Judicial Cooperation, Brussels Regulation and Cooperation Mechanisms

Transcription

1 Judicial Cooperation, Brussels Regulation and Cooperation Mechanisms Jurisdiction and Applicable Law: Brussels I, Rome I and II Cooperation Mechanisms between Commission/NCAs and national courts Prof. Stéphanie Francq Chair of European Law Dr. Damien Gerard Visiting Lecturer in EU Competition Law

2 I. Introduction why PIL? Cross-border cases: infringement of competition law often collective, continuous, and international Relevance of conflict of laws in private antitrust litigation? Various issues: Where to bring proceedings? National law applies to damage? Which one? How to obtain evidence in other MS? Enforcement of damages decision in other MS etc.? Not : who is right and who is wrong

3 I. Introduction: sources Content of conflict of laws in private antitrust litigation? Full scale of EU private international law rules: Where to bring proceedings : Brussels I/Ibis How to determine applicable law : Rome I / II How to obtain evidence : Evidence Regulation How to enforce decision :various civil cooperation Regulations

4 I. Introduction why cooperation? Ar#cle 101 and 102 TFEU: full direct effect Full parallel jurisdic#on between EU Commission, na#onal compe##on authori#es (NCAs) and na#onal courts, but: public interest private interest(s), as a mafer of public policy Na#onal courts competent to hear and decide lawsuits between private par#es: contractual disputes cease and desist ac#ons damages claims

5 I. Introduction why cooperation? Interplay between private and public enforcement complementarity but: avoid conflicts (ensure consistency) safeguard effec#veness (incl. 6(4)(c) of Damages Direc#ve propor#onality of disclosure)! Coopera#on mechanisms Two sepngs: standalone ac#ons follow- on ac#ons (NCA or Commission decision)

6 II. PIL: jurisdiction and applicable law Where to bring proceedings? How to determine the applicable law?

7 I. Introduction: mapping 1.Jurisdiction: Regulation Brussels Ibis (1215/2012) - Domicile of one def. + others if connected claims : art. 4 = art. 8, 1 - Place of harmful event : art. 7, 2 2. Applicable Law: Regulation Rome II (864/2007) - Art. 6, 3 = law of the affected market

8 I. Introduction: Let s start with facts Decision by EU Commission re cartel formed by companies involved in designing and manufacturing contact strips for pantographs used in power supply for high speed trains Manufacturers of contract strips agreed to maintain prices at an artificially high level found to be in violation of Article 101 of the TFEU

9 I. Introduction: Let s start with facts Commission decision addressed to a number of companies : G, established in Germany; I, established in Italy and U established in the US Companies were subject to a fine except I, which benefited from the leniency program

10 I. Introduction: Let s start with facts Company F, established in France, seeks compensation for loss and damage which it alleges to have suffered as a result of the involvement in the cartel of G, I, and U. F is a customer of G and I and has in the past bought large quantities of contacts strips from both companies Claim also directed towards B, the English subsidiary of G B was not an addressee of the Commission's decision; the claim is not a follow-on action, but a stand alone claim

11 I. Introduction: Let s start with facts B alleges that there is a complete lack of evidence to support key allegations made against it such that the proceedings have no real prospect of success. It is debated whether F ever purchased contact strips from B G and I pretend that F never bought contact strips directly from them but rather through other suppliers, namely a Spanish (S1) and a French company (F2), who had acquired the contact strips from G and I

12 I. Introduction: Let s start with facts US Germa Spain UK U G S1 B Ital France I F F2

13 I. Introduction: Let s start with facts US Germa Spain UK U G S1 B Ital France I F F2

14 II. Let s start the fun: Jurisdiction Step 1. Check whether the Regulation Brussels Ibis applies - Def = Dom in EU (art. 6, 1 Brussels Ibis) (be mindful of jurisdiction clause art. 23) - Civil and Commercial Matters (ar. 1): «action for recovery of sums not due on the ground of unjust enrichment which has its origin in the repayment of a fine imposed in competition law proceedings does not fall within civil and commercial matters» Hungarian competition authority v. Siemens ECJ, , C-102/15

15 II. Jurisdiction Step 2: identify whether you have jurisdiction (international) 2 main options in case def. dom in EU (Brussels Ibis): 1. Art Recast (2 + 6, 1 Brussels I): action in the Mb State of domicile of one def. + sue other EU defendants, in same Mb State, if claims connected 2. Art. 7, 2 Recast (5, 3 Brussels I): Torts: place where the «harmful event» occurred

16 II. Jurisdiction NB: Alternative options under Brussels I/I bis: 1. Art. 25 Recast (23 Brussels I): jurisdiction clause 2. Art. 7, 1 Recast (5, 1 Brussels I): if contractual claim 3. Art. 7, 5 Recast (art. 5, 5 Brussels I) : branch office " Are they neglected and if yes, why?

17 II. Jurisdiction NB: Alternative options under Brussels I/I bis: Are they neglected and if yes, why? - Scope of jurisdiction clause : - Interpretation of jurisdiction clause for national court to decide (Duffryn, C-214/89) - provided that those clauses refer to disputes concerning liability incurred as a result of an infringement of competition law (CDC, C-352/13) - Contractual nature of claims : 7, 1 or 7, 2 Brussels I bis? - Breach of statutory duty v. obligation freely assumed by one party towards another (Handte, C-26/91) and conduct complained of may be considered a breach of the terms of the contract (Brogsitter, C-548/12) - Why is this overlooked? Risk of splitting the litigation

18 II. Jurisdiction: art , 1 Recast The royal avenue Why? one forum, all EU defendants, worldwide damage But 3 C : 1. Dom 1 defendant in a Mb State 2. Sue other defendants domiciled in a Mb State 3. If «related claims»

19 II. Jurisdiction: art , 1 Brussels I bis US Germa Spain UK U G S1 B Juris? Ital France I F F2

20 II. Jurisdiction: art , 1 Brussels I bis Condition 1: Dom 1 defendant in a Mb State - Art. 8, 1 : «any» defendant - UK practice concerning the anchor defendant: B is a defendant «Cause of action» : domestic procedural law («arguable») 1- A subsidiary who did not knowingly implement the cartel? Yes Use of the concept of undertaking in EU competition The Provimi point 2- Even if claimant never bought products from that subsidiary? Yes All infringers (members of undertaking) cause the loss alleged by the claimant (impossible to buy at regular market price) = Wide scope of art. 8, 1 Brussels I bis

21 II. Jurisdiction: art , 1 Recast Condition 1: Dom 1 defendant in a Mb State - What ECJ has to say about this? - 8, 1 : not fraud (Kalfelis, case 189/97): not for the sole purpose of ousting the jurisdiction of natural forum (do.def) - 8, 1 : OK even if the anchor claim is inadmissible under domestic law (Reisch Montag, C-103/05, insolvency) : OK even if claim against anchor defendant is later withdrawn because of a settlement (CDC, C-352/13) - unless firm evidence of collusion at time proceedings were instituted - not simply holding negotiation

22 II. Jurisdiction: art , 1 Recast Condition 2: Sue other defendants domiciled in a Mb State - How about U (dom US)? Not under Brussels I/Ibis (art. 4 Brussels I; art. 6 I bis) Under similar provisions of national (procedural) law NB: forum non conveniens

23 II. Jurisdiction: art , 1 Recast Condition 3: «Related claims» - Standard? «provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings» - UK Practice? Provimi ( 45 to 47) : OK sue G and I in UK with B - All private law claims for damage deriving from same infringement - Likely foreign judge would take another position on the «anchor» defendant issue (subsidiary as part the undertaking even if no knowledge) - Danger of irreconcilable judgements

24 ><Roche Nederland, C-539/03, : same factual and legal situation >< Freeport, C-98/01, ; Painer, C- 145/10, : identity of legal basis not indispensable II. Jurisdiction: art , 1 Recast Condition 3: «Connected claims» Connected if: risk of irreconcilable outcomes in the context of the same situation of fact and law (CDC, 20) Facts? Ok in private enforcement action even if implementation of the cartel = contracts in different places and at different times Because cartel agreement amounted to a single and continuous infringement of Article 101 (CDC, 21) Law? Judgement can be irreconcilable because liability conditions may differ between the various national laws " no need for the same law to be applicable (CDC 22-23)

25 II. Jurisdiction: 4 + 8, 1 Brussels I bis US Germa Spain UK U G S1 B Juris? yes: B+G, Ital France I, U I F F2

26 II. Jurisdiction: art. 7, 2 Brussels I bis Art. 7, 2 : place of the harmful event - Harmful event: - where event giving rise to the damage occurred - where the damage occurred < Case 21/76, Bier v. Mines de Potasse - Scope of jurisdiction: - event: the whole damage - damage: limited to damage that occurred in the forum < Shevill, C- 68/93

27 II. Jurisdiction: art. 7, 2 Brussels I bis Art. 7, 2 : place of the harmful event 1. Locating event giving rise to liability? 2. Locating the damage? 3. For each claim individually? CDC, 36: yes

28 II. Jurisdiction: art. 7, 2 Brussels I bis Art. 7, 2 : place of the harmful event 1. Locating event giving rise to liability? - Place of the agreement? Pro: everybody was there >< Contra: fortuitous diff to prove might change over time - CDC, 45-50: against all participants: - Place of the conclusion of the cartel if possible to identify (the master agreement ) - Place where one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer

29 II. Jurisdiction: art. 7, 2 Brussels I bis Art. 7, 2 : place of the harmful event 2. Locating the damage? " Where does the damage occur? " What happens in case of passing on? Direct damage

30 II. Jurisdiction: art. 7, 2 Brussels I bis " Where does the damage occur? - Economic loss >< material/physical harm - Where: where I buy (?), where contract is signed (outdated!), where goods are delivered, where victim is domiciled, where victim s assets are concentrated? - UK practice: UK claimant = loss in UK? - The ECJ: - Direct damage : initial harm - Not to be simply confused with claimant s domicile or the centre of its patrimony = Result of a series of cases: Dumez, Case 220/88; Marinari, C-364/93; Kronhofer, C-168/02 - Local : damage suffered on territory of court

31 II. Jurisdiction: art. 7, 2 Brussels I bis " Where does the damage occur? - Economic loss: CDC, Differs for each victim - Is located at victim s registered office ( 52) - For the for the whole of the loss inflicted upon that undertaking due to additional costs - Against all the defendants who participated in the single and continuous infringement " 7, 2 might become royal avenue too!

32 II. Jurisdiction: 7, 2 Brussels I bis US Germa Spain UK U G S1 B Ital France I F Juris??? F2

33 II. Jurisdiction: 7, 2 Brussels I bis US Germa Spain UK U G S1 B Ital France I F F2

34 II. Jurisdiction: art. 7, 2 Brussels I bis " Passing on: Can F sue G, I in France for damage caused by cartel when it bought goods from other retailers? - Art. 7, 2 Brussels I bis, against G, I = initial damage, not the indirect loss (Dumez, Case 220/88) " where is the initial damage and who is victim thereof? - UK practice - Answer of CAT in Deutsche Bahn: - vict. + retailer in UK (member of cartel) = UK - F + F1 in France = Jurisdiction? - Meaning of passing on defence: no harm suffered if passed? - No initial damage supported by S1 and F1 - Victim of Initial damage = F?

35 II. Jurisdiction: How about U? US Germa Spain UK U G S1 B Ital France I F Juris??? F2

36 II. Jurisdiction: How about U? Brussels I/I Bis does not apply (art. 6 Brussels I bis) National Rules on International Jurisdiction Parallel proceedings EU/ US? Art. 34 Brussels I bis - Case pending in EU against G/I and litigation in US against U, G/I = related actions - EU court second seized - Third State decision likely to be recognized + proper administration of justice = stay of proceedings in EU

37 Is this really an issue? III. Applicable Law - In private enforcement action, much ground is covered by EU law - Especially in follow on actions : infringement of competition law = determined by the Commission under EU law - Directive 2014/104 on Damage action : right to full compensation (art. 3); jointly and severally liable (art. 11); presumption that cartel cause harm (art. 17); limitation period at least 5 years (art. 10) + Communication and guidelines on quantifying harm

38 Is this really an issue? III. Applicable Law - Formally: directive does not apply horizontally (direct effect) - Room for divergences in national laws: Standard of proofs (how precise?), quantification of damage, statute of limitation - Which law applies? Not automatically lex fori!

39 III. Applicable Law for damage action: Rome II Before we start : applicable law to what? Existence of infringement = Competition Law " Sets its own standard of application (EU: implementation test Case 89 & al to 129/85, Woodpulp) " In terms of CL = overriding mandatory rules Damage = Applicable Law " Rome II " Recital 22: 6, 3 covers non contractual obligations arising out of infringement But controversy

40 III. Applicable Law for damage action: Rome II Before we start : applicable law to what? ( ) cartel agreement amounted to a single and continuous infringement of Article 101 TFEU and Article 53 of the EEA Agreement. That decision does not, however, determine the requirements for holding the defendants liable in tort, jointly and severally as the case may be, since this is to be determined by the national law of each Member State. CDC, 21

41 III. Applicable Law Also keep in mind: various aspects of the claim - Contractual side (validity of the contract) : Regulation Rome I - Procedural side (standing to sue, standard of proof): lex fori - Damage: Regulation Rome II, art. 6, 3

42 III. Applicable Law for damage action: Rome II Art (a) The law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is (...) affected. (b) When the market is (...) affected in more than one country, the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seized, provided that the market in that Member State is amongst those directly and substantially affected by the restriction of competition out of which the noncontractual obligation on which the claim is based arises;

43 III. Applicable Law for damage action: Rome II where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can only choose to base his or her claim on the law of that court if the restriction of competition on which the claim against each of these defendants relies directly and substantially affects also the market in the Member State of that court. 4. (...) NB: 6.1 & 2 = unfair competition

44 III. Applicable Law for damage action: Rome II Problem 1: how do we identify the affected market? Method to be used to locate the market affected by the anticompetitive conduct? Application of the market definition principles of EU competition law: economic assessment (market of products + geographic market)? Probl: - Ok in Follow on. But laws are nationals; eco market are not - Difficult to assess as a judge in a Stand alone case - Global assessment of the market v. individual claims (CDC, 36, individual assessment of the harmful event)

45 III. Applicable Law for damage action: Rome II Problem 1: how do we identify the affected market? Method to be used to locate the market affected by the anticompetitive conduct? Adapted to the needs of private international law Probl: Which criteria? - Recital 21: affected market = damage (// art. 4 Rome II) - See link with Art. 7, 2 Brussels Ibis: damage = registered office (CDC 52) - What if damage suffered in more than one country? CDC registered office for the entire damage ( 54)?? Or Mosaic effect

46 III. Applicable Law for damage action: Rome II Problem 2: Type of link needed between anti-competitive conduct and the affected market? Any affected market? Mosaic effect Examples - Price-fixing cartel in A sells products to buyers in B. The buyers in B resell to buyers in C. Is the market of C affected? - In the contact strips case : is the UK an affected market when not even sure victim ever bought goods in UK from B? NB: in competition law: direct, substantial, foreseeable effect on a market (Gencor T-102/96)

47 III. Applicable Law for damage action: Rome II Problem 2: Type of link needed between anti-competitive conduct and the affected market? Any affected market? Mosaic effect Main solutions advanced Art. 6, 3(a) does not spell out any qualifications >< 6, 3 (b), any effect suffices Direct, substantial and foreseeable effect requirement must be read into Art. 6(a), or at least reasonableness and proximity: - Purpose Ro II = proximity and foreseeability - Art. 6, 3) // Art. 4 : Damage as defined by ECJ = Direct

48 III. Applicable Law for damage action: Rome II Problem 1 & 2: how do we identify the affected market? Not much practice ECLI:NL:RBDHA:2014:15722 Rechtbank Den Haag Netherlands PIL (Art. 4, 1 WCOD): where the competition relations are damaged = where demand and offer meet In the end, apply law of each buyer s place of registration " Individual assessment Decision states that Netherlands conflict rule is different from Rome II = place of the damage, not citing art. 6, 3???

49 III. Applicable Law for damage action: Rome II Problem 2: Mosaic effect " how to escape from this? Concentration Rule art. 6, 3 (b) Plaintiff may base entire claim on local law (lex fori) if + plaintiff sustained damage in several EU Member States + defendant domiciled in Member State (anchor defendant) + substantial effects in the court state (not epicenter but significant) -> claimant can opt for lex fori What if more than one defendant? Restrictive practice of non-domiciled defendant (each of them) = direct & substantial effect in MS of court (anchor defendant)

50 III. Applicable Law for damage action: Rome II What if entire damage sustained outside EU > no option right Even if defendant domiciled in the EU What if more than one claimant? - the person seeking compensation - Broad understanding as long as market = substantially affected

51 II. PIL: Let s start with facts US Germa Spain UK U G S1 B Ital France I F F2

52 III. Applicable Law for damage action: Rome II I. Competition Law on infringement II. Damage? Sues in UK against B/G/I = concentration rule 6, 3, (b) German Law BUT direct and substantial effect in UK??? If no concentration rule: «affected market»

53 III. Applicable Law for damage action: Rome II affected market in economic sense = the EU individual assessment is necessary ( 52 CDC) affected market = damage for F : Question : - On the basis of CDC, can it be considered the damage of F is entirely suffered in France? France is the affected market for F - Or affected market suffered by F: place where demand and offer meet and competition disturbed = in several countries: - Apply German Law to German damage ; French Law to French damage; Italian law to Italian damage; - What of UK Law??? (link is remote, is it an affected market?)

54 III. Applicable Law for damage action: Rome II As a way of conclusion: Preliminary question, please????

55 III. Cooperation Mechanisms why? Ar#cle 101 and 102 TFEU: full direct effect Full parallel jurisdic#on between EU Commission, na#onal compe##on authori#es (NCAs) and na#onal courts, but: public interest private interest(s), as a mafer of public policy Na#onal courts competent to hear and decide lawsuits between private par#es: contractual disputes cease and desist ac#ons damages claims

56 III. Cooperation Mechanisms why? Interplay between private and public enforcement complementarity but: avoid conflicts (ensure consistency) safeguard effec#veness (incl. 6(4)(c) of Damages Direc#ve propor#onality of disclosure)! Coopera#on mechanisms Two sepngs: standalone ac#ons follow- on ac#ons (NCA or Commission decision)

57 III. Cooperation Mechanisms Consistency Obliga#on to apply EU compe##on law to prac#ces affec#ng trade between Member States (convergence rule Art. 3, Reg. 1/2003) Ar#cle 101: full consistency requirement Case 14/68, Walt Wilhelm Block exemp#on regula#ons Ar#cle 102: stricter na#onal laws allowed When applying EU law, comply with: Charter of Fundamental Rights and general principles ECJ case law (and Commission decisions) principles of equivalence and effec#veness

58 III. Cooperation Mechanisms Consistency Concurrent proceedings before Commission and na#onal courts: parallel or subsequent ac#on? Parallel ac#on: avoid conflicts (Art. 16, Reg. 1/2003) ask Commission (ini#a#on, status, decision) stay proceedings (Art. 16, Reg. 1/2003; C- 234/89, Delimi+s; C- 344/98, Masterfoods) may decide if: (i) outcome not doubcul; (ii) similar precedent

59 III. Cooperation Mechanisms Consistency Subsequent ac#on: obliga#on not to issue judgment contrary to Commission decision (Art. 16, Reg. 1/2003) Final decision on merits: no reassessment Commitment decisions: reassessment possible (Case C- 547/16, Gasorba) suspend proceedings pending ECJ review if doubts, ask the ECJ re: validity or interpreta#on (preliminary ruling Art. 267 TFEU) consider interim measures?

60 III. Cooperation Mechanisms Consistency What if NCA proceedings? mafer of na#onal law submission of NCA observa#ons (Art. 15, Reg. 1/2003) domes#c NCA decision: infringement deemed irrefutably established (Art. 9(1) Damages Direc#ve) foreign NCA decision: at least prima facie evidence of infringement (Art. 9(2) Damages Direc#ve)

61 III. Cooperation Mechanisms Consistency Coopera#on mechanisms (Art. 15, Reg. 1/2003): ask for Commission s opinion Neutral and objec#ve (not par#san/disclosure); non binding Economic, factual, legal mafers (specific) allow Commission/NCA to submit observa#ons WriFen observa#on: own ini#a#ve (incl. on propor#onality of request for disclosure Art. 6(11) of Damages Direc#ve) Oral observa#ons: if permifed by court Court to transmit documents required for assessment According to na#onal rules (equivalence and effec#veness) ask informa#on from Commission Documents (also Art. 5 of Damages Direc#ve third- party, if not in possession of par#es or other third- party) Procedural informa#on

62 III. Cooperation Mechanisms Effectiveness Focus on access to file (Commission or NCA): Confiden#ality Business secrets: guarantees from na#onal courts Art. 5(4) Damages Direc#ve: obliga#on (incl. LPP) Effec#veness of public enforcement SeFlement submissions: excluded (unless withdrawn) Leniency corporate statements: excluded (vs pre- exis#ng informa#on)! incl. in case of disclosure order Aker closure of proceedings (against all par#es): Case specific informa#on Commission origina#ng documents! suspension order pending appeal (e.g., T- 164/12 R, Alstom)

63 III. Cooperation Mechanisms Effectiveness Focus on leniency documents: Precedents: Case C- 360/09, Pfleiderer, paras : case- by- case weigh#ng of interests in disclosure vs protec#on of informa#on/leniency programs, in accordance with na#onal law and all relevant factors Case C- 536/11, Donau Chemie, para. 48: statutory disclosure prohibi#on/ unlimited access is not permissible non- disclosure only jus#fied by public interest rela#ng to the effec#veness of leniency programs Key dis#nc#on: Corporate statements: voluntary and self- incrimina#ng statements + verba+m quota#ons Pre- exis#ng informa#on: evidence exis#ng independently of the proceedings of the compe##on authority

64 Thank you! Ques+ons?