SEV s Comments on Commission s public consultation on the functioning of Regulation 1/2003.

Transcription

1 Athens, September 30, 2008 SEV s Comments on Commission s public consultation on the functioning of Regulation 1/ INTRODUCTION EXECUTIVE SUMMARY The Hellenic Federation of Enterprises (SEV) welcomes the opportunity to participate in the Consultation in view of the preparation of the Report on the Functioning of Regulation 1/2003 launched by the Commission on 24 July The comments provided hereby reflect the views of the representatives of SEV s members and do not necessarily reflect the position of any particular member of SEV. The following comments refer exclusively to procedural and substantive issues related to the application of Articles 81 and 82 (and their Greek equivalents, Articles 1 and 2 of Greek Competition Law 703/77) by the Hellenic Competition Commission (HCC) and the Greek Courts, since Regulation 1/2003 came into force. In summary, our main observations are the following: i. Obligation to notify agreements to the HCC: Law 703/77 contains elements of the pre-regulation 1/2003 notification system. This should be replaced by the self-assessment system provided by Regulation 1/2003. ii. Establishment of infringement of Articles 81 and 82 by the HCC: The HCC does not conduct sufficient economic analysis in the assessment of cases. iii. Institutional structure of the HCC: There are serious concerns regarding the independency of the HCC from its supervising authority, the Greek Ministry of Development. iv. Procedural ineffectiveness: There are significant delays in the examination of complaints by the HCC. v. Investigation powers: The investigation powers vested in HCC by Law 703/77 leave great latitude to the personnel of the Secretariat of the HCC. vi. Lack of effective judicial review of HCC s decisions by the Administrative Court of Appeals of Athens: We are in favor of the establishment of a specialized Court which would hear the appeals against the decisions of the HCC.

2 SEV hopes that the suggestions contained in this submission will be of assistance to the Commission. 2. SPECIFIC COMMENTS PART 1 DIRECT APPLICABILITY OF ARTICLE 81(3) EC 1. To your knowledge, how has the application of Article 81(3) in accordance with Article 1 of Regulation 1/2003 worked in practice? Have you encountered any particular issues in relation to the direct applicability of Article 81(3) EC that you would like to highlight? In your reply, please provide details / references for any cases referred to where possible and specify whether these issues related to: (i) the assessment made under Article 81(1) EC; (ii) the application of the four conditions of Article 81(3) EC; (iii) the burden of proof rule in Article 2 of Regulation 1/2003; or (iv) any other matter. The main concern regarding the application of Article 81(3) in Greece relates to the fact that Greek Competition Law 703/77 contains elements of the pre-regulation 1/2003 notification system. Article 21 of Law 703/77 provides for the obligation to notify agreements to the HCC, in a manner similar to the regime established by old Regulation 17/1962. Obviously, such a notification system entails both an unnecessary administrative burden and a significant compliance cost for Greek companies, since each notification must be accompanied by payment of a fee in favor of the HCC. Such a burden is unacceptable, especially in light of the fact that the HCC rarely reviews the agreements that have been submitted to it per the obligation of Article 21. However, the most critical aspect of Article 21 is that the mere non-notification of an agreement results in: (a) an administrative fine but, more importantly, (b) the loss of the right to invoke the exceptions of Article 1(3) (the Greek equivalent of Article 81(3)). In other words, when faced with the allegation of violation of Article 81(1) and Article 1(1) (the Greek equivalent of Article 81(1)) regarding a particular agreement, a Greek company -which hasn t notified said agreement to the HCC- does not have the right to invoke the exceptions of Article 1(3) but- by virtue of the direct applicability of Article 81(3) - has the right to invoke the exceptions of Article 81(3). On the other hand, the practice of the HCC in such cases is, first (as regards the application of Article 1(3)), to declare that the company does not have the right to invoke Article 1(3) (because it hasn t notified the agreement) and, second (as regards the application of Article 81(3)), to proceed and examine, ex officio, whether the requirements of Article 81(3) (which are almost identical to those of Article 1(3)) are met. We believe that the current Greek system violates the principles established by Article 3 of Regulation 1/2003, and, especially, Article 3(2) according to which the 2

3 application of national competition law may not lead to the prohibition of agreements, decisions by associations of undertakings or concerted practices which may affect trade between Member States but which do not restrict competition within the meaning of Article 81(1) of the Treaty, or which fulfill the conditions of Article 81(3) of the Treaty or which are covered by a Regulation for the application of Article 81(3) of the Treaty. This is a highly dysfunctional system which creates uncertainty and, effectively, removes the benefit of the exception of Article 1(3). We are in favor of an amendment of Law 703/77, which would abolish the notification requirement of Article 21 and would be in line with the self-assessment system provided by Regulation 1/2003. PART 4 ENFORCEMENT BY NATIONAL COMPETITION AUTHORITIES 1. Have you been involved in proceedings for the application of Articles 81 and 82 EC before NCAs? Based on your experience, how do you evaluate the enforcement action taken by the NCAs? Please illustrate your answer with reference to concrete examples where possible. The HCC has been keen to apply Articles 81 and 82 alongside their Greek equivalents, i.e. Articles 1 and 2 of Law 703/77. However, a fundamental difference in terms of the assessment of cases between the European Commission and the HCC is the lack of economic analysis on the part of the HCC and its insistence on the application of the per se rule, especially in the implementation of Articles 81(1) and 1(1). In this respect, the HCC is eager to find a violation by object by relying exclusively on the (quite often, ambiguous) language of a contractual clause, without resorting to any economic analysis or examination of its effects, which could corroborate its findings or establish the infringement. 2. The institutional structure of the NCAs varies between Member States (e.g. one body with exclusive competence to investigate and decide; the division of the investigation and decision-making between two bodies; the NCAS acts as a prosecutor with prohibition and/or fine decisions being imposed by national courts; and/or sectoral regulators have competence to apply Articles 81 and 82 EC to the sector for which they are competent). In your experience, does this raise any issues and if so, please specify. The issue of the institutional structure of the HCC has been controversial. The legislative framework that governs the HCC and its Secretariat (and all related issues) are described by Attorney General Jacobs in his opinion in the Syfait case (C-53/03, Judgment of 31/05/2005, Syfait and others, Rec.2005,p.I-4609). In this respect, we submit that the two areas of concern identified by AG Jacobs, i.e. the lack of independency of the HCC vis-à-vis the Greek Ministry of Development (its supervising authority) and the relationship between the Secretariat and the President of the HCC, remain unclear. 3

4 We would welcome a legislative initiative which would clarify these issues. 3. Based on your experience, do you consider that the procedural framework applicable to NCAs' proceedings works efficiently and effectively? Please specify your views by authority and by subject matter (e.g. Powers of investigation, types of decision, deadlines etc) as appropriate. It should be noted that a petition for annulment of HCC s Procedural Regulation is currently pending before the Greek Conseil d État. Such petition argues that HCC s Procedural Regulation contains provisions which limit the right of defense of the accused companies. On the other hand, the most prominent procedural deficiency of the HCC is the delay in the handling of complaints based on either Articles 81, 82 and/or their Greek equivalents Articles 1 and 2 of Law 703/77. Article 24 par. 4 of Law 703/77 provides for a deadline of six months (which can be extended for an additional two month period) within which the Commission must issue its decision on the complaint. This deadline is rarely observed. The significant delays in the examination of complaints by the HCC are unacceptable. We would welcome any measure that would result in the acceleration of the process and would bring it in line with the practice of the European Commission. 4. Have you encountered legal or practical difficulties due to specificities in the investigation powers, types of decisions and/or any other aspect of the procedures of individual authorities and/or due to differences of such matters between different authorities? If so, please explain in detail. Numerous aspects of the investigatory practice of the HCC raise issues of unconstitutionality. In broad terms, the investigation powers vested in HCC by Law 703/77 (especially, Articles 24-26) are similar to those enjoyed by the European Commission according to Regulation 1/2003 (especially, Articles and 22). However, Articles of Law 703/77 leave great latitude to the personnel of the Secretariat of the HCC in the exercise of these powers. Indicatively, during a dawn raid, it is not uncommon for the personnel of the Secretariat to try to access (or succeed in accessing) files (either personal or professional), which are not related to the investigation. In one prominent case, the employees of the Secretariat tried to access the files of the in-house counsel of a multinational company in Greece, and retreated only following the immediate intervention of the Athens Bar Association, which was notified by the attorney-under-investigation. In this respect, some of the requirements of Law 703/77 can be seen as lax, compared to other provisions in Greek legislation regulating the conduct of investigations by police authorities or other authorities with similar powers (e.g. customs authorities). The most prominent example is the lack of participation of the prosecutorial authorities in the conduct of an HCC-led, in-house search. Under Law 4

5 703/77, a warrant by the prosecutorial authorities or the presence of a police officer are not prerequisites for a dawn raid, whereas under the Greek constitution and general Greek criminal procedure principles such searches and seizures can not take place without the presence or authorization of the public prosecutor and/or a representative of the judicial authority. Under current Article 26 par. 7 of Law 703/77, such involvement of the prosecutorial or judicial authorities is possible only upon request of the employees of the Secretariat of the HCC but is not mandatory in the first place. The above examples offer ample evidence of a legislative lacuna, which gives wide discretion to the employees of the Secretariat. We are of the opinion that such discretion must be curtailed. The pertinent case law of the European Court of Human Rights and the European Court of Justice (see the judgments in the Roquette Frères, Société Colas Est, Funke cases) is pointing to that direction as well. It is urgent that the above situations be addressed by the Greek legislator. 7. Have you had experience with proceedings before national courts reviewing decisions of NCAs? Have you encountered any issues that you wish to report? Please specify as appropriate. The biggest deficiency of competition law enforcement in Greece is the lack of a specialized Court, which could hear the appeals against the decisions of the HCC. Currently, the Administrative Court of Appeals of Athens, a Court of general administrative jurisdiction, is competent for such appeals. In fact, Article 16 par. 4 of Law 703/77 provides for the institution of specialized chambers within the Administrative Court of Appeals of Athens, which will be competent to hear appeals against decisions of the HCC. This provision has not been implemented yet. Bearing in mind that even the defective decisions of the HCC are rarely overturned by the Administrative Court of Appeals of Athens, it is urgent to remedy the lack of effective judicial review by the Greek administrative courts by establishing a full-time Greek Competition Court in the form of a separate department of the Administrative Court of Appeals of Athens. Dionissis Nikolaou Director General 5