Memorandum by John Temple Lang[89]
and Robert O'Donoghue[90]
SUMMARY
This submission suggests that there is
no need to set up a new competition court. The improvements that
are necessary can be obtained by a small number of changes in
the Rules of Procedure of the Court of First Instance, in particular,
by combining the expedited procedure with more active case management.
One other key reform to save time would be to have chambers of
judges with experience in competition cases who are able to hear
and decide cases in languages other than French, without translating
the written pleadings into French.
1. OUTLINE AND
SCOPE OF
THIS SUBMISSION
1.1 This submission is made in response
to the call for evidence on the subject of a possible EU competition
court.
It is in the following Parts:
— Part 1 summarises briefly the criticisms
of the present system.
— Part 2 discusses several issues that
need to be considered separately.
— Part 3 replies to the questions asked
in the Call for evidence, in the light of the comments in Part
2.
1.2 This submission does not consider the
following issues, which seem to be outside the scope of the inquiry:
— whether the Commission should no
longer decide European competition cases, but instead bring cases
before an EU court which would decide the cases;
— whether changes should be made within
the Commission, so that the same officials no longer write both
the Statement of Objections and the decision in the same case;
— whether the CFI should become the
court of appeal from national competition authorities when they
apply EU competition law, rather than national courts, as at present;
or
— whether, assuming that appeals from
national competition authorities continue to go to national courts,
Member States should set up specialised courts for the purpose.
If the Sub-Committee wishes to receive evidence
on any of these issues, we would be glad to submit it.
PART 1: CRITICISMS
OF THE
PRESENT SYSTEM
1.3 There are two principal criticisms of
the present procedural system:
— Delay. Judgments in competition
cases are said to be too slow, in particular in cases under the
EU Merger Regulation. The average duration of CFI competition
proceedings is 33 months. Although the use of the CFI's expedited
procedure has been very efficient—usually resulting in a
judgment around nine months after the initial appeal—this
ignores significant other delays in the entire process of approval.
In difficult merger cases, extensive pre-notification
contacts with the Commission, sometimes lasting months, are not
unusual. Commission merger investigations are also longer now
following reforms in 2004 that allow the Commission or the notifying
parties to "stop the clock". Following a successful
appeal, the CFI must also send annulled decisions back to the
Commission for re-examination, which also means significant additional
delay. If this occurs, the review will in many cases be complicated
by the fact that the market may have changed materially in the
period since the Commission's initial review, eg, the emergence
of new markets that did not form part of the Commission's assessment.
Companies are rarely willing or able to keep deals alive for long
periods of this kind, particularly in the case of merger prohibition
decisions.
In non-merger competition cases, the Commission
is extremely slow, and it is the Commission, not the CFI, which
needs to be reorganised.
— No re-trial/re-hearing. The
second criticism made is that the CFI's review involves only a
limited review of the decisions of the Commission in a "judicial
review" type function, and not a re-hearing or re-trial.
It would be impossible to deal with both of these
criticisms simultaneously. They are mutually incompatible. Bearing
in mind that the Commission would have to investigate the facts
first in order to bring a case before any court, any system of
re-hearings or re-trials would inevitably take longer than the
Commission's present administrative procedure plus the CFI proceedings.
A choice between these objectives is therefore
needed. At least in Merger Regulation cases, speed is more important
than a re-trial. The objectives, in merger cases at least, should
be speed, and finality. It would be easier, if necessary or desirable,
to increase the extent and depth of judicial review by the CFI
than to introduce re-trials. But the CFI on occasions already
goes into considerable detail.
2. PART 2: SPECIFIC
QUESTIONS
2.1 To simplify consideration of other questions,
it is convenient to consider first whether, if a new court or
specialised chamber were to be set up, it should be one from which
an appeal would lie to the CFI (in which case the new body would
be, in effect, a "judicial panel") or one which would
be at the same level as the CFI itself.
The arguments for not adding a fourth "layer"
(in addition to the Commission, the CFI, and the Court of Justice)
seem overwhelming. Creating a new layer would have the effect
of prolonging proceedings if appeals were made to the CFI. Only
if, contrary to the views expressed here, it was impossible to
achieve the desired results by means of a court or chamber at
the level of the CFI should a judicial panel, or the equivalent,
be considered.
2.2 Assuming that any new body should be
at the level of the CFI, the choice lies between some kind of
specialised chamber of the CFI, with some special procedural rules
applicable to its cases, and a new, separate, court.
Only if it is impossible or unduly difficult
to achieve the desired results by means of a specialised chamber
should a new separate court be considered. A new court would take
a long time to set up. If it were set up on lines similar to the
CFI, which would facilitate its establishment, there would be
little point in it being separate.
2.3 Clearly, the workload of the CFI would
be reduced, and its remaining cases speeded up, if some of its
present cases were handed over to judicial panels, provided of
course that only a modest proportion of the cases in question
were appealed to the CFI. This reform should be urgently considered,
for cases other than competition cases.
2.4 Another way of altering the ratio of
CFI judges to cases would, of course, be to increase the number
of members of the CFI. This may be desirable and indeed necessary,
but would not be sufficient.
2.5 There does not seem to be any objection
of principle to setting up a chamber of the CFI which would specialise
in competition cases and which would decide them in accordance
with a modified version of the Rules of Procedure of the CFI.
No fundamental difficulty has arisen as a result of having special
rules for "expedited procedures" in the CFI or in the
Court of Justice. Further changes in the Rules, or in the practice
of the CFI, could be made to facilitate handling of competition
cases. Similar approaches have been successfully used at national
level, eg, the Competition Appeal Tribunal (CAT) in the United
Kingdom. We therefore recommend this approach.
2.6 One possibility is to impose mandatory
time limits for judgments under the specialised rules. We do not
recommend this, for several reasons. It would clearly not be a
sufficient solution. It would have to be combined with stricter
limits on pleadings and shorter deadlines for companies, with
a solution to the translation problem, and with stricter case
management. If these measures were taken, as we suggest, mandatory
time limits would be unnecessary. In any case, mandatory time
limits are undesirable, since their only effect is to leave insufficient
time for what may be the most important and difficult part of
the proceedings.
2.7 It does not appear to us that lawyers
who have persuaded the CFI to use the expedited procedure have
reduced either the number or the complexity of their arguments
as much as they might have done, or that the CFI has insisted
on such reductions as much as it could have insisted. The sanctions
for excessively long pleadings—reduced costs awards—are
also unlikely to be effective in most cases, particularly because
the Commission anyway does not refund successful applicants' reasonable
lawyers' fees. What is needed is stricter case management, rather
than changes in the Rules of Procedure, something which has worked
effectively for the CAT (where appeals from OFT decisions are
often determined in three to six months). It does not seem unreasonable
to say that an applicant's lawyer who is asking for an expedited
procedure should be obliged to make only a small number of arguments.
This would no doubt oblige him or her to choose the strongest
arguments, which is desirable anyway, and if for some reason a
large number of arguments are thought necessary, an expedited
procedure can be refused.
2.8 Reducing the number of arguments would
be insufficient unless the court also was more strict on the length
of pleadings, the length and number of annexes, and the number
of suggested witnesses. Again, this would mean more active and
stricter case management, rather than changes in the Rules of
Procedure.
2.9 It is well known that much of the time
taken by the CFI is due to the need, in many cases, to translate
pleadings. We believe that this problem must be faced, however
politically sensitive or controversial it may be. We therefore
suggest that, at least in cases in which an expedited procedure
is requested, 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.
This is our most important recommendation. We
recognise that it is the most controversial one. But similar things
have been done, eg, with the Community Trademark Office in Alicante,
which uses English, German, French, Spanish, and Italian as principal
languages, while allowing for the use of other languages in limited
circumstances.
We also suggest that applicants should be allowed,
but not required, to submit their own translations of their written
pleadings to the Court.
2.10 Another change in the practice of the
CFI would be less necessary if our proposals for reduced numbers
of arguments and for avoiding unnecessary translations were accepted,
but we think it would be useful in any event. 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.
2.11 The effect of the proposals made above
would be to place much of the responsibility on the lawyers for
applicants to reduce and shorten the procedure. This is appropriate
when expedited procedures are requested, and this will be done
most often, and will be most likely to be justified, in Merger
Regulation cases. Provided that all of the reforms that we propose
are made applicable to merger cases, we do not think that it is
either necessary or desirable to limit them to those cases. There
may well be other competition cases from time to time in which
judgments are urgently needed and in which the lawyers would be
willing to reduce their arguments in order to obtain them. We
see no reason why the benefit of the reforms that we propose should
be confined to merger cases, even if they are particularly necessary
in those cases.
2.12 If it is understood, as it certainly
would be, that the purpose of the changes in the Rules and practice
which we suggest here was to speed up judgments in at least some
competition cases, we believe that it should be acceptable for
some of the members of the CFI to sit more frequently in cases
of this kind. We accept that there are advantages in having such
cases decided by judges with experience in competition law. We
certainly do not think it is necessary to set up a formally separate
court merely to obtain these advantages. We do not consider that
the unquestioned formal equality among judges of the CFI would
be put into doubt if it was understood that some of the judges
would sit more frequently than others in competition cases being
dealt with by the expedited procedure.
2.13 Of course, 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.
2.14 Another change which has been suggested
would allow the Court of First Instance, 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.
This would involve an amendment of the existing
Merger Regulation. More important, in some cases it would give
the CFI a new and different kind of task, unlike its normal role.
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.
A reasonable compromise would be to allow the
CFI to adopt a final decision, in cases in which the CFI considered
that it could satisfactorily do so, but to allow the case to be
referred back to the Commission if that was thought necessary.
Presumably the case would be sent back if the CFI thought that
the circumstances had substantially altered, or if a new investigation
was needed for some other reason. The CFI would decide the case
definitively if it considered that it could do so by making relatively
simple changes in, or additions to, the Commission's decision.
The CFI could then judge in each case whether its judicial role
enabled it to adopt a satisfactory final decision without a new
administrative investigation.
Comments
2.15 Having a specialised procedure (essentially
a modified version of the existing expedited procedure) rather
than a separate court would provide flexibility in the allocation
of the work of the judges. Whether this led to setting up a de
facto specialised chamber of the CFI seems to us to be less
important than the practical result. Presumably, if the volume
of cases which it was necessary or appropriate to deal with in
this way, the result would be one or more specialised chambers.
We recognise that these proposals would involve
some modification of the existing practice for allocating cases
between chambers. When a case is filed, a decision would need
to be taken as soon as possible whether the case should be given
to a chamber of specialised judges, and the allocation of the
case would be made before the chamber responsible could decide
whether an expedited procedure was necessary or appropriate. However,
there would be no doubt about whether the case was a competition
law case, and no doubt about whether the applicant was seeking
an expedited procedure. So the case could be allocated to a suitable
chamber, which could then decide how it should be dealt with.
3. PART 3: REPLIES
TO THE
QUESTIONS ASKED
IN THE
CALL FOR
EVIDENCE
3.1 Need for action at union level
No EU Competition Court is needed, even for
Merger Regulation cases.
3.2 Reform of the CFI
Changes in the rules and procedures of the CFI
would be preferable. These should include more active case management
in expedited procedure cases, and the allocation of competition
cases in which expedited procedures are requested, as far as possible,
to chambers of judges with experience in competition cases and
who are able to hear and decide the case in the language in which
the application to the CFI is written. This would eliminate the
need for translation.
3.3 Jurisdiction of the Competition Court
Any new chamber or court should not be a "judicial
panel", because that would introduce a fourth level of procedures.
It would also be difficult to get suitably qualified judges at
a level below the CFI. It is true that the problem of delay is
most acute in merger cases, but a judicial panel would offer no
advantages in comparison with a specialised chamber of the CFI.
3.4 Composition of the Competition Court
Judges in a specialised court or chamber should
have experience in competition law and be able to hear and decide
competition cases in French, English and if possible also in German,
Italian and Spanish.
We see no advantages in national competition
law judges being seconded ad hoc to a competition court
(or a specialised chamber of the CFI).
We see no reason why economists or accountants
should not be appointed to a panel, to act as advisers to the
court for the purpose of particular cases, when that was thought
necessary.
3.5 Appeals from the Competition Court
If a specialised chamber of the CFI was set
up for merger and other competition cases, appeals (on points
of law) would go to the Court of Justice as usual.
3.6 Future role of CFI
There are arguments for having Article 234 questions
from national courts in competition cases (and indeed in other
kinds of cases) sent to the CFI, as the CFI deals with more competition
cases than the Court of Justice.
However, Article 234 questions can only be on
questions of law, so the CFI's greater experience in dealing with
questions of fact and economic assessments would have little relevance.
Also, this would be unsatisfactory if there
were frequently appeals to the Court of Justice. In addition,
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.
25 October 2006
89 Cleary Gottlieb Steen and Hamilton LLP, Brussels
and London; Professor, Trinity College, Dublin; Visiting Senior
Research Fellow, Oxford. Back
90
Cleary Gottlieb Steen and Hamilton LLP, Brussels. Back
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