Jurisdictional issues in private antitrust enforcement – Advocate General Bobek sets a proper benchmark
Do national courts have the power to fully apply Article 101(1) TFEU and Article 53(1) EEA‑Agreement with regard to anticompetitive practices? This question was referred to the European Court of Justice by the Rechtbank Amsterdam (District Court Amsterdam) on 6 November 2019 (Case C ‑819/19). Advocate General Bobek gave his opinion on the matter in his Opinion of 6 May 2021. Anna-Jacqueline Limprecht reports.
Price agreements for air freight services trigger the proceedings
As a warning, it should be mentioned that a large number of figures, data and facts follow, which are unfortunately indispensable for further understanding. So please take a deep breath and get to it, it’s worth it!
The EU Commission’s decision of 9 November 2010 (Case C. 39258) contained findings that a number of carriers were involved in the coordination of various elements of prices to be charged for airfreight services on routes between EU and EEA airports and out of these territories in the period from December 1999 to February 2006. The General Court of the EU partially annulled this decision in several judgments of 16 December 2015 due to contradictions between the grounds and the operative part. The Commission subsequently issued another decision on 17 March 2017 (Case At.39258) in which it adjusted the operative part of its reasoning but maintained the substance of its original 2010 decision. The period of infringement referred to above was also fully confirmed. However, it is striking that the Commission limited the finding of infringement for EU third country routes to the period from 1 May 2004 and for non-EU third-country routes from 19 May 2005. It justified this limitation with the system of secondary legislation introduced by the Council for the air transport sector pursuant to Art. 103 TFEU (cf. Regulation (EC) No 411/2004 andRegulation (EC) No 1/2003). The airfreight cartel could almost thank one’s lucky stars that the fines imposed
are peanuts amount to just EUR 776 million due to the limited time periods. Nevertheless, they were not satisfied, so the decision has again been challenged before the General Court. Unfortunately, the outcome of the proceedings cannot yet be revealed, as the decision is still pending.
So far, so good, but what does the Rechtbank Amsterdam have to do with it? Quite simply, it’s
as always about money! The applicants – Stichting Cartel Compensation and Equilib Netherlands BV – initiated civil proceedings against the participants in the air cargo cartel before the District Court of Amsterdam. (Those of you who speak Dutch – or would like to – can find the decision of the Rechtbank Amsterdam of 2 August 2017 with question referred here). On the one hand, they are seeking a joint and several order to pay damages. On the other hand, they also request a finding that the unlawful acts took place over the years from 1999 to 2006, i.e. without temporal limitations to the period from 1 May 2004 or 19 May 2005. In their opinion, Art. 101 TFEU has direct effect for the entire period at issue, irrespective of the public enforcement of antitrust law, so that the transitional regime established by Art. 104 and 105 TFEU does not preclude applicability by national courts.
Netherlands or England – Who will prevail?
Contrary to what you might think, there will be no discussion of disputes over entry regulations or quarantine rules for fans of the English and Dutch national teams at UEFA EURO 2020.
It is a much more exciting duel: public versus private enforcement!
Can the claimants simply rely on the direct effect of Article 101 TFEU to establish competence for national courts irrespective of the administrative enforcement of competition law? The Rechtbank Amsterdam (spoiler alert!) thinks so. However, it is better to be safe than sorry, so it prefers to ask the ECJ. But where do these doubts come from?
As there are not yet enough players in the game , let’s bring England onto the field. For the High Court of Justice (England and Wales) (Case  EWHC 2420 (Ch)), upheld by the Court of Appeal (England and Wales) (Case  EWCA Civ 37), also had to decide on a civil action against the participants in the air cargo cartel. It held that no damages could be claimed for acts that took place before 1 May 2004 (for the EU) or 19 May 2005 (for the EEA). In fact, the previous case law practice of the ECJ (more on this later) was indicator enough that it did not need to be
bothered asked by way of a request for a preliminary ruling.
And so quickly we find ourselves in a divergence on the interpretation of competition law and on the preliminary ruling request of the Rechtbank Amsterdam.
When two quarrel, the third
works is happy, in this case the ECJ.
To cut a long story short, we now finally come to the opinion of AG Bobek (not otherwise designated pt. references below refer to these motions).
Extension of the question referred
First of all, it is noteworthy that AG Bobek has extended the question referred for a preliminary ruling: He does not only examine whether national courts have competence to apply Art. 101(1) TFEU and Art. 53(1) EEA Agreement to anti-competitive conduct during the period of validity of the “transitional regime” established by Art. 104 and 105 TFEU. For AG Bobek, this rather gives rise to a the more fundamental issue concerning the (inter)dependence of public and private enforcement of EU competition rules (pt. 3). Or, to put it differently: Do national courts have competence over antitrust liability actions even without an upstream administrative procedure to monitor and apply the relevant substantive legal rules?
Let us first shed light on the relationship between the aforementioned transitional regime of the TFEU and the competences of the national authorities and courts.
The starting point of the discussion is the question of the role of national courts under Art. 103 to 105 TFEU. Brief repetition of the basics: The prohibition of cartels under Art. 101 (1) TFEU aims at the comprehensive protection of undistorted competition. Agreements that are contrary to this purpose are void, Art. 101 (2) TFEU. Article 101 (3) TFEU provides for exemption possibilities. However, Art. 101 TFEU does not provide further rules on the procedure for the application and enforcement of these principles. Article 103 TFEU finds a remedy by empowering the Council to “lay down ‘the appropriate regulations or directives to give effect to the principles set out in’ Article 101 TFEU […]” Accordingly, the Council of the EU has the task of further defining the scope and administrative supervision Art. 101 TFEU.
But what about the period before the Council exercises these powers?
The so-called transitional regime, more precisely Art. 104 and 105 TFEU, may provide an answer to this question. According to these, the administrative authorities of the Member States and, in addition, the Commission are competent for the implementation of the principles until the entry into force of the provisions adopted in pursuance of Art. 103 TFEU. So the national courts are obviously not covered by this provision?
Not quite, because a vague reminder of legal methodology shows that a lot is possible by way of legal interpretation and judicial further development of the law, and that the silence of a provision is only an indication. Thus, according to Art. 103 to 105 TFEU, the role of national courts remains apparently unclear so far. However, AG Bobek emphasises that there is no doubt whatsoever that, at least since Regulation (EC) No 1/2003, national courts are empowered to apply Art. 101 TFEU in full (pt. 36). In its view, a limitation of the competence of the national courts prior to the adoption of Regulation 1/2003 was not apparent. For Article 101 TFEU, as for other individual fundamental freedoms of the TFEU (e.g. Articles 45 and 56 TFEU or also Articles 49 and 50 (2) TFEU), it applies that the relevant Treaty provision first lays down the principle and then designates the corresponding institution(s), which concretise(s) this principle by adopting additional provisions. The ECJ held that this fundamental principle of the TFEU (principle – concretisation) applies independently to all competent national authorities, including in particular, the national courts, who called upon to apply those provisions to the cases before them (pt. 48). The applicability of Art. 101 TFEU by the national
authorities courts thus already existed from a structural point of view of the Treaty since the entry into force of the EEC Treaty even before the Council acted pursuant to its empowerment under Art. 103 (1) TFEU in order that paragraphs 1 and 2 produced full effects. – Sounds plausible at first.
For the direct effect of Art. 101 (1) TFEU, further reference is made to a number of landmark decisions. According to the Courage and Crehan judgment (Case C ‑453/99), the Commission and the defendants argue that Art. 101 TFEU cannot have direct effect before the Council has introduced implementing measures with regard to Art. 101 TFEU. The applicants base their argument on the Sabam judgment (Case 127/73) to affirm direct effect. But what applies now?
Let us have a look at
Mother Courage and Crehan first. In this decision, the ECJ emphasises that the Court has previously held that Articles 101 and 102 TFEU “produce direct effects in relations between individuals and and create rights for the individuals concerned which the national courts must safeguard.” Moreover, “national courts, whose task it is to apply the provisions of Community law in areas within their jurisdiction must ensure that those rules take full effect and must protect the rights which they confer on individuals” (pt. 23 and 25). In Sabam, the ECJ states that “the competence of [national] courts to apply the provisions of Community law […] derives from the direct effect of those provisions. As the prohibitions of [Articles 101 and 102 TFEU] tend by their very nature to produce direct effects in relations between individuals, these Articles create direct rights in respect of the individuals concerned which the national courts must safeguard” (decision ground 15 and 16). These judgments thus reaffirm the main objective of the prohibition of cartels: the protection of undistorted competition. In relation to these judgments, AG Bobek emphasises the part of Art. 101 TFEU that has direct effect between individuals: the prohibition of certain anti-competitive agreements (pt. 56). The prohibition unambiguously contains the duty “Thou shalt not kill cartelise”. This argumentation is to appreciate, as Art. 101 (1) TFEU per se sanctions any cartel agreement and concerted practices. An exemption possibility under Art. 101 (3) TFEU cannot change this. Just because the provisions of Art. 101 (1) TFEU are declared inapplicable does not mean that these agreements are suddenly not restrictive of competition. They are merely exempt from the ban on cartels. Accordingly, the agreements that are actually prohibited may be practised legally (keyword rule-exception principle). In order to protect the effective enforcement of the rights of individuals, national courts must then be able to apply Article 101 (1) TFEU directly and independently of implementing regulations. Otherwise, effective protection of competition is difficult to imagine.
Isn’t there a special position for the aviation sector?
A restriction of the material scope of application of Article 101 (1) TFEU could be considered, which could possibly result from Article 103 (2) (c) TFEU. According to this provision, the Council may determine the scope of application of Art. 101 TFEU for various branches of economy in more detail. This provision is intended to separately take into account specific characteristics of individual sectors. In the defendant’s and the Commission’s view, the Council did not make use of its possibility to further define the scope of Article 101 TFEU for the air transport sector. Accordingly, the entire air transport sector was not open to the competition rules of the Treaty anyway. The national courts would therefore not have been allowed to examine the compatibility of agreements with Article 101 (1) TFEU even if there was a direct effect of this provision.
With regard to the specific provisions for the air transport sector raised in the proceedings (see e.g. Regulation No 3975/87, which restricts the opening of competition rules for “intra-EU routes”), however, AG Bobek argues that these only relate to
private public enforcement of competition law and thus do not restrict the judicial application of Article 101 (1) TFEU. Moreover, the wording of Article 103(2)(c) TFEU (“if need be”) clarifies that regulation by the Council is merely optional and that the Treaty commences from the vantage point of full application of competition rules to all branches of the economy. Accordingly, Art. 101 TFEU produces effect for the individual economic sectors (i.e. also for the air transport sector) without the need for a special regulation pursuant to Art. 103 (2) lit. c TFEU. (Cf. pt. 73, 75 and 78)
But then direct effect must be denied at least for Art. 53 of the EEA Agreement?
Art. 53 of the EEA Agreement is identical in substance to Art. 101 TFEU. Therefore, if following the opinion of AG Bobek, the same must apply with regard to the direct applicability of Art. 53 EEA Agreement. According to the established case law of the ECJ, the provisions of the EEA Agreement constitutes an integral part of EU law and must be interpreted uniformly with the provisions of the TFEU (keyword: principle of homogeneity).
Going into Extra Time: Public versus Private Enforcement
As reported at the outset, AG Bobek extends the question referred to the (inter)dependence of public and private enforcement of EU competition rules.
Having already reported on the competition law group liability here and here, another milestone for claims for redress follows with the opinion of AG Bobek: “At the structural level, provisions of EU law, which have direct effect, are by default enforceable before the national courts, irrespective of the potential centralisation of (part of the) administrative competence for their enforcement with certain administrative authorities. In the particular context of competition law, this means that undertakings breaking the rules of fair competition cannot hide behind a lack of administrative enforcement, and must expect that claims for redress will be brought directly before the competent courts of the Member States by the parties they have allegedly injured.” (pt. 99)
AG Bobek reminds of the general requirements for a cartel-related claim for redress. The examination of whether an undertaking did or did not breach its legal obligations resulting from the TFEU is the sole responsibility of the civil courts in the context of actions for damages. If a public law decision were first required to bring an action for damages, private enforcement would merely stand in line behind the administrative enforcement. “However, that view (or certainly that outcome) is simply incompatible with the nature of the system and the case-law of this Court” (pt. 95)
As is well known, anticipation is the best joy. Of course, it must be considered that preceding decisions of a public authority entail enormous simplifications of proof for the plaintiffs of actions of damages. Consequently, such civil damage proceedings without preceding administrative proceedings are quite rare in practice, which at the same time illustrates the special nature of this request for a preliminary ruling. If the ECJ now follows the opinion of AG Bobek, this would mean
lots of dosh a high claim for damages for the plaintiffs, as the entire period from 1999 to 2006 would have to be considered. At the same time, the High Court of England and Wales would not be confirmed in its legal opinion. It therefore remains exciting to see how the ECJ will decide in this case.
So what do we take with us?
- In interpretation disputes between national courts, a request for a preliminary ruling should always be considered.
- The competence of national courts to apply Article 101 TFEU does not depend on secondary EU law.
- Public and private enforcement are independent and at the same time strong players in enforcement of EC Competition law issues.
Anna-Jacqueline Limprecht is a research assistant at the Chair of Civil Law and German and International Corporate, Commercial and Antitrust Law at Heinrich Heine University Düsseldorf and a doctoral student of Prof. Dr Christian Kersting, LL.M. (Yale).