Select Committee on European Union Fifteenth Report

CHAPTER 6: Increasing the Jurisdiction of the CFI

174.  The force of the recommendations made in the previous Chapter is directed at the reduction of the CFI's workload and the speeding up of existing procedures. It might therefore seem odd that we should be considering increasing the CFI's jurisdiction at the present time. However, the CBI paper proposes, as a corollary to the establishment of a new Competition Court, that the CFI take over, from the ECJ, jurisdiction for requests from national courts for preliminary rulings in the competition field. The CBI envisages the number of such requests increasing following the modernisation in the application of the EC competition rules brought about by Regulation 1/2003[70] as national courts faced with problems in their application of Community competition law seek clarification from the ECJ.

The preliminary rulings procedure

175.  Article 234 TEC enables the courts or tribunals of Member States to refer points of Community law to the ECJ for interpretation. It is an important jurisdiction of the Court having regard to the fact that provisions of the Treaty, as well as other EC legislative instruments (e.g. regulations, directives, decisions), may produce direct effects and create individual rights which national courts must protect. Further, it is well-established that Community law has supremacy over national law. It is important therefore that national courts should have access to a definitive source for interpretation of Community law. Article 234 thus plays a key role in ensuring the uniformity and consistency in the determination and application of Community law.

176.  Preliminary references make up approximately half the cases heard by the ECJ. There has been steady growth in the number of references for preliminary rulings: this reflects both the increase in the subject matter covered by the Treaties and also the enlargement of the Union from six to, now, 27 Member States. A table showing the expanding workload of the ECJ is set out in Appendix 3.

177.  In practice the national court can expect to wait 21 months for an answer to its questions. Various suggestions have been made over the years as to how the position might be improved, including limiting the national courts empowered to make references (e.g. excluding national courts of first instance) and the introduction of a filtering system. In 1999 the ECJ also suggested that the CFI might be given a preliminary rulings jurisdiction, possibly with an increase in the number of judges and subject to the inclusion of a mechanism for ensuring that the most important question would always come to the ECJ.[71] This idea was taken up by the Member States in the Nice Treaty.

The Nice Treaty

178.  Article 225(3) TEC provides that the CFI may have such jurisdiction in "specific areas" laid down by the Statute of the Court. Where the Court of First Instance considers that the case requires a decision of principle likely to affect the unity or consistency of Community law, it may refer the case to the Court of Justice for a ruling. Further, decisions given by the CFI on questions referred for a preliminary ruling may exceptionally be subject to review by the ECJ, under the conditions and within the limits laid down by the Statute, where there is a serious risk of the unity or consistency of Community law being affected.

The issue

179.  The proposal that the CFI, if it became the first court of appeal against judgments of the EU Competition Court, might also be given a preliminary reference jurisdiction in competition cases is not developed in the CBI Brief and raises some serious issues.

180.  There is, it should be acknowledged, a certain logic in the proposal, as Judge Vesterdorf observed and M. Petite, for the Commission, agreed (QQ 422, 342). Peter Roth thought that there might be a case even without a new Competition Court. He said: "There is something artificial and discordant in the present structure, whereby appeals from Commission decisions are primarily determined by the CFI whereas references from national courts are determined by the ECJ, when these different procedural routes are common strands in the development of competition law jurisprudence" (p 155).

181.  Sir Christopher Bellamy also saw merit in the idea, particularly as regards "cases which can be properly identified and isolated as being pure Article 81 and Article 82 cases. Indeed, I think there is some argument for saying that the Court of Justice is not particularly well-adapted to doing those kinds of cases in a sort of one­shot way. They tend to be very fact­intensive and the Court of Justice is not geared up really to fact­intensive cases" (Q 231). Allen & Overy identified the potential benefits: it "would consolidate, and not dilute, the expertise of the CFI and, at the same time, free up resources at the ECJ level" (p 117).

182.  The OFT was firmly against the idea: "First, references from national courts to a lower Court would not appear to be consistent with the constitutional and legal significance of competition cases. Secondly, the very objective of the preliminary reference procedure is to ensure the uniform application of Community law. It is not clear, for instance, why competition cases should go to a lower Court, but cases on discrimination or equal pay, should go to the highest Court; or why cases raising similar issues of principle but in different policy areas (e.g. competition and consumer law) should go to different Courts; or what would happen to cases which raised both competition law and other EU law issues" (p 153).

183.  Other witnesses identified problems of definition or characterisation. Preliminary references do not always come neatly wrapped and often raise general issues of Community law (e.g. the nature and extent of remedies, as in Courage v Crehan[72]) or involve Treaty Articles in addition to 81 and 82. Judge Vesterdorf acknowledged the potential difficulty: "you must recognise that certain of the references concern at one and the same time competition law and perhaps other areas of central Community law, like free movement of capital, goods or other things. Therefore, it might, in certain of these cases, be a question of who should deal with that sort of case" (Q 423). Temple Lang and O'Donoghue pointed to potential political concerns: "Article 86 cases present a difficulty. What seems to be an Article 82 case may prove to be an Article 86 case, which the State would not be satisfied to have decided by the CFI" (p 162).

Consequences of Modernisation Regulation

184.  Judge Vesterdorf, in his 2005 paper, envisaged the changes in enforcement regime introduced by Regulation 1/2003 (the Modernisation Regulation)[73] giving rise to a greater number of preliminary rulings by the ECJ and recognised that "it may be more coherent to allow the CFI the power to deal with such preliminary rulings as is possible under Article 225(3) EC". The CBI shares that view (p 2).

185.  It may well be early days but such an increase in requests for preliminary rulings has not yet materialised. Indeed the evidence given by Philip Lowe, Director General of the Commission's Competition Directorate General, would suggest that a great increase is unlikely. Mr Lowe has been looking at this issue in conjunction with national competition authorities. The Commission had met with judges in different jurisdictions and the heads of national competition authorities (NCAs) to work out what would be the most appropriate and effective system. The view of the judges was that the preliminary ruling procedure, whichever court (ECJ or CFI) took them, was extremely lengthy. National courts had to reach a decision quickly and, Mr Lowe said, their tendency in practice was to ask for evidence or for the appearance of the appropriate NCA rather than to seek a preliminary ruling. So while it is accepted that it is ultimately the Community Courts that have responsibility for ensuring coherence and consistency of application of the Competition rules, preliminary references would be exceptional and rare given the delay which they inevitably involve (Q 361).

Enlarging CFI's jurisdiction

186.  As mentioned, ensuring competition is central to the activities of the EC, and the detailed rules in Articles 81 and 82 and the EC Merger Regulation play an important part in delivering an effective internal market. It is therefore not surprising that the ECJ may not be disposed to a transfer of competence in competition questions, at least at the present time. M. Petite said: "[The ECJ] 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" (Q 342). Furthermore, any attempt to confer a preliminary reference jurisdiction on the CFI could lead to serious problems of characterisation and definition. Questions relating to the Competition rules are not easily separated from other free movement issues. As Sir David Edward said: "They do not come in nice little boxes" (Q 327).

187.  In any case, since a new Competition Court seems most unlikely at the present time, the "logic" that if the CFI became the first court of appeal in certain competition cases[74] it should have a preliminary reference jurisdiction falls away. Clear benefits therefore need to be identified before any change is made. Improving on the position of litigants in the ECJ, by reducing its workload with the possibility of improving service in other cases, would be an obvious benefit. But conferring a preliminary reference jurisdiction on the CFI in relation to Community competition law would not greatly reduce the workload of the ECJ. The volume of business is quite small.[75] While the modernisation of the enforcement of the EC Competition rules could lead to an increase in the number of references this is not yet the case and any increase in litigation following upon the Commission's recent Green Paper[76] promoting the private enforcement of the Competition rules is even farther off.

188.  We therefore see no urgent need for the Community Courts to consider the question of conferring preliminary reference jurisdiction on the CFI.

Trade marks

189.  Were appeals from OHIM in EC trade mark cases to be transferred to a judicial panel, as has been mooted in Chapter 5, the question arises as to whether the CFI should have a preliminary jurisdiction in relation to trade marks. It might be argued that the same logic which would confer such jurisdiction in competition matters were a new Competition Court to be established should apply. We did not take evidence on this question but consider it a matter which would need to be examined most carefully if our recommendation on the transfer of trade mark cases is taken forward. Whether the ECJ would be more receptive to this than appears to be the case in relation to competition matters needs to be explored.

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70   For some 40 years enforcement of the Community's competition rules was centralised. While the competition rules in Articles 81 and 82 could be enforced by national competition authorities (pursuant to Article 84) and applied by national courts (by virtue of direct applicability), the Commission was in practice the principal and almost sole enforcement agency, its procedure being governed by Regulation 17 of 1962 (and in transport cases, sector specific implementing regulations). A major change occurred on 1 May 2004. Modernisation of the application of Articles 81 and 82 was effected by Regulation (EC) No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (sometimes referred to as the Modernisation Regulation). Responsibility for applying the competition rules is now shared between the Commission and national competition authorities (NCAs) and national courts. The main features of the regime introduced by Regulation 1/2003 are: (1) the end of the notification of agreements to obtain exemption under Article 81(3) and the introduction of self-assessment; (2) decentralisation of enforcement with greater involvement of national courts and competition authorities in enforcing Community competition rules; (3) a strengthening and clarification of the Commission's enforcement powers. While the Commission has lost its power to grant negative clearance and/or exemption to a particular agreement or practice it retains the power to take decisions requiring the termination of infringements and to fine undertakings. It also has powers to co-ordinate enforcement action with NCAs and to intervene in actions before national courts. Back

71   The Court of Justice set out its idea in 1999 in a discussion paper entitled The Future of the Judicial System of the European Union. Back

72   Case C-453/99, [2001] ECR I-6297. Back

73   The issue has become relevant following the fundamental changes in how the EC Competition rules (Articles 81 and 82 TEC) are enforced which were introduced by Regulation 1/2003 (the Modernisation Regulation)-see footnote 70. The Commission no longer has a monopoly in enforcing the rules but shares this responsibility with national courts and NCAs. Back

74   i.e. challenges against Commission decisions in application of Articles 81 and 82 or under the EC Merger Regulation.  Back

75   Judge Vesterdorf said: "As a matter of fact, last year the Court of Justice received seven references on competition law, in one year it only received one and the highest number over the last five­year period was 15 references and that was in 2001. That represents two to three per cent of their caseload regarding references so it is not a major problem numerically" (Q 423). Back

76   Green Paper: Damages actions for breach of the EC antitrust rules, COM(2005) 672, 19 December 2005; Commission Staff Working Paper: Annex to the Green Paper "Damages actions for breach of the EC antitrust rules", SEC (2005) 1732, 19 December 2005. Back