1 T he obje c tive : to pr e ve nt double pe nalisation | i - - PDF document

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Should jur isdic tions se e k to ll t t t alloc ate c ase s to pr e ve nt double pe nalisation? AN E U PE RSPE CT IVE

Kr is Van Hove ICN Car te l Wor kshop, T aipe i

3 October 2014

1  The obje c tive: “to prevent double penalisation”  The me ans: “jurisdictions seek to allocate cases”

Ove r vie w

 The me ans: jurisdictions seek to allocate cases  The practitioner’s vie w: concerns and suggestions  Conclusion 2

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What is the “no double pe nalisation (ne bis in ide m)” pr inc iple ?

T he obje c tive : “to pr e ve nt double pe nalisation” | i

Conviction or acquittal under a final criminal judgment in one State bars prosecution 

How is the pr inc iple applie d at the national and E U le ve l?

• UN: 1966 International Covenant on Civil and Political Rights (Art. 14(7))
• Council of Europe: Convention for the Protection of Human Rights and

Fundamental Freedoms (Protocol No 7, Art. 4)

• EU case law: a long-established “fundamental principle of EU law”

q j g p

• f the same person for the same facts in another State

g p p

• EU: codified in the Charter of Fundamental Rights of the European Union (Art. 50)
• National legal systems: recognised as a fundamental legal principle

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How is the pr inc iple applie d in the fie ld of c ompe tition law?

• The application has been confirmed in the case law of the EU Courts (e.g.

Limburgse Vinyl Maatschappij, C-238/99P)

T he obje c tive : “to pr e ve nt double pe nalisation” | ii

• The rationale: the principle is to be observed with respect to EU competition law

proceedings “because of their similarity to proceedings at criminal law.” (Toshiba, Case C-17/10, Opinion of AG Kokott)

H i th i i l li d t th i t ti l l l ( th th ithi th E U)?

E CJ in L imbur gse Vinyl Maatsc happij, C-238/ 99P at §59: “the princ iple o f no n bis in ide m,[…] pre c lude s, in c o mpe titio n matte rs, an unde rtaking be ing fo und guilty o r pro c e e dings fro m be ing bro ught against it a se c o nd time o n the gro unds o f anti-c o mpe titive c o nduc t in re spe c t o f whic h it has be e n pe nalise d o r de c lare d no t liable by a pre vio us unappe alable de c isio n.”

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How is the pr inc iple applie d at the inte r national le ve l (othe r than within the E U)?

• Prosecution and sanctioning are generally considered to be an important

expression of sovereignty

• ECJ: the principle is rejected at the international level because of no “unity of

the legal interest being protected” and no general principle of EU or public international law holding otherwise

• Traditionally remedied through bilateral or multilateral agreements between

States and is gradually being recognised by international criminal tribunals 4

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Conc lusion

• The national legal order of the EU Member States and the EU legal order v. the

T he obje c tive : “to pr e ve nt double pe nalisation” | iii

g g international legal order

• Applicable in the competition law field
• Double penalisation is an issue where multiple agencies have parallel

competences to enforce laws with overlapping legal interests

• Example in point:

 The EU: where the Commission and the Member State agencies are all competent to enforce EU competition law  Solution: case allocation under the European Competition Network (in accordance with indicative, non-binding principles set out in the 2004 ECN Notice) Notice) 5 

Case alloc ation unde r the E ur

• pe an Compe tition Ne twor

k (E CN): Alloc ation Pr inc iple s (i)

T he me ans: “jur isdic tions se e k to alloc ate c ase s” | i

• Each agency retains full discretion as to whether or not to investigate
• Reallocation should happen only at the outset of the procedure and when the

agency initially in charge is not “well placed” to act

• Reallocation should be “quick and efficient” and should “not hold up ongoing

i ti ti ” Case allocation is NOT a “transfer” of a case from one agency to another but merely

• ne agency abstaining from acting or closing the file. (Commission Staff Working

Paper accompanying the Commission Report on the Functioning of Reg. 1/2003, 2009, §221) investigations”

• Reallocation should preferably go to a single agency but parallel action by

two or three agencies is not excluded  In cases involving parallel action, coordination should take place as much as possible (e.g. appointment of a lead agency) 6

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Case alloc ation unde r the E ur

• pe an Compe tition Ne twor

k (E CN): Alloc ation Pr inc iple s (ii)

T he me ans: “jur isdic tions se e k to alloc ate c ase s” | ii

When is an agency well placed?

• An agency is well placed if three cumulative conditions are met:

i. the conduct investigated “has substantial direct[,] actual or foreseeable

e ffe c ts on competition within [the agency’s] territory, is imple me nte d within

• r or

iginate s from [the agency’s] territory”;

ii. the agency “is able to effectively br

ing to an e nd the entire infringement,

[…] and […] can, where appropriate, sanc tion the infringement adequately”; and iii. the agency “can gathe r, possibly with the assistance of other [agencies], the e vide nc e required to prove the infringement.” (ECN Notice, § 8) When is parallel action appropriate?

• Parallel action may be appropriate if there are effects in multiple Member States

and action by a single agency is insufficient to end and/or sanction the infringement adequately

• The Commission is particularly well placed if the conduct affects competition in

more than three Member States 7 When is parallel action appropriate? When is the Commission well placed? 

Case alloc ation unde r the E ur

• pe an Compe tition Ne twor

k (E CN): Ope r ational me c hanism

• An early warning system is in place

T he me ans: “jur isdic tions se e k to alloc ate c ase s” | iii

How is the process facilitated?

• An early warning system is in place

E ar ly war ning syste m (§§16-19, E CN Notic e ): “[..] T he Co unc il Re gulatio n c re ate s a me c hanism fo r the c o mpe titio n autho ritie s to info rm e ac h o the r in o rde r to e nsure an e ffic ie nt and quic k re - allo c atio n o f c ase s. Artic le 11(3) o f the Co unc il Re gulatio n lays do wn an o bligatio n fo r NCAs to info rm the Co mmissio n whe n ac ting unde r Artic le 81 o r 82 o f the T re aty be fo re o r witho ut de lay afte r c o mme nc ing the first fo rmal inve stigative me asure [i.e . usually a re que st fo r info rmatio n o r an inspe c tio n] […].” [I n a Jo int S tate me nt, the natio nal age nc ie s have e xpre sse d the ir jo int inte ntio n to make the same info rmatio n available amo ng e ac h o the r.] T he Co mmissio n has ac c e pte d an e quivale nt o bligatio n to info rm NCAs unde r Artic le

• Agencies have the option to suspend or terminate proceedings because

another agency is dealing with the case

• Agencies provide mutual assistance in the form of:

i. an exchange of information ii. assistance with respect to collecting information

• Companies have no right to allocation but certain safeguards are foreseen

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has ac c e pte d an e quivale nt o bligatio n to info rm NCAs unde r Artic le 11(2) o f the Co unc il Re gulatio n. […] (E CN No tic e , §17).

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Conc lusion

• Case allocation under the European Competition Network (ECN) is intended for

T he me ans: “jur isdic tions se e k to alloc ate c ase s” | iv

p p ( ) the special situation in which 29 agencies are all competent to apply the same competition rules within the EU

• It is based on non-binding principles centered around the foundation of the well

placed agency and an operational mechanism centered around information- sharing and mutual assistance

• Reallocation remains the exception
• The situation at the international level is not the same as within the EU and case
• The situation at the international level is not the same as within the EU and case

allocation would thus appear at first sight of very limited relevance at that level. Yet, the private practitioner has concerns with some recent developments and sees some form of case allocation as a possible remedy to meet these concerns 9 

F ir st ar e a of c onc e r n: A gr

• wing tr

e nd of applying c ompe tition r ule s e xtr a-te r r itor ially base d on the notion of indir e c t e ffe c ts (i)

T he pr ac titione r ’s vie w: c onc e r ns and sugge stions| i

Issue: →If an agency claims jurisdiction on the basis of indirect effects that a cartel produces, it risks imposing a second sanction with respect to a given transaction (e.g. a price- fixed sale) since that very same transaction may already have been the subject of a fine in the country where the transaction took place →In my view, this is a violation of the principle of ne bis in ide m and there is a serious risk

• f over-deterrence

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F ir st ar e a of c onc e r n: A gr

• wing tr

e nd of applying c ompe tition r ule s e xtr a-te r r itor ially base d on the notion of indir e c t e ffe c ts (ii)

T he pr ac titione r ’s vie w: c onc e r ns and sugge stions| ii

Suggestion: →Pr

e fe r r e d option: showing restraint in applying competition rules extra-territorially

based on indirect effects →Alte r

native option for jur isdic tions c laiming c ontinue d jur isdic tion on this basis:

introducing a case allocation mechanism whereby the agency of the jurisdiction where the transaction took place is considered the agency well placed to handle that case →At the ve r

y le ast: offsetting any fine already imposed against any new fine in the

11 →At the ve r

y le ast: offsetting any fine already imposed against any new fine in the

interest of avoiding imposing a disproportionate fine 

Se c ond ar e a of c onc e r n: T he inc r e ase d c r iminalisation of the c ar te l offe nc e (i)

T he pr ac titione r ’s vie w: c onc e r ns and sugge stions| iii

Issue: Issue: →As a growing number of jurisdictions provide for custodial sanctions for a cartel

• ffence while the principle of ne bis in ide m is still not generally recognised to apply at

the international level, persons involved in an international cartel may face multiple custodial sanctions. The spread of criminalisation of the cartel offence around the globe means that, before long, these persons may face very long or, possibly, even life sentences →In my view, such a situation militates against the principles of proportionality, fairness and natural justice and there is a serious risk of over-deterrence 12

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Se c ond ar e a of c onc e r n: T he inc r e ase d c r iminalisation of the c ar te l offe nc e (ii)

T he pr ac titione r ’s vie w: c onc e r ns and sugge stions| iv

Solution: Solution: →Pr

e fe r r e d option: showing restraint in criminalisation of the cartel offence

→Alte r

native option: introducing a case allocation mechanism whereby a single well

placed agency handles the case →At the ve r

y le ast: offsetting any sanction already imposed against any new sanction

13 1. The principle of “no double penalisation (ne bis in ide m)” is generally recognised at the national and EU level but not at the international level

Conc lusion

2. Double penalisation is an issue where multiple agencies have parallel competences to enforce laws with overlapping legal interests 3. The case allocation mechanism under the ECN based on the foundation of the well placed agency is a workable solution to avoid such double penalisation 4. Case allocation is also a possible alternative solution to address problems of double penalisation and disproportionate fines when there is a risk of (i) sanctioning for a cartel’s indirect effects or (ii) multiple criminal sanctions 14