United States: Enter Margrethe Vestager: Exit Joaquin Almunia Pursued By An Ombudsman

As outgoing EU competition commissioner, Joaquin Almunia, packs his family photos into the obligatory single cardboard box that embodies professional departures, the Brussels competition community is abuzz with speculation as to what might lie ahead under his replacement, Margrethe Vestager. Their contrasting public styles also invite some comment, with Mr Almunia under the cloud of an ombudsman investigation for outspoken public comment on a pending case.

Ms Vestager gave a polished performance during her successful confirmation hearing before the European parliament on 2 October. Denmark's deputy prime minister and minister for economic affairs and the interior until taking up this new challenge, this one-time unpaid intern in the European parliament showed qualities reminiscent of the fictional and charismatic Danish prime minister Birgitte Nyborg in the hit Nordic Noir series Borgen: quietly confident in her own abilities, measured but progressive, and with impeccable English. Ms Vestager is, after all, the leader of the Danish Radical Left Party (nicknamed the "Radicool" party). By her own admission, "literally it is radical left" but in substance it is "social liberals".

A full programme

Ms Vestager's in-tray when she takes office (on 1 November, if the schedule holds) will keep her busy. Her biggest customer, literally and figuratively, is arguably Google, with DG Comp presently looking at its alleged dominant practices in Search, the Android platform and other matters, while, in other quarters, Big Data concerns keep it equally in the limelight, along with calls for Europe to develop tech champions to counter Silicon Valley giants. And DG Comp's state aid investigations into sweetheart tax deals struck by member states such as Ireland, Luxembourg and the Netherlands with prominent multinationals such as Apple, Fiat and Starbucks have come to the fore just in the last few weeks, as the European Commission reaches for any available angles of attack on member states engaging in unfair tax competition. Also in the in-tray are cartel investigations into various financial services (Libor, Forex, CDS) as well as auto parts, which have been trundling along for some time. Ms Vestager will in addition be responsible for pushing through changes to the EU Merger Regulation currently under debate in DG Comp's white paper Towards more effective EU merger control. And the potentially incendiary investigation into Gazprom's abusive terms of supply is presently on hold, pending the international crisis in the Ukraine.

Ogling Google

At the top of the new commissioner's inbox is DG Comp's investigation into Google's dominance in Search, opened in 2010. Competition Commissioner Almunia recently conceded he would not be able to conclude the case during his term of office, despite his previous advocacy of the likely sufficiency of Google's third offer of commitments. He broke the news that he now judged the offer insufficient in an interview with Bloomberg TV – just as he had chosen a Spanish radio interview to announce the rejection of an earlier offer. The likely failure of the third offer was already in the wind from the moment in late July when he gave an unattributable briefing to leading members of the Brussels press corps about his developing views on the case.

Ms Vestager told the European parliament during her confirmation hearing that she hopes the Google Search probe will not be further delayed by other antitrust investigations into Google. Whether the case will progress to a formal statement of objections – and then ultimately a fine – remains to be seen. When pushed during the European parliament hearing on this point, she said that she does not yet know what the next steps in the case will be. This was indeed the only appropriate answer in the circumstances.

Strong and silent type?

Which brings us to the subject of the manner in which the EC – generally through the mouthpiece of the competition commissioner, although sometimes through an official spokesperson or other senior official – puts information into the public domain about ongoing competition cases.

To some extent, this is specific to the style of the individual competition commissioner. But the practice has been common to some degree to all the EU competition commissioners who have held office during the last two decades. Mr Almunia, though, might be said to have taken the practice to heights previously unseen, to the extent that, in August this year, the European ombudsman opened an investigation into a complaint by Crédit Agricole over statements made by the commissioner during the ongoing cartel investigation into the financial benchmark Euribor.

Not for nothing has Mr Almunia earned himself a reputation among the Brussels antitrust press corps as "always good for a story". And although the press pack will be hoping that the arrival of Ms Vestager does not see the disappearance of what has, in many respects, been their lifeblood over the last five years, a more serious question remains: what is appropriate for a competition commissioner to say in the public domain about ongoing cases?

No-one would say that the commissioner should decline all invitations to speak, since communication about policies and priorities is an important role. On the other hand, the commissioner has important decision-making powers and (to put it in legal terms) they should act in a quasi-judicial way. It is one thing to announce a decision once taken, or an opening of a Phase 2 merger investigation, for example. But it is a much more delicate thing to comment on a case that is still under examination – for example, as to the extent of concerns in a pending investigation, the imminence of a statement of objections, the extent of remedies that may be required, or the quality of a commitment offer.

During Mr Almunia's term, there have regularly been cases in the headlines because of comment of this kind. When the procedural step is actually taken by the institution, there are usual channels for communication. Until it has been taken, many would argue, there should be radio silence.

The fact that there is a media appetite for comment (and even nowadays an expectation that there will be comment) does not make it right to give comment. Nor equally the fact that information may emerge from other sources. "No comment on pending investigations" is a simple but effective response.

Examples from near and far

The German Federal Cartel Office, the UK's Competition and Markets Authority and the US antitrust agencies all work in that way. The US Department of Justice's antitrust division manual (Chapter VII, H., 2.) states:

"The policy of the Department of Justice and the antitrust division is that public out-of-court statements regarding investigations, indictments, ongoing litigation and other activities should be minimal, consistent with the Department's responsibility to keep the public informed... Public comment [...] should be limited out of fairness to the rights of individuals and corporations and to minimise the possibility of prejudicial pre-trial publicity."

The US Federal Trade Commission takes a similar line in its operating manual (chapter 17, sections 2.1 and 2.5): "The basic premise underlying the Commission's public information program is the public's right to know what the Commission is doing, tempered by the parameters established by the FTC Act and the Commission's Rules. "Staff also speak with the press on a broad range of topics. [...] Any discussion with the press, however, may include only information that has been released to the public."

Perhaps Commissioner Dixon encapsulated the issue most effectively in his statement in the US Cinderella Career and Finishing Schools v FTC case as far back as 1970:

"There is in fact and law authority in the Commission, acting in the public interest, to alert the public to suspected violations of the law by factual press releases whenever the Commission shall have reason to believe that a respondent is engaged in activities made unlawful by the Act.

"This does not give individual commissioners license to prejudge cases or to make speeches which give the appearance that the case has been prejudged.

"Conduct such as this may have the effect of entrenching a commissioner in a position which he has publicly stated, making it difficult, if not impossible, for him to reach a different conclusion in the event he deems it necessary to do so after consideration of the record." (425 F.2d 583 (DC Circuit 1970), 590).

Communication dilemmas in hybrid cartel cases

Crédit Agricole is alleging precisely this in its complaint before the European ombudsman now: that Mr Almunia made statements during the Euribor cartel investigation indicating that he may have taken a position even though the investigation had not yet concluded.

Crédit Agricole was one of three banks that decided not to voluntarily settle when the Commission settled with other banks and levied reduced fines on them (in December 2013) for their role in attempting to manipulate Libor and Euribor benchmark interest rates. In May 2014, JPMorgan Chase, HSBC and Crédit Agricole each received statements of objection. In June, Mr Almunia said that the investigation could be wrapped up by the end of October.

It is unclear which specific statements by Commissioner Almunia since the original dawn raids carried out in October 2011 are the subject of Crédit Agricole's complaint to the ombudsman, but a review of media stories on the Euribor cartel investigation reveals that there could be several which, it might be argued, bring into question the impartiality of the investigation. In September 2012, for example, the commissioner stated that the conduct under investigation in the Euribor and other cartel probes may be of a "level of gravity above average". Earlier, in June 2012, Mr Almunia remarked to a news service that the evidence DG Comp had collected in the probe was "telling" and that he was sure the investigation would not be closed without results.

The "hybrid" nature of this particular cartel case, involving a group of confessor banks prepared to settle for reduced fines on the one hand, alongside three that are still fighting to maintain their innocence, undoubtedly raises new communication challenges for Europe's competition regulator. The Commission has made clear that it does not want parties that participate in good faith in cartel settlement processes to fall hostage to those that do not want to settle, but it has a fine line to tread. The three banks which did not settle in the Euribor investigation now face an uphill battle trying to maintain their lack of involvement against a backdrop of clear confessions from their alleged conspirators. That one of them has turned to the ombudsman with due process concerns following various statements made in the public domain is hardly surprising.

Can she rise above it?

Ms Vestager has to date conducted herself with aplomb. Following her confirmation hearing in the European parliament, one MEP even went as far as to call her a "star commissioner". The competition portfolio, of all EC portfolios, arguably provides the greatest opportunity for media exposure for the individual in the competition commissioner seat. But it also brings with it the significant responsibility of protecting the integrity of that role, because that integrity is inextricably linked to the fairness of the procedures as a whole. Ms Vestager takes office amid a clamour of voices seeking support for European champions and the tilting of the antitrust playing field to serve other policy goals. Her demeanour in parliament promises a welcome determination to tread a straight and narrow path in applying the law in the required objective manner.

And to add to her in-tray: the DG Comp rulebook is noticeably lacking any guidance of the kind cited from the US agencies, as to the extent of permissible public comment on ongoing cases. It would be a proud part of a legacy, five years from now, to have added that missing chapter.

Originally published by Competition Law Insight, 14 October 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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