GLOBAL COMPETITION LAW CENTRE

1. GLOBAL COMPETITION LAW CENTRE MARK CLOUGH QC, Partner, Solicitor Advocate Thefuture role and organisation of the Court in the competition field Brussels, 6 December 2005 3875581

2. Introduction • Issues • Options for Reform • Is it time for a radical solution?

3. Issues 1. Limited role of judicial review in administrative competition law system 2. Procedural delays 3. Language and enlargement 4. Decentralisation and Modernisation

4. Issues 1. Limited role of judicial review in administrative competition law system • Limited nature of judicial review under Article 230 EC: not full appeal on the merits • The CFI may not substitute its own decision on the merits but must “remit” the case back to the Commission to draw the necessary consequences under Article 233 EC: unsatisfactory for applicant and the Commission as judicial review not determinative

5. Issues 2. Procedural delays • Delay: “the main problem with our current system of judicial review is not its effectiveness in terms of how closely the Courts scrutinise the Commission’s decision, but in terms of the speed of that review…” (Bo Vesterdorf, Judicial review in EC Competition law: reflections on the role of the Community Courts in the EC system of competition law enforcement” (Competition Policy International, Vol.1, No.2 Autumn 2005)

6. Issues • According to President Bo Vesterdorf, average time for an anti-trust or merger case under the normal procedure of the CFI is approximately 33 months and approximately 10-12 months under the expedited procedure with shortest merger case just under seven months • Delay is a major issue in mergers: six months should be maximum period for merger appeal to have value for business • ECJ Statistics – average time for references for preliminary rulings 2004: approximately 23 months (2003: 25 months); direct actions 2004: 20 months (2003: 25 months); appeals 2004: 21 months (2003: 28 months)

7. Issues 3.Language and enlargement • 25 ECJ judges and 25 CFI judges • 9 new working languages – 20 ECJ working languages and 21 CFI (including Irish) • 380 possible linguistic combinations • Article 35 CFI RP language regime may only be changed by unanimous decision of the Council under Article 64 of the Statute; all pleadings, including those submitted by a Member State in its own language still have to be translated into the language of the case; the working language of the Court is French, so all documents are translated from the language of the case into French, the working language of the Court; main cause of delay; translation main cost of the Court; politically sensitive question to which there is no easy solution

8. Issues 4. Decentralisation and Modernisation • Greater powers granted NCAs and National Courts encourages recourse to National Courts: Regulation 1/2003 • Delay in preliminary ruling proceedings before ECJ (22 months) and annulment actions before CFI (33 months) encourages recourse to National Courts • No change to Luxembourg as seat of the European Court: European Court Judges still claim that centralised European Court system necessary to ensure uniformity and consistency

9. Issues • ECJ case law on procedure before National Courts in absence of harmonisation requires national procedure and remedies subject to principles of equality and effectiveness; major differences in national procedures, e.g. private competition enforcement: burden and standard of proof, evidence rules (discovery), collective actions (group litigation orders or class actions), calculation of damages, costs, standing of claimants, causation and remoteness of damage • Does recourse to National Courts driven by decentralisation necessarily mean less uniformity and consistency in application of EC Competition law?

10. Options 1. Procedural Improvements: insufficient 2. Changes to judicial Structure (Nice Treaty- based changes): 4 options – A. transfer of ECJ jurisdiction to CFI; B. non-competition specialist tribunals; C. competition specialist tribunals; D. specialist competition chamber 3. The Modernisation Option

11. Options • Procedural Improvements: insufficient • Expedition procedures: priority treatment, the accelerated or expedited procedure, the simplified procedure and the possibility of giving judgment without an Opinion of the Advocate General • 2003: CFI reduced from five to three number of judges to hear competition case • CFI RP Council amendments include expedited procedure pleading rules under Article 76(a) to allow fallback longer pleading if shorter version not needed when expedition not pursued • ECJ new internal deadlines, CFI likely to follow

12. Options • CBI proposed “super-fast track” optional expedited procedure for mergers so that completed within six months of Commissions Phase 2 ECMR Decision by abridging timetable • The UK DTI has proposed as another informal method of self-help that the parties limit the length of their pleadings as requested by the CFI Practice Directions (not to exceed 20 pages if possible), making the most of the flexibility available within the existing expedited procedure • The UK DTI has also proposed that applicants who request the expedited procedure could include in their application for expedition a request that the language of their case should be used by the court in its consideration of it

13. Options • Changes to judicial Structure (Nice Treaty-based changes) • A number of structural reforms are made possible by the Nice Treaty and have already begun • Option A: transfer of jurisdiction to CFI from ECJ. Article 225 EC, as amended by the Nice Treaty which entered into force on 1 February 2003, provides that the CFI is to have jurisdiction to hear and determine at first instance all direct actions with the exception of those assigned to a judicial panel and those reserved in the Statute for the ECJ

14. Options • Advantages: • 5% (25 pending cases) of the ECJ cases moved to the CFI in 2004 mainly concerning state aid and the European Agriculture Guidance and Guarantee Fund • potential to reduce ECJ caseload further by transferring Article 234 references to CFI • Disadvantages: • decrease in caseload of ECJ results in increase in caseload of CFI • Regulation 1/2003 and Decentralisation are expected to increase private litigation significantly, confronting national courts with complex competition law questions which they will feel it necessary to refer to the ECJ for a preliminary ruling under Article 234 EC • “it may be more coherent to allow the CFI the power to deal with such preliminary rulings as it is possible under Article 225(3) EC. This would, however, inevitably increase the workload of the CFI even further and would be an additional factor to be considered in any discussion and changes the aim of improving speed in the adjudication of competition cases before the Community Courts.” (Vesterdorf article, page 27)

15. Options • Option B: non-competition Judicial panels (or specialist tribunals) under Article 225A: “The Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Court of Justice or at the request of the Court of Justice and after consulting the European Parliament and the Commission may create judicial panels to hear and determine at first instance certain classes of action or proceeding brought in specific areas. The decision establishing a judicial panel shall lay down the rules on the organisation of the panel and the extent of the jurisdiction conferred upon it. Decisions given by judicial panels may be subject to a right of appeal on points of law only or, when provided for in the decision establishing the panel, a right of appeal also on matters of fact before the Court of First Instance.”

16. Options • The first judicial panel was created on 2 November 2004, when the Council adopted Decision 2004/752/EC, Euratom establishing the European Union Civil Service Tribunal (OJ 2004 L 333/7). This new specialised Tribunal, consisting of seven judges, will be called on to hear disputes involving the European Union Civil Service. Its decisions will be open to an appeal, limited to points of law, before the CFI and, exceptionally, subject to review by the ECJ in the circumstances prescribed by the Protocol on the Statute • CFI lost 25% of its annual caseload (and the ECJ about 10% of its annual caseload accounting for appeals relating to staff cases)

17. The CFI president in his recent article has supported the creation of judicial panels to remove other cases from the CFI’s workload: “a more practical and realistic solution would be to focus the CFI’s resources more on competition cases by removing from its jurisdiction a number of other cases in specific areas such as those relating to EC officials and trademarks.” (Page 26) The president notes that in addition to the 20% [25%] of the current caseload attributable to civil service cases, a further 17% could be removed through the creation of a trademarks tribunal Options

18. Options • Advantages of non-competition judicial panels under Article 225A: • removal of approximately 40% of the CFI caseload would leave CFI free to deal promptly with competition, merger and state aid cases • Disadvantages: • CFI caseload of appeals from specialist panels could be as great as panel caseload • volume of new competition cases likely to grow (if CFI has jurisdiction over competition references)

19. Options • Option C: competition judicial panel (or specialist competition tribunal) under Article 225A: • Advantages of a specialised Competition Tribunal: • Specialist judges would be better suited to examine closely the complex economic assessments undertaken by the Commission • Tailor-made procedures could be optimised for the specific needs of competition cases • Possibly greater resources to deal more effectively and more expeditiously with competition cases • Could be a move towards a more coherent system of three levels of jurisdiction: First instance Tribunals, appeals to the CFI, and exceptional review by to the ECJ

20. Options • Reduce the workload of the ECJ by relieving it of systematic appeals against the CFI’s competition judgments in areas that do not always merit adjudication by the highest court (e.g. determination of the correct amount of fine) • Reduce workload of the CFI by removing competition, merger (and possibly state aid) cases from its first instance jurisdiction • Disadvantages of a specialised competition tribunal: • Appeals to the CFI could lengthen the proceedings if appeals became systematic • The specialisation of judges could also result in the greater insularity that sometimes characterises the competition law community • The judicial panel under Article 225A EC would not alter the limited nature of the judicial review process as full jurisdiction would not be granted

21. Options • The process of establishing a panel would take a number of years as the experience with the proposal for a judicial panel to deal with Community Patent cases demonstrates • Option D: specialist CFI competition chamber(s) created by case management: An alternative solution involving no change to the existing structure of the CFI would be to create one or more specialised chambers for competition cases with three or five judges specialised in and focussing on competition cases alone • Advantages of specialised competition chambers: • improving the speed of treatment of competition case • easy implementation at an internal level;

22. Options • Disadvantages of specialised competition chambers: • the risk of overall under-utilisation of the specialist chamber depending on the workload of competition cases at any particular time - difficult to resist pressure to allocate non-competition cases to the specialised chambers in times of under-utilisation or not to allocate competition cases to other chambers in times of over-utilisation • more difficult to establish specific procedures within the existing structure of the CFI

23. Options • From a historical perspective it is interesting to note the criticism of the creation of specialised courts/tribunals or specialised chambers made in a report by the British Institute of International & Comparative Law into “the role and future of the European Court of Justice”, presented by Lord Slynn of Hadleigh in 1996. The report considered there to be a number of disadvantages including the difficulty of defining a structured relationship between all the different tribunals, a concern that specialist tribunals would proliferate and ultimately jeopardise the uniform interpretation and application of Community law

24. Options • The Modernisation Option • A radical solution: a new CFI competition court architecture based upon a specialist competition chamber or tribunal • European Commission Green Paper on the desirability of encouraging private enforcement actions in the National Courts will increase need for consistency and uniformity in application of EC competition law • Decentralisation of administrative decisions and the enhanced roll of private enforcement actions highlights the need for a totally new approach to the organisation of the Community courts in competition cases: there seems no obvious reason why the court structure should not match the decentralised administrative structure of EC competition law

25. Options • On the one hand the European Commission shares the administrative powers of enforcement of EC competition law with the National Competition Authorities (NCAs) through the European Competition Network (ECN) with its system of allocating cases to the best placed NCA (or the Commission itself). • On the other hand, the new system of directly applicable EC competition law enables the National Courts to exercise equivalent powers to those of the European Commission and/or their national competition authority within the scope of their jurisdiction. With the new emphasis on private enforcement and damages claims, the National Courts will have a parallel if not more important role, to that of the Community Judicature, in competition enforcement in Europe.

26. Options • The question is: should the National Courts, and in particular specialist national competition courts, play a much greater role than they do at present in the system of judicial control and European competition law enforcement?

27. Is it time for a radical solution? • In the same way as the NCA’s belong to the ECN presided over by the European Commission, member states could establish a specialist national competition court which is then nominated to form part of a chamber of the CFI with the judges of the National European Competition Court belonging to the enlarged chamber of the CFI responsible for all types of competition law case. The CFI competition chamber could be responsible for allocating cases either to itself or to the best placed National European Competition law court in accordance with strict criteria subject to review by the CFI • A similar structure could form part of a specialist competition tribunal under Article 225A EC

28. Is it time for a radical solution? • The key features of the new “European Competition Court Network” could be along the following lines • The national judges nominated by each Member State to the CFI Chamber would be members of the CFI • A Member State would be permitted to nominate more than one national judge up to a total of three to sit in their National European Court, provided that two were nationals from another Member State

29. Is it time for a radical solution? • The jurisdiction of the National European Competition Law courts would cover: • appeals against the administrative decisions of the NCAs as well as of the European Commission (where the particular national court had jurisdiction and where the CFI chamber allocated the appeal to that national court) • a similarjurisdiction in relation to fines or penalties • jurisdiction to hear claims for damages or restitution of loss caused by infringement of national or European competition law whether on the basis of follow – on actions or not • the jurisdiction rules applicable under the Brussels Regulation would apply to determine which national European competition Court had jurisdiction in private enforcement cases.

30. Is it time for a radical solution? • power to give a preliminary ruling under Article 234 EC on a reference from any national court (provided that the CFI competition chamber had allocated the reference to that national European competition Court) • and jurisdiction to award damages against the European institutions on the same grounds as the CFI, (again if that national European Court is allocated the case in question by the CFI Competition Chamber) • The language of the case will be the language of the Member State in which the national European competition Court is situated and will be a relevant factor in the decision of the CFI Competition Chamber making the case allocation decision

31. Is it time for a radical solution? • The CFI Competition Chamber would adopt its own rules of procedure and those to be applied by the national European Competition Courts. To the extent that those procedure rules are not initially comprehensive, and otherwise until such time as national rules of procedure and remedies are harmonised at the Community level, national rules on procedure and remedies will apply subject to the general principles of equality and effectiveness laid down by the ECJ case law • An appeal on a point of law may be made from the national European competition law court to the main competition chamber of the CFI with a further appeal only possible with permission of that CFI chamber or the ECJ, to the ECJ

32. Is it time for a radical solution? • An appeal on a point of law may be made against a decision by the CFI competition chamber at first instance to the ECJ, save on a reference where appeal may only be brought with permission of the ECJ • The scope of judicial review by the national European competition law courts (and by the CFI competition chamber) would be a full re-hearing and appeal on the merits so that the court could substitute its own decision or remit the decision for reconsideration • An alternative to the European-wide nominated national European competition Court system would be to establish one (or possibly more than one) specialist European competition law tribunal under Article 225A EC in one of the Member States. The jurisdiction, scope of review and procedure would be the same as that above

33. Is it time for a radical solution? • Clearly the area of controversy in creating a national level of the European court will be the safeguards needed to ensure consistency and uniform application of community competition law • In the light of the modernisation and decentralisation of European competition law and the policy priority given to deterrence and consumer welfare (including compensation), the increased role of national courts in private enforcement militates in favour of their participation in public enforcement as appellate or referral courts. This parallel structure to that of the ECN should not only enhance the competition culture required to improve the competitiveness of European industry to meet the goals of the Lisbon Agenda but also over time guarantee a structural uniformity in the application of European competition law at the national level

34. Is it time for a radical solution? • These two possible systems of national European competition law court include the following advantages: • increased access to justice arising from faster court proceedings, local culture and language, local judicial experience • Enhanced consistency and uniformity of application of European competition law at the national level through the appointment of national European Competition Court judges as CFI judges by the Member States as a whole in accordance with the established procedure; and through the creation of a court in a wider network supervised by the CFI in Luxembourg to which references and/or appeals may be made as appropriate and subject to the authority of the CFI preserving the coherence and unity of the Community legal system

35. Is it time for a radical solution? • The removal of certain major obstacles to streamlined procedures before the CFI and ECJ, including language, workload delays, budget hurdles, procedural delays, and delays resulting from the nature of judicial review under Article 230 EC (which will have to be amended) • The obvious problem is delay – how long will it take? Will the Member States ever make the required Treaty amendments, if they are necessary? • The Answer is that nothing is going to happen for a long time, if a radical solution is not adopted. The Member States are accustomed to IGCs and Treaty amendments – sorting out the European Constitution could provide the opportunity needed.

36. GLOBAL COMPETITION LAW CENTRE MARK CLOUGH QC, Partner, Solicitor Advocate Thefuture role and organisation of the Court in the competition field Brussels, 6 December 2005 3875581