WORLD COMPETITION Law and Economics Review

Transcription

1 WORLD COMPETITION Law and Economics Review

2 Published by: Kluwer Law International PO Box AH Alphen aan den Rijn The Netherlands Website: Sold and distributed in North, Central and South America by: Aspen Publishers, Inc McKinney Circle Frederick, MD United States of America Sold and distributed in all other countries by: Turpin Distribution Services Ltd. Stratton Business Park Pegasus Drive, Biggleswade Bedfordshire SG18 8TQ United Kingdom World Competition is published quarterly (March, June, September, and December). Print subscription prices, including postage (2012): EUR 596/USD 795/GBP 438. Online subscription prices (2012): EUR 551/USD 736/GBP 406 (covers two concurrent users). World Competition is indexed/abstracted in the European Legal Journals Index. Printed on acid-free paper. ISSN Kluwer Law International BV, The Netherlands All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the publisher. Permission to use this content must be obtained from the copyright owner. Please apply to: Permissions Department, Wolters Kluwer Legal, 76 Ninth Avenue, 7th Floor, New York, NY , USA. permissions@kluwerlaw.com Printed and Bound by CPI Group (UK) Ltd, Croydon, CR0 4YY.

3 Editor José Rivas Associate Editor Book Review Editor Publisher US Review Editor Economics Review Editor Marja Lubbers Valentine Korah Simon Bellamy Spencer Weber Waller Doris Hildebrand Advisory Board Robert Anderson, World Trade Organization Sir Christopher Bellamy, President, Appeals Tribunal, United Kingdom Competition Commission Manuel Conthe, Former Chairman of Spain s Securities Commission Sir David Edward, Professor, University of Edinburgh; former Judge, Court of Justice of the European Union. Claus-Dieter Ehlermann, Senior Counsel at Wilmer Cutler Pickering Hale & Dorr LLP Jonathan Faull, Director General, Internal Market and Services,European Commission, Professor of Law, Vrije Universiteit Brussels Eleanor M. Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law Allan Fels, Professor at the Australia and New Zealand School of Government Nicholas Forwood, Judge, General Court of the European Union Rafael García-Valdecasas y Fernández, Former Judge, General Court of the European Union Francisco Enrique González Díaz, Cleary Gottlieb, Steen and Hamilton, Brussels Barry E. Hawk, Director, Fordham Corporate Law Institute and Partner, Skadden, Arps, Slate, Meagher & Flom LLP Herbert Hovenkamp, Ben V. & Dorothy Willie Professor of Law and History, University of Iowa, USA Rafael Illescas Ortiz, Professor of Commercial Law, University Carlos III, Madrid Frédéric Jenny, Professor of Economics at ESSEC, Chair of the OECD Competition Committee Valentine Korah, Emeritus Professor, University College London, Honorary Professor of the College of Europe Koen Lenaerts, Judge, Court of Justice of the European Union Ignacio de León, Professor, Department of Economics, New York University Patrick McNutt, Visiting Fellow, Manchester Business School, UK and former Chairman, Competition Authority, Dublin and former Chairman, Jersey Competition & Regulatory Authority, UK. John L. Murray, Chief Justice of Ireland; former Judge, Court of Justice of the European Union and Visiting Professor, l Université Catholique de Louvain David O Keeffe, Professor, University College London and Visiting Professor, College of Europe, Bruges Giuseppe Tesauro, Judge, Corte Constituzionale della Repubblica italiana Spencer Weber Waller, Professor and Director, Institute for Consumer Antitrust Studies, Loyola University Chicago School of Law Wouter P.J. Wils, Hearing Officer, European Commission, and Visiting Professor, King s College London Editorial Board Ralf Boscheck, Marie Demetriou, Romain Galante, Juan Gutiérrez, Donogh Hardiman, Benoît Keane, Pablo Muñiz, Ali Nikpay, Morten Nissen, Kletia Noti, Laura Olza-Moreno, Dimosthenis Papakrivopoulos, Rudolph Peritz, Tom Pick, Azza Raslan, J. Matthew Strader, Nicoleta Tuominen, Michael Weiner, Peter Whelan All correspondence should World Competition be addressed to: Bird & Bird Avenue, Louise 235 box 1, 1050 Brussels, Belgium. Tel: +32 (0) Fax +32 (0) world.competition@twobirds.com 2012 Kluwer Law International BV, The Netherlands, All Rights Reserved. ISSN Mode of citation: 35 W.Comp. 3

4 WORLD COMPETITION Law and Economics Review Volume 35 September 2012 Number 3 Editor s note September The Oral Hearing in Competition Proceedings before the European Commission The Role of the Hearing Officer in Competition Proceedings before the European Commission State Aid Modernization: Institutions for Enforcement of State Aid Rules Did They Do It? The Interplay between the Standard of Proof and the Presumption of Innocence in EU Cartel Investigations Price Fixing in Crisis: Implications of an Economic Downturn for Cartels and Enforcement Collective Redress in EU Competition Law: An Open Question with Many Possible Solutions Wouter P.J. Wils 397 Wouter P.J. Wils 431 Phedon Nicolaides 457 Maria João Melícias 471 Andreas Stephan 511 Adrianna Andreangeli 529 Book Reviews 559

5 Did They Do It? The Interplay between the Standard of Proof and the Presumption of Innocence in EU Cartel Investigations Maria João MELÍCIAS * This article examines the need for EU Courts to clarify the appropriate standard of proof in cartel proceedings. It discusses the usefulness of this legal benchmark in antitrust procedure, having regard to the Member States different legal traditions re the rules of evidence and the implications of a dissimilar approach to the problem across the EU, in a system of parallel enforcement regimes. In the absence of an EU provision on the matter, the article observes that the presumption of innocence, which is a generally recognized international standard, provides for a workable solution, considering the evidence based safeguards that stem from it, in light of both the Strasbourg and the EU courts case law. Bearing in mind the intrinsic distinctive nature between competition law cases, the article finally explores whether it is appropriate to argue the existence of a single uniform standard of proof and review and submits that these inevitably vary according to the subject matter of each case, notably, to whether the presumption of innocence is applicable or not. 1 INTRODUCTION After over five decades of case law, the European Union (EU) courts have always seemed reluctant to clearly define the appropriate standard of proof within cartel cases, that is, as understood within the common law tradition, the degree of certainty that is required in order to establish the existence of an infringement to Article 101 of the Treaty on the Functioning of the EU (TFEU) (ex 81 EC). There are, of course, numerous judgments in which the Courts have expressed the opinion that the Commission must demonstrate the existence of an infringement to the required legal standard. But instead of actually identifying what such standard is supposed to be, the Courts have simply preferred to state, in a formulation that may slightly vary, that the Commission must produce a * Senior Associate lawyer at PLMJ Sociedade de Advogados RL (Lisbon); Law Degree (University of Lisbon); LL.M (NYU); M.A. (King s College London). The author would like to thank Professor Richard Wish for his valuable insights into earlier drafts of this article. The author may be reached at mariajoao.melicias@plmj.pt. Melícias, Maria João. Did They Do It? The Interplay between the Standard of Proof and the Presumption of Innocence in EU Cartel Investigations. World Competition 35, no. 3 (2012): Kluwer Law International BV, The Netherlands

6 472 WORLD COMPETITION sufficiently firm, precise and consistent body of evidence to justify its view. 1 To those educated within a common law system, the immediate question that may spring to mind is naturally the following: sufficient evidence to what extent? Sufficient enough to overcome any reasonable doubt as to the existence of an infringement? Or sufficient only to the point that, in the face of the evidence, the existence of an infringement seems more likely than not? Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 101 and 102 TFEU (ex 81 and 82 EC), 2 somehow breaking the myth of Member States procedural autonomy, codified that which had already been set up by the existing case law: the allocation of the burden of proof in antitrust investigations and litigation. Pursuant to recital 5 in its preamble, this was meant to ensure an effective enforcement of the EU competition rules and at the same time the respect of fundamental rights of defence. However, Regulation No. 1/2003 left expressively outside its scope of application, the standard of proof, by indicating in the same recital that it affects neither national rules on the standard of proof nor obligations of competition authorities and courts of the Member States to ascertain the relevant facts of a case, provided that such rules and obligations are compatible with general principles of EU law. In other words, when it comes to the standard of proof, the usual principle of Member States procedural autonomy still applies, so long as the relevant national rules comply with the principle of equality and effectiveness in the enforcement of EU antitrust law. The reason for such exclusion was not made explicit. Therefore, the question regarding what is the appropriate standard of proof in cartel proceedings at EU level remains open to discussion Joined Cases 29 & 30/83, CRAM & Rheinzink v. Commission [1984] ECR 1679, para. 20; Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 & C-125/85 to C-129/85, Ahlström Osakeyhtiö and Others v. Commission [1993] ECR I-1307, para. 127; Case T-62/98, Volkswagen v. Commission [2000] ECR II-2707, para. 43. OJ 2003 L 1/1. For further literature on the topic of the standard of proof and review in competition cases see, for example: D. Bailey, Scope of Judicial Review under Article 81 EC, 41 Com. Mkt. L. Rev (2004); D. Bailey, Standard of Proof in EC Merger Proceedings; a Common Law Perspective, 40 Com. Mkt. L. Rev (2003) ; Y. Botteman, Mergers, Standards of Proof and Expert Economic Evidence, 2 J. Competition L. & Econ. 71 (March 2006); F. Castillo de la Torre, Evidence, Proof and Judicial Review in Cartel Cases, 32 World Competition (2009) ; M. Collins, The Burden and Standard of Proof in Competition Litigation and Problems of Judicial Evaluation, 5 ERA-Forum scripta iuris europaei n. 1 (2004); K. Geeurickx, The German Banks Cartel Case, 5 Competition L. Insight (2006); E. Gippini-Founier, The Elusive Standard of Proof in EU Competition Cases, 33 World Competition (2010); H. Legal, Standards of Proof and Standards of Judicial Review in EU Competition Law, in Annual Proceedings of the Fordham Corporate Law Institute International Antitrust Law & Policy (Barry Hawk, ed. Juris Publishing 2005); B. Louveaus & P. Gilbert, The Standard of Proof under the Competition Act, 3 Eur. Competition. L. Rev. (2005); P. Lowe, Taking Sound Decisions on the basis of available evidence, in European Competition Law Annual 2009: Evaluation of Evidence and its Judicial Review in Competition Cases (Claus-Dieter Ehlerman & Mel Marquis eds.,hart Publishing 2011); L. Parret, Sense and

7 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 473 This article examines the need for EU Courts to clarify the appropriate standard of proof in cartel proceedings. First, it examines the concept of standard of proof pursuant to the common and civil law approaches and discusses the usefulness of this legal benchmark in antitrust procedure, having regard to the Member States different legal traditions re the rules of evidence and the implications of a dissimilar answer to the problem across the EU, in a system of parallel enforcement regimes. Second, the article observes that, in the absence of an EU provision on the matter, the presumption of innocence, which is a generally recognized international standard, provides for a workable solution, considering the evidence based safeguards that stem from it, in light of both the Strasbourg and the EU courts case law. Finally, bearing in mind the intrinsic distinctive nature between competition law cases, the article explores whether it is appropriate to argue the existence of a single uniform standard of proof (and review) and submits that these inevitably vary according to the subject matter of each case, notably, to whether the presumption of innocence is applicable or not. 2 THE CONCEPT OF STANDARD OF PROOF 2.1 THE CIVIL AND COMMON LAW APPROACHES It should be noted that for the purposes of this article the concept of standard of proof will be understood as the level of confidence or persuasion necessary to demonstrate an infringement, that is, a notion strictly concerned with evidence and facts, 4 notably, with the cogency of evidence that compels acceptance by the mind that a fact is true. The concept of standard of proof falls within a conceptual framework more familiar to jurisdictions based on the rule of precedent, that is, it rests on the need to define a model of reference or ideal probabilistic threshold 5 that ensures consistency between judicial decisions. Therefore, the quest for the appropriate standard within EU antitrust cases appears to have been mostly a concern of commentators trained within the common law tradition nonsense of rules of proof in cartel cases - TILEC Discussion paper ISSN (2008), Available at SSRN: com/abstract= ; R. Posner, An Economic Approach to the Law of Evidence (John M. Olin Law & Economics Working Paper no. 66, 2D series); A-L. Sibony and E. Barbier de La Serre, Charge de la preuve et théorie du contrôle en droit communautaire de la concurrence: pour un changement de perspective, RTD eur. 43 (2), Avr.-Juin 2007, Under common law systems, the notion may have a wider scope as it can be understood as the degree of persuasion required for a court to reach a certain conclusion, be it a finding of fact or an argument: see D. Bailey, supra n. 3, pp D. Bailey, Standard of Proof in EC Merger Proceedings; a Common Law Perspective, supra n. 3, p See E. Gippini-Founier & F. Castillo de la Torre, supra n. 3.

8 474 WORLD COMPETITION As to legal systems reliant on a civil law tradition, such as the Portuguese, there is no explicitly used formula regarding the degree of certainty that must be achieved, under criminal, civil or administrative procedure. Although it may seem disturbing from a common law perspective, the main positive rule in this regard is, prima facie, that there is no actual rule inasmuch as the evidence is freely appraised by the decision maker according to its inner or prudent conviction and the rules of experience. 7 When asked to apply the law, judges are naturally influenced by the weight of their own visions of the world. Different visions of the world may often lead to different outcomes, even in the presence of a similar set of facts and evidence. Civil law jurisdictions are able to live relatively well with such diversity, since it is seen as the simple reflection of a plural society. More importantly, the absence of an explicit evidentiary threshold label does not mean that a judicial decision may be arbitrary, irrational, emotional or subjective. Quite the contrary: any judicial decision should be right, leaving little or no room for doubt. The provisions on free evaluation of evidence must be combined with the duty to state reasons, on the one hand, and, when it comes to punitive law, with the right to the presumption of innocence, on the other.the duty to state reasons requires the court to make a critical assessment of the probative value of evidence, that is, the logical reasoning which supported its conviction. In addition, the fundamental right to the presumption of innocence determines that such conviction can only be achieved when the court is certain of the facts beyond any reasonable doubt. It is not a conviction based on a mere voluntaristic option for the finding of a fact against doubt, or by virtue of a high likelihood or probability of the fact. Instead, it is a rational process that can only be satisfied when the court was able to put aside any doubt that could be raised, as less likely or probable as it might seem. The principle of free evaluation of evidence, understood as an effort to determine the truth, finds its normative limit in the in dubio pro reo rule ( ). This rule requires certainty for the finding of facts that are unfavourable to the accused. 8 In other words, pursuant to the presumption of innocence, facts or circumstances that are unfavourable to the defendant can only be deemed to be proven beyond any reasonable doubt; moreover, it is irrefutable that if there is any doubt as regards the 7 8 See Study of the Laws of Evidence in Criminal Proceedings throughout the European Union, Summary Report, October 2004, by The International Department of the Law Society of England and Wales (available from the European Commission, DG JLS/D3, Criminal Justice Unit, B-1049 Brussels, ref CMO, 9); F. Castillo de la Torre, supra n. 3 above, footnotes 85 and 86 and literature cited therein, e.g. E. Sherwin & K. Clermont, A comparative view of standards of proof, 50 Am. J. Comp. L. 243, 246 (2002); C. Engel, Preponderance of the Evidence versus Intime Conviction - A Behavioral Perspective on a Conflict Between American and Continental Law, 33 Vt. L. Rev. 435 (2009); Art. 127 Portuguese Code of Criminal Procedure and Art. 655 Portuguese Code of Civil Procedure. Judgment of the Portuguese Supreme Court of Justice (SCJ) of (Case ) CJ [2002] 3, 185.

9 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 475 assessment of evidence, the decision can only be favourable to the defendant. 9 The beyond reasonable doubt expression is thus found in the reasoning of most judgments of Portuguese courts, not so much as a pre-set evidentiary threshold or standard of proof, but as a direct corollary of the presumption of innocence. Moreover, the notion of balance or preponderance of probabilities, which is so familiar to common law jurisdictions, is simply inexistent. The consistent jurisprudence of the superior courts also shows that the presumption of innocence is applicable not only in criminal procedures, but also in every procedure leading to the imposition of a penalty. 10 The presumption of innocence is, therefore, a common principle to all areas of punitive law. In practice, reliance on this principle to its fullest extent depends on the seriousness of the accusations and gravity of the resulting sanctions. In effect, the former Portuguese Competition Council had already defined the requisite standard of proof in antitrust cases in the following terms: Where it is not possible to adduce direct evidence, recourse should be made to a system of evidence that allows to infer the factum probandum, by way of an assessment based on the rules of common experience, science and economics, which is capable of overcoming any reasonable doubt. Moreover, it is necessary for the evidence produced to support the firm conviction that the facts are true beyond reasonable doubt. 11 The EU judicial system is inspired by the administrative traditions of civil law jurisdictions, notably, French administrative law, in which the concept of standard of proof simply does not exist. 12 For this reason, certain commentators have argued that, when reviewing the applicability of Article 101 TFEU, the EU Courts are influenced by the reasoning process of civil law countries, which constitute the vast majority of Member States. 13 Indeed, the EU Court s usual approach to the appraisal of evidence does resemble, to a certain extent, the above illustrated rationale, in that it primarily rests on the principle of the unfettered evaluation of evidence, unconstrained by the various rules laid down in the national legal systems. As explained by Advocate General Bo Versterdorf in Rhône-Poulenc: Apart from the exceptions laid down in the Communities own legal order, it is only the reliability of the evidence before the Court which is decisive when it comes to its evaluation. ( ) the Court of Justice allows only an overall assessment of a document s probative value and simple rules of evidential logic to be decisive in the evaluation of evidence ( ) Judgment of the SCJ of (Case 141/97) BMJ 4101, 265. See judgments of the Portuguese Administrative Supreme Court of (R ) AD 504, and of (R ) BMJ 455, 548, which concerned disciplinary actions. Activities Report of the Portuguese Competition Council, 1990, pp H. Legal, supra n. 3, p E. Gippini-Founier, supra n. 3.

10 476 WORLD COMPETITION However, conclusions drawn from the evidence must never, of course, develop into ill-founded speculation. There must be a sufficient basis for the decision and any reasonable doubt must be for the benefit of the applicants according to the principle in dubio pro reo. 14 Notwithstanding the above, the terms requisite legal standard and standard of proof have unquestionably emerged and are pervasive in the EU Courts recent jurisprudence, probably as a result of the common law influence. Such development also serves to show how EU Competition law, such as EU law in general, is enriched by the Member States different legal heritages. Indeed, though certain civil law trained commentators may be sceptical as to the usefulness of the concept of standard of proof, 15 it is rather intuitive that some clarity in this respect would bring more predictability and transparency to antitrust investigations, that is, it would introduce legal certainty for all the parties involved, which is particularly important in the current European antitrust system of parallel enforcement regimes. It would thus facilitate both the agencies fact finding task and the legal protection of the concerned undertakings. Moreover, one should take into account that the almost legislative role played by the EU courts jurisprudence in the development of EU competition law calls for clearer substantive and procedural standards. In this respect, the EU courts authority as source of EU competition law (hence case law ) resembles more the importance of courts decisions in common law systems than in civil law jurisdictions, where previous courts holdings under similar sets of facts constitute nothing more than persuasive argument. 2.2 THE POSSIBLE APPLICABLE TESTS CONSEQUENCES IN TERMS OF ENFORCEMENT It is common ground that the legal standard of certainty beyond reasonable doubt, as expressed within the common law tradition, is typical of criminal procedural law. In reality, it is the most frequent test adopted in criminal proceedings throughout the European Union, even if articulated somewhat differently in civil law jurisdictions. 16 There is an argument that the test should be one that is less strict or onerous in antitrust cases in order not to undermine the effectiveness of competition law enforcement, on the one hand, and because such proceedings are not as a rule strictly criminal in nature (at least in the conventional sense of the word), on the Case T-1/89, Rhône-Poulenc SA v. Commission [1991] ECR II-867, p. 954 E. Gippini-Fournier & F. Castillo de la Torre, supra n. 3. Study of the Laws of Evidence in Criminal Proceedings throughout the European Union, supra n. 7. This Study reveals that, whether explicitly or implicitly, all the twenty-seven legal systems analysed adopted some kind of legal standard, the most common being expressed as beyond reasonable doubt.

11 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 477 other hand. According to such an approach, a decision imposing a fine might be taken as long as the decision-maker is persuaded that the relevant facts have occurred beyond a balance of probabilities test, i.e. they appear more likely than not. Indeed, this seems to be the current state of the art, for example, under English law. 17 In JJB Sports, the Competition Appeal Tribunal (CAT), relying on the administrative nature of the system established by the Competition Act, clarified that the correct standard should be the civil or administrative one that is, the balance of probabilities, albeit based on strong and compelling evidence. 18 The European Commission has also tried to argue a similar position under EU Competition law, although, in our opinion, so far, without success. 19 As a result, at EU level there is still a significant degree of uncertainty in this regard. In most Member States, the applicable test in antitrust proceedings is not explicit; it is rather the result of the national courts decision-making practice. A variety of phrasings is used (although some of them express a similar underlying idea), for example: the beyond reasonable doubt standard, the principle of material truth entailing an accurate and truthful finding of facts, the balance of probabilities test, the principle of free evaluation of evidence, an equivalent standard to the one developed by the EU Courts etc. 20 Naturally, this discussion is mostly relevant if, in practice, may lead to different results in terms of enforcement. If it were feasible to develop a model of probability applicable to each formula, one might say that in the beyond reasonable doubt test, the degree of certainty that the facts occurred is closer to 100% (although it does allow for a margin of unreasonable doubt, which means that absolute certainties naturally do not have to be achieved). Moreover, a guilty verdict is precluded if the relevant decision-maker entertains reasonable doubts as to the finding of facts that constitute an infringement, that is, doubts that are rational, objectively justified and not merely imaginary. In turn, in the balance or preponderance of probabilities test, the degree of confidence required for the finding of an infringement must only be above 50%, that is, a fact must seem more likely, than not. At least conceptually, the same set of evidence may be deemed to B. Louveaus & P. Gilbert, supra n. 3. JJB Sports Plc v. OFT and Allsports Limited [2004] CAT 17. Joined Cases T-44/02 OP, T-54/02 OP, T-56/02 OP, T-60/02 OP & T-61/02 OP, Dresdner Bank and Others v. Commission [2006] ECR II-3567, para 58. D. Cahill & J. Cooke, The Modernisation of EU Competition Law Enforcement in the EU (Fide 2004 National Reports) which includes a comprehensive overview of European countries antitrust systems. It is interesting to note that most of the national rapporteurs were unresponsive or unclear when asked about the standard of proof required to establish the existence of an infringement to articles 101 and 102. Some of them explained, instead, how the burden of proof was allocated in their legal systems (France, Croatia, Luxembourg), which also illustrates how the concept of standard of proof is unfamiliar outside common law jurisdictions.

12 478 WORLD COMPETITION establish the existence of an infringement according to the latter criterion but not according to the former. (However, in practice the different possible degrees of certainty may be hardly quantifiable). Another obvious consequence that may stem from this approach is that competition authorities must carry out a more rigorous investigation if a beyond reasonable doubt criterion is required. In short, in a system where national courts and agencies (hereinafter also referred to as NCAs ) hold the powers to apply the EU competition rules in full, in the absence of a procedural provision under EU law to solve this issue, the different traditions of Member States on the rules of evidence might threaten, at least hypothetically, the effectiveness and uniformity of EU Competition Law enforcement across the EU. An infringement might be deemed to be established in one Member State, but insufficiently proven in another. Economic operators could be treated differently in relation to the same infringements, thus putting at risk a level playing-field for undertakings in the common market. In fact, the apparent unwillingness of the EU jurisprudence in clearly defining the appropriate standard of proof in cartel cases might be due to a difficulty in reconciling the abovementioned different legal traditions of Member States as regards the rules of evidence and to the wish of avoiding being constrained by the respective domestic interpretations. Additionally, it may be the result of a concern: that the adoption of a strict formula or criteria in this respect might undermine the Commission s powers of investigation when enforcing antitrust rules. However, as discussed below, it is submitted that such concern is unwarranted, since the fundamental right to the presumption of innocence, which is a standard resulting from the Member States common legal traditions and thus a general principle of EU law, provides for a workable solution. 3 WHAT CONSTITUTES THE PRESUMPTION OF INNOCENCE 3.1 THE FUNDAMENTAL RIGHT TO THE PRESUMPTION OF INNOCENCE AND ITS PROCEDURAL IMPLICATIONS The EU Courts have never expressly recognized that antitrust proceedings and sanctions might be of a criminal nature. 21 On the contrary, Article 23 (5) of Regulation No. 1/2003, in what seems to be an attempt to circumvent the European Court of Human Rights (ECrtHR) jurisprudence on the matter, clarifies that decisions imposing antitrust fines shall not be of a criminal law nature. The purpose and useful effects of such a provision are unclear, as it will certainly 21 Even though that is the opinion of some of its former judges: see B.Vesterdorf, Competition Law as a Regulative Factor in the Globalised Market Economy, 11th International Conference on Competition (Bonn 2003) Bundeskartellamt, p. 164.

13 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 479 not prevent undertakings from benefiting from the protection conferred by the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), given the autonomous concept of criminal charge developed by the ECrtHR for the purposes of applying its Article 6. At least within the meaning of Article 6 of the ECHR and for the purposes of benefiting from the protection established therein, antitrust sanctions are, in effect, of a criminal nature, inasmuch as they pursue deterrent and punitive purposes. 22 Despite this background, the EU Courts have imported some basic principles of criminal procedural law into EU antitrust procedure, inter alia, the presumption of innocence, by taking into account the nature and degree of severity of the resulting fines.the application of the principle of the presumption of innocence in antitrust investigations is now uncontroversial. 23 This principle is enshrined in most international conventions on fundamental rights 24, notably in Article 6 (2) of the ECHR. Moreover, Article 48 of Charter of Fundamental Rights of the European Union does not even distinguish the application of this principle with regard to criminal charges or other types of punitive proceedings. 25 The presumption of innocence is thus a generally recognized international standard. It should be understood as neither a mere declaration of intent, with some sort of inspirational value, nor as a legal presumption, within the conventional sense. Instead, it should be regarded as a fundamental right, with specific substance and important procedural consequences, which lies at the very core of the concept of due and fair procedure under Article 6 ECHR. This principle rests upon the belief that it is worth tolerating the risk of acquitting a guilty person, in order to avoid the risk of convicting an innocent According to the ECrtHR s case law, a penalty is deemed to be of a criminal nature when it pursues deterrent and punitive objectives (and not only where it entails imprisonment), which is the case of most antitrust fines. See Cases 8544/79, Öztürk v. Germany, Series A, Vol. 73, paras , which concerned an administrative infringement; 41087/98, Phillips v. United Kingdom, Reports of Judgments and Decisions 2001-VII, para. 31; A.P., M.P. and T.P. v. Switzerland, Reports of Judgments and Decisions 1997-V, para 39; 56568/00, Y v. Norway, Reports of Judgments and Decisions 2003-II, para 39; Case no /08, A. Menarini Diagnostics S.R.L. v. Italy, paras , Sept. 27, Case C-199/92, Hüls v. Commission [1999] ECR I-4287, paras ; Case C-235/92, Montecatini v. Commission [1999] ECR I-4539, paras ; Joined Cases T-67/2000, T-68/00, T-71/00 & T-78/00, JFE Engineering and Others v. Commission [2004] ECR II-2501, para 178; Case T-279/02, Degussa v. Commission [2006] II-897, para. 115; Joined Cases Dresdner Bank, n. 19 above, para. 61. For example, Art. 11(1) of the Universal Declaration of Human Rights of 1948 and Art. 14 (2) of the International Covenant on Civil and Political Rights of In this context, it is worth noting that, in the course of the preparatory legislative works of Regulation No. 1/2003, the European Parliament s Committee on Legal Affairs and the Internal Market submitted a proposal for incorporation of a provision dedicated to the Presumption of innocence. However, this amendment was dropped in the Regulation s final draft (see the European Parliament s Report on the Proposal for a Council Regulation on the implementation of the rules laid down in Art. 81 and 82 of the Treaty, A5-0229/2001, pp ). OJ 2010 C 83/389.

14 480 WORLD COMPETITION one. This is the central significance of the principle, from which all its corollaries derive. Such a belief implies a choice of civilization, which is (should be?) characteristic of modern democratic societies that are based upon the respect for human dignity: the choice for liberty over security. Needless to say, the presumption of innocence does not just seek to avoid unduly depriving a person of his or her liberty, in a strict sense, but also pursues the wider purpose of safeguarding a person s good name and reputation. Every legal system usually seeks to avoid all types of judicial errors wherever feasible, both from a deterrence perspective and within a retributive rationale. However, empirical experience demonstrates that perfect information scenarios and mathematical certainties are rarely achieved when dealing with human behaviour.this fact determines a policy choice to be followed in case of doubt: the option for the presumption of innocence implies a clear preference for unjustified findings of innocence over unjustified findings of guilt. The fundamental right to the presumption of innocence is thus incompatible with the prospect of finding an accused guilty of an infringement pursuant to a balance of probabilities, because such a standard enhances the risk of the least desirable of judicial errors: unfair findings of guilt. In other words, the presumption of innocence might be said to entail a preference for type I errors (false positives) over type II errors (false negatives). In the realm of antitrust, this kind of option can also make sense in that there is an argument that markets can self correct type II errors, whereas type I errors are irreparable. In any event, irrespective of whether antitrust sanctions and proceedings are to be deemed of a criminal nature, or merely administrative, or both, it is submitted that the recognition of the relevance of the fundamental right to the presumption of innocence within antitrust investigations entails additional consequences as regards the rules of evidence. In effect, the presumption of innocence incorporates important corollaries that are related to the rules of evidence, 26 some of which have already been specifically acknowledged both by the Strasbourg and the Luxembourg judicatures. In its Green Paper on The Presumption of Innocence, the Commission examined what is meant by this principle and what rights stem from it.the main purpose of the Paper was to ascertain whether the presumption of innocence is understood in the same way throughout the EU. Given that the rights associated with the presumption of innocence are, in many legal systems, linked to evidence, the Commission decided to classify it precisely under evidence-based safeguards. According to the Commission, guidance is found in the ECrtHR s case law as to 26 On the procedural corollaries of the presumption of innocence in general, see, E. Costa, A presunção de inocência do arguido na fase de inquérito, 23 Revista do Ministério Público Ano 92 (2002); and J. Silveira, O conceito de indícios suficientes no processo penal português, Jornadas de Direito Processual Penal e Direitos Fundamentais (2004).

15 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 481 what constitutes the presumption of innocence, notably: The accused must be treated as not having committed any offence until the State, through the prosecuting authorities, adduces sufficient evidence to satisfy an independent and impartial tribunal that he is guilty. There should be no judicial pronouncement of his guilt prior to a finding of guilt by a court ( ). He should be able to refuse to answer questions. He should generally not be expected to provide self-incriminating evidence ( ). Generally, the prosecution must prove the defendant s guilt beyond reasonable doubt. 27 Even though the Strasbourg Convention does not lay down rules on evidence as such, including rules on the admissibility and taking of evidence, 28 which are to be found in national codes of procedure, the ECrtHR still retains the power to ascertain whether national proceedings as a whole are fair in light of Article 6, which includes, in the case of criminal proceedings, the observance of the presumption of innocence. Pursuant to the established case law of the ECrtHR, Article 6(2) requires, inter alia, that when carrying out their duties, the members of a court should not start with the preconceived idea that the accused has committed the offence charged; the burden of proof is on the prosecution, and any doubt should benefit the accused ( ).Thus, the presumption of innocence will be infringed where the burden of proof is shifted from the prosecution to the defence. 29 Needless to say, the ECrtHR case law is binding on Member States pursuant to Article 46 ECHR and will be on the EU once the respective accession to the ECHR is concluded. In any event, as regards EU antitrust procedure, the EU Courts have acknowledged that when interpreting the scope of fundamental rights which form an integral part of the EU legal order, the EU judicature must take into account the ECrtHR case law. 30 Therefore, despite the different legal traditions of Member States, it is possible to systematize the following evidence based-rights or safeguards as core corollaries of the presumption of innocence, notably: (i) The allocation of the burden of proof: it is incumbent on the authority alleging an infringement to prove its existence. In other words, the COM(2006) 174 final, Brussels, , p.3. See ECrtHR Cases 10862/84, Schenk v. Switzerland, Series A-140, para 46; and 21497/93, Mantovanelli v France, Reports 1997-II, para 34. Cases 18731/91, John Murray v. United Kingdom, Reports of Judgments and Decisions 1996-I, para 54; /83 Barberà, Messegué and Jabardo v. Spain, Series A-146, paras and 77. Joined Cases C-238/99 P, C-244/99 P, C-245/99 P, C-247/99 P, C-250/99 P to C-252/99 P & C-254/99 P, Limburgse Vinyl Maatschappij and Others v. Commission [2002] ECR I-8375, paras

16 482 WORLD COMPETITION defendant is exempted from the burden of having to prove its own innocence. In this connection, the burden of proof should not be unduly reversed to the defence; (ii) The standard of proof: if there is reasonable doubt, the defendant must not be found guilty, i.e. the accused has the benefit of doubt according to the in dubio pro reo principle; 31 In other words, generally, the court must be convinced of the existence of the infringement beyond reasonable doubt. As illustrated hereunder, these procedural rights are also valid to a certain degree in antitrust proceedings. Naturally, reliance on the principle of the presumption of innocence to its fullest extent would mean accepting the existence of a wider privilege against self-incrimination in competition law than that which has been acknowledged so far by the EU Courts, including the right of silence and the right not to be compelled to produce inculpating evidence. 32 In this regard, it is noteworthy that the EU courts have simply preferred to establish, perhaps too boldly, that the presumption of innocence applies within antitrust cases, without ever distinguishing which of the several procedural rights that that can be drawn from it are actually relevant. One might argue that, as a result, an interesting open door to future developments of EU competition procedure has been left open. 3.2 THE PROCEDURAL COROLLARIES OF THE PRESUMPTION OF INNOCENCE IN LIGHT OF THE EU COURTS CASE LAW Some of the basic procedural safeguards which constitute the presumption of innocence have also already been directly or indirectly acknowledged by the Luxembourg judicature in cartel cases. The question of who holds the burden of proof is definitely settled at EU level, both by the case law and Article 2 of Regulation No. 1/2003: wherever there is a dispute as to the existence of an infringement of the competition rules, it is incumbent on the Commission to prove the infringements found by it to the required legal standard. 33 In turn, the undertaking or association of undertakings claiming the benefit of Article 101(3) of the Treaty shall bear the burden of proving that the conditions of that paragraph are fulfilled. However, as a matter of good administration, the relevant competition authority must also contribute to Cases Barberà, Messegué and Jabardo v. Spain, n. 29 above, para 77, and Case 33501/96, Telfner v. Austria, para 15. Green Paper The Presumption of Innocence, COM(2006) 174 final, Brussels, OJ 2006 C 151/7 and The Study of the laws of evidence supra n. 7 above, p. 9. Cases C-185/95, Baustahlgewebe v. Commission [1998] ECR I-8417, para. 58, and C-49/92, Commission v. Anic [1999] ECR I-4125, para. 86.

17 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 483 this task by using the means at its disposal to ascertain whether the facts and circumstances of a positive economic balance are verified. 34 Additionally, the EU Courts have consistently held that wherever there is doubt concerning the finding of incriminating facts, the benefit of that doubt must be given to the accused undertakings, in accordance with the classic Latin axiom of in dubio pro reo. 35 Moreover, the Courts usually take into account the principle of the presumption of innocence when discussing compliance by the Commission with such rules of evidence. 36 In reality, the procedural rules regarding the taking of evidence highlighted above notably, the standard of proof beyond reasonable doubt, on the one hand, and the in dubio pro reo rule, on the other are necessarily linked together. One rule cannot logically subsist without the other: 37 if every reasonable doubt as to incriminating facts or evidence must be resolved to the advantage of the accused undertaking, then, by way of rational consequence, the existence of collusive behaviour cannot be established on a balance of probabilities, since such standard will inevitably still allow for the appearance of doubt. In other words, any reasonable doubt in relation to a constituent element of an infringement must be overcome before any such infringement is established; otherwise, an acquittal decision must follow. A similar type of reasoning can be found, for instance, in JFE Engineering. In this case, the Commission had argued that there were no grounds for submitting that the Court had previously applied the beyond any reasonable doubt test. For the Commission, the interpretation to that effect of the concept of sufficiently precise and coherent evidence had not been adopted by the Court. In this context, the General Court (GC) held the following: Where there is doubt, the benefit of that doubt must be given to the undertakings accused of the infringement ( ). The Court cannot therefore conclude that the Commission has established the existence of the infringement at issue to the requisite legal standard if it still entertains doubts on that point, in particular in proceedings for the annulment of a decision imposing a fine. In the latter situation, it is necessary to take account of Joined Cases 56 & 58-64, Consten and Grundig v. Commission [1964] ECR I-299, para Case 27/76, United Brands v. Commission [1978] ECR 207, para 265; Joined Cases C-403/04 P & C-405/04 P, Sumitomo Metal Industries and Nippon Steel Corp v. Commission [2007] ECR I-729, para. 52; Opinion of A.G. Geelhoed Case C-308/04 P, SGL Carbon v. Commission [2006] ECR I-5977, para Cases Hüls, paras , Montecatini, paras and JFE Engineering, paras , supra n. 23. To this effect, see the judgments of the SCJ, supra n. 8 and n. 9, which draw the need to overcome any reasonable doubt in criminal proceedings from the in dubio pro reo rule.

18 484 WORLD COMPETITION the principle of the presumption of innocence resulting in particular from Article 6(2) of the European Convention for the Protection of Human Rights 38 As a result, the abovementioned procedural rules constitute the various steps that decision makers both agencies and courts should observe when assessing evidence. In this context, it should be emphasized, however, that the presumption of innocence is not limited to giving the defendant the benefit of doubt. In fact, it should operate, first and foremost, in a previous moment, by forcing the appearance of doubt in the assessment of the evidence, by imposing such a doubt whenever the existence of an infringement and the defendants guilt cannot be affirmed with reasonable certainty. This means that the working hypothesis from which a decision maker should start when interpreting evidence is the more likely scenario that a defendant did not perpetrate an infringement, that is, the evidence must be interpreted in the light that is most favourable to the accused. Therefore, the presumption of innocence, inasmuch as the standard of proof is at issue, is mostly relevant when analysing the probative value and credibility of evidence, that is, when deciding whether the body of evidence adduced by the relevant competition authority is capable of prevailing over any reasonable doubt, including any plausible alternative and lawful explanation for a certain behaviour. If such a degree of certainty is not met, the relevant authority should refrain from imposing a penalty. In reality, such duty is not only dictated by the presumption of innocence, but also by the need to avoid the unnecessary economic and social costs of continuing an investigation, preparing an appeal and conducting a court hearing, thus devoting available resources to cases capable of withstanding the courts scrutiny. 3.3 THE EVOLUTION OF THE EU COURTS CASE LAW AS REGARDS THE STANDARD OF PROOF Recently, the EU Courts case law underwent apparently contradictory developments with respect to the requisite standard of proof. A series of EU judgments left ground to argue that a high standard of proof, perhaps not essentially different than the degree of certainty required by the beyond reasonable doubt test, must be met in relation to the finding of facts that constitute a cartel infringement (since complex economic assessments are rarely relevant when it comes to proving a cartel). In CRAM and Suiker Unie, the ECJ had already made very clear that when the Commission s reasoning is based on the supposition that the facts established 38 Case JFE Engineering, supra n. 23, paras

19 PROOF AND THE PRESUMPTION OF INNOCENCE IN EU CARTEL 485 cannot be explained otherwise than by concerted action, it is sufficient for the applicants to prove circumstances which cast the facts in a different light and which thus allow for another lawful explanation to be substituted for the one adopted by the Commission. In effect, under such circumstances, it cannot be ruled out that the facts can be explained as the result of legitimate unilateral behaviour. 39 Consequently, as a rule, the Commission cannot simply rely on economic evidence consisting of, for example, parallel behaviour or on the assessment of market conditions in order to demonstrate the existence of unlawful conduct, because such reasoning will most likely leave room for an alternative plausible explanation of the facts, that is to say, for doubt to emerge in the Court s conviction. For the reasons mentioned above, in Ahlström, Advocate General Darmon 40 emphasized that, when relying on a system of indirect evidence, special care should be taken to infer the existence of a concerted practice. Moreover, he considered that the concept of sufficiently precise and coherent proof implied that it was necessary to achieve a degree of certainty beyond any reasonable doubt. Advocate General Darmon further added that, in accordance with the principles governing the taking of evidence, it was incumbent on the Commission to carry out such demonstration. He went on to say that the burden of proof cannot be reversed by a simple finding of parallel conduct. He concluded that, in any event, if the parties put forward a plausible explanation, which is compatible with the adoption of an independent decision by each undertaking, then collusion could not be deemed to be established. Hence, the position of Advocate Darmon was that parallel conduct (i) neither created the presumption of collusion (ii) nor shifted the burden of proof. It follows from the foregoing that competition authorities should take into account, on their own initiative, exculpatory evidence or potential alternative lawful explanations for the facts, before issuing a statement of objections, even though such a task may be difficult to achieve in systems where the same agency combines the investigatory, prosecutorial and adjudicative functions, given the natural bias that competition officials may be prone to. 41 Agencies and courts should not yield to the temptation of requiring undertakings to demonstrate an alternative rational explanation for certain behaviour, in the absence of any further Joined Cases 40 to 48, 50, 54 to 56, 111, 113 & 114/73, Suiker Unie and Others v. Commission [1975] ECR 1663, paras. 304, 359 and 363; and CRAM, n. 1 above, paras. 16 and 20. Opinion of A.G. Darmon in Ahlström, supra n. 1, paras W.Wils, The Combination of the Investigative and Prosecutorial Function and the Adjudicative Function in EU Antitrust Enforcement:A Legal and Economic Analysis, 27 World Competition (2004).