CBI BRIEF—15 June 2006
THE CURRENT
PROBLEM
A major problem for companies planning a merger
is that under the EC merger regime there is virtually no remedy
available to them if the Commission decides against their merger.
They have no choice about notifying a qualifying merger, but after
the process of a Commission investigation they are likely to have
to wait for a year for a review of an adverse decision. Faced
with this delay the merger is likely to be abandoned.
22 NOVEMBER 2006
Mergers and acquisitions are essential for the
restructuring of EU industries and the reallocation of resources.
If there is a fundamental flaw in the mechanism this can only
damage the effectiveness of competition and EU competitiveness.
The best solution in the CBI's view is the establishment
of a new Competition Court to operate as a judicial panel of the
Court of First Instance (CFI).
OTHER POSSIBLE
IMPROVEMENTS
Fast-track procedures
The CFI, recognising the problems caused by
delay, introduced a "fast-track" procedure in 2003.
With active case management and reduced pleadings it has been
possible to reduce the time previously required for the judicial
review of a Commission decision. In the merger cases of Schneider
Electric v Commission in 2003 and EDP v Commission
in 2005, decisions were given in less than 11 months.
CBI members have made it clear that if parties
to a merger cannot obtain a final decision within six months they
are likely to abandon the merger because the costs and uncertainty
of delay become unacceptable. Accordingly the CBI has explored
the option of a further acceleration of the expedited procedure,
a "super fast-track", so that decisions can be given
within six months. The experience of the Competition Appeal Tribunal
(CAT) in the UK showed that this could be achieved.
A key feature of this proposal was that the
parties with the court's agreement could choose the language of
the proceedings to eliminate the need for translation. However
the CBI understands that the Rules of Procedure make this difficult
and the current expedited procedure is the fastest that can presently
be achieved.
Increased resources for translation
Since the working language of the court is French
all documents need to be expertly translated, a process which
can add some weeks to the time taken to release the court's decision.
Staff with the required skill level are also in demand from the
major law firms with the result that recruitment is difficult
and costly.
Establishment of Civil Service Tribunal
Under the Nice Treaty, specialist judicial panels
of the CFI can be set up and the first of these, the Civil Service
Tribunal, came into operation on 1 January 2006. This Tribunal
will now hear all the staff cases of the EC Commission, amounting
to around 170 cases a year. This will reduce the workload of the
CFI and should free up the judges to spend more time on competition
cases.
However the staff cases are of relatively short
duration and have normally been scheduled between the major cases
handled by the CFI so in practice this reduction in workload is
not expected to have much impact on the time required for competition
cases.
ADVANTAGES OF
A SPECIAL
COMPETITION COURT
Having examined the other options for speeding
up the judicial review of Commission decisions, the CBI has concluded
that the best solution is the establishment of a special Competition
Court. The advantages would be:
— The proceedings of the Competition
Court could be tailor-made and specially cater for the need for
a speedy review of mergers.
— The judges would only hear competition
cases, so they would be expert in competition law.
— The Court could decide to deal
with cases in a language other than French.
— The CFI, as the appeal court
from the Competition Court, could deal with preliminary questions
on competition law from national courts, which will increase in
number following Modernisation (Regulation 1/2003). This would
ensure that these matters were dealt effectively by the judges
with the most relevant experience, as the ECJ would not have the
same involvement with the substance of competition law.
STRUCTURE AND
SCOPE OF
THE COMPETITION
COURT
The Court would be established as a judicial
panel of the CFI in the same way as the Civil Service Tribunal.
Appeals from the Court would lie to the CFI and exceptionally
on a point of law to the ECJ.
The standard of judicial review would be the
same as that currently conducted by the CFI. The Court would test
the lawfulness of the Commission's decision but would not re-take
a decision based on its view of the merits of the case. It would
however establish whether the evidence relied upon by the Commission
is factually accurate, reliable and consistent and whether it
contains all the information that must be taken into account in
order to substantiate the conclusions drawn. As demonstrated by
recent merger cases, this is a substantial and necessary power
of review.
Judges on the Court would be full-time appointees
in accordance with the Nice Treaty. There would probably need
to be nine judges constituted in three chambers.
The Court would be empowered to hear all competition
matters referred to it by private parties and/or Member States,
with the probable exception of state aid cases as Member States
may require these to be heard by the CFI itself. With the increased
emphasis on the private enforcement of competition law, the Court
would fulfil an important function in assisting this development
in Member States.
Parties in competition cases have often been
concerned about the Commission's due process and the limited powers
of the Hearing Officer. A Competition Court should have the scope
to deal with procedural matters where these give rise to dispute.
SUMMARY AND
CONCLUSION
Almost all aspects of EC competition law have
been substantially revised over the past few years, with the EC
Merger Regulation and the Modernisation Regulation being the principal
examples. DG Competition itself has been reorganised and new procedures
introduced to improve the process of reviewing mergers. The one
area not touched so far is the judicial review of Commission decisions.
The CBI believes that this is an important matter
for companies whose business future can depend on the proper application
of EC competition law and that the establishment of a special
Competition Court is in the best interests of European business.
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