Parallel Cartel Enforcement Actions in Europe

February 16, 2012

Case C-17/10 Toshiba Corporation et al v. Úřad pro ochranu hospodářské soutěže [2012] ECR NYP

On February 14, 2012, the Court of Justice of the European Union (the "CJEU") delivered a landmark Judgment that clarifies the parallel application of EU and national competition law to infringements taking place before and after the accession of a Member State to the EU.[1]

The EU competition rules cannot be applied retroactively to anticompetitive behaviour in a Member State that had not as yet acceded to the EU during the period in which the infringing conduct occurred. In these situations, national competition rules may sanction an infringement covering the period before that Member State’s accession to the EU, up until the date of accession.

According to the CJEU, this system of parallel reviews does not breach the ne bis in idem ("double jeopardy") principle.

Background

EU competition rules contain a number of procedural rules concerning the parallel application of national and EU competition rules:

1.  Article 101 of the TFEU (the prohibition on restrictive agreements and arrangements) is directly applicable and enforceable by the Commission, National Courts, and National Competition Authorities.

2.  The Commission and National Competition Authorities are obliged to apply EU competition law in close cooperation at both national and EU levels.

3.  Where an investigation based on the same factual grounds has been initiated by more than one authority, the Commission and National Competition Authorities may allocate it to a single authority in order to respect the principles of legal certainty, subsidiarity and effectiveness of EU law.

Facts and Reference for a preliminary ruling

In January 2007, the Commission adopted a decision in respect of a cartel that had engaged in a single and continuous infringement from 1988 to May 11, 2004 in the gas insulated switchgear market (the "Commission Decision").[2] In August 2007, the Czech Competition Authority adopted, in a separate proceeding, a decision on the basis of Czech law relating to the infringement by the same cartel for the period up to March 3, 2004.

After a series of appeals before national courts and a return of the case from the Czech Supreme Administrative Court, the Krajský soud v Brně (the "Czech Court") referred a series of questions to the CJEU regarding the application of EU competition rules, namely: the retroactive application of Article 101 of the TFEU, the procedural regime and delimitation of competences at EU and national level, and the ne bis in idem principle.

Non-retroactive application of Article 101 of the TFEU

First, the CJEU observed that the provisions of the TFEU apply in the new Member States as from the date of their accession. Second, respect for the principles of legal certainty and the non-retroactive effect of laws preclude the application of Article 101 of the TFEU in a Member State prior to its accession to the EU.

Delimitation of competences and powers of the Commission and National Competition Authorities

The CJEU found that a "national competition authority does not […] permanently and definitely lose its power to apply national competition law where the Commission opens a proceeding."[3] However, in applying national competition rules, National Competition Authorities must respect the ne bis in idem principle.

Respect for the ‘ne bis in idem’ principle

Ne bis in idem is a principle of EU law which must be complied with in proceedings involving the imposition of fines under competition rules.

The CJEU recalled that the application of this general principle of EU law is subject to three conditions: identity of the facts; unity of the offender; and unity of the legal interest protected. According to the CJEU, the "identity of the facts" condition was missing in the case at issue, as the Commission Decision had assessed and referred to the "consequences of the cartel at issue [in] the ‘Member States of the time’ and the States ‘which were contracting parties to the EEA agreement’."[4] A contrario, this condition would be fulfilled where a case appraised by the Commission had defined the scope of the effects of the infringement as being EEA-wide, including recently acceded Member States, and the fine calculation had not reflected the relevant Member States’ more recent accession to the EU. 

Conclusion

The Judgment is of major importance for the purposes of defining the nature and duration of a cartel infringement. In the case at issue, May 2004 marked a clear demarcation point between the previous regime and the scheme currently in force: the cartel infringement had ended only months before that date, with the Czech Republic joining the EU in that same month. However, had the Czech Republic entered the EU some time before 2004, or had the cartel infringement continued for another couple of years, the guidance provided by the CJEU should have been arguably identical, given the following:

• First, where an infringement of EU competition rules has effects within the territory of the EEA, including in Member States that have acceded to the EU during the existence of the cartel, the Commission’s jurisdiction derives from the effects of the cartel in the territory of the EEA, even if the boundaries have changed throughout the infringing period.
• Second, the application by the Commission of Articles 101 or 102 of the TFEU precludes the enforcement of national competition rules where the unity of the facts (including the geographic scope of the infringement), of the offender and of the legal interest protected is established. However, where the Commission has factored the evolution of the geographic boundaries of the EU into the infringing companies’ EEA turnover figures for the purposes of calculating fines, the effects on competition in the Member States during the pre-accession period will not have been sanctioned. In these situations, the ne bis in idem principle does not present a bar to National Competition Authorities opening investigations for infringements of their national competition rules during the pre-accession period.