Select Committee on European Union Fifteenth Report


CHAPTER 5: Other Solutions

110.  It is by no means generally accepted that the creation of an EU Competition Court is the best solution to the problem described by the CBI. One option is the creation of a specialist chamber (i.e. a small team of judges dedicated to competition cases) within the CFI.[53] This received a substantial measure of support from witnesses, not least because it was perceived that it would be easier and quicker to establish than a new Competition Court. But the establishment of a specialist chamber raises resources issues, in particular the question whether existing judges could be redeployed or more judges would be needed.

111.  Some witnesses, including both French and German industry (as represented by MEDEF and the BDI respectively), considered reform of the CFI's rules and procedures to be a better way forward. The BDI said that it would "avoid the need to erect new structures and would thus be cost-saving and easier to implement" (p 118).

112.  We examine these options below. We conclude this Chapter by looking at some of the other suggestions put forward by witnesses during our inquiry. We were presented with a wide spectrum of possibilities. Some are radical and would involve substantial institutional change requiring Treaty amendment. Others, some in the hands of the CFI, would require little, if any, legislative action.

A specialist chamber of the CFI

113.  Establishment of a specialist chamber or chambers within the CFI received support from industry and legal practitioners. Both the BDI and Svenskt Näringsliv (the Confederation of Swedish Enterprise) took the view that the creation of specialist competition chambers in the CFI would be preferable to the establishment of a new court (pp 118, 157). The IBA thought that this solution would be "comparatively simple, and carries both legal and practical advantages over the creation of a separate competition court". In particular the IBA noted that creating merger chambers within the CFI would not create an additional level of review (and therefore extend the avenues of appeal) and could be unilaterally determined by the CFI (i.e. without need for unanimous agreement in the Council of Ministers) (p 137).

114.  The proposal also received support from those favouring a new court. Both the International Chamber of Commerce (ICC) and UNICE considered the specialist chamber to be "a sensible interim solution" having regard to the time which would be needed to set up a Competition Court (pp 144, 163). The CLA thought that the creation of a specialist chamber "would be a step in the right direction and should be instigated immediately" (p 127).

115.  The DTI thought that a specialist chamber "would be preferable to the tribunal proposal because it would not add an additional judicial layer but still suffers from the same difficulties in terms of detachment of competition law, a two-tier judicial system and complexity of the case" (p 132). Others also identified difficulties in principle and in practice. Three issues attracted particular attention.

(I) JUGE LÉGAL—IMPARTIALITY

116.  Sir Christopher Bellamy drew attention to the principle of juge légal (the principle of the lawful judge or gesetzlicher Richter) and suggested that this could conceivably present an obstacle to creating specialist chambers (Q 195). Under this principle the allocation of judges to specific cases must be made by reference to objective rules laid down in advance.[54] Accordingly, the CFI's Rules[55] require detailed provisions on the composition of chambers to be laid down and published in advance. In the Union context the principle also serves, as Judge Cooke observed, to secure impartiality, as between Member States, in the allocation of cases (Q 426).

117.  There appears in practice to be some degree of flexibility in the application of the principle. Judge Vesterdorf explained: "when I attribute cases to the chambers, it is in a principle according to one after another, so to speak, but I do take due care of the workload of the individual judges, of the individual chambers and also of the expertise of any given chamber. If we have a case which is particularly urgent[56] or important, if I have a chamber in which there are three completely new judges and they have never done such a case before it might be preferable to hand it over to one of the judges or one of the chambers that has been doing that sort of case more often" (Q 426).

(II) IMPLICATIONS OF SPECIALISATION

118.  It is envisaged that given the CFI's current workload the Court would probably need two specialist competition chambers. Sir Christopher Bellamy pointed to possible negative consequences: "Effectively, that means you have got to take six judges out of the life of the CFI and tell them to get on with competition cases. It is probably the case that among those six would be at least two judges from major Member States who would, as it were, peel off and do competition. Now if you assume one of those judges might be the United Kingdom judge, for example, what you have effectively achieved is to take the United Kingdom judge out of the CFI, i.e. he is not participating, or hardly participating, in the other 900 cases the Court is doing because he has been told to specialise in competition. Whether or not that is an entirely desirable development, I am not at all sure" (Q 195).

119.  The Commission doubted whether the Court would favour the idea. M. Petite said: "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" (Q 350). Judge Vesterdorf indeed expressed concern about the potential loss of flexibility which a specialist chamber could bring to the working of the Court (Q 426).

120.  Not all were deterred by such considerations. Temple Lang and O'Donoghue said: "court specialisation might possibly have disadvantages, such as specialised judges' loss of perspective, and issues of status as between judges in different chambers. But we believe that these risks are not significant or likely to outweigh the gains in efficiency and consistency of decision-making that can be expected to result from having a specialised chamber and specialised judges" (p 161).

(III) RESOURCES

121.  As in the case of a new court, it is generally agreed that setting aside a specialised chamber to deal only with merger cases would not be practicable because of the likely cyclical nature of the workload. But extending the remit of any specialist chamber or chambers to competition cases generally could create logistical problems. Judge Vesterdorf doubted whether it would be practical with the present number of judges and the pattern of the work (especially large multiparty cartel cases[57]): "Imagine that all those cases would be sifted down to only six judges in two chambers, and hoping that these judges would be able to get the case out more swiftly than we can do now—it is not really realistic. That brings in again the question of should we then have extra judges? If we get extra judges that problem would be less of a problem" (Q 399). However, as we explain below, appointing more judges to the Court could also be a problem.

122.  The creation of a specialist chamber or chambers within the CFI is not an attractive option. Without more judges, it would not bring any advantage over the present arrangements and indeed could lead to a reduction in flexibility in the allocation of cases to chambers which could have unwelcome effects including possible delay. Further, in the absence of extra judges, the creation of specialist chambers would imply removing Member States' nominated judges from the general work of the Court. Even if extra judges were appointed, the majority of Member States would no longer have judges sitting on competition cases. This is unlikely to be acceptable to Member States.

CFI Rules and procedure

123.  We asked whether reform of the CFI's Rules and procedures was needed and, if so, what changes should be made. Witnesses' attention focussed on the fast-track procedure (including the language regime) and the scope for its improvement, largely through practice and not formal rule change. Witnesses had different perceptions of the existence of and scope for pro-active case-management by the Court. Before examining the fast-track procedure we consider the point raised by a number of witnesses that the CFI is not free to fix its own Rules and is therefore handicapped.

Autonomy in rule-setting

124.  Sir David Edward drew attention to the CFI's lack of autonomy in relation to its rules of procedure. Sir David advocated that the CFI and indeed the ECJ should have power to fix their own rules of procedure so as to allow them "to test out new procedural methods and expedients that would go some way towards achieving greater speed and efficiency" (p 51). He pointed, however, to the political sensitivities involved (Q 245). Sir Christopher Bellamy had some "sympathy with Sir David Edward's point that it would be better if they could be changed more flexibly and more quickly, but that does raise constitutional problems" because of the requirement to secure a majority in the Council (Q 195). [58]

125.  Both the Commission and the CFI doubted the need for change here. The Commission believed that the CFI already had "a margin for manoeuvre for managing the procedure which we think is fairly workable" (Q 356). M. Petite also defended the requirement for approval by the Council: "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" (Q 358).

126.  Judge Vesterdorf said that he had seen the submissions regarding the CFI's lack of procedural freedom, but changes had been made during the Court's lifetime to introduce more flexibility. (The CFI Rules have been amended ten times in the 17-year lifetime of the Court.) Judge Vesterdorf did not think there was "a real problem" here and did not believe that the present legislative arrangements were an obstacle to improving and increasing flexibility in the CFI's procedures (Q 394).

127.  It is at first sight remarkable that amendments, however minor, to the rules of procedure of the Community Courts are subject to decision in the Council of Ministers. The Treaty of Nice removed the requirement for unanimity in most cases although even in those cases changes have to secure the agreement of a substantial number of Member States. Any amendment of the rules relating to language arrangements still requires unanimity[59] and clearly this would raise a political issue. We nevertheless believe that consideration should be given to allowing both courts, the ECJ and the CFI, some measure of autonomy to set their own Rules. We find it difficult to believe that there is not a middle way, differentiating between rules whose amendment would require political endorsement and those which could be left to the Court.

Improving the fast-track

128.  As mentioned, of the 28 fast-track applications accepted by the CFI 17 have concerned mergers. The Commission reported that the length of time to decide merger cases in 2000 (before introduction of the fast-track) had on average been more than two years. Since then, major improvements had been achieved through the introduction and successful use of the fast-track procedure. This procedure has allowed the CFI to conclude the review of complex merger cases within approximately 10 months and in two cases decisions were reached in 7-8 months (p 66). The Commission accepted that a further reduction from 10 to 6 months was desirable but also emphasised the relative newness of the fast-track procedure. The CFI was still in the process of discovering what worked and what could be dispensed with. Nonetheless recent experience showed the procedure could work well (QQ 339, 357).

129.  As described above, the fast-track procedure eliminates a second round of written pleadings and lays more emphasis on the oral hearing. It may not always be attractive to the applicant parties as it requires them to accept restrictions on the number of grounds of appeal and the length of written submissions.[60] So it may not be appropriate where there are many factual, legal and procedural issues in play. There is therefore a cost for the firms involved and a restraint on the lawyers and other advisers. It is, however, noteworthy that in half (21 out of 42) of the merger appeals brought since its introduction in 2001 the fast-track has been requested and such applications have been granted in most cases (p 103).

130.  Witnesses believed that there was scope to improve on the present performance under the fast-track procedure. They singled out two areas in particular, use of languages and case management.

(A) THE CFI'S WORKING LANGUAGE

131.  It is clear that, if the pleadings and other documents are not furnished in French (the CFI's internal working language), then some time will inevitably be taken up with translation even though, where a case is on the fast-track procedure then, as Judge Vesterdorf explained, its translation will be given priority. Significantly, neither the Commission nor the CFI thought the language issue was a major cause of delay in merger cases though the Commission thought that some time could be saved if the Court adopted the same type of targets in relation to its internal linguistic regime as the Commission did (QQ 348, 352). The CFI did not think there was much scope for further savings (Q 395).

132.  We have already noted (see para 64) that whether changing the working language to English or another language or having, as the BDI suggested, a small number of working languages, would save time, and if so how much time, is debatable. By contrast, it is generally recognised that any change (for example, from French to English) would be politically sensitive and controversial. It is a route very few witnesses chose to travel. Nor would we.

133.  Nonetheless some suggestions were made by practitioners to bring some flexibility in relation to the fast-track procedure. Peter Roth proposed "a rule that, where the Judges constituting the Chamber hearing a fast track case so decide, the documents need not be translated out of the language of the case" (p 155). Temple Lang and O'Donoghue suggested that "the court should decide, when an application has been received in any given language, whether it can be satisfactorily dealt with in that language. We accept that this would mean that applications written in languages spoken by a majority of the judges will be dealt with more quickly than cases initiated in less widely-spoken languages. But pleadings in a case in a less widely-spoken language must be translated anyway. If a case is initiated in a language which is known to a sufficient number of the judges to be dealt with in that language, we see no justification for imposing the delays which inevitably result from having the pleadings translated" (p 137).

134.  The DTI suggested that greater resources could be put into translation (DTI para 7.3). The Government were not, however, advocating an increase in addition to that given in recent years to the CFI (mentioned by Judge Vesterdorf—see Q 395) but merely suggesting that if savings could be made elsewhere then there was a good case for these savings to be reallocated for translation within the existing CFI budget (DTI letter).

(B) CASE MANAGEMENT

135.  Witnesses also looked to the Court for the operation of effective case management practice and application of stricter deadlines. A number pointed to the efficiency with which the Competition Appeal Tribunal (CAT) dealt with merger appeals under domestic legislation. The CLA, for example, suggested that the CFI could usefully adopt the CAT's practice of having a case management conference at the beginning of the process where the target date for the hearing and decision is discussed (p 126). But how far the practice of one body can be imported into another is not certain. Sir Christopher Bellamy, then President of the CAT, considered that there were limits to the analogy with the CAT, not least as regards caseload and the difficulty the CFI faced in relation to translation and language (Q 194).

136.  It is clear that there are already examples of good practice within the CFI. The EDP case, as mentioned, was dealt with by the CFI in seven months, despite the language problems and the intervention of third parties. The Commission attributed that to "very rigorous case management" by the judge-rapporteur. By contrast the Commission did not consider that there had been sufficiently firm management in the IMPALA case (QQ 337, 350). The DTI also acknowledged that some progress had already been made but believed that there was "scope for the CFI to speed up its process by making changes to the existing case management procedures" (p 132).

137.  A number of witnesses spoke of the need for firmness and rigour on the part of the judge-rapporteur. The Joint Competition Law Working Party (JWP) called for the strict enforcement of time limits (p 146). Temple Lang and O'Donoghue argued that the Court should be rigorous in limiting the number of arguments but should also be more strict on the length of pleadings, the length and number of annexes, and the number of suggested witnesses. All this, they believed, could be achieved within the existing Rules (p 160). The JWP also called for public commitments from the CFI as to the time in which the Court would respond to requests for use of the fast-track procedure and the time (following the oral hearing) in which judgments would be handed down (p 146).

138.  We are aware that there may be underlying cultural and historical differences here. As Sir David Edward said: "contrary to some people's impression … the Continental tradition is against procedural autonomy and against case management, except in the investigative role of the judge in the criminal procedure. By and large the Continental tradition is, as they put it, towards the passivity of the judge". He thought this was something on which the UK could take a lead (Q 239). We are encouraged by the recent experience in the EDP case that there are opportunities available in the current Rules which might be better exploited. Firmer case management by judges could lead to significant time savings.

More judges

139.  A number of witnesses, including the CCBE (Council of Bars and Law Societies of Europe) (Q 89) argued that appointing more judges would be the best way to solve the problem defined in the CBI's proposal. Peter Roth thought that the appointment of more judges "would do more than anything else to address the problem … if the alternative is the creation of a separate court, it seems a more economical and satisfactory solution. And it would have the inestimable benefit that it would address delays in CFI cases more generally, not just in merger appeals" (p 155). Judge Vesterdorf thought that extra judges on the court would be "evidently something that would be useful" (Q 389). Others were more cautious. Temple Lang and O'Donoghue thought that an increase in the number of judges might be "desirable and indeed necessary, but would not be sufficient" (p 160).

140.  Appointing more judges seems a simple and straightforward way of addressing the issue but history does not provide a helpful precedent. Indeed it demonstrates a serious political difficulty with any such proposal. In 1999 the CFI asked for an additional six judges, allowing for two extra chambers to be set up to deal with trade mark cases,[61] and the Council of Ministers agreed to the increase in principle. But as Sir Christopher Bellamy, then a CFI judge, said: "The proposal got nowhere because no­one could agree on who the other six would be and which privileged states would have a second judge" (Q 197). In Judge Vesterdorf's words, "the case died an undignified death before the Council" (Q 389).

Time for appeals

141.  Both the CCBE and the Commission thought that there would also be merit in looking at the German system of appeal, whereby a party is able to appeal on the basis of a short document supplementing the application with detailed pleadings and evidence shortly thereafter (QQ 108, 352). The CCBE envisaged the situation where the appellant seeking the expedited procedure could introduce the case to the Court by providing the key documents and engage with the judge-rapporteur at a very early stage to discuss the conduct of the case (Q 103). We agree that the CCBE's proposal merits further consideration provided that there would be safeguards to avoid wasting the Court's time with speculative or unmeritorious appeals. There are clear advantages if the judge-rapporteur can take control of the procedure at the earliest opportunity.

142.  The DTI proposed that consideration should be given to reducing the current two month time limit for "registering" appeals to one month. On examination it transpired that the Government were not proposing any amendment to Article 230 TEC (which stipulates a two month limitation for appeals) but "outside a legal imposition, the CFI can, within the scope of its organisational measures, indicate to the parties that they do not have to take the whole 2 months to file their appeal. If an applicant is seriously concerned about time limits this must merit their consideration" (p 135).

143.  We remain unclear as to whether the Government are suggesting anything more than a general reminder to all parties that if time is of the essence they should and need not delay filing their application. However, we note that the basic two month limitation period is currently extended by a ten days delai de route. We see no reason why in an age of virtually instantaneous communication (the Court accepts service by fax or email) there remains a need for the additional ten days delai de route.

The six month target

144.  A number of witnesses agreed with the CBI that a decision from the CFI within six months should be the target to aim for. Whether six months is sufficient to save the merger will of course depend on the particular circumstances. We are concerned that in many cases it may not suffice, but it seems clear that anything longer than six months will almost certainly prevent the merger.

145.  The Commission seemed to think that six months was achievable (p 64, Q 337). But Judge Vesterdorf said that "there is a minimum time under which you cannot go even if the case is introduced in our working language" (QQ 392, 428).

146.  Speed is not, however, the only consideration. The rights of the parties to be heard, including the rights of third party interveners, have to be respected. The Commission believed that "These considerations introduce a natural limit to the reduction of time for judicial review" (p 66). M. Petite said: "most companies involved in this situation, although they are interested in speed, are also interested in a fair outcome. In our experience, they are saying that they would like, as the CBI has said, around six months but they would not be necessarily interested in sacrificing one month or two months simply in order to meet an artificial legal deadline. They would like to see the due process rightfully respected" (Q 337).

147.  The position as regards third parties may be critical. As explained, if they intervene in fast-track proceedings brought by the merging parties attacking a prohibition decision, the CFI will in practice limit their involvement to an oral presentation at the hearing. There may nevertheless be questions of access to evidence and of confidentiality to be resolved en route.

148.  Equally, if not more, problematic for the merging parties is where a third party is trying to block a merger which has been given the green light by the Commission. As Judge Vesterdorf indicated, such a party may have "all the interest on the world in stopping or slowing down the procedures" (Q 392). Although, as the Commission made clear (Q 341), the merger can go ahead there always remains the risk, and hence uncertainty, as to whether the ultimate result could be that they have to demerge. The IMPALA challenge of the Sony/Bertelsman merger was criticised by many witnesses for the time it took, some 18 months even under the fast-track procedure.[62] Stricter case management would seem to be needed. Peter Roth said: "There is no reason why, with appropriate sanctions, the kind of prolongation of the proceedings displayed in IMPALA should be permitted" (p 155). We agree.

149.  A separate problem may arise where a third party challenges a merger but does not apply for the fast-track. Mr Berrisch, for the CCBE, said: "There one could think about the possibility of giving the merging parties as interveners the right to request an accelerated procedure to make sure that this case is then decided very quickly, so that they do not have a Sword of Damocles of a negative decision hanging above their transaction" (Q 105). We believe this suggestion merits further consideration.

Judgments

150.  Two suggestions were made by practitioners for improvements relating to the preparation and publication of judgments by the Court.

151.  First, Temple Lang and O'Donoghue urged the Court to be more economical in judgment writing. They said: "We believe that CFI judgments are unnecessarily long, and that the arguments of the parties could be summarised more shortly. We note that this is being done already in Reports for Hearings. We realise that it must be done with care, and we know that it is sometimes quicker to write a long summary than a short one. Nevertheless, we believe that the CFI could reduce its workload by this means also. This would also mean that there is less to translate" (p 161). This is something which we hope the Court will consider.

152.  Second, the suggestion was made that time might be saved if the Court were able to give judgment at the earliest possible stage without having to set out its reasoning which would follow later. The Commission were not comfortable with the idea and thought that any time saved would only be marginal (Q 351). The CFI found the idea distinctly unattractive. Judge Vesterdorf said: "It is certainly not our practice and we have not at any point in time had to decide whether the Court could pronounce the positive part of the judgment—the end result—and then send out the motivation later on, I think it would be quite inconceivable to my colleagues" (Q 397). Both the Commission and the Court queried what the effect would be as regards time running for any appeal to the ECJ.

Taking decision-making away from the Commission

153.  Some witnesses suggested that a more radical solution was needed, namely that a body independent of the Commission, possibly but not necessarily the CFI, should take any decision to block a merger. This is not a new idea. As Mr Lowe, for the Commission, commented: "The debate has always been there. It returns frequently" (Q 339).

154.  Witnesses doubted whether the Commission would be enthusiastic about such a fundamental change. For the Commission M. Petite and Mr Lowe rehearsed some of the advantages and disadvantages of such a scheme. Mr Lowe said: "the issue is a wider, much more serious one as to what kind of institution would be created which would have sufficient independence to be satisfactory to the European public interest. Here, the debate has gone on for a number of years on this. Would it for example be an institution such as the German Cartel Office? Would it necessarily therefore have to have commissioners appointed by each Member State in it? Would there be any right of referral to any political institution of its decisions or would it be totally independent?" The Commission representatives emphasised the balance of the current institutional arrangements which Member States had endorsed at the time of the last review of the EC Merger Regulation in 2002 (Q 339).

155.  It is significant that the main thrust of the CBI proposal is not for any change in the basic system under the EC Merger Regulation and we detected no general swell of opinion in that direction, and certainly no support from the Commission or the Court. The idea of taking decision-making, even if only prohibition decisions, away from the Commission, it seems to us, is only of academic interest at the present time.

Enlarging jurisdiction of the CFI

156.  The Court's jurisdiction under Article 230 TEC (the route by which competition cases usually reach the CFI)[63] is limited to reviewing the legality of the measure being challenged. The Court's role, in the case of an appeal against a Commission decision applying the competition rules or the EC Merger Regulation, is one of checking that the Commission has applied the law and assessed the facts properly. As a number of witnesses made clear, the CFI conducts only a limited "judicial review" type function, and not a re-hearing or re-trial.

157.  In practice many appeals in cartel cases are concerned with the imposition and level of any fine imposed by the Commission. Here, in addition to its Article 230 jurisdiction, the CFI has "unlimited jurisdiction" under Article 229 TEC.[64] As Judge Vesterdorf told us: "There, we have in principle a complete free hand and we can take the final decision and we do take the final decision on that issue" (Q 414).

158.  One suggested change would be to allow the CFI, when it annuls a Commission merger decision, to adopt a decision itself (subject to appeal to the Court of Justice) instead of referring the decision back to the Commission. In the UK the Competition Appeal Tribunal (CAT) has such a power, though as Sir Christopher Bellamy, then President of the CAT, said: "exactly how we exercise it is fiercely debated and not yet ruled on by the Court of Appeal". He nevertheless considered it to be "a highly desirable power particularly in merger cases but also in other cases that avoids the obvious ping-pong of sending it back and forwards" (QQ 214, 216).

159.  Giving the CFI such a power would, of course, require legislative change. So far as competition cases (i.e. appeals against Commission decision in application of Articles 81 and 82 TEC) are concerned it would involve Treaty amendment, Judge Vesterdorf suggested (Q 413). The position as regards decisions under the EC Merger Regulation is, because of its legal base, possibly different. Sir Christopher Bellamy drew our attention to a precedent in the Community Trade mark Regulation. There the Court, reviewing the decisions of OHIM, "has jurisdiction to annul or alter the contested decision".[65] Sir Christopher described the power, pouvoir de reformulation, as enabling the court to "change it basically, or re-take the decision rather than send it back" (Q 214).

160.  A number of witnesses thought that if the CFI had such a power it might change (possibly lengthening) the proceedings before the court. Further, as Temple Lang and O'Donoghue said, "It would also mean that the CFI final judgment would need to be based on the facts as they were at the date of the Commission's decision (which would have been argued before the CFI), and not the market situation as it was at the date of the CFI's judgment, as the Merger Regulation now provides" (p 161).

161.  Judge Vesterdorf expressed concern that such a change might upset the present institutional balance and he doubted whether Member States would accept it (Q 413). We nevertheless believe that the proposal deserves further consideration. Temple Lang and O'Donoghue believed that a "reasonable compromise" was possible. The Court should be given the discretion to take the final decision itself where, for example, there has been no substantial alteration in the circumstances nor other factor apparently requiring a fresh investigation (p 161). We believe that the CFI should be given such a power.

Reducing the burden of cartel cases

162.  Large cartel cases represent a significant part of the CFI's overall workload in the field of competition and often appeals are brought against the level of the fines. These cases can be very time-consuming and it is not unusual for the CFI, after lengthy proceedings, to reduce the fine. Mr Lowe, for the Commission, accepted that this was an area where the Commission hoped to improve the position and they were considering proposing the introduction of a system of plea-bargaining similar to that which pertains in the US. By shortening the procedure within the Commission and removing appeals against the fine, such a system could bring benefits for both the Commission and the CFI (Q 344).

163.  We asked whether the CFI welcome such a change. Judge Vesterdorf replied: "If it would mean fewer cases brought to the Court because there has been successful plea-bargaining, from our point of view that would be perfectly fine. As a judge in the Court being overloaded, if cases are solved in that way so much the better." However, Judge Vesterdorf thought that the court would want to be assured that the rights of the parties were fully respected by the Commission (QQ 417-8).

164.  This is a constructive proposal on the part of the Commission and we will watch its development with interest, not least because of the concern identified by Judge Vesterdorf. But if the practical effect is, as Mr Lowe suggested, to remove time-consuming cases from the Court's list then that can only be welcomed.

Transferring other business to a judicial panel

165.  Judge Vesterdorf agreed that the only way the CFI can really achieve faster determinations is if they have less work across the board. He agreed with the suggestion made by a number of witnesses that this might be done by offloading the Community trade mark work which is a fast-growing area of the CFI's workload (Q 429).

THE COMMUNITY TRADE MARK

166.  Council Regulation 40/94 set up a unitary system of protection of trade marks throughout the Member States. The Community trade mark system consists of one single registration procedure which grants to its owner an exclusive right in the 27 Member States of the European Union. The system is administered by the Office for Harmonization in the Internal Market (OHIM),[66] which is situated in Alicante, Spain. The Community trade mark has been a success. Since OHIM became operational in 1996 more than 200,000 companies from all over the world have turned to OHIM to seek EU-wide protection for their trade marks and designs. The system receives some 60,000 applications a year, a figure far exceeding initial expectations.

167.  Following examination and publication of the trade mark application third parties can challenge registration, invoking earlier rights. Where the outcome of opposition proceedings is positive for the applicant, or where no opposition has been filed, the Community trade mark will be registered. Where registration is refused or contested appeal proceedings may be commenced before Boards of Appeal within OHIM. From there an appeal lies to the CFI.

GROWTH IN NUMBER OF APPEALS

168.  As a number of witnesses pointed out, the most numerous category of cases now before the CFI is trade marks. The Commission contrasted the number of 42 competition law cases per year with the 98 new trade mark cases in 2005 (p 66). The CFI drew our attention to the increase in trade mark cases, up 46 per cent in the last year. OHIM itself now has four Boards of Appeal and has recently strengthened its procedures considerably in the expectation that there will be a substantial increase in the number of cases to be decided on appeal by the Boards. The CFI received 143 trade mark cases in 2006 and is expecting around 170 in 2007 (Q 375).

SUITABILITY FOR TRANSFER

169.  It is noteworthy that trade marks (intellectual property cases) was one of three types of cases originally envisaged (by the 1999 Committee of Reflection, preceding the Nice Treaty) as being suitable for transfer to a judicial panel (the other two being staff cases and competition cases) (QQ 377, 379).

170.  Both the Commission and the CFI thought that appeals from OHIM might be suitable for transfer to a judicial panel. M. Petite, for the Commission, said: "Like in staff conflicts, it is pretty repetitive. They are rather routine cases" (Q 341). Judge Vesterdorf said: "this is an area of law that is clearly distinguishable and can be wrapped up and sent off to a new court whenever the workload for our Court becomes such that we cannot deal with all the cases" (Q 376). In his view, transferring the Community trade mark work to a judicial panel should have priority over transferring competition cases (QQ 378-9).

171.  It is clear that there is a sufficient workload for a judicial panel and that the removal of trade mark cases would have a marked effect in alleviating the workload of the CFI. Judge Vesterdorf said that removal of trade mark cases "would enable it to use the expedited procedure more frequently and more effectively in cases which merit it, including competition and, in particular, merger cases".[67] Judge Forwood said: "it would create within the Court of First Instance a degree of flexibility that would enable us to handle more of these cases—perhaps within an even more acceptable timeframe, which does of course vary from case to case—and without putting at risk the handling of the 99 or 95 per cent of other cases that are not being handled according to the accelerated procedure framework" (Q 381).

COMMISSION'S REACTION

172.  Removal of trade marks to a judicial panel received a positive but cautious response from the Commission. Mr Lowe, for the Commission, thought that if the difficulty with merger cases was to be solved it might be useful inter alia to push for a judicial panel for trade marks (Q 355). But M. Petite explained that there were difficulties with such a proposal, not least in determining the relationship between a judicial panel and the existing Board of Appeal. (It seems that when the notion of judicial panels was first proposed it was envisaged that the Board of Appeal might become such a panel.[68]) It would also be necessary to evaluate the success of the transfer of staff cases (Q 341).

173.  The transfer of trade mark cases could lead to a marked decrease in the CFI's workload and we encourage the Commission to give urgent consideration to this suggestion. It is not a new idea—it was included in the Commission Work Programme for 2005[69]—and some preliminary work should therefore have already been undertaken. And it seems most unlikely that M. Petite, on behalf of the Commission, would have countenanced the possibility of a judicial panel for trade marks before the Committee had he not considered it a viable proposition.



53   The CFI does not sit as a full (27 judge) court. Cases are in practice dealt with by chambers of three judges, one of whom acts as judge-rapporteur and takes particular responsibility for the case (Q 385). Back

54   See Arnull, The European Union and its Court of Justice (2nd edit 2006) at p 28-9. Back

55   Rules of Procedure of the Court of First Instance of the European Communities, Articles 10-14. Back

56   The workload of the particular chamber was an important consideration in the allocation of cases under the fast-track procedure (Q 387). Back

57   This pattern could change if the Commission were to introduce plea-bargaining. See paras 162-4. Back

58   At present the Treaty requires the Council's approval (by qualified majority)for any rule change (Article 224 TEC) (under the Constitutional Treaty, the position of the "General Court" would be similar-Article III-356). In May 1999 the Court of Justice presented a discussion paper entitled The Future of the Judicial System of the European Union. This wide-ranging document summarised the difficulties the Community Courts then faced and identified the consequences that the Amsterdam Treaty and other EU developments would have for the Courts. The Court proposed a number of changes, including an amendment of the Rules of Procedure, at that time subject to unanimity in the Council. The Court feared that maintaining this requirement in an enlarging Union could paralyse the process of amending its Rules and those of the CFI. It was proposed that the Treaties be amended so as to empower both Courts "to adopt their own Rules of Procedure or, at the very least, so that the Rules require Council approval by a qualified majority only". Member States adopted the latter suggestion in the Nice Treaty. Neither the Court nor Member States chose to revisit this question in the context of the Constitutional Treaty. Consideration of the Union's judicial architecture was a limited affair, dealt with by a so-called "discussion circle" which began work later than the other Working Groups. However, the discussion circle did examine, and make recommendations on, the need for unanimity in relation to amendment of the Statute of the Court. See Final Report of the discussion circle on the Court of Justice. Brussels, 25 March 2003. Doc CONV 636/03, at para 10. Back

59   Article 64 of the Statute of the Court of Justice. Back

60   The CFI's Practice Directions (Part VI Applications for Expedited Procedure) state: "2. As the expedited procedure is largely oral, such an application will be granted only if the pleading (application of defence) of the party requesting expedition is confined to a summary of the pleas relied upon and where the annexes are limited in number. 3. An application in respect of which expedited procedure is requested must not in principle (depending on the nature of the issues and the circumstances of the case) exceed a maximum of 10 to 25 pages." [2002] OJ L87/48. Back

61   Doc 8198/99. Proposals submitted by the Court of Justice and Court of First Instance with regard to the new intellectual property cases. We consider how to deal with the growing burden of trade mark cases at paras 165-173 below. Back

62   Indeed, IMPALA's conduct was criticised by the Court. See Case T-464/04, IMPALA v Commission Judgment of 13 July 2006, at paras 546-52. Back

63   i.e. challenges by addressees of Commission decisions finding an infringement of the competition rules and imposing a fine (Articles 81 and 82) or prohibiting a merger, or by third parties such as disappointed complainants or competitors. Back

64   Article 229 is applied, in competition cases, by virtue of Article 31 of Regulation 1/2003 (the Modernisation Regulation) and, in merger cases, by Article 16 of the EC Merger Regulation.  Back

65   Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark. Article 63(3). Reproduced in Article 65(3) of the Proposal for a Council Regulation on the Community trade mark (codified version). Brussels, 19 December 2006. Com(2006) 830 final. Back

66   The OHIM is managed by a President who is appointed by the Council and has responsibility for the operational functioning of the Office. An Administrative Board composed of one representative of each Member State and one representative of the Commission supervises the Office. Back

67   Competition Policy International. Autumn 2005, Vol 1, No 2, at p 26. Back

68   Grainger, The Community Judiciary at the Dawn of the Third Millenium: a Revolution or a simple Face-lift, 34 Bracton Law Journal 7-34 (2002). Back

69   COM(2005) 15 final. Back


 
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