GLOBAL COMPETITION LAW CENTRE

1
GLOBAL COMPETITION LAW CENTRE
The future role and organisation of the Court in
the competition field

• MARK CLOUGH QC, Partner, Solicitor Advocate

Brussels, 6 December 2005
3875581
2
Introduction

• Issues
• Options for Reform
• Is it time for a radical solution?

3
Issues

• 1. Limited role of judicial review in
  administrative competition law system
• 2. Procedural delays
• 3. Language and enlargement
• 4. Decentralisation and Modernisation

4
Issues

• 1. Limited role of judicial review in
  administrative competition law system
• Limited nature of judicial review under Article
  230 EC not full appeal on the merits
• The CFI may not substitute its own decision on
  the merits but must remit the case back to the
  Commission to draw the necessary consequences
  under Article 233 EC unsatisfactory for
  applicant and the Commission as judicial review
  not determinative

5
Issues

• 2. Procedural delays
• Delay the main problem with our current system
  of judicial review is not its effectiveness in
  terms of how closely the Courts scrutinise the
  Commissions decision, but in terms of the speed
  of that review (Bo Vesterdorf, Judicial review
  in EC Competition law reflections on the role of
  the Community Courts in the EC system of
  competition law enforcement (Competition Policy
  International, Vol.1, No.2 Autumn 2005)

6
Issues

• According to President Bo Vesterdorf, average
  time for an anti-trust or merger case under the
  normal procedure of the CFI is approximately 33
  months and approximately 10-12 months under the
  expedited procedure with shortest merger case
  just under seven months
• Delay is a major issue in mergers six months
  should be maximum period for merger appeal to
  have value for business
• ECJ Statistics average time for references for
  preliminary rulings 2004 approximately 23 months
  (2003 25 months) direct actions 2004 20 months
  (2003 25 months) appeals 2004 21 months (2003
  28 months)

7
Issues

• 3. Language and enlargement
• 25 ECJ judges and 25 CFI judges
• 9 new working languages 20 ECJ working
  languages and 21 CFI (including Irish)
• 380 possible linguistic combinations
• Article 35 CFI RP language regime may only be
  changed by unanimous decision of the Council
  under Article 64 of the Statute all pleadings,
  including those submitted by a Member State in
  its own language still have to be translated into
  the language of the case the working language of
  the Court is French, so all documents are
  translated from the language of the case into
  French, the working language of the Court main
  cause of delay translation main cost of the
  Court politically sensitive question to which
  there is no easy solution

8
Issues

• 4. Decentralisation and Modernisation
• Greater powers granted NCAs and National Courts
  encourages recourse to National Courts
  Regulation 1/2003
• Delay in preliminary ruling proceedings before
  ECJ (22 months) and annulment actions before CFI
  (33 months) encourages recourse to National
  Courts
• No change to Luxembourg as seat of the European
  Court European Court Judges still claim that
  centralised European Court system necessary to
  ensure uniformity and consistency

9
Issues

• ECJ case law on procedure before National Courts
  in absence of harmonisation requires national
  procedure and remedies subject to principles of
  equality and effectiveness major differences in
  national procedures, e.g. private competition
  enforcement burden and standard of proof,
  evidence rules (discovery), collective actions
  (group litigation orders or class actions),
  calculation of damages, costs, standing of
  claimants, causation and remoteness of damage
• Does recourse to National Courts driven by
  decentralisation necessarily mean less uniformity
  and consistency in application of EC Competition
  law?

10
Options

• 1. Procedural Improvements insufficient
• 2. Changes to judicial Structure (Nice Treaty-
  based changes) 4 options A. transfer of ECJ
  jurisdiction to CFI B. non-competition
  specialist tribunals C. competition specialist
  tribunals D. specialist competition chamber
• 3. The Modernisation Option

11
Options

• Procedural Improvements insufficient
• Expedition procedures priority treatment, the
  accelerated or expedited procedure, the
  simplified procedure and the possibility of
  giving judgment without an Opinion of the
  Advocate General
• 2003 CFI reduced from five to three number of
  judges to hear competition case
• CFI RP Council amendments include expedited
  procedure pleading rules under Article 76(a) to
  allow fallback longer pleading if shorter version
  not needed when expedition not pursued
• ECJ new internal deadlines, CFI likely to follow

12
Options

• CBI proposed super-fast track optional
  expedited procedure for mergers so that completed
  within six months of Commissions Phase 2 ECMR
  Decision by abridging timetable
• The UK DTI has proposed as another informal
  method of self-help that the parties limit the
  length of their pleadings as requested by the CFI
  Practice Directions (not to exceed 20 pages if
  possible), making the most of the flexibility
  available within the existing expedited procedure
• The UK DTI has also proposed that applicants who
  request the expedited procedure could include in
  their application for expedition a request that
  the language of their case should be used by the
  court in its consideration of it

13
Options

• Changes to judicial Structure (Nice Treaty-based
  changes)
• A number of structural reforms are made possible
  by the Nice Treaty and have already begun
• Option A transfer of jurisdiction to CFI from
  ECJ. Article 225 EC, as amended by the Nice
  Treaty which entered into force on 1 February
  2003, provides that the CFI is to have
  jurisdiction to hear and determine at first
  instance all direct actions with the exception of
  those assigned to a judicial panel and those
  reserved in the Statute for the ECJ

14
Options

• Advantages
• 5 (25 pending cases) of the ECJ cases moved to
  the CFI in 2004 mainly concerning state aid and
  the European Agriculture Guidance and Guarantee
  Fund
• potential to reduce ECJ caseload further by
  transferring Article 234 references to CFI
• Disadvantages
• decrease in caseload of ECJ results in increase
  in caseload of CFI
• Regulation 1/2003 and Decentralisation are
  expected to increase private litigation
  significantly, confronting national courts with
  complex competition law questions which they will
  feel it necessary to refer to the ECJ for a
  preliminary ruling under Article 234 EC
• it may be more coherent to allow the CFI the
  power to deal with such preliminary rulings as it
  is possible under Article 225(3) EC. This would,
  however, inevitably increase the workload of the
  CFI even further and would be an additional
  factor to be considered in any discussion and
  changes the aim of improving speed in the
  adjudication of competition cases before the
  Community Courts. (Vesterdorf article, page 27)

15
Options

• Option B non-competition Judicial panels (or
  specialist tribunals) under Article 225A
• The Council, acting unanimously on a proposal
  from the Commission and after consulting the
  European Parliament and the Court of Justice or
  at the request of the Court of Justice and after
  consulting the European Parliament and the
  Commission may create judicial panels to hear and
  determine at first instance certain classes of
  action or proceeding brought in specific areas.
  The decision establishing a judicial panel shall
  lay down the rules on the organisation of the
  panel and the extent of the jurisdiction
  conferred upon it. Decisions given by judicial
  panels may be subject to a right of appeal on
  points of law only or, when provided for in the
  decision establishing the panel, a right of
  appeal also on matters of fact before the Court
  of First Instance.

16
Options

• The first judicial panel was created on 2
  November 2004, when the Council adopted Decision
  2004/752/EC, Euratom establishing the European
  Union Civil Service Tribunal (OJ 2004 L 333/7).
  This new specialised Tribunal, consisting of
  seven judges, will be called on to hear disputes
  involving the European Union Civil Service. Its
  decisions will be open to an appeal, limited to
  points of law, before the CFI and, exceptionally,
  subject to review by the ECJ in the circumstances
  prescribed by the Protocol on the Statute
• CFI lost 25 of its annual caseload (and the ECJ
  about 10 of its annual caseload accounting for
  appeals relating to staff cases)

17
Options

• The CFI president in his recent article has
  supported the creation of judicial panels to
  remove other cases from the CFIs workload
• a more practical and realistic solution would
  be to focus the CFIs resources more on
  competition cases by removing from its
  jurisdiction a number of other cases in specific
  areas such as those relating to EC officials and
  trademarks. (Page 26)
• The president notes that in addition to the 20
  25 of the current caseload attributable to
  civil service cases, a further 17 could be
  removed through the creation of a trademarks
  tribunal

18
Options

• Advantages of non-competition judicial panels
  under Article 225A
• removal of approximately 40 of the CFI caseload
  would leave CFI free to deal promptly with
  competition, merger and state aid cases
• Disadvantages
• CFI caseload of appeals from specialist panels
  could be as great as panel caseload
• volume of new competition cases likely to grow
  (if CFI has jurisdiction over competition
  references)

19
Options

• Option C competition judicial panel (or
  specialist competition tribunal) under Article
  225A
• Advantages of a specialised Competition Tribunal
• Specialist judges would be better suited to
  examine closely the complex economic assessments
  undertaken by the Commission
• Tailor-made procedures could be optimised for the
  specific needs of competition cases
• Possibly greater resources to deal more
  effectively and more expeditiously with
  competition cases
• Could be a move towards a more coherent system of
  three levels of jurisdiction First instance
  Tribunals, appeals to the CFI, and exceptional
  review by to the ECJ

20
Options

• Reduce the workload of the ECJ by relieving it of
  systematic appeals against the CFIs competition
  judgments in areas that do not always merit
  adjudication by the highest court (e.g.
  determination of the correct amount of fine)
• Reduce workload of the CFI by removing
  competition, merger (and possibly state aid)
  cases from its first instance jurisdiction
• Disadvantages of a specialised competition
  tribunal
• Appeals to the CFI could lengthen the proceedings
  if appeals became systematic
• The specialisation of judges could also result in
  the greater insularity that sometimes
  characterises the competition law community
• The judicial panel under Article 225A EC would
  not alter the limited nature of the judicial
  review process as full jurisdiction would not be
  granted

21
Options

• The process of establishing a panel would take a
  number of years as the experience with the
  proposal for a judicial panel to deal with
  Community Patent cases demonstrates
• Option D specialist CFI competition chamber(s)
  created by case management An alternative
  solution involving no change to the existing
  structure of the CFI would be to create one or
  more specialised chambers for competition cases
  with three or five judges specialised in and
  focussing on competition cases alone
• Advantages of specialised competition chambers
• improving the speed of treatment of competition
  case
• easy implementation at an internal level

22
Options

• Disadvantages of specialised competition
  chambers
• the risk of overall under-utilisation of the
  specialist chamber depending on the workload of
  competition cases at any particular time -
  difficult to resist pressure to allocate
  non-competition cases to the specialised chambers
  in times of under-utilisation or not to allocate
  competition cases to other chambers in times of
  over-utilisation
• more difficult to establish specific procedures
  within the existing structure of the CFI

23
Options

• From a historical perspective it is interesting
  to note the criticism of the creation of
  specialised courts/tribunals or specialised
  chambers made in a report by the British
  Institute of International Comparative Law into
  the role and future of the European Court of
  Justice, presented by Lord Slynn of Hadleigh in
  1996. The report considered there to be a number
  of disadvantages including the difficulty of
  defining a structured relationship between all
  the different tribunals, a concern that
  specialist tribunals would proliferate and
  ultimately jeopardise the uniform interpretation
  and application of Community law

24
Options

• The Modernisation Option
• A radical solution a new CFI competition court
  architecture based upon a specialist competition
  chamber or tribunal
• European Commission Green Paper on the
  desirability of encouraging private enforcement
  actions in the National Courts will increase need
  for consistency and uniformity in application of
  EC competition law
• Decentralisation of administrative decisions and
  the enhanced roll of private enforcement actions
  highlights the need for a totally new approach to
  the organisation of the Community courts in
  competition cases there seems no obvious reason
  why the court structure should not match the
  decentralised administrative structure of EC
  competition law

25
Options

• On the one hand the European Commission shares
  the administrative powers of enforcement of EC
  competition law with the National Competition
  Authorities (NCAs) through the European
  Competition Network (ECN) with its system of
  allocating cases to the best placed NCA (or the
  Commission itself).
• On the other hand, the new system of directly
  applicable EC competition law enables the
  National Courts to exercise equivalent powers to
  those of the European Commission and/or their
  national competition authority within the scope
  of their jurisdiction. With the new emphasis on
  private enforcement and damages claims, the
  National Courts will have a parallel if not more
  important role, to that of the Community
  Judicature, in competition enforcement in Europe.
  

26
Options

• The question is should the National Courts, and
  in particular specialist national competition
  courts, play a much greater role than they do at
  present in the system of judicial control and
  European competition law enforcement?

27
Is it time for a radical solution?

• In the same way as the NCAs belong to the ECN
  presided over by the European Commission, member
  states could establish a specialist national
  competition court which is then nominated to form
  part of a chamber of the CFI with the judges of
  the National European Competition Court belonging
  to the enlarged chamber of the CFI responsible
  for all types of competition law case. The CFI
  competition chamber could be responsible for
  allocating cases either to itself or to the best
  placed National European Competition law court in
  accordance with strict criteria subject to review
  by the CFI
• A similar structure could form part of a
  specialist competition tribunal under Article
  225A EC

28
Is it time for a radical solution?

• The key features of the new European Competition
  Court Network could be along the following lines
• The national judges nominated by each Member
  State to the CFI Chamber would be members of the
  CFI
• A Member State would be permitted to nominate
  more than one national judge up to a total of
  three to sit in their National European Court,
  provided that two were nationals from another
  Member State

29
Is it time for a radical solution?

• The jurisdiction of the National European
  Competition Law courts would cover
• appeals against the administrative decisions of
  the NCAs as well as of the European Commission
  (where the particular national court had
  jurisdiction and where the CFI chamber allocated
  the appeal to that national court)
• a similar jurisdiction in relation to fines or
  penalties
• jurisdiction to hear claims for damages or
  restitution of loss caused by infringement of
  national or European competition law whether on
  the basis of follow on actions or not
• the jurisdiction rules applicable under the
  Brussels Regulation would apply to determine
  which national European competition Court had
  jurisdiction in private enforcement cases.

30
Is it time for a radical solution?

• power to give a preliminary ruling under Article
  234 EC on a reference from any national court
  (provided that the CFI competition chamber had
  allocated the reference to that national European
  competition Court)
• and jurisdiction to award damages against the
  European institutions on the same grounds as the
  CFI, (again if that national European Court is
  allocated the case in question by the CFI
  Competition Chamber)
• The language of the case will be the language of
  the Member State in which the national European
  competition Court is situated and will be a
  relevant factor in the decision of the CFI
  Competition Chamber making the case allocation
  decision

31
Is it time for a radical solution?

• The CFI Competition Chamber would adopt its own
  rules of procedure and those to be applied by the
  national European Competition Courts. To the
  extent that those procedure rules are not
  initially comprehensive, and otherwise until such
  time as national rules of procedure and remedies
  are harmonised at the Community level, national
  rules on procedure and remedies will apply
  subject to the general principles of equality and
  effectiveness laid down by the ECJ case law
• An appeal on a point of law may be made from the
  national European competition law court to the
  main competition chamber of the CFI with a
  further appeal only possible with permission of
  that CFI chamber or the ECJ, to the ECJ

32
Is it time for a radical solution?

• An appeal on a point of law may be made against a
  decision by the CFI competition chamber at first
  instance to the ECJ, save on a reference where
  appeal may only be brought with permission of the
  ECJ
• The scope of judicial review by the national
  European competition law courts (and by the CFI
  competition chamber) would be a full re-hearing
  and appeal on the merits so that the court could
  substitute its own decision or remit the decision
  for reconsideration
• An alternative to the European-wide nominated
  national European competition Court system would
  be to establish one (or possibly more than one)
  specialist European competition law tribunal
  under Article 225A EC in one of the Member
  States. The jurisdiction, scope of review and
  procedure would be the same as that above

33
Is it time for a radical solution?

• Clearly the area of controversy in creating a
  national level of the European court will be the
  safeguards needed to ensure consistency and
  uniform application of community competition law
• In the light of the modernisation and
  decentralisation of European competition law and
  the policy priority given to deterrence and
  consumer welfare (including compensation), the
  increased role of national courts in private
  enforcement militates in favour of their
  participation in public enforcement as appellate
  or referral courts. This parallel structure to
  that of the ECN should not only enhance the
  competition culture required to improve the
  competitiveness of European industry to meet the
  goals of the Lisbon Agenda but also over time
  guarantee a structural uniformity in the
  application of European competition law at the
  national level

34
Is it time for a radical solution?

• These two possible systems of national European
  competition law court include the following
  advantages
• increased access to justice arising from faster
  court proceedings, local culture and language,
  local judicial experience
• Enhanced consistency and uniformity of
  application of European competition law at the
  national level through the appointment of
  national European Competition Court judges as CFI
  judges by the Member States as a whole in
  accordance with the established procedure and
  through the creation of a court in a wider
  network supervised by the CFI in Luxembourg to
  which references and/or appeals may be made as
  appropriate and subject to the authority of the
  CFI preserving the coherence and unity of the
  Community legal system

35
Is it time for a radical solution?

• The removal of certain major obstacles to
  streamlined procedures before the CFI and ECJ,
  including language, workload delays, budget
  hurdles, procedural delays, and delays resulting
  from the nature of judicial review under Article
  230 EC (which will have to be amended)
• The obvious problem is delay how long will it
  take? Will the Member States ever make the
  required Treaty amendments, if they are
  necessary?
• The Answer is that nothing is going to happen for
  a long time, if a radical solution is not
  adopted. The Member States are accustomed to
  IGCs and Treaty amendments sorting out the
  European Constitution could provide the
  opportunity needed.

36
GLOBAL COMPETITION LAW CENTRE
The future role and organisation of the Court in
the competition field

• MARK CLOUGH QC, Partner, Solicitor Advocate

Brussels, 6 December 2005
3875581