Burden

1
Burden Standard of Proof in Competition Law
Assimakis Komninos
2
Definitions

• Burden of proof
• Who must prove and what Who fails to prove, if
  50-50 (legal burden of proof) (GR objective
  burden of proof)
• ei incumbit probatio qui dicit, non qui negat
  General principle of (Community) law
  (Laboratoires Boiron, AG Tizzanos Opinion, 68)
• Standard of proof
• Degree of proof necessary for judicial/administrat
  ive conviction
• Conflicting interests/principles
• Effectiveness of competition law enforcement v.
  rights of defence presumption of innocence (in
  dubio pro reo)

3
The European Systems of Competition Law
Enforcement

• Centralised Administrative Enforcement
  (inquisitorial system with adversarial elements)
• Antitrust ex post enforcement through deterrence
  in the absence of pre-screening
• a. Article 81 EC agreements Principle of
  prohibition
• b. Article 82 EC monopolies Principle of abuse
• Merger Control ex ante enforcement through
  pre-screening as a substitute to ex post
  enforcement through deterrence
• Decentralised Administrative, Civil and Criminal
  Enforcement (inquisitorial or adversarial system)

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Burden of Proof Article 2

• Article 2 Regulation 1/2003
• In any national or Community proceedings for
  the application of Articles 81 and 82 of the
  Treaty, the burden of proving an infringement of
  Article 81(1) or of Article 82 of the Treaty
  shall rest on the party or the authority alleging
  the infringement. The undertaking or association
  of undertakings claiming the benefit of Article
  81(3) of the Treaty shall bear the burden of
  proving that the conditions of that paragraph are
  fulfilled.
• No change of legal reality for enforcement by the
  Commission
• Consten and Grundig, p. 347
• Fiatagri, 99
• Métropole, 130-131

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Burden of Proof Article 2

• Change of legal reality for enforcement by Member
  State courts and (possibly) authorities
• Previously GT-Link, 22-27
• It is for the domestic legal order of each
  Member State to lay down the detailed procedural
  rules, including those relating to the burden of
  proof, governing actions for safeguarding rights
  which individuals derive from the direct effect
  of Articles 81 and 82 of the Treaty, provided
  that such rules are not less favourable than
  those governing similar domestic actions and do
  not render virtually impossible or excessively
  difficult the exercise of rights conferred by
  Community law.

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Legal Burden of Proof v. Evidential Burden to
Adduce Evidence

• It should be for the party or the authority
  alleging an infringement of the competition rules
  to prove the existence thereof and it should be
  for the undertaking or association of
  undertakings invoking the benefit of a defence
  against a finding of an infringement to
  demonstrate that the conditions for applying such
  defence are satisfied, so that the authority will
  then have to resort to other evidence.
• Although the legal burden of proof is borne
  either by the Commission or by the undertaking or
  association concerned, the factual evidence on
  which a party relies may be of such a kind as to
  require the other party to provide an explanation
  or justification, failing which it is permissible
  to conclude that the burden of proof has been
  discharged. (not an one-way route)
• Aalborg Portland, 78-79

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Legal Burden of Proof v. Evidential Burden to
Adduce Evidence

• The Commission naturally bears the burden of
  proving all the findings which it makes in its
  decision. However, before there is any need to
  allocate the burden of proof at all, each party
  bears the burden of adducing evidence in support
  of its respective assertions. A substantiated
  submission by the Commission can be overturned
  only by an at least equally substantiated
  submission by the parties. The rules governing
  the burden of proof are only applicable at all
  where both parties provide sound, conclusive
  arguments and reach different conclusions.
• Therefore, if in its decision the Commission
  draws conclusions as to the conditions prevailing
  in a particular market on the basis of
  objectively verifiable evidence from stated
  sources, the undertakings concerned cannot refute
  the Commissions findings simply by
  unsubstantiatedly disputing them. Rather, it
  falls to them to show in detail why the
  information used by the Commission is inaccurate,
  why it has no probative value, if that is the
  case, or why the conclusions drawn by the
  Commission are unsound. This requirement does not
  represent the reversal of the burden of proof
  but the normal operation of the respective
  burdens of adducing evidence.
• Nederlandse Federatieve Vereniging voor de
  Groothandel op Elektrotechnisch Gebied
  (electrotechnical fittings) AG Kokotts Opinion,
  73-74

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Burden of Proof Article 81(1) EC

• Commission must prove the infringements which it
  has found and adduce evidence capable of
  demonstrating to the requisite legal standard the
  existence of the facts constituting an
  infringement
• e.g. German Banks Judgment of 27 September 2006,
  59
• Commission must prove in particular
• identity of parties
• nature of parties involvement in the
  infringement
• products/services involved
• duration of the infringement
• Rule of Reason - Ancillary restraints - Article
  81(1) EC? (legal v. evidential burden)
• Métropole, 131

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Burden of Proof Article 81(3) EC

• A person who relies on Article 81(3) EC must
  demonstrate that those conditions are satisfied,
  by means of convincing arguments and evidence.
  The Commission, for its part, must adequately
  examine those arguments and that evidence, that
  is to say, it must determine whether they
  demonstrate that the conditions for the
  application of Article 81(3) EC are satisfied. In
  certain cases, those arguments and that evidence
  may be of such a kind as to require the
  Commission to provide an explanation or
  justification, failing which it is permissible to
  conclude that the burden of proof borne by the
  person who relies on Article 81(3) EC has been
  discharged. In such a case the Commission must
  refute those arguments and that evidence.
• Glaxo Spain, 235-236
• BUT Commission must examine ex officio obvious
  Art. 81(3) points (good administration - Consten
  Grundig, p. 347)
• Non liquet? (50-50)? ? problematic (legal v.
  evidential burden - in dubio pro reo)
• BERs ? parties have the burden to prove that they
  fall within ? non-rebuttable presumption of
  legality pursuant to Article 81(3) EC vis-à-vis
  third parties

10
Burden of Proof Article 82 EC

• Commission must prove the infringement (e.g.
  United Brands, 264-265)
• Defences? Objective justification? ? Article 2
  Reg. 1/2003 ? no differentiation
• 2005 DP, 77 The burden of proof for such an
  objective justification or efficiency defence
  will be on the dominant company (also Michelin
  II, 107 Tournier and Lucazeau AG Jacobss
  Opinion, 43)
• Article 82 EC has no hidden paragraph 3 no
  bifurcation (system of abuse) paragraph 3
  inherent within the concept of abuse problem
  also between the prima facie exclusionary conduct
  o.j. division of burden of proof (DP)
• In reality, not a question of burden of proof,
  but of burden to bring forward relevant
  argumentation and evidence to support a defence
  (if 50-50, Commission fails to establish an
  abuse legal burden)

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Burden of Proof Merger Control

• Prohibition Decisions Commission bears the
  burden of proof
• e.g. Airtours, 63 Schneider, 179
• Under the structure of the Merger Regulation,
  it is the responsibility of the Commission to
  show that a concentration would significantly
  impede competition. The Commission communicates
  its competition concerns to the parties to allow
  them to formulate appropriate and corresponding
  remedies proposals. It is then for the parties of
  a concentration to put forward commitments The
  Commission has to assess whether the proposed
  remedies, once implemented, eliminate the
  competition concerns identified. It is only the
  parties that have all the relevant information
  necessary for such an assessment, in particular
  as to the feasibility of the commitments proposed
  and the viability and competitiveness of the
  assets proposed to divest. It is therefore the
  responsibility of the parties to provide all such
  information available that is necessary for the
  Commission's assessment of the remedies
  proposal.
• New Draft Remedies Notice, 6-7

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Burden of Proof Merger Control

• Whereas the parties have to propose commitments
  sufficient to remove the competition concerns and
  submit the necessary information to assess them,
  it is for the Commission to establish whether or
  not a concentration, as modified by commitments
  validly submitted, must be declared incompatible
  with the common market because it leads, despite
  the commitments, to a significant impediment of
  effective competition. The burden of proof for a
  prohibition or authorisation of a concentration
  modified by commitments is therefore subject to
  the same criteria as an unmodified
  concentration.
• New Draft Remedies Notice, 8 EDP, 62 et seq.
• THUS
• Commission ? legal burden of proof always
• Undertakings ? (a) opportunity to propose
  commitments (b) evidential burden to provide
  necessary information

13
Standard of Proof

• Recital 5 Reg. 1/2003
• This Regulation affects neither national rules
  on the standard of proof nor obligations of
  competition authorities and courts of the Member
  States to ascertain the relevant facts of a case,
  provided that such rules and obligations are
  compatible with general principles of Community
  law. (effectiveness)
• Beyond reasonable doubt gt High degree of
  probability gt Balance of probabilities (51
  rule) gt Mere possibility
• Too high a standard of proof ? per se legality
• Too low a standard of proof ? per se illegality

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Standard of Proof between Common and Civil Law

• Standard of Proof ? common law concept
• Civil law ? free-unfettered evaluation of
  evidence
• The activity of the Court of Justice and thus
  also that of the Court of First Instance is
  governed by the principle of the unfettered
  evaluation of evidence, unconstrained by the
  various rules laid down in the national legal
  systems.
• Polypropelene AG Vesterdorfs Opinion
• The principle that prevails in Community law is
  that of the unfettered evaluation of evidence and
  that it is only the reliability of the evidence
  that is decisive when it comes to its evaluation
• Mannesmannröhren-Werke, 84

15
Standard of Proof Article 81 EC

• Article 81(1) EC
• Commission must produce sufficiently precise and
  coherent proof or demonstrate convincingly
  certain facts Commission must produce precise
  and consistent evidence to support the firm
  conviction that the infringement took place
• e.g. CRAM / Rheinzink, 20 Wood Pulp II, 127
  Volkswagen (ECJ), 20 JFE Engineering, 341
  Mannesmannröhren-Werke, 260 Glaxo Spain, 82
• Article 81(3) EC
• Undertaking must employ convincing arguments and
  evidence ? Commission must adequately examine
  those arguments and that evidence, conduct a
  proper examination, validly take into account
  all the factual arguments and the evidence
  pertinently submitted by an undertaking, and
  refute certain of those arguments, especially if
  they are sufficiently relevant and substantiated
  to require a response or if they are relevant,
  reliable and credible, having regard to their
  content.
• Glaxo Spain, 235, 236, 263, 303

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Standard of Proof Article 81 EC - Cartels

• High Standard?
• High standard of proof required Conclusions
  drawn from the evidence must never develop into
  ill-founded speculation. There must be a
  sufficient basis for the decision and any
  reasonable doubt must be for the benefit of the
  applicants according to the principle in dubio
  pro reo.
• Rhône-Poulenc (Polypropelene), AG Vesterdorfs
  Opinion, p. 885
• Since recourse to indirect forms of evidence is
  involved, caution must be exercised in
  establishing the existence of a concerted
  practice It is necessary to establish a degree
  of certainty that goes beyond any reasonable
  doubt Unless the court can be satisfied by a
  set of presumptions having a solid basis,
  concertation is not established. In any event, if
  there is a plausible explanation for the conduct
  found to exist which is consistent with an
  independent choice by the undertakings concerned,
  concertation remains unproven.
• Wood Pulp II AG Darmons Opinion, 195

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Standard of Proof Article 81 EC - Cartels

• In dubio pro reo - Any doubt in the mind of the
  Court must operate to the advantage of the
  undertaking to which the decision finding an
  infringement was addressed Given the nature of
  the infringements in question and the nature and
  degree of severity of the ensuing penalties, the
  principle of the presumption of innocence
  applies The Commission must show precise and
  consistent evidence in order to establish the
  existence of the infringement The direct
  evidence relating to the meeting is not
  sufficient for it to be considered, without any
  reasonable doubt remaining on that point, that
  the banks present concluded an agreement Those
  indicia do not suffice to support to the
  requisite standard of proof the theory that there
  was a concurrence of wills on the common fixing
  of prices
• German Banks (Dresdner), 60-62, 144

18
Standard of Proof Article 81 EC - Cartels

• Or Low Standard?
• Presumption that the undertakings participating
  in collusive action and remaining active on the
  market take account of the information exchanged
  with their competitors when determining their
  conduct on that market. Commission must
  establish to the requisite legal standard that
  an undertaking has participated in collusion for
  the purpose of restricting competition it does
  not have to adduce evidence that the collusion
  manifested itself in conduct on the market
• Anic Partecipazioni, 121,126
• Prima facie evidence It is sufficient for the
  Commission to show that the undertaking concerned
  participated in meetings at which
  anti-competitive agreements were concluded,
  without manifestly opposing them, to prove to the
  requisite standard that the undertaking
  participated in the cartel It is for that
  undertaking to put forward evidence to establish
  that its participation in those meetings was
  without any anti-competitive intention by
  demonstrating that it had indicated to its
  competitors that it was participating in those
  meetings in a spirit that was different from
  theirs.
• Aalborg Portland, 81 Sumitomo, 47

19
Standard of Proof Article 81 Cartels
Empirical Conclusions

• Distinction between direct and circumstantial
  evidence
• Direct evidence documentary evidence, smoking
  guns, witness testimony, statements made by
  other incriminated undertakings
• Circumstantial evidence hearsay, common sense,
  information on participation in meetings or
  travels, economic evidence referring to movements
  in the market
• If documentary evidence is sufficient to prove
  the cartel infringement ? no need to check actual
  conduct in the market
• If insufficient ? coincidences and indicia
  connected with conduct on the market may have to
  be taken into account
• Distinction between agreement and concerted
  practice
• see Electrotechnical Fittings AG Kokotts
  Opinion, 56
• In the absence of a firm, precise and consistent
  body of evidence, it must be held that
  concertation regarding announced prices has not
  been established by the Commission.
• Wood Pulp II, 71

20
Standard of Proof Article 82 EC

• In dubio pro reo
• United Brands, 265
• When the Commission applies a prospective
  analysis, the quality of the evidence it produces
  is particularly important
• Tetra Laval, 39-45
• Dominant company must provide specific
  information about possible defences it must not
  merely state generally that there are
  efficiency reasons its line of argument must not
  be too general and insufficient to provide
  economic reasons to explain specifically the
  claimed efficiencies.
• Michelin II, 108-109

21
Standard of Proof Merger Control

• Ex ante enforcement BUT no sanctions (no criminal
  law parallels) ? sufficiently cogent and
  consistent body of evidence (e.g. Kali Salz,
  228)
• The Merger Regulation does not establish a
  presumption as to the compatibility or
  incompatibility with the common market of a
  transaction which has been notified. It is not
  the case that the Commission must find in favour
  of a concentration falling within its
  jurisdiction in a case in which it might
  entertain doubts but rather that it must always
  make an actual decision one way or the other.
• General Electric, 61
• The Commission is required to undertake a
  complex assessment predicting the effects of the
  concentration on the structure and competitive
  dynamics of the markets concerned. No need of
  establishing the above with absolute certainty.
  It is sufficient if, on the basis of solid
  elements gathered in the course of a thorough and
  painstaking investigation, and having recourse to
  its technical knowledge, the Commission is
  persuaded that the notified transaction would
  very probably lead to the creation or
  strengthening of such a dominant position. If the
  Commission is not so convinced, it must on the
  contrary authorise the merger.
• Tetra Laval AGs Tizzanos Opinion, 73-74

22
Standard of Proof Merger Control

• Prospective analysis - collective dominance -
  conglomerate mergers
• Where the Commission takes the view that a
  merger should be prohibited because it will
  create a situation of collective dominance, it is
  incumbent upon it to produce convincing evidence
  thereof. The evidence must concern, in
  particular, factors playing a significant role in
  the assessment of whether a situation of
  collective dominance exists, such as, for
  example, the lack of effective competition
  between the operators alleged to be members of
  the dominant oligopoly and the weakness of any
  competitive pressure that might be exerted by
  other operators.
• Airtours, 63
• The Commissions analysis of a merger producing
  a conglomerate effect calls for a close
  examination of the circumstances which are
  relevant for an assessment of that effect on the
  conditions of competition on the reference
  market.
• Tetra Laval (ECJ), 40