European Union: European Court Of Justice Upholds Use Of Evidence From Noncompetition Authority

In Short

Background: The European Court of Justice ruled that in antitrust proceedings, the European Commission may rely on the fortuitous conveyance of evidence by a national tax authority.

The Result: This ruling sets the stage for information sharing that capitalizes on cooperation between the European Commission and national authorities (whether in the field of competition or in other areas).

Looking Ahead: Companies will have even greater incentives for a comprehensive legal compliance system, given the confirmed legitimacy of a more extensive use of information sharing between EU and national authorities.


The European Court of Justice ("CoJ") has upheld the European Commission's use of evidence transmitted by a national authority other than a Member State competition authority in a cartel investigation. The CoJ ruled on April 27, 2017, that the national authority properly transmitted such evidence under national law and that, in particular, nothing under EU competition rules impeded such transfer (Case C-469/15 P, FSL Holdings NV, Firma Léon Van Parys NV, and Pacific Fruit Company Italy SpA ("Pacific Fruit Group") v. European Commission).

Background

This ruling arises from the Commission's investigation of anticompetitive practices relating to the exchange of price-related information of bananas in northern Europe (northern European investigation), commenced in 2005.

In the context of the northern European investigation, the Commission received documents in July 2007 relating to the alleged anticompetitive practices from the police section of the Italian tax authority, which was conducting a national tax investigation. The documents, found when inspecting the office and home of an employee of Pacific Fruit Company Italy SpA, implicated anticompetitive practices occurring in southern Europe.

In 2007, following receipt of such information, the Commission carried out dawn raids at banana importers' offices in Spain and Italy and found two pages of the same notes already transmitted by the Italian tax authority. Following its investigation of anticompetitive practices in southern Europe (southern European investigation), the Commission issued a decision in 2011 that fined Pacific Fruit Group €8,919,000 for coordinating their price strategy in Greece, Italy, and Portugal, as well as exchanging information on future market pricing conduct.

Commission May Rely on Evidence Properly Transmitted by a National Noncompetition Authority

Pacific Fruit Group appealed the Commission's decision before the European General Court, specifically challenging the Commission's use of the documents transmitted by the Italian tax authority.

While the General Court reduced the fine, due to interruption of the infringement for a limited period, it otherwise upheld the rest of the decision (as set out below). In 2015, Pacific Fruit Group appealed to the CoJ, contesting the use of evidence transmitted by a national authority.

The CoJ fully upheld the General Court, dismissing Pacific Fruit Group's claim that the European Commission unlawfully used evidence transmitted by the Italian tax authority. The findings of the CoJ are outlined below.

Proper Transfer of Evidence by National Authorities Under National Law. Pacific Fruit Group asserted that the transmission of the evidence must comply with not only national law, but also EU law. However, the CoJ upheld the General Court's finding that (i) national law governs when national authorities transmit information to the Commission obtained in application of national criminal law, and (ii) the EU courts have no jurisdiction to rule on the lawfulness of a measure adopted by a national authority under national law.

The CoJ referred to the General Court's findings that the police section of the Italian tax authority had properly provided the documents to the Commission. These documents were transmitted after Rome's public prosecutor had authorized the internal transfer of such evidence from the Italian tax authority's police section to its market protection section (dedicated to protecting competition in Italy). Therefore, the public prosecutor must have known that he was authorizing the use of such documents for the purposes of a competition investigation. The public prosecutor subsequently responded to a European Commission request to confirm that the Commission could communicate the evidence to the parties without prejudicing the national investigation in Italy.

The Commission May Use Information Collected by a Noncompetition Authority for Another Purpose. The CoJ further rejected Pacific Fruit Group's interpretation of the EU competition rules that evidence shall only be used in relation to the subject matter for which it was collected by the national authority (see Article 12(2) of Regulation 1/2003 on information exchange between the Commission and national competition authorities, which provides that "[i]nformation exchanged shall only be used in evidence for the purpose of applying [Article 101 or 102 TFEU] and in respect of the subject-matter for which it was collected by the transmitting authority").

Pacific Fruit Group contended that, under such provision, the Commission must assess whether documents transmitted are used only in relation to the national authority's purpose in collecting such information. Therefore, it argued that the disputed documents should have been used only as evidence in a national tax investigation, as they were collected for such purpose, and not for a competition investigation.

The CoJ, however, noted that Regulation 1/2003 seeks to enhance cooperation between competition authorities at the EU and national levels by facilitating the exchange of information, including confidential information. With this in mind, the CoJ found that Regulation 1/2003 (Article 12 (2)) did not create a more general rule prohibiting the Commission from using information transmitted by national authorities other than the Member States' competition authorities, solely because such information had been obtained for other purposes. The CoJ found that such a rule would unduly burden the Commission's role in overseeing the enforcement of EU competition law.

As further noted by Advocate General J. Kokott in her opinion delivered on November 27, 2016, the existence of an antitrust offense can be demonstrated by any appropriate evidence. EU law has no general principle such that competition authorities may rely only on certain forms of evidence or take into account only evidence from certain sources. A prohibition on the reuse of evidence for purposes other than why it was originally gathered can only arise where EU or national law sets out an express intended purpose for a particular item of evidence, such as under the above-referred Regulation 1/2003, Article 12 (2) (evidence exchanged between European competition authorities) and Article 28 (1) (evidence gathered by the Commission in the course of antitrust proceedings and covered by professional secrecy). These safeguards are to prevent evidence, gathered by a competition authority for the specific purpose of antitrust law, from subsequent use against companies in other proceedings with stricter standards of procedural law, e.g., in criminal law proceedings. Such restriction, however, cannot exceed what is necessary to protect the rights of defense and professional secrecy.

In this respect, in 1989, the CoJ rejected claims that the Commission improperly used information obtained in a dawn raid to initiate a subsequent dawn raid concerning a different subject matter. The CoJ found that the Commission cannot be barred from initiating an inquiry in order to verify or supplement information obtained during a previous investigation, if such information indicates the existence of anticompetitive conduct (Case 85/87, Dow Benelux v. Commission, 17 October 1989, para. 19).

No Violation of Fundamental Principles of EU Law. Pacific Fruit Group further argued that the Commission violated its rights of defense in taking over two years to inform it that the Italian tax authority had transmitted such evidence, which then led to the Commission's initiation of the southern European investigation.

In dismissing this claim, the CoJ recalled that access to the file is triggered only upon the Commission's issuance of a statement of objections, which sets out all essential elements of the Commission's case. Receipt of the statement of objections, combined with access to evidence, ensures that the rights of defense are fully observed.

The Commission was not required to inform Pacific Fruit Group of the disputed evidence prior to issuing the statement of objections. Such an obligation would endanger the effectiveness of the Commission's investigation. As noted by the General Court, if parties learned about evidence in the Commission's possession during its initial investigation stage, this could lead to concealing other related information.

Furthermore, the CoJ noted that Pacific Fruit Group had not explained why lack of knowledge about such documents would have affected its ability to defend itself following notification of the statement of objections.

Implications

The CoJ judgment sets the stage for information sharing that capitalizes on cooperation between the Commission and national authorities (whether in the field of competition or in other areas). Indeed, in the field of antitrust, the European Commission's ability to use information and evidence obtained from national authorities touches on one of the central building blocks of the modernized system for the enforcement of competition law, as reminded in the Advocate General's opinion.

In light of the confirmed legitimacy of a more extensive use of information sharing amongst EU and national authorities, companies will have even greater incentives for a comprehensive legal compliance system. Indeed, as in the present case, a domestic noncompetition inspection (targeting tax evasion, money laundering, insider trading, etc.) may well open the door to a full-blown EU antitrust investigation and hefty consequent fines.

Three Key Takeaways

  • EU law has no general principle that requires competition authorities to rely on only certain forms of evidence or evidence from certain sources.
  • Companies cannot expect that evidence will be shielded from antitrust scrutiny when taken by a national noncompetition authority for purposes unrelated to competition enforcement. Such authority may communicate this evidence to the EU competition authority, as long as such information is properly transferred.
  • Affirming that information exchange between national and EU authorities is primordial to the effective application of EU competition law, this ruling will serve to bolster and perhaps even inspire greater cooperation and information sharing amongst enforcement authorities across different sectors. 

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Charlotte Breuvart
Cecelia Kye
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions