This essay was produced by our professional law writers as a learning aid to help you with your studies
Published: Fri, 02 Feb 2018
When examining potential violation of competition law, the EU Commission investigates, prosecutes and adjudicates. Evaluate with reference to an effective separation of powers.
The European Commission (the Commission), acting under Article 23 (2) of Regulation 1/2003, can fine undertakings up to 10% of their total turnover for a breach of competition law. Considering fines in the “hundreds of millions [of euros] are not uncommon”, it is critical that not only the Commission respect due process, adequately ensuring undertakings’ Article 6 European Convention on Human Rights (ECHR) ‘right to a fair trial’ but the United Kingdom (UK), entrusted with the responsibility to enforce European Union (EU) competition law, does the same. Indeed, the sheer scale of the Commission’s fines is made exceptionally clear in the recent, well-publicised Microsoft case, who were fixed with a $1.1 billion fine following the decision that they abused their dominant position in the computer software industry. This paper argues that competition law proceedings (proceedings) before the Commission are inherently flawed, fundamentally violating due process and Article 6 ECHR. In arguing so, first, the Commission’s combined investigative, prosecutorial and adjudicative approach to enforcement, together with the increasingly deterrent nature of the fines they impose, is criticised. Second, the existing standard of judicial review the EU courts exercise over Commission decisions is disapproved.
Combined investigative, prosecutorial and adjudicative functions
Under Article 6 (1) ECHR;
“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law…”
Firstly, it is argued that the Commission’s investigative, prosecutorial and adjudicative powers contravene the entitlement to an ‘independent and impartial tribunal’. When assessing potential infringements of Articles 101 or 102 Treaty on the Functioning of the European Union (TFEU), the Commission similarly initiates the proceedings, setting out the ‘charges’, investigates the potential infringement, assessing the facts and legal arguments, and, if it decides so, can impose a fine. Whilst the Organisation for Economic Co-operation and Development respectfully suggest that such combination of functions “can dampen [the Commission’s] internal critique” (emphasis added), this author argues it does, resulting directly in ‘prosecutorial bias’. One can readily appreciate how case teams, subject to little external control, having perhaps initially identified the potential infringement and then subsequently dedicated limited resources and thousands of hours towards investigation, “search for evidence which confirms rather than challenges” their beliefs in order to secure an infringement decision. Indeed, as Montag has suggested:
“[It] is understandable in human terms that Commission officials sometimes want to push through what they perceive to be ‘their’ case. And it explains why arguments put forward by … parties often appear to fall on deaf ears”.
Moreover, the European Court of Human Rights (ECtHR), in Dubus S.A. v France, provided how an ineffective separation between the Commission Bancaire’s investigative, prosecutorial and adjudicative functions, justified Dubus S.A’s claim that a ‘prejudgement’ had existed before the formal imposition of a penalty. The irony in the Dubus case is that in France, its competition authority clearly separates its investigative and prosecutorial functions. As the authority’s President, Bruno Lasserre, notes:
“[O]ur case handlers don’t take part in the decision, which is taken by a board whose members act in full independence”.
Italianer has attacked the above “tunnel-vision” claim, arguing, inter alia, independent hearing officers, responsible for conducting oral hearings, safeguard procedural fairness. Criticising Italianer, whilst prima facie hearing officers may appear to inject impartiality into proceedings, it would be naïve to assume, considering their formal association with the Commission, once can view them entirely, and automatically, objective.
Evaluating this point further, and only serving to exacerbate the problem of the Commission being investigator, prosecutor and adjudicator, is the exceptionally important fact that the Commission is a political institution. As experienced practitioner Forrester has noted, the decision to initiate competition proceedings is:
“[T]aken by a college of 27 political appointees who take such a decision collectively by majority vote. No competition agency on earth takes decisions this way … There is the institutional possibility that political considerations will influence … the decision making. I have been involved in cases where that has happened” (emphasis added).
Deterrent nature of Commission fines
Secondly, it is argued that the deterrent effect of the Commission’s fines renders proceedings de facto criminal. This, it is submitted, infringes the undertaking’s right to a ‘fair…hearing’ as criminal proceedings, under Article 6 (3) ECHR, grant undertakings further procedural safeguards. Contrary to Article 23 (5) of Regulation 1/2003 stating the Commission’s fines are “not … criminal”, the ECtHR, in Jussila v Finland, have explicitly restated that a substantive rather than formal interpretation of classifying proceedings is to be adopted. Deterrence, a key concept underpinning many criminal penalties, is repeatedly voiced by the Commission as a fundamental reason behind the imposition of its fines. Indeed, the Commission’s own fining guidelines specifically, and repeatedly, state “fines should have a … deterrent effect”. Consequently, for the purposes of Article 6 ECHR, one can justifiably conclude that proceedings before the Commission are, in reality, criminal. As noted above, criminal proceedings demand additional compliance with Article 6 (3) ECHR, requiring that, in our case, inter alia, undertakings have the right to examine witnesses and obtain their attendance. However, the European Court of Justice has suggested that as the Commission’s decisions are administrative, the Commission should not be classed as a ‘tribunal’ and thus, not be bound by Article 6. In criticism, this author finds it exceptionally difficult to see how Commission fines, potentially hundreds of millions of euros, merely due to an ‘administrative’ classification, justify curtailing ECHR enshrined procedural guarantees. Indeed, Forrester agrees, and has argued that the proper response:
“[I]s to note that competition law and constitutional law must give priority to reality, not to titles or labels…it should be a cause for embarrassment” that the Commission have not made any relevant adaption of processes. “The commission must be ready to satisfy Art.6 in some manner”.
Having discussed why proceedings before the Commission are inherently flawed, insightful parallels concerning an effective separation of powers can be drawn between the UK’s own system of competition law enforcement.
The recently created Competition and Markets Authority (CMA) is the UK’s single competition regulator. It amalgamated the Office of Fair Trading (OFT) and the Competition Commission (CC). Under this old system, the OFT conducted the first phase review of merger and market investigations and the CC independently conducted a detailed, in-depth, final second phase investigation. This separation between the investigative and decision-making stage offered a ‘fresh, second pair of eyes’ when assessing evidence and saw the CC examine its cases strictly ‘de novo’, distinct from the OFT who selected the cases it wished to investigate. One can see how enforcement under this institutional structure, for the very same reasons outlined above with regards to the Commission’s combined investigative, prosecutorial and adjudicative powers, safeguarded against risks of prosecutorial bias. Indeed, Allan notes how the necessity for a fresh, second pair of eyes, in order to guarantee procedural fairness, “provided the raison d’être for the CC’s” very being.
Unfortunately however, reforms are on the horizon and the CMA will now conduct both the first and second phases of merger and market investigations. The CMA, the Government suggest, “strikes the balance between … robustness of decision making … [and] speed”, promoting administrative efficiency. Currie agrees, noting how “the large swings in workload” under the existing two phase system, seeing the CC “going from famine to feast”, were “hard to manage”.
However, criticising this reform, it is questionable whether enabling the CMA to conduct both phases of merger and markets investigation will give investigated businesses confidence that their case has been handled fairly, subject to due process. Will internal mechanisms adequately protect against the possibility of prosecutorial bias? Such a question has significant practical consequences. For example, businesses subject to proper, transparent procedures, who believe a fair trial has taken place, are perhaps less likely to appeal decisions imposed against them. However, the Government are confident that its internal mechanisms will retain procedural fairness, arguing “those decisions currently taken by the CC will be the responsibility of … independent panellists”. Criticising, it is important to note, similar to hearing officers’ formal association with the Commission, that the CMA board retains overall responsibility for overseeing the panel system. Therefore, one should not automatically rule out the possibility of the CMA exerting influence over not only the panel system, but also individual panellists. Consequently, under this new enforcement system, it is difficult to see how parties will truly be given an Article 6 (1) ECHR “fair crack of the whip”. The result is a reformed system of enforcement that, unfortunately, creates an ineffective institutional separation of powers and begins to resemble the Commission’s inherently flawed system.
Inadequate level of judicial review
The existing standard of judicial review the EU courts exercise over Commission decisions is now attacked for Article 6 ECHR non-compliance.
In Menarini Diagnostics v Italy, the ECtHR held that decisions can be taken by an administrative body whose enforcement framework breaches Article 6 ECHR, provided that those decisions are subject to ‘full jurisdiction’ judicial control, i.e. review on the merits; a full merits review, granting the Court the jurisdiction to assess the very validity of the decision and annul if appropriate, rather than being confined to assessment of procedure, subsequently ensures Article 6 ECHR. However, far from being “the ultimate guarantor for due process” Italianer suggests, the limited level of judicial review that the EU courts exercise over Commission decisions fails to satisfy this requirement, resulting in Article 6 ECHR non-compliance. The General Court in France Télécom v Commission (Wanadoo) explicitly stated its “review [is] limited to verifying procedure [compliance] … and whether there [was] any manifest error of appraisal”. Criticising, this directly contradicts ECtHR case law, providing that in cases determining a criminal charge, to which competition law proceedings belong, “… judicial determination of the dispute cover[s] questions of fact as much as questions of law”. Additionally unsettling, even where the EU courts do indeed find illegality on part of the Commission’s decision, they cannot amend it and are only able to annul. Powerless to systematically reassess the facts, they are forced to remit the issue to the Commission, which may or may not adapt its previous decision. Gebhard voices similar concern, arguing for the “re-empowering” of the EU courts in order to break this “antitrust enforcement deadlock”.
Again, interesting parallels can be drawn between the EU’s level of judicial review over Commission decisions and the level of review exercised by the UK’s Competition and Markets Authority. Undertakings subject to UK competition enforcement procedures, it is argued, receive a higher level of Article 6 ECHR protection when compared to enforcement subject to the Commission’s processes. This is due to the existing power vested in the Competition Appeal Tribunal (CAT) to judicially review on the merits, enabling a detailed examination of the facts and merits of the decision to be undertaken, ultimately allowing the CAT “to take any decision which the OFT could have”. A crucial check and balance in the CMA, the CAT’s ability to review on the merits perhaps “Article-6-proofs” the UK’s competition law enforcement system.
Concluding, this paper has argued that competition law proceedings before the Commission are inherently flawed. It has been suggested that accumulating investigative, prosecutorial and adjudicative powers breaches due process and does not result in an effective separation of powers. Additionally, combining such functions violates undertakings Article 6 ECHR ‘right to a fair trial’; a violation that cannot be underplayed considering fines which the Commission levy are often multi-million pound in nature. Indeed, whilst companies the size of Microsoft can arguably afford to shoulder the burden of fines totalling $1.1 billion, it is doubtful whether smaller companies could successfully operate after being fixed with comparatively large penalties. Lastly, inadequate judicial review over decisions that should be classified as criminal, providing additional procedural guarantees, does the same. An interesting parallel was then drawn between the UK’s CMA review on the merits.
 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty  OJ L1/1
 I Forrester, ‘Due Process in EC competition cases: a distinguished institution with flawed procedures’ (2009) 34 (6) European Law Review 817, 820
 The Convention for the Protection of Human Rights and Fundamental Freedoms 1950
 Article 5, Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty  OJ L1/1
 See Microsoft Corp. v Commission of the European Communities Case T-201/04 and Microsoft Corp. v European Commission Case T-167/08
 Consolidated Version of the Treaty on the Functioning of the European Union  OJ C83/47
 ‘Statement of Objections’, Article 10, Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the commission pursuant to articles 81 and 82 of the EC treaty  OJ L/123
 OECD Country Studies, ‘European Commission – Peer Review of Competition Law and Policy’ (2005) at page 62 available at accessed 05 October 2015
 WPJ Wils, ‘The Combination of the investigative and prosecutorial function and the Adjudicative Function in EC Antitrust Enforcement: A Legal and Economic Analysis (2004) 27(2) World Competition 201, 215
 F Montag, ‘The Case for a Radical Reform of the Infringement Procedure under Regulation 17’ (1996) 8 European Competition Law Review 428, 430
 Application No. 5242/04  ECtHR
 Bruno Lasserre. ‘An interview with Bruno Lasserre’ (August/September 2008) 11 Global Competition Review
 A Italianer, ‘Safeguarding due process in antitrust proceedings’ (23 September 2010) Fordham Competition Law Institute, Annual Conference on International Antitrust Law and Policy’, Session on “Enforcers” perspectives on international antitrust” at page 9 available at 05 October 2015
 Ibid at page 10
 n.2 supra at 822
 n.1 supra
 Jussila v Finland  45 EHRR 39; also see Engel v Netherlands [1979-1980] 1 EHRR 647
 See, inter alia, N Kroes, ‘Speech on the Private and public enforcement of EU competition law – 5 years on’ Speech/09/106 (12 March 2009) International Bar Association Conference, European Commission at page 5 available at accessed 05 October 2015
 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (2006) OJ C210/02 para 4
 See, SA Musique Diffusion francaise and others v Commission of the European Communities  ECR 1825
 n.2 supra at 830
 B Allan, ‘Redesign of the UK’s Competition System: The Case for an Effective Separation of Powers’ (2010) 9 (4) Competition Law Journal 389, 396
 HM Government, Department for Business Innovation and Skills, ‘Growth, Competition and the Competition Regime: Government Response to Consultation’ (15 March 2012) at page 95 available at accessed 06 October 2015
 D Currie, ‘Speech on the new Competition and Markets Authority: how will it promote competition?’ The Beesley Lectures (7 November 2013) at page 3 available at accessed 06 October 2015
 n.23 supra at page 94
 L Carstensen, ‘Keynote speech to the Association of Corporate Counsel Europe’ Seminar in Association with Baker & McKenzie (9 March 2011) at page 2 available at accessed 06 October 2015
 Application No. 43509/08  ECtHR; also see Albert and Le Compte v Belgium Application No. 7299/75;7496/76  ECtHR 1
 n.13 supra at page 11
 Case T-340/03  at para 129
 n.27 supra at paras 38-42
 Le Compte, Van Leuven and De Meyere v Belgium Application No. 6878/75; 7238/75  ECtHR at para 51
 DMB Gerard, ‘Breaking the EU antitrust enforcement deadlock: re-empowering the courts?’ (2011) 36(4) European Law Review 457
 A Andreangeli, ‘Toward an EU Competition Court: “Article-6-Proofing” Antitrust Proceedings before the Commission’ (2007) 30(4) World Competition 595
Cite This Essay
To export a reference to this article please select a referencing style below: