In a 30 May 2011 speech, the EU Commissioner for competition policy, Joaquín Almunia, announced a series of changes to EU antitrust procedures, with a view to providing parties under investigation with more transparency into European Commission (EC) investigations. These changes follow announcements that the Commissioner has made, relating in particular to fines, private enforcement and oral hearings. The new changes are welcome, but there remain significant challenges for businesses that are the subject of EU antitrust proceedings.
Announcements from the Commissioner
Following criticism and increasing calls from legal and business
communities for the EC to respect fundamental rights of defence and
to guarantee "due process" to parties under
investigation, the Commissioner had announced, in a series of
speeches in 2010, that a number of procedural changes were going to
take place. (For a discussion of prior EC announcements, see our
antitrust alert of November 2010.)
The first measure was announced in April 2011. The Commissioner announced
that the EC would begin to include in its statement of objections
(SO), the document that describes an antitrust challenge,
"the elements for the calculation of the fine, such as the
value of the cartelised sales...but also, for example, an
indication of the gravity and issues of recidivism. This innovation
will open a channel for dialogue with the parties and will give
them a better idea, at an early stage, of the size of the fines
that may be imposed on them."
In his recent speech of 30 May 2011, the Commissioner went further,
announcing the following measures to be adopted by the EC, relating
to the crucial issues of due process and the rights of
defence:
1. Key documents. Parties under investigation will
have earlier and wider access to "key documents" (such as
economic studies) before they potentially receive a SO from the EC
and have access to the EC's file.
2. State of play meetings. These meetings provide
a forum for the mutual exchange of information between the EC and
the parties under investigation, at key points in the procedure.
These may be meetings at the EC's offices or if appropriate by
telephone or videoconference. Usually held for abuse of dominance
investigations, now they will be extended to cartel cases. Such
meetings also will be introduced for complainants, so that the
Commission can discuss with them whether it will continue to
investigate a matter that they have raised with the EC.
3. Hearing Officers. The Commissioner announced
various measures as regards the Hearing Officers.
3.1. Hearing Officers will be involved from the start of an
investigation, whereas until now they were only involved after the
issuance of a SO.
3.2. Hearing Officers will have the powers to review disputes over
legal privilege. This is potentially an important practical change
as, under the current rules, privilege disputes between the EC and
the parties must be brought to the EU Courts, where proceedings may
take several years. The Commissioner indicated that,
"Under our new rules, companies claiming privilege over
documents could address themselves to the Hearing Officer, let him
check the content of the documents and ask him to make a
recommendation." (For more information on the scope of
legal privilege in the EU, see this
antitrust alert.)
3.3. Hearing Officers may also be appointed from outside of the
Commission, a possibility that the Commissioner will
"seriously consider in the future."
Helpful changes – but not enough
We certainly welcome the changes announced by the Commissioner,
as they will enhance transparency in EU antitrust
proceedings.
The fundamental flaw remains. Nevertheless, the
Commissioner made clear that "the fundamentals will not
change. The hearing officers will not become judges and will not
rule on the substance of cases; they will remain the guarantors of
procedural rights." These changes will not remedy the
perceived fundamental flaw in the process: the fact that the EC
acts as investigator, prosecutor and judge – with the
inherent issues that this raises in terms of independence,
impartiality and the rights of defence. These unfortunate
"fundamentals" will remain unchanged despite the measures
announced by the Commissioner.
The definition of "key documents." It is
the EC that will determine which are the "key documents"
in its file and therefore to which documents the investigated
parties will have access before receiving a SO or access to
complete file. However, the EC has a history, in some cases, of
only selectively including documents from its file and selectively
not relying on potentially exculpatory documents. It therefore
remains to be seen how, in practice, the EC will discharge this new
requirement to give access to "key documents".
Are Hearing Officers well-suited to deal with legal
privilege issues? It is potentially an improvement that
legal privilege issues may be submitted to Hearing Officers, rather
the Case Team or ultimately the EU Court. However, we can see at
least two reasons why investigated parties may be reluctant to
allow the Hearing Officers to review, in detail, the content of
potentially privileged documents.
First, although Hearing Officers do not report to the investigating
case team, they report to the Commissioner, who is a member of the
Commission that ultimately will decide the outcome of the
investigation.
Second, disclosing documents to a Hearing Officer raises potential
waiver issues. For example, there is a line of precedent in the
U.S. that, if a privileged document is shown to a third party or a
privilege is waived in one proceeding, the party is deemed to have
waived legal privilege on the entire subject-matter and for other
proceedings. Accordingly, although it is a question of U.S. law,
showing a legally privileged document to the Hearing Officer could
be claimed in the U.S. to be waiver of the privilege for the entire
subject-matter. This may have ramifications not only for U.S.
government antitrust investigations, but also U.S. private actions
for damages.
For these reasons, investigated parties in practice may be
reluctant to allow Hearing Officers to review these documents and
rule on issues of legal privilege.
No changes to oral hearings. Early in his mandate,
the current Commissioner had announced forthcoming changes to the
way in which oral hearings would be run. However, no such measure
was announced as part of this recent package of reforms. This is
disappointing. As discussed in our November 2010 Alert, in a system
with limited due process safeguards (investigation, prosecution and
decisionmaking powers belonging to one institution), the fact that
oral hearings are not chaired by an independent decisionmaker and
are not public exacerbates the limits of the protections afforded
to investigated companies.
Conclusion
Overall, the announced measures may contribute to improving the transparency of EC antitrust proceedings and somewhat improving "due process." The announced measures therefore are potentially important for investigated companies. Only time will tell whether, in practice, these measures will have a real effect on investigated parties. In any event, they are not sufficient to remedy the "fundamentals" of this fundamentally-flawed enforcement system.
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