linked to the nature of the process itself. In order to establish the intensity of judicial review, it could be helpful to enumerate various grounds to challenge the EU Commission’s decisions. These grounds are reflected in the Article 263 TFEU: lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers. Article 261 TFEU mentions the unlimited jurisdiction of the CJEU with regard to the penalties provided for in the regulations of the European Parliament and the EU Council. Such provision is confirmed in Regulation 1/2003 in relation to the “decisions whereby the Commission has fixed a fine or periodic penalty payment“.⁵⁵ As reaffirmed by the CJEU in Danone, ”the [EU] judicature is empowered to exercise its unlimited jurisdiction where the question of the amount of the fine is before it“.⁵⁶ The CJEU is thereby empowered to cancel, reduce, or increase the fine or periodic penalty payment.

Although the text of the above legal provisions might create an illusion that the CJEU exercises a full and uniform degree of judicial review in relation to the identified issues, the judicial practice demonstrates significant divergence in the intensity of review depending on its subject: correctness of facts, evidential support, legal interpretations, complex economic assessments, etc. There could be instances where the above issues overlap; this would be the case when the application of the substantive legal test might depend on the outcome of the complex economic assessment.

The review over correctness of facts, on which EU Commission bases its findings has traditionally been regarded as intense. AG Tizzano characterized the intensity of the judicial review of facts in the following way:

With regard to the findings of fact, the review is clearly more intense, in that the issue is to verify objectively and materially the accuracy of certain facts and the correctness of the conclusions drawn in order to establish whether certain known facts make it possible to prove the existence of other facts to be ascertained.⁵⁷

An illustrative example of the CJEU’s review of correctness of facts can be found in Schneider litigation. In Schneider/Legrand, the EU Commission reviewed a merger between two manufacturers of electrical equipment, which were active on the national markets of several EU MS.⁵⁸ Due to the differences in the regulatory frameworks in some EU MS, which required the equipment produced by the merging parties to satisfy certain technical standards, the EU Commission concluded that relevant geographical markets are national ones.⁵⁹ However, when assessing the dominance of the merging parties, “Commission based its assessment of the impact of the concentration on transnational, global considerations, extrapolated from a single market without demonstrating its relevance at the national level”.⁶⁰ The GC noted that EU Commission’s assessment was “vitiated by errors and omissions which deprive it of probative value”.⁶¹

Similarly, the GC pointed out the EU Commission’s omissions in substantiating its claims of collective dominance in Airtours. In that case, the EU Commission alleged that UK short-haul package-holiday market was experiencing very moderate growth, which would reinforce the alleged collective dominance of the remaining market players. When examining evidential support that EU Commission presented in substantiation of its claim, the GC found that it was based on a single-page brief prepared at an unknown date.⁶² Moreover, the Court observed that it was “apparent from the cursory examination of that document that the Commission’s reading of it was inaccurate”.⁶³

Recalling the unlimited jurisdiction of the CJEU in relation to the fines imposed by the EU Commission, one would observe a thorough review of the factors considered by the EU Commission since the early CJEU judgments. In Chemiefarma, for example, the CJEU has reviewed a complex variety of circumstances ranging from the nature of anticompetitive infringement to the size and market shares of the undertakings concerned.⁶⁴ In that case, the Court has established an error in the EU Commission’s calculation of the duration of infringement, which justified a slight reduction of the initial fine.⁶⁵ A similar conclusion in Dunlop Slazenger resulted in a 40% reduction of the fine imposed by the EU Commission.⁶⁶ In Pioneer, the CJEU, referring to its powers of unlimited jurisdiction, slashed the EU Commission’s fine by a half for errors of assessment in relation to duration and gravity of the infringement, the intent, the role, and the financial situation of the undertakings concerned.⁶⁷

Although the above instances seem to be relatively straightforward cases where the CJEU revealed inconsistencies and inappropriate usage of evidence, the distinction between the review of facts and review of assessment of facts is not always so obvious. The importance of the distinction between the correctness of evidence and conclusions drawn from it becomes relevant in assessments of complex economic matters, where the EU Commission is granted a certain margin of appreciation.

3.2 Limitations of Judicial Review: Complex Economic Assessments and Manifest Errors

The standard of review related to the errors of assessment in antitrust cases is traditionally found in the Aalborg Portland judgment, an Article 101 TFEU case that evolved around the assessment of economic matters. According to the CJEU:

examination by the Community judicature of the complex economic assessments made by the Commission must necessarily be confined to verifying whether the rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or misuse of powers.⁶⁸

Legal treatises explain that under this “manifest error of assessment” standard, “GC will allow the Commission considerable margin of appreciation and will only annul a Commission decision where it finds that the Commission has committed manifest errors of appreciation”.⁶⁹ At the same time, the CJEU acknowledged the evolution of this standard by distinguishing between traditional standard of judicial review and stricter standard of review that emerged after the landmark Tetra Laval litigation.⁷⁰

The concept of “manifest error of assessment” has been relied on by the CJEU throughout its jurisprudence.⁷¹ It served as a formalistic expression for indicating deficiencies in the EU Commission’s assessment. A very typical usage of this terminology can be found in the GC’s Impala judgment:

[Commission’s finding] is not supported by a statement of reasons of the requisite legal standard and is vitiated by a manifest error of assessment in that the elements on which it is based are incomplete and do not include all the relevant data that ought to have been taken into consideration by the Commission and are not capable of supporting the conclusions which are drawn from them.⁷²

The same concept has been used by the GC to justify its abstention from exercising the unlimited jurisdiction over determination of fines in Wieland-Werke case. In the latter judgment, the GC held:

in areas such as determination of the amount of a fine imposed pursuant to Article 15(2) of Regulation No 17, where the Commission has a discretion, for example, as regards the amount of increase for the purposes of deterrence, review of the legality of those assessments is limited to determining the absence of manifest error of assessment.⁷³

At a first glance, it appears that “manifest” implies obvious errors and inconsistencies that can be established by the CJEU without conducting a reassessment of the EU Commission’s findings. This understanding of the standard of judicial review was widely shared during the early years of the EU competition law. For example, in the 1990s Brown suggested:

The CJEU will not attempt to substitute its own view of the effectiveness of competition in relevant markets. Only the Commission has the necessary expertise and fact-finding powers to carry out such a factual analysis. The future role of judicial review by the Community courts is likely to be limited to rulings on important issues of law or procedure and ensuring that the Commission does not make manifest errors in applying the law to the facts.

Similarly, Bebr, summarizing the early CJEU’s practice, concluded that “the Court may certainly not be expected to push the extent of its judicial review any further than is absolutely indispensable for ensuring and respecting the principle of rule of law”.⁷⁴ Advocate General Slynn in an early Article 81 EC case noted: “The question in this case is whether the arguments raised by [the applicant] concerning the Commission’s assessment of competition in the relevant market and the inferences it drew from that assessment disclose such manifest error, misdirection or unreasonableness on the Commission’s part that the decision must be annulled”.⁷⁵ In RJB Mining, the GC also confirmed similar understanding of the word manifest: “the failure [by the EU Commission] to observe legal provisions is so serious that it appears to arise from an obvious error of evaluation”.⁷⁶ Thus, initially the scope of judicial review was regarded as limited to the errors in application of law and manifest errors in application of the law to the facts, an approach that clearly demonstrated significant deference to the EU Commission’s assessment. Irrespective of the reasons behind intensifying judicial review of the EU Commission’s decisions, the lack of clarity concerning the standard of judicial review led to the following situation: the CJEU on several occasions substituted the EU Commission’s assessment by its own. The Court ruled that the evidence put forward by the EU Commission was unconvincing and thus concluded that there had therefore been a manifest error of assessment on the side of the EU Commission. This de novo assessment of the evidence already evaluated by the EU Commission would appear closer to the concept of full review rather than to the limited review of the manifest errors of assessment.

3.3 Full Judicial Review and Margin of Appreciation

The attribution of the margin of assessment recognizes the complexity of the assessment and existence of alternative interpretations of the given facts. It acknowledges that a specialized agency like the EU Commission is better placed to carry out these complex assessments than courts. Legal framework restricts the scope of judicial review in the area where the agency exercises its margin of assessment since the legislator intended to give the ultimate say in these matters to the administrative agency. The term “margin of discretion”, although being often used in the EU jurisprudence,⁷⁷ in our view appears somewhat misleading. In the absence of a detailed analysis, it creates an impression that the EU Commission has the discretionary powers (i.e., unlimited within its margins) to make decisions on matters of economic assessment. In order to avoid this confusion and add clarity to this term, we prefer to use the expressions “margin of appreciation”, “margin of assessment”, or “certain freedom of evaluation”,⁷⁸ expressions that were likewise used in the EU jurisprudence.⁷⁹

The margin of appreciation should be viewed as an exception from the full judicial review exercised by the courts over the decisions of administrative agencies. According to judge Legal, the limited judicial control should take place in three types of cases: (1) when the contested decision incorporates the use of discretionary powers that the institution holds, when the dispute at hand is more political than legal, or when no available source of law dictates a particular answer to the problem posed; (2) when the decision implies an assessment of a highly technical nature that the judge is not better prepared or, even in some cases, less well prepared than the agency to provide an objective answer to the questions posed; (3) when the assessment on which the decision rests has already been conducted by an independent and an impartial authority, like a jury or a quasi-jurisdiction, which if the court were to fully review for the second time would lead to a duplication.⁸⁰

The discretion in economic assessments has been confirmed in a number of CJEU’s judgments.⁸¹ According to some commentators, the significance of the EU Commission’s discretion lies in the fact that once it has undertaken a comprehensive investigation and supported its conclusion with a solid evidence, the CJEU would not annul the EU Commission’s decision even in a case where the CJEU’s own assessment would differ from that of the EU Commission. In relation to fines imposed for the infringements of EU competition law where the CJEU is expected to exercise the unlimited review, a certain margin of discretion has been allowed to the EU Commission within its Fining Guidelines.⁸² In particular, the EU Commission can assess the appropriate amount of the fine taking into consideration the duration of the infringement, the deterrent effect of the sanction,⁸³ as well as attenuating circumstances (i.e., degree of cooperation showed by the sanctioned undertaking during the investigations).⁸⁴ In Heineken, the GC confirmed that ”the Commission enjoys a broad discretion as regards the method for calculating fines“ so that ”in areas such as determining the amount of a fine…where the Commission has such a discretion, review of the legality of its assessments is limited to determining the absence of manifest error of assessment“.⁸⁵ Likewise, in Carbon Tokai, the GC stated that in relation to the quality and usefulness of cooperation by the cartelists, the Commission has “a wide discretion“ and only the ”manifest abuse of that discretion“ should be penalized by the Court.⁸⁶ Similarly, in FMC Foret, the GC acknowledged that “the Commission has a discretion as regards the application of attenuating circumstances”.⁸⁷

In turn, the CJEU has refused to substitute its assessment for that of the GC exercising “its unlimited jurisdiction as to the amount of the fines imposed on undertakings”,⁸⁸ thus leaving certain issues in the “wide discretion” of the EU Commission. Hence, the overview of the CJEU’s practice in exercising its “unlimited jurisdiction” led some commentators to conclude that “over the last 30 years, one of the main characteristics of the EU Courts’ unlimited jurisdiction has been the discrepancy between the judge’s ample powers and the very limited—and at times insufficient—use made of such powers”.⁸⁹

3.4 Full Judicial Review in Antitrust Cases in the Aftermath of KME Case Law: Myth or Reality?

The debate about the standard of judicial review in EU competition law cases and its compatibility with the fair trial principle under Article 6 ECHR as applied by the ECtHR in Menarini has been recently reinvigorated in the aftermath of the Chalkor ⁹⁰ and KME ⁹¹ judgments issued by the CJEU at the end of 2011.

In the KME case, the EU Commission imposed a EUR 39 million fine on the undertakings forming part of the KME group for participation in a set of anticompetitive agreements on the copper plumbing tubes market.⁹² On appeal before the CJEU, the appellant argued that the GC⁹³ had violated its fundamental right to full and effective judicial review by failing to conduct a thorough review of the EU Commission’s decision. According to KME, the GC has “deferred to an excessive and unreasonable extent to the Commission’s discretion”.⁹⁴ Advocate General Sharpston, in her opinion, has addressed the issue whether the GC exercised the full jurisdiction within the meaning of Article 6 ECHR and the relevant case law of the ECtHR.

Unlike the Advocate General, the CJEU in its assessment of the KME’s pleas chose to refer solely to Article 47 of the EU Charter rather than to Article 6 ECHR. In explaining the relationship between the GC’s judicial review and the EU Commission’s margin of assessment, the CJEU simply reiterated its statement in Tetra Laval ⁹⁵:

whilst the Court recognizes that the Commission has a margin of discretion with regard to economic matters, that does not mean that the Community Courts must refrain from reviewing the Commission’s interpretation of information of an economic nature. Not only must the Community Courts, inter alia, establish whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it.⁹⁶

Therefore, “the Courts cannot use the Commission’s margin of discretion…as a basis for dispensing with the conduct of an in-depth review of the law and of the facts“.⁹⁷ Finally, the CJEU reached the conclusion that „the review of legality provided for under Article 263 TFEU, supplemented by the unlimited jurisdiction in respect of the amount of the fine, provided for under Article 31 of Regulation No 1/2003, is not therefore contrary to the requirements of the principle of effective judicial protection enshrined in Article 47 of the EU Charter“.⁹⁸

The significance of the KME precedent lies primarily in the fact that the CJEU for the first time has expressly affirmed the compatibility of the EU competition law system with the right to a fair trial (although only under the EU Charter, not under ECHR). While there have been various suggestions as to why the CJEU decided to avoid the reference to ECHR,⁹⁹ the Court has affirmed that Articles 261 and 263 TFEU provide the Courts with sufficient legal powers to conduct an adequate control of the EU Commission’s decisions, which would guarantee the right to a fair trial under Article 47 of the EU Charter. According to the KME ruling, the EU Commission’s discretion, which in some instances remains “substantial“ or „wide“, does not prevent the GC “from carrying out the full and unrestricted review, in law and in fact, required of it“.¹⁰⁰ This statement appears to be in line with the requirements laid down by the ECtHR in Menarini: “judicial body with full jurisdiction with the power to quash in all respects, in facts or in law, decision rendered by the lower body“.¹⁰¹ This led some authors to assume that the CJEU is gradually intensifying its standard of review and narrowing down the EU Commission’s margin of discretion.¹⁰² Other authors have argued that the KME precedent “falls short of a coherent framework for appraising whether the EU system of review complies with the requirement of a fair trial“.¹⁰³ While awaiting the emerging case law, where the ECtHR would have an opportunity to further substantiate the compliance of its judicial review with the fundamental rights guaranteed in the EU Charter and ECHR, we submit that the mere reiteration of Tetra Laval formula of judicial review outside the merger control context does not resolve the problem of compliance of various limitations on the allegedly full jurisdiction of the CJEU that have been discussed above.

4 Concluding Remarks

The progressive criminalization of competition law enforcement has produced a vibrant debate concerning the compliance of the EU competition enforcement regime with the right to a fair trial. Menarini eliminated the concerns previously expressed by a number of authors concerning the compatibility of the administrative system of competition law enforcement with Article 6 ECHR. In that ruling, the ECtHR defined competition law fines as “minor” criminal sanctions, which could thus be imposed by an administrative authority like an NCA or EU Commission. Nevertheless, the ambiguous requirement of full judicial review introduced by the ECtHR has opened a new debate in relation to the standard of judicial review exercised by the CJEU/GC in reviewing the decisions of the EU Commission. During the last two decades, the EU Courts in Luxembourg have progressively broadened the scope of their judicial review. Nevertheless, it is unclear at the moment whether the Tetra Laval standard of judicial review complies with the Menarini requirement of a full judicial review.

In KME, the CJEU positively self-assessed the compatibility of its standard of judicial review with Article 47 of the EU Charter. However, it is unclear whether the ECtHR would achieve the same conclusion in relation to Article 6 ECHR. The Menarini judgment referred to the compatibility of the enforcement regime of the national competition law with Article 6 ECHR. Only when the EU accedes to the ECHR will the ECtHR be able to verify the correctness of the self-assessment made by the CJEU in KME. In fact, when the EU joins the ECHR, a company fined by EU Commission will be able to appeal to the ECHR “after having exhausted the domestic remedies” (i.e., after having appealed the EU Commission decision to the GC and CJEU). Taking into consideration that 3 years after the entry into force of the Lisbon Treaty the EU is still not a Contracting Party of the ECHR, we do not expect any time soon an ECtHR judgment assessing the compatibility of the EU competition law enforcement system with Article 6 ECHR.

Even if we assumed that the ECtHR would consider CJEU standard of review in line with its Menarini case law, the issue would still remain open at the national level. As previously noted by the authors, at the level of EU MS and candidate countries national courts do not always perform full judicial review of the NCA decisions.¹⁰⁴ In particular, in the new EU MS and candidate countries, national courts often limit their review to the procedural aspects of the NCA decisions. Therefore, following the example of Menarini Pharmaceutical, a company sanctioned by the NCA of one ECHR, Contracting Parties could appeal to the ECtHR, arguing that in the context of national proceedings the national courts did not conduct a full review of the NCA decision. In such cases, the ECtHR could achieve a different assessment in comparison to the conclusions reached in Menarini in relation to the standard of judicial review applied by the Italian courts.

In conclusion, while the potential diverging views between the courts in Luxembourg and Strasbourg will be clarified only when the EU accedes to the ECHR, in the coming years the ECtHR is expected to rule on new cases concerning the compatibility of the national standard of judicial review in competition cases with the requirement of full judicial review. As a consequence, the compatibility of the standard of judicial review and the right to a fair trial is likely to remain one of the more debated issues in the field of competition law.