Examination of Witnesses (Questions 340-359)
M Michel Petite and Mr Philip Lowe
10 JANUARY 2007
Q340 Lord Lester of Herne Hill: Mr Lowe
referred to the need for the body of Commissioners as a whole
to approve the administrative decision. I am very familiar with
that in the domestic context where we have administrative agencies
with commissioners representing the broader public interest. The
officials then put the decision to the commissioners. My question
is based on scepticism about the need for such a procedure. It
may well be that the Treaty requires it but leaving that to one
side would I be right in thinking that the need to present the
case to Commissioners who are not experts adds to the burden of
your staff and that, in most cases, the Commissioners effectively
rubber stamp the decision anyway so it is purely cosmetic; or
is that an overstatement of the position or just wrong? Given
that M Petite said these are administrative decisions followed
by a judicial review accountability to the Court, what is the
purpose of having recourse to the body of lay Commissioners from
this point of view rather than dispensing with that altogether
and therefore removing one burden, speeding up the process even
more? Is this a purely political, cosmetic burden imposed upon
you?
Mr Lowe: First of all, the Commission is the
body as an institution which is empowered as a whole by the regulation
to for example review a merger. Then the Commission has to judge
which particular decisions in relation to a merger need to be
taken by the College as a whole or which they can empower the
Competition Commissioner or indeed myself as director general
to take as an administrative decision. Many of the purely procedural
or day-to-day decisions are taken by me or one of my directors.
For the approval of a merger in phase one—90 per cent of
our operations are approved after the 25 day period—the
Competition Commissioner herself is empowered to take that decision.
There is thus already a gradation in terms of which things go
up to the College of Commissioners and those relate to around
seven per cent so far of a total of more than 3,000 that we have
processed inside the Commission. What are the advantages and disadvantages?
The advantages are certainly that the institution of the Commission
as a whole with its political and legal weight supports and backs
that decision. From a legal point of view, that is essential for
the next stage, for the judicial review. It has to be a Commission
decision to do it. Secondly, one may judge that Commissioners
are lay individuals but there are of course, due to the strong
economic and social focus of the Commission's market orientated
work, many Commissioners round the table who have very strong
and informed views on the policy issues behind a competition decision.
Therefore, even though it was undervalued by one of your witnesses,
there are from time to time policy issue discussions either in
the Commission meeting or in preparation for it which raise important
issues which have to be dealt with in the final decision on a
merger. An example was I am afraid erroneously quoted by one witness
in relation to a stainless steel merger, where I happened to be
director of the merger task force at the time. It was taken to
the Commission with a recommendation to oppose it and there was
a split of nine Commissioners for and nine Commissioners against.
The reason why we could not decide it was because there was no
quorum in the meeting. We had to have ten at the time to get a
decision and we did not have ten. There was a genuine disagreement
between some of the Commissioners who believed that the merger
concerned, which brought together several economic interests in
the steel industry in Europe, was necessary to strengthen the
competitiveness of the European industry. They believed that the
Russian industry was capable of providing potential competition
to these new agents. That is simply an example of where there
was an issue involved. It also arises in areas like intellectual
property, take for example a case outside the merger area like
Microsoft. One can imagine that the commissioner in charge of
internal market rules and intellectual property rights could have
a strong view about the application, for example, of the software
arrangements in Europe. These are issues where it is an advantage.
On the disadvantage side, yes, it adds another layer. On the other
hand, many people have said, "How could it be possible that
administrative officials could decide these things on their own
without recourse to some more objective, distanced view from the
precise results of their investigations?" That is why we
believe the system does have some robustness.
Q341 Lord Mance: Can I just accept the
premise which you have been asking us to accept? That is that
the Commission's existing operations continue and that it is an
investigatory and a decision making body. I want to come back
to the very beginning of the evidence, particularly M Petite's,
which suggested perhaps that there was not really a problem. Firstly,
if the Commission is an investigating and decision taking body,
would you agree that that makes a satisfactory and speedy appellate
process more important as an aspect of the rule of law and in
order to encourage confidence? Secondly, have you really accepted
that in the figures you have given us? If I have them correctly
you have focused on fast track proceedings since 2001 where you
say only three negative decisions have been considered by the
Court of First Instance. Does that not overlook the main point
which is made, that there is a general chilling effect if there
is a slow appellate process? We have seen in Mr Roth QC's observations
to us figures for seven fast track proceedings, all of them in
excess of the six months which the CBI says is the maximum duration
for effective judicial review, and one of them more than three
times that. A number of them are nearly twice that. What about
the general chilling effect? Secondly, you have spoken only of
three negative decisions. What about appeals which are subject
to conditions where a person affected might well like to appeal
the condition if that could be done speedily but prefers to lump
it if he or it knows that it will not be done speedily? As a supplementary
observation, you are probably aware that we have received indications
that the President of the CFI has some sympathy for the need for
reform. One should not, I suggest, be too diverted by the idea
of a new court. The main thrust of this is whether either a new
court or new rules and procedures are necessary to solve a perceived
problem. I wonder if you would like to comment?
M Petite: Taking your points in your order,
firstly on the chilling effect, indeed the chilling effect can
only apply to negative decisions. We have seen that more and more.
They are all appealed. We do not see any chilling effect. It is
true for mergers and in all areas of competition. It is true for
state aids. A chilling effect whereby a negative decision would
not be appealed is simply, factually not happening. This brings
me to your following question. The CBI rightly makes the point
that there are other fast track procedures which have been used
in excess of these three negative decisions. They have been cases
in either procedural decisions or on positive decisions with conditions.
These fast track procedures in the case of positive decisions
by hypothesis are triggered by a third party but in these conditions
the deal is hardly at stake. The deal is safe. The third party
attacks the deal but the deal will be carried on. The need for
fast decisions is not exactly in the same proportion. The deal
is not in dire difficulty. We have mentioned the fact that when
a third party triggers the judicial review of a decision there
are immediately issues of confidentiality and access to documents
which are indeed extremely complicated and on which often the
result is to prolong the procedure if again it is not very strictly
managed. As for the CFI President's view, we know it well. He
has a case certainly on one point which is that his Court of First
Instance is obviously overloaded. I think that is right. The Court
of Justice as a whole has been overloaded for many years. I have
several observations. One is that the Court of Justice is at present
succeeding in reducing its delays for decisions. It is using the
window of opportunity, having ten more judges—12 from the
beginning of this week—and not a corresponding number of
new cases. There is a window of opportunity with more judges and
not more cases. They are really trying hard to reduce that stock
and they are succeeding. It was very urgent because in particular
on preliminary rulings it is also the key condition to be able
to answer within a relatively short and acceptable time. Otherwise,
you will not have preliminary references at all. They are dealing
with the problem but they have been dealing with the problem also
by discharging on the Court of First Instance. In particular state
aid cases have been transferred to the Court of First Instance
which in turn has been more overloaded than it should have been.
As regards the Court of First Instance it has a problem now. Of
course they have the same facility of having 12 more judges and
the corresponding staff in addition. They have also been in the
happy situation of creating a quite good precedent to what the
CBI is after. That is, a jurisdictional panel for staff conflicts.
This has taken out of their stock from fewer than 500 cases per
year around 140 which have been diverted to this new jurisdictional
chamber. What the Court thinks about this as a whole is that this
needs still to be assessed. Does it work? In other words, are
the decisions taken by this specialised jurisdictional panel good
and credible because, if they were all appealed to the Court of
First Instance, we would be back to square one with no net gain.
These jurisdictional panels need to have the expected high quality
and this needs still to be assessed. This does not solve the President's
problem. He is looking for other plausible candidates for other
jurisdictional panels. We have been discussing that for some years.
It is highly probable that if there is a good candidate for further
transfer to a panel it would probably be in the area of trade
marks rather than competition. Why? Because trade marks are also,
like staff conflicts, very technical and generate a lot of litigation.
We are talking about 100 cases per year, more or less. Like in
staff conflicts, it is pretty repetitive. They are rather routine
cases. These could be diverted to a new layer of jurisdiction.
Competition is exactly the reverse, few cases but extremely labour
intensive. The profile of a good candidate for a new panel in
the general view would be for trade marks in the future once the
staff issue is assessed. It has complications because all the
trade mark decisions come from the Alicante Office where there
are administrative appeals. Should we keep them? How would they
combine with this jurisdictional review? This is an area which
is still open but these are the possible solutions which might
cope with the CFI workload which is enormous. I think there are
solutions and the President is well aware of them.
Q342 Lord Jay of Ewelme: My question
follows on to some extent from the one that you have just answered,
M Petite. I was struck by the emphasis which both you and Mr Lowe
in your oral evidence and in your written evidence put on the
need to maintain the present institutional balance and the dangers
of shifting that institutional balance. You said that the CBI
proposal of a new court would shift that balance. What I would
like to explore briefly is what options there are which, regardless
of whether or not they might be the right ones, would in your
view not shift the institutional balance unsatisfactorily? First
of all, we have been talking a little bit about the possibility
of jurisdictional panels for these sorts of cases. I would be
interested to know whether again, leaving aside the arguments
for and against a competition panel or a merger panel rather than
a trade mark panel, if there were to be a panel for mergers or
for competition policy more broadly, you would see that as being
consistent with the present institutional balance that you would
like to see preserved. Presumably, you would not see further streamlining
of the CFI as causing any difficulties in terms of institutional
balance because you said at the beginning that it is something
which you would see as a possible solution. A number of witnesses,
including Sir David Edward, have suggested to us that one of the
difficulties in that is that the CFI does not have the necessary
authority itself to make the changes which could lead to the streamlining
that those people would like to see. Do you think it should have
such authority itself and would that in turn cause any difficulties
in terms of institutional balance?
M Petite: In terms of shifting the balance,
what balance are we talking about? One of the major issues, apart
from the fact that you might be shifting from the existing administrative
system to a more prosecutory procedure, which remains out of the
questions you just raised, is that the shifting of balance to
a large extent would happen between the Court of Justice and the
Court of First Instance. Decisions from any jurisdictional panel
could be appealed to the Court of First Instance. Questions related
to this shift have been raised by you, my Lords, and answered
by witnesses on what would the implications be in particular,
a very interesting case, where would preliminary rulings go in
that sort of situation? The straightforward answer, which is the
only logical one, is that if competition panels' decisions were
appealed to the Court of First Instance the logic ought to be
that preliminary rulings also should go to the Court of First
Instance in the area of competition. This so far the Court of
Justice has not agreed to. They hold the view that they should
remain the sole court dealing with this essential, uniform interpretation
of Treaty and Community law which the preliminary rulings are
about. They are very reluctant to transfer to the Court of First
Instance any power in the area of preliminary rulings which puts
the system in a kind of unbalanced situation. On the internal
procedure and Sir David's mentioning of it, there is a lot to
be said for flexibility within the existing procedure. To a large
extent, the Court of First Instance within their internal rules
have rather good mastery in managing the case. This being said,
the internal rules are not out of their hands. The procedure is
that they have the right to try and change these rules. Then it
is for the Council of Ministers at qualified majority to take
them or leave them. They cannot amend them which is very specific
under the Treaty. This puts the Court in a very good position
to have the internal rules amended. The only need for the Court
of First Instance is the approval of the Court of Justice itself
because the Court of First Instance is not a distinct institution
from the Court; it is a single institution the President of which
is the President of the Court of Justice. They need really the
approval of the Court as a whole and then they are in a relatively
strong position to have their internal rules amended, but the
fact is that the flexibility to a large extent, in our view, already
exists and they have not felt the need to extensively review these
internal rules so far.
Q343 Chairman: Mr Lowe, you would like
to add to that?
Mr Lowe: I would like to say something briefly
in relation to Lord Mance's very first remark: Do you think that
an investigative and decision-making body of the kind which the
Commission is now representing in this area should be matched
by a fast-track procedure with judicial review? This is the official
position of the Commission which was adopted by us in 2002. We
placed very great emphasis and the Commission has placed very
great emphasis on that in this very critical period of 2002 when
we carried out the reforms. Yes, one can say that, if there were
continued improvement of the fast-track procedure to the levels
which are proposed by the CBI, it is quite conceivable that this
would encourage a certain number more of interventions by parties,
but not necessarily the merging parties. It would possibly encourage
third parties to come in more often, knowing that they could eventually
get some delay on the implementation of a deal more easily. There
are examples, before the fast-track procedure, where it is certainly
true that the companies decided they would not appeal because
they thought the procedure was long. But the whole background
to the building of this fast-track procedure—which was very
much the initiative of President Vesterdorf himself, to his credit—started
a process which we believe can go on to be further improved. On
the issue of institutional balance, I hope it is clear from what
Michel Petite and I are saying. We are not saying that the proposal
for a judicial panel changes the balance between the Commission
and the Court (CFI). It could conceivably be changed if some of
the suggestions of some of your witnesses were adopted (like the
transfer of the power of decision to the Court), but the power
of the panel in itself has more implications for the relative
competencies of the Court of First Instance, the new panel, and
the Court of Justice. Of course, underlying all this process of
improvement, if we were, in the short term, to go down this track,
must be some attention to the resources of the court: the numbers
of judges but also the staff involved. I do not think it is fully
realised how significantly the competition-related activity of
the European Institutions has increased. Last year, we registered
365 merger notifications. This is the highest number ever. We
are subject to those tight deadlines, as I referred to. We also
had to handle a continued high level of applications for leniency
in cartel investigations. In 2005 and 2006, we imposed the highest
volume of fines on companies of any antitrust authority in the
world. We have a systematic problem with cartel investigation
which has an impact on the work of the Court of First Instance,
in so far as virtually every cartel decision which we take is
challenged by firms in Luxembourg.
Chairman: I am afraid there is a division. We
have to pause in our taking of this evidence from you.
The Committee suspended from 5.15 pm to
5.26 pm for a Division in the House of Lords
Q344 Chairman: May we continue. Mr Lowe,
you were rudely interrupted by the process. Would you like to
finish your comment?
Mr Lowe: My Lord Chairman, yes. The simple message
is this: because of the strengthening of the fight against cartels,
which are the most pernicious thing from the point of view of
the consumer, they are always hotly contested by the parties concerned
and the cases are appealed in Luxembourg. The average time taken
by the Commission to investigate at the moment is 33 months, which
is a long time. The average in the States is around two years;
the average in Germany is around 18 months. We believe this is
an area we have to improve on and we want to make proposals to
the Commission so that we can adopt a system similar to that in
the US, where you can enter into plea agreements with the parties
when they are satisfied that in the end we have good case. That
would be of enormous benefit, both for the Commission and for
the Court, because it will avoid not just the length of our existing
procedure but also the further delay of usually a year or 18 months
at the Court, where, for the moment, the average performance of
the litigators is such that they get no overturning in any way
of the substance of our cartel decisions but generally, on average,
a 15-20 per cent reduction in the fine.[13]
If we can get a situation where we can agree, on a preliminary
basis with the parties, not to go down that road, then we shorten
the procedure, which must give the firms themselves more legal
certainty and a speedier process and it will lead to a more effective
use of resources inside the department. I hope that is what Mr
Temple Lang was referring to when he said that our antitrust procedures
should be reorganised. We are doing other things by way of reorganisation
but they are not the subject of today's discussion.
Chairman: I follow. We take note of that and hope
in due time—sooner rather than later—it may bring
some relief to the CFI as well.
Lord Clinton-Davis: The impression has been given
that Commissioners are regarded as ciphers by the civil servants.
That is entirely wrong, in my view, having been a Commissioner
myself.
Lord Lester of Herne Hill: May I apologise, because
I was the one who put that in the form of a question. I did not
mean any disrespect to Commissioners.
Q345 Lord Clinton-Davis: I am prepared
to take anything from Lord Lester except scolding!
Mr Lowe: My Lord, it is equally matched by the
number of Commissioners who regard their administrators as ciphers!
Q346 Lord Lester of Herne Hill: Is it
not right that the Competition Directorate consults, first of
all, with the Cabinets of Commissioners which are affected or
perceived to be affected? Is it not right also that individual
Commissioners are briefed, first of all, by the companies involved;
secondly, by their own experts in their Cabinets and outside;
and, thirdly, is there not discussion between individual Commissioners
affecting the policies which are designed and frequently are there
not amendments proposed by the individual Commissioners going
to the Commission?
Mr Lowe: My Lord Chairman, the system is not
unlike what could be found in a national administration; that
is that, first of all, when we are making a proposal, even in
a first phase decision, we have to consult our opposite numbers
in other departments who are dealing with the sectors concerned.
They do not have a power of veto if we are proposing a clearance
decision. They have, however, in a major investigation which is
second phase and is to be taken by the Commission, the power to
at least inform their Commissioner of their concerns, and those
concerns, if they differ from ours, are reflected in the preparatory
meetings for the meeting of the College of Commissioners. Lord
Clinton-Davis is correct to say that the Cabinets, the private
staff of the Commissioners, are presented with the proposal and
discuss all the aspects of it. If there are issues which give
rise to disagreement, it leads to discussion between Commissioners.
I have to say, however, my Lord Chairman, given the experience
which the Commission has now built up since 1990 in the application
of this regulation, and the clear, transparent concentration on
competition criteria, the arguments of any Commissioner coming
forward with proposals to amend a decision have to be clearly
related to the accuracy of the market investigation which we have
carried out and clearly related to the application of the competition
criteria we are applying. If, for example, the Commissioner in
charge of information society, telecoms, believes that we have
made a false analysis of the market definition for broadband services,
her services and she herself may indeed have to present that case
in the Commission. It usually happens, however, that we are able
to resolve those problems at the Commission services' level before
it gets to Commissioner level.
Q347 Lord Lester of Herne Hill: At an
early stage in Mr Lowe's evidence, he indicated that he would
be able to help by providing information about the staff resources
available to the Commission and to the CFI. I wonder whether now
would be a convenient moment to do that, since it is obviously
important.
Mr Lowe: As far as the CFI is concerned, I think
it would be more appropriate for Mr Vesterdorf himself to be questioned
on that point, but I can give you an idea of the situation as
it relates to our own activity. We have a total staff in the department
of 720, of whom 417 are professionals (lawyers and economists).
Of those, 285 are concerned with merger activity and antitrust
work; that is to say, restrictive agreements and abuses of dominant
position (the Visa, MasterCard, Microsoft type case) or sectoral
inquiries (such as we have just done on energy, which Mrs Kroes
has presented today, and on financial services). We have 114 professionals
looking after state aid cases. We have an average intake of 400
notifications of state aid from governments in recent years and
we take around 350 decisions each year on state aids. The relevant
staffing figure here—and I am not talking about the support
staff, as such, but the professionals (lawyers and economists)
who investigate and prepare decisions—is 285 for the antitrust
and merger work, who are mainly concerned with the issues dealt
with by the CBI proposal. The broadly equivalent figure to our
activity here is that of the combined number of professionals
in the OFT and the Competition Commission dealing with the same
category of cases. That figure for the UK is 324. In France the
figure is 453 for the two agencies. The US agencies also have,
per their workload, significantly higher numbers of professionals.
So do, indeed, many other agencies. We are ready to submit these
details in written form if the Committee would so wish. We have
looked very carefully at the productivity compared with output—and
I am not saying the impact of output at this stage—and we
will be working with other competition authorities, because we
all want to try to make our activities more cost-effective. DG
Competition was submitted to the OECD peer review at the end of
2005 and their strong opinion was that we were severely understaffed
to deal with the workload to which I have referred earlier. In
parallel to that, the competition team—a small competition
team of around 15 professionals in the legal service of the Commission
follows every anti-trust and merger case we deal with—is
also under pressure and so are the teams under President Vesterdorf
in the Court of First Instance. I think the appropriate thing
is for us to give you these statistics.
Chairman: So it is, no doubt, but I am not sure
whether we are the most useful Committee to whom to appeal in
regard to resources for your department! But there it is. Thank
you very much.
Q348 Lord Bowness: The witnesses will
know that we have had evidence about the language regime. You
refer to it in your written evidence and you point out the distinction
between the language of procedure and the internal working language.
I wonder if you could expand a bit on the statement that you make
later on, that it appears the delays due to translation are rather
due to the internal working methods of the CFI; that if translation
is a real problem it can be tackled by the CFI already. You go
on to say that both the CFI and the ECJ need to have an internal
working language—which I understand—which so far has
been French, and the choice of an internal working language can
of course change by a decision of the courts. Are you suggesting
that could be done on a case-by-case basis? Is it a decision for
the courts alone? Indeed, how would it help? Would the choice
of another language, with due respect, help, if the language was
not French?
Mr Lowe: May I make an initial response in relation
to what we do inside the Commission on an exceptional basis vis-a"-vis
the mergers? We try as far as possible to carry out our investigation
in the language in which the merger is notified by the parties.
That is enormously helpful to the final result. But Michel Petite
is much more of an expert on the linguistic regimes in that court.
M Petite: On languages I think we also have
to put the matter straight. I have seen some confusion with some
witnesses. The language of procedure has to be clearly distinguished
from the language in which the Court deliberates, ultimately.
The language of procedure is at the choice of the appellant. He
chooses his language and the procedure is dealt with in that language.
For mergers—for competition, as a whole—English is
the vast majority. But not always. In contrast, for example, with
cases like preliminary rulings, competition cases in the Court
of First Instance are, thankfully, not translated into the now
official 23 languages. In preliminary rulings, everything is translated
in all these languages in order to allow any Member States to
intervene because, by definition, it has to be presumed that the
question might be of interest to any Member State. Not so in direct
competition actions before the Court of First Instance. Fortunately,
we do not have that immense burden. The only thing which ultimately
is translated into the all languages is the decision itself. The
decision itself, in practice, is issued in the language of the
procedure and the rest follows sometimes very much later. For
the language of the procedure, one could say there is not much
burden in terms of language. The complication which was mentioned
is, indeed, the fact that, so far, the Court of Justice and the
Court of First Instance have and still are convinced that they
need to have, in practice, a sole language in which they deliberate,
so the deliberation of the Court is taking place in a single language,
which so far remains French. It is their choice. It is a de
facto choice and it could be altered without touching the
rules of procedure. That is the situation—which implies,
indeed, that the written pleadings are translated into French.
Some flexibility has been taken. The annexes, for example, are
very rarely translated. That is the situation. In effect, we do
not feel that so far the language issue for that type of case
is a major cause of delay. It is one for preliminary rulings,
probably, but for these competition cases we do not feel that
it is the core issue of the practical problems raised by the CBI.
Q349 Chairman: That leads rather neatly
to what specific proposals you may have for improving—as
I think you suggest still can be improved—the fast-track
procedure in the CFI. Where do you see room to reduce the areas
of delay which undoubtedly are experienced?
M Petite: We have covered that issue partly
already. The case of a special chamber has been raised by several
witnesses. This, indeed, for example, would avoid all the drawbacks
of an additional layer of jurisdiction.
Q350 Chairman: You prefer it certainly
to new panels.
M Petite: Indeed, it has some charm. It raises
a number of other issues which the Court of First Instance would
be very interested in dealing with. It would imply a certain specialisation
of judges, as was mentioned earlier. Is that to be commended or
not? There are pros and cons and I think witnesses have been pretty
thorough on that. As a matter of fact—but this can be asked
to the President of the Court of First Instance as well—it
would not be easy to set up because competition cases sometimes
can be cyclical. The more specialised chamber you have, the less
flexibility you have in turning the cases to a chamber or to another.
Would the judges easily accept not to be in the chamber dealing
with competition cases? I do not know. Most of them want to remain
in a wide panel of types of cases, so that will be an internal
problem for the Court of First Instance probably to pursue that
idea. Again, to add up on what is mentioned in the rules of procedure,
it is probably something which could be organised without altering
the internal rules. They organise their chambers as they wish
and, so far, the Court of First Instance has not proceeded to
establishing a special chamber for competition cases or for merger
cases. For the practical improvements, I think we have covered
more or less, in not too many details, what we have in mind, that
the main thing really is to streamline the procedure. It has to
be in the firm hands of a judge-rapporteur who will confine the
means to the strict essential, which will restrict the written
procedure to its minimum; avoid replies/ rejoinders; concentrate
third-party intervention to the hearing. It is exactly that which
has happened in the Portuguese case and which did not happen in
the Sony/Bertelsmann case. We see that this is the main
area. Other ideas have been aired; for example, to dispense, in
the first stage, the decision of the Court of all the motivation,
so that they can issue the decision immediately without, in the
first place, the full reasoning. This is done in some of our Member
States. In Spain and Germany it can happen: you have the direction
of the decision issued and the motivation only later on.
Q351 Chairman: The reasoning, as we call
it.
M Petite: Absolutely. The reasoning follows.
It raises a number of issues with which we are not too comfortable
but it is an idea which could at least be followed up. The decision
has to be reasoned. It also raises issues such as when does the
deadline for appeal start running after the decision is taken—most
probably when the decision is complete, with its reasoning—but
the gain of time is therefore not necessarily very large. We have
seen that some national courts do it and gain possibly a few days,
but this is probably marginal.
Mr Lowe: May I add to what Michel Petite has
said, maybe to give you a synthetic list?
Q352 Chairman: Yes, that could be helpful.
Mr Lowe: (i) If there are more judges and support
staff with competition experience, this is inevitably going to
speed up the process. Resources is a problem for the CFI, without
any doubt. (ii) effective case management by the reporting judge.
(iii) notwithstanding the cold shower Michel Petite put on it—and
we are talking about improvements in terms of numbers of weeks—the
discipline established in the linguistic regime internally can
be stretched to shorten the debate if targets are put on questions.
We do that internally ourselves. (iv) there is merit in the German
system of appeal, where you have a first deadline to lodge an
appeal, on the basis of a short document.
Q353 Chairman: And then supplement your
grounds later.
Mr Lowe: And supplement your grounds later.
Given the fact that we are talking about improvements maybe of
two months overall, it would seem to us that a possibility to
do that already would give you one month extra, at least, to start
the ball rolling inside the Court and to sustain, let us say,
the viability of the transaction in terms of time limits. There
are other possibilities which, as I say, depend on us. I have
mentioned the issue of reducing the workload of the court by settlements
in the cartel field. If these proposals were to be examined in
a serious way, I believe, institutionally, it is the Court itself
that would have to take the initiative but obviously with the
support and assistance of the Commission to do it.
Q354 Chairman: So it is an accumulation
of this, that and the other improvement which, hopefully, together
would reduce the overall time taken on the review process by up
to a couple of months. That is how you see the way forward: nothing
more dramatic than that.
Mr Lowe: The more dramatic issue to which we
have also referred is the possibility to examine the establishment
of judicial panels in areas where one can clearly see an immediate
benefit because of the repetitive nature of the work.
Q355 Chairman: So take trademarks away
and free up the CFI in that sort of way.
Mr Lowe: Consolidate the progress now being
made on staff cases, which was a significant workload for the
Court of First Instance; secondly, push for a solution of this
kind for trademarks; and, thirdly, if possible ensure that no
further delegations of authority come from the Court of Justice
to the Court of First Instance to make its work even more complicated.
Chairman: It will be interesting to see to what
extent our witnesses next week from the CFI agree with you.
Q356 Lord Lester of Herne Hill: I am
a bit confused about the scope of the power of the CFI with regard
to its own procedures. Some witnesses have given the impression
that the Court is not free to make its own rules of procedure
and therefore is handicapped. On a quick and ignorant reading
of the existing rules of procedure, and having heard you, it seems
to me that there is considerable scope for wider discretion in
case management and even for making more internal rules. In particular,
article 64, I think it is, refers to measures of organisation
and procedure being prescribed, after hearing the Advocate General
and so on and so forth. I have seen the practice directions and
I have seen the remainder of that article but am I right in thinking,
or is this completely wrong, that there is in fact considerable
scope for active case management and for more directions to be
prescribed to improve the efficiency of the judicial process?
M Petite: My answer would be: yes, there is
a lot of scope and the Court actually uses it. They issue guidelines
on how written pleadings should be drafted, how long they should
be and not exceeding a number of pages. They have a margin for
manoeuvre for managing the procedure which we think is fairly
workable.
Q357 Lord Lester of Herne Hill: Are they
using that, in your view, insufficiently? Apart from the Portuguese
case, do you think the Court is now much more active in case management
in the way, for example, that our courts are now as a result of
Lord Woolf's performance?
M Petite: They are only beginning to test this
fast-track procedure and they are only beginning to check what
does work and what is superfluous. It is a testing period. I think
the most recent case was of good performance and I think they
will reach the conclusion that by managing more firmly the whole
procedure they have good results. This can go as far, as in the
Portuguese case, as asking the parties if they want the benefit
of the fast-track procedure to renounce to some legal claims—which
is not insignificant. That goes a bit far. Indeed, they have that
power to confine the debate to its essential legal issues and
stick to that. That is a major simplification.
Mr Lowe: May I add—and this is the Commission
speaking in its role with its responsibilities of service to the
business community—that we share the view of the CBI and
UNICE that this fast-track procedure needs to be not just bedded
down but clearly shown to be working and conforming to a discipline
of which the legal representatives of companies are aware when
they advise their chief executives as to what to do. Given the
fact that it is now three years since the beginning of the fast-track
experiments, it is urgent that we resolve this question. The Commission
is pledged to assist the court in making sure that this fast-track
procedure does work and that business knows how it works. That
is important.
Q358 Lord Lucas: In what way would the
foundations of the world tremble if the CFI could set its own
rules of procedure? What advantage accrues from them having to
go to the Council of Ministers to make changes?
M Petite: I think the world would not take a
different direction, but it is a fact that the rules of procedure
of the courts are very often in the competence of the legislator,
in our own Member States, so it is not a completely alien idea
that this has to be, to a certain extent, rubber-stamped, or endorsed
at least, by the legislator—in that case, the Council being
the legislator. It is rare that courts have full flexibility on
their internal procedures and this has been reproduced here in
a way which is, in our view, not too burdensome on the Court,
because the Council is in a difficult position: to take it or
leave it at qualified majority.
Lord Lucas: It is a qualified majority matter.
Q359 Chairman: Do you know of any case
where a Court has sought some alteration in its rules of procedure
and been refused?
M Petite: No, not to my knowledge, my Lord Chairman.
I think they are very careful not to make a proposal which would
be refused.
13 Note by Witness: 15/20 per cent just refers
to the sole cases where a reduction has been obtained. If one
takes into account all the applications for reduction, the correct
data is "less than 10 per cent". Back
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