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Article: August 2018: EU Litigation Update

Business Litigation Reports

Improved Judicial Review of EU Commission Decisions? The record of success in challenging EU Commission (EC) Article 102 infringement decisions in recent years has been woeful especially since the EU General Court’s 2007 judgment in Microsoft v. Commission. The contrast with the judicial record on appeals against decisions under the EU Merger Regulation or Article 101, is striking.

The cause of this phenomenon was summarized in Microsoft where the Court noted that where “complex economic assessments” were involved, judicial review is restricted merely to “checking whether the relevant rules on procedure and on stating reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers.” It held that if the EC’s decision is based on “complex technical appraisals, those appraisals are subject to only limited review by the Court”, as a result of which it cannot substitute its own assessment of matters of fact for that of the EC.

The limited prospects of successful judicial review of EC Article 102 decisions, due the deference given to whatever could be labelled as matters of “complex economic assessments” has resulted in corporations under investigation having an incentive to settle with the EC by agreeing to Article 9 commitments, even when there were strong grounds to defend the case.

Is there now, due to recent case law developments and indications from the Bench, a prospect of a more intense judicial review of EC infringement decisions such that the incentive to settle cases due to a lack of confidence in the intensity of judicial review at appellate level has changed?

In September 2011, the European Court of Human Rights (ECtHR) delivered judgment in the Menarini case, holding that because of the severity of competition law sanctions, they were equivalent to those imposed under the criminal law. Although an administrative body could impose fines, such a finding had to be capable of being challenged before an independent and impartial Court having full jurisdiction to review the decision. In the particular case, the ECtHR held that the appeal Court in question was not limited to simply verifying lawfulness. Rather, the Court also had to assess whether the administrative authority made proper use of its powers, whether its decision had been substantiated and proportionate, and even to check the administrative authority’s technical findings.

The Menarini case has been relied on by the EU Courts in cases such as KME and Chalkor which considered the degree and intensity of judicial review that was required in competition cases to ensure that the Menarini principles were respected and that the EC’s decision was reviewed by a Court having the requisite full jurisdiction. While the Court recognized that, as regards complex economic assessments, the EC has a margin of discretion, that does not mean that the EU Courts must refrain from reviewing the EC’s interpretation of information of an economic nature. Instead, the EU Courts must assess whether the evidence relied on is factually accurate, reliable and consistent as well as whether that evidence contains “all the information which must be taken into account to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it”. Furthermore, “in carrying out such a review, the Courts cannot use the Commission’s margin of discretion – either as regards the choice of factors taken into account in the application of the criteria mentioned in the Guidelines or as regards the assessment of those factors – as a basis for dispensing with the conduct of an in-depth review of the law and of the facts.”

The requirement to undertake a higher standard of judicial review set out in KME and Chalkor has been upheld and further evolved in the Court of Justice’s subsequent judgments including Galp, Mastercard and Intel. In the recent en banc Intel judgment, the CJEU ruled that “the General Court must examine all of the applicant’s arguments,” including both factual and economic evidence to assess the validity of the EC’s findings.

The impact of this new case law has been felt in other competition law appeals, for example, Kone, Schindler and Mastercard. The Vice President of the General Court, Judge van der Woude stated: “After the judgment in Mastercard, I’m not aware of any other judgment by or under which the General Court may have said that there is a margin of appreciation in complex economic matters.”

In conclusion, the impact of the incorporation of the Charter on Fundamental Rights into EU law has had a substantial impact on the intensity and quality of judicial review before the EU Courts. The previous deference given to the EC’s decisions where its reasoning could be labelled as comprising matters of complex economic assessment seems to be in the process of being rolled back. How far this process will go is as yet unclear, but in light of the recent case law calling for an in-depth review of the facts and an assessment all the evidence put forward, whether or not of an economic nature, there may now be a much better prospect of securing a more thorough and detailed judicial review on appeal of EC decisions in all competition cases, especially Article 102 cases. There are a number of major Article 102 appeals in the Court’s docket so we shall have wait and see how this development plays out.