Competition – Administrative procedure – Decision ordering an inspection

Judgment

T-402/13

25.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Action for annulment

Orange

v

Commission

General Court

4th Ch.

M. Prek

/

Competition – Dawn-raids

Keywords

Competition – Administrative procedure – Decision ordering an inspection – Proportionality – Appropriateness – Necessity – Absence of arbitrary character – Reasoning

Significant points

In this appeal by Orange against two Commission decisions ordering inspections of the former’s premises, the General Court has confirmed the validity of the Commission’s inspection decisions. The General Court has stated that, even though the French competition authority had investigated and rejected similar allegations of infringement, the Commission was entitled to launch its own investigation as the latter isn’t bound by decisions of a national court or national authority under Articles 101 and 102 TFEU.Furthermore, the General Court emphasised that the Commission was entitled in its investigation to conduct inspections rather than first review the information voluntarily submitted by Orange to the French competition authority. This was because, despite the possibility under Regulation No. 1/2003 for the Commission to use information gathered by a national competition authority looking at the same infringement, the French authority had not conducted any inspections itself and the type of information for which the Commission was searching could not have been provided voluntarily by Orange to the national authority.

Lastly, the information at the Commission’s disposal when adopting the inspection decisions to be sufficiently reliable that the Commission’s decision to conduct inspections was not arbitrary, as shown by the precise and detailed terms of the inspection decisions themselves.

 

Noteworthy

 The lack of prior consultation by the EU Commission of the data at the disposal of the national authority seems contrary to the spirit of Regulation No. 1/2003, which encourages co-operation and the exchange of information between the Commission and national competition authorities and to the principle of proportionality. On this last point, it is noteworthy that the powers of the ECB to request information from credit institutions under the Single Supervisory Mechanism Regulation are subject to an obligation to first consult information already made available to national competition authorities.

Supervision of credit institutions and investment firms

Conclusions

C-507/13

20.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Action for annulment

United Kingdom of Great Britain and Northern IrelandVEuropean Parliament and Council of the European Union

CJEU

N. Jääskinen

EU Banking & Financial Law

Key-words

 Supervision of credit institutions and investment firms – Action for annulment – Directive 2013/36/EU (“CRD 4”) – Articles 94(1)(g) and 94(2) and Article 162(1) and (3) – Setting of ratios between the fixed and variable components of the remuneration payable to employees of credit institutions and investment firms whose professional activities have a material impact on the institution’s risk profile – Regulation 575/2013 – Articles 450(1)(d)(i) and (j) and 521(2) – Disclosure of certain information appertaining to remuneration – Choice of legal basis – Social policy – Principles of proportionality, subsidiarity and legal certainty – Ultra vires – Protection of personal data – Customary international law – Extra-territorial effect of Article 94(1)(g) of Directive 2013/36/EU

Summary

  1. Regarding the legal basis, given that the variable component of remuneration impacts directly on the risk profile of financial institutions, it can affect the stability of financial institutions who can operate freely across the EU, and in consequence that of the financial markets of the EU. As such, the measures challenged by the UK are related to the conditions of access to and pursuit of activities of financial institutions in the internal market and are lawfully based on Article 53 (1) TFEU.
  2. While the determination of the level of pay is unquestionably a matter for the Member States (social policy), fixing the ratio of variable remuneration to basic salaries does not equate to a “cap on bankers bonuses”, or fixing the level of pay, because there is no limit imposed on the basic salaries that the bonuses are pegged against.
  3. The disclosure of the total remuneration for each member of management is not mandatory but rather a discretionary power conferred on Member States. In addition, when considering any demand for such information, Member States would be legally bound to comply with EU data protection legislation and the financial institution may of course challenge the legality of any such decision before the appropriate judicial authority.
  4. On the issue of whether the conferral of powers on the EBA is illegal, Advocate General Jääskinen notes that the EBA is merely empowered to elaborate non-binding draft measures which cannot pass into law unless then adopted by the Commission and are therefore incapable of affecting the rights and obligations of the individuals concerned. As a consequence, this delegation of power to the EBA is valid. In addition, the powers delegated to the Commission and to the EBA by the directive only relate to non-essential technical elements, the strategic and political choices having been taken in the basic legislative act.
  5. As to the UK’s contention that the principle of legal certainty is violated by the fact that the provisions apply to employment contracts concluded before the entry into force of the directive, the Advocate General retorts that the financial institutions received notice of further legislation on remuneration well in advance of the transposition dates contained in the directive. Combined with the wide media attention surrounding this issue and the publication of the directive in the Official Journal in June 2013, the Advocate General concludes that the measures would have been well known and prepared for by the time they took effect at the beginning of 2014.
  6. Advocate General Jääskinen finds no legitimate grounds for the UK’s claim that the contested provisions infringe the principles of proportionality and subsidiarity, affirming that the objective of creating a uniform regulatory framework of risk management could not have been better achieved by national governments as opposed to the EU.
  7. Finally, in  AG’s opinion an EU legislative measure can not be invalid simply because it has effects on conduct in territory located outside of the EU. In AG’s opinion, the United Kingdom would simply be wrong if it sought to claim that only territorial jurisdiction to legislate is permitted under international law. On the other hand, if it were to accept, which appears to be the case, the personality principle and even the effects doctrine as alternative bases for jurisdiction, it has failed to demonstrate that international law requires something more specific in terms of a ‘sufficient nexus’, and that this requirement was unfulfilled by the contested provision in the CRD IV Directive.

Noteworthy

Following the delivery of these conclusions, United Kingdom of Great Britain and Northern Ireland has dropped back its action for annulment.

Approximation of laws on animal health

Judgment

C-443/13

13.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Reference for a preliminary ruling

Ute Reindl

v

Bezirkshauptmannschaft Innsbruck

 CJEU

 4th Chamber

L. Bay Larsen

M. Szpunar

Laws on animal health

Key-words

Approximation of laws on animal health — Regulation (EC) No 2073/2005 — Annex I — Microbiological criteria applicable to foodstuffs — Salmonella in fresh poultry meat — Failure to comply with microbiological criteria found at the distribution stage — National legislation imposing a penalty on a food business operator active only at the stage of retail sale — Compatibility with EU law — Effective, dissuasive and proportionate nature of the penalty

Summary

1. It follows from its wording (concept of products placed on the market during their shelf-life) and the objective of food law to attain a high level of protection of public health that fresh poultry meat from the animal populations listed in Annex I to Regulation (EC) No 2160/2003 of the European Parliament and of the Council on the control of salmonella and other specified food-borne zoonotic agents must satisfy the microbiological criteria indicated in Annex I, Chapter I, Row l.28 of Commission Regulation (EC) No 2073/2005, at all stages of distribution including the retail sale stage.2. EU law must be interpreted as meaning that, in principle, it does not preclude national law, which imposes a penalty on a food business operator which is active only at the distribution stage for placing foodstuff on the market, on account of any failure to comply with the microbiological criteria laid down in Annex I, Chapter I, Row 1.28 of Regulation No 2073/2005.Legislation, such as that at issue in the main proceedings, which provides for a fine if food stuffs unfit for human consumption are placed on the market, may help to attain the fundamental objective of food law, that is, a high level of protection of human health.Even if the system of penalties in the case in the main proceedings is a system of strict liability, it must be recalled that, according to the case law of the Court, such a system is not, in itself, disproportionate to the objectives pursued, if that system is such as to encourage the persons concerned to comply with the provisions of a regulation and where the objective pursued is a matter of public interest which may justify the introduction of such a system.

It is up to the national court to determine whether the penalty at issue in the main proceedings observes the principle of proportionality referred to in Article 17(2) of Regulation No 178/2002.

Noteworthy

TFEU and EEA Agreement

Judgment

C-112/14

13.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Appeal

European Commission v United Kingdom of Great Britain and Norhern Ireland

CJEU

8th Chamber

E. Jarašiūnas

P. Mengozzi

TFEU and EEA Agreement – Action for failure to fulfil obligations

Key-words

Free movement of capital — Articles 49 TFEU and 63 TFEU – Articles 31 and 40 of the EEA Agreement – National tax legislation — Attribution of gains to participators in close companies — Different treatment of resident and non-resident companies — Wholly artificial constructions — Proportionality

Summary

 In so far as that legislation is such as, first, to discourage residents of the United Kingdom, whether natural or legal persons, from contributing their capital to non-resident close companies and, secondly, to impede the possibility of such a company attracting capital from the United Kingdom, it constitutes a restriction of the free movement of capital, which is prohibited in principle by Article 63 TFEU.A national measure restricting the free movement of capital may thus be justified where it specifically targets wholly artificial arrangements which do not reflect economic reality and whose sole purpose is to avoid the tax normally payable on the profits generated by activities carried out on national territory (judgment in Itelcar, C‑282/12, EU:C:2013:629, paragraph 34 and the case-law cited).

It is clear, however, that the legislation at hand is not confined specifically to targeting wholly artificial arrangements which do not reflect economic reality and are carried out for tax purposes alone, but also affects conduct whose economic reality cannot be disputed. Furthermore, it does not allow the taxpayer concerned to provide evidence to show the economic reality of his participation in the company in question.

In addition, since it is common ground that the legislation at hand applies also to companies resident in a Member State of EFTA which is party to the EEA Agreement, and in so far as the provisions of Article 40 of the EEA Agreement have the same legal scope as the substantially identical provisions of Article 63 TFEU (judgments in Commission v Belgium, EU:C:2012:670, paragraph 88 and the case-law cited, and Commission v Finland, EU:C:2012:688, paragraph 53 and the case-law cited), all the foregoing considerations may, in circumstances such as those in the present case, be transposed mutatis mutandis to Article 40 of the EEA Agreement.

Noteworthy

Directive 2004/39/EC (MiFID)

Judgment

C-140/13

12.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Appeal

Annett Altmann, Torsten Altmann, Hans Abel, Waltraud Apitzsch, Uwe Apitzsch, Simone Arnold, Barbara Assheuer, Ingeborg Aubele, Karl-Heinz AubeleV

Bundesanstalt für Finanzdienstleistungsaufsicht

CJEU

2nd Chamber

J.L. da Cruz Vilaça

N. Jääskinen

EU Banking & Financial Law — MiFID

Key-words

 Directive 2004/39/EC (MiFID) — Article 54 — Obligation of professional secrecy incumbent on national financial supervisory authorities — Information concerning a fraudulent investment firm in compulsory liquidation

Summary

Article 54(1) and (2) of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments (MiFID) must be interpreted as meaning that, in administrative proceedings, a national supervisory authority may rely on the obligation to maintain professional secrecy against a person who, in a case not covered by criminal law and not in a civil or commercial proceedings, requests it to grant access to information concerning an investment firm which is in judicial liquidation, even where that firm’s main business model involved large scale fraud and the wilful harming of investors’ interests and several executives of that firm have been sentenced to terms of imprisonment.As a matter of law, the effective monitoring of the activities of investment firms, through supervision within a Member State and the exchanging of information by the competent authorities of several Member States, requires that both the firms monitored and the competent authorities can be sure that the confidential information provided will, in principle, remain confidential.

The sole specific cases in which the general prohibition on divulging confidential information covered by professional secrecy does not preclude its transmission or use are set out in detail in Article 54 of Directive 2004/39.

Therefore, as regards information concerning investment firms declared bankrupt or being compulsorily wound up, such as that at issue in the main proceedings, the obligation to maintain professional secrecy may be disregarded, without prejudice to cases covered by criminal law, only where the three conditions referred to in Article 54 (2) — namely that the confidential information must not concern third parties, that such information is divulged in civil or commercial proceedings and that such information is necessary for carrying out such proceedings — are fulfilled.

In the case at hand, it does not appear from the order for reference that the dispute in the main proceedings, which concerns an administrative procedure relating to a request for access to information and documents held by a national supervisory authority on the basis of the IFG, is covered by criminal law, since that request was submitted after the criminal convictions of Phoenix’s executives, or that it is made in the course of civil or commercial proceedings brought by the applicants in the main proceedings.

Noteworthy

Dura lex, sed lex.The CJEU has adopted an approach which is stricter than in competition law private enforcement (cf. case Donau C-536/11). Accordingly, the applicants must take care to make their request for access to information in the course of civil or commercial proceedings, a notion likely to be clarified in future judgments.

Agreements, decisions and concerted practices — Market for flat glass in the European Economic Area (EEA)

Judgment

C-580/12 P

12.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Appeal

Guardian Industries Corporation and Guardian Europe Sarl

v

Commission

CJEU

3rd Chamber

C.G. Fernlund

M. Wathelet

Appeal  Agreements, decisions and concerted practices

Key-words

Appeal — Agreements, decisions and concerted practices — Market for flat glass in the European Economic Area (EEA) — Price-fixing — Calculation of the amount of the fine — Inclusion of an undertaking’s internal sales

Summary

In order to determine the amount of the fine to be imposed on an undertaking, the proportion of the overall turnover deriving from the sale of products in respect of which the infringement was committed is the best means to reflect the economic importance of that infringement and the relative weight of that undertaking in it. As regards such sales, a distinction therefore need not be drawn between external and internal sales. Excluding a company’s internal sales would effectively favour vertically integrated companies by reducing their relative weight in the infringement to the detriment of other companies, on the basis of a criterion which has no connection with the objective pursued (namely that of reflecting the economic importance of the infringement and the relative weight of each of the undertakings which took part in it).The Court has therefore decided to reduce the amount of the fine imposed on Guardian by 30% and to set that fine at €103.6 million.

Noteworthy

A judgment which has as the effect of improving the internal coherence of the EU Commission 2006 Guidelines on the calculation of the amount of fines for the infringement of EU antritrust provisions and therefore to limit the (rather considerable) room for assessment of the EU Commission in this respect. It also contributes to more equality between vertically integrated and non-integrated firms and as a result is in line with the principle of neutrality of European law with respect to the manner in which companies structure and design their business.

State Aid – ES – Tax – Selectivity

Judgment

T-219/10

T-399/11

07.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Actions for annulment

Autogrill España
(T-219/10)

Banco Santander and Santusa
(T-399/10)

v.

European Commission

CJEU

2nd Ch., extended composition

S. Gervasoni

/

State aid

Key-words

State aid – Tax regime allowing for the deduction of shareholdings in foreign companies – Notion of state aid – Selectivity – Identification of a category of undertakings advantaged by the measure – Absence

Summary

  1. The existence of a derogation from or an exception to a reference framework does not in itself establish that a measure is selective, provided that this measure is available, a priori, to any undertaking.
  2. A tax regime which is not aimed at any particular category of undertaking or the production of goods, but a category of economic transactions does not constitute a state aid provided it does not preclude, a priori, any category of undertaking from taking advantage of it, for example on the basis of its activity.
  3. A finding of the selectivity of a measure – especially a tax measure – must be based, inter alia, on a difference in treatment between categories of undertakings under the legislation of the same Member State, that is to say, either on an exclusion of one or several categories of undertakings or on the identification of a peculiar category of undertakings presenting specific features.

Noteworthy

After the Judgment C-6/12, P Oy, of the CJEU (18 July 2013), relating to the notion of discretionary power of the administration, the condition of selectivity is construed rigorously once again by the General Court. In doing so, the EU Courts put limits on the increasing attempts of the EU Commission to interpret (too) widely the notion of state aid, especially in direct taxation matters, which remains under the exclusive competence of the Member States.

Public procurement — Principles of equal treatment and transparency

Judgment

C-42/13

6.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Appeal

Cartiera dell’Adda SpA v CEM Ambiente SpA

CJEU

10th Chamber

C. Vajda

P. Cruz Villalón

 Public procurement

Key-words

Public procurement — Principles of equal treatment and transparency – Directive 2004/18/EC — Grounds for excluding a tenderer from participating — Article 45 — The personal situation of the candidate or tenderer — Compulsory statement concerning the person designated as ‘technical director’ — Statement not included with the tender — Exclusion from the contract without any possibility of remedying that omission

Summary

 Article 45 of Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, read in conjunction with Article 2 of the directive, and the principle of equal treatment and the obligation of transparency must be interpreted as not precluding the exclusion of an economic operator from a procurement procedure on the grounds that the operator has failed to comply with the requirement laid down in the contract documentation to annex to his bid, on pain of exclusion, a statement to the effect that the person designated in the bid as the operator’s technical director has not been the subject of criminal proceedings or a conviction, even where, at a date after the expiry of the deadline for submitting bids, such a statement has been provided to the contracting authority or it is shown that the person in question has been identified as the technical director in error.First, the principle of equal treatment requires tenderers to be afforded equality of opportunity when formulating their bids, which therefore implies that the bids of all tenderers must be subject to the same conditions. Second, the obligation of transparency is intended to preclude any risk of favouritism or arbitrariness on the part of the contracting authority. It implies that all the conditions and detailed rules of the award procedure must be drawn up in a clear, precise and unequivocal manner in the contract notice or specifications ensuring that, first, all reasonably informed tenderers exercising ordinary care can understand their exact significance and interpret them in the same way and, second, that the contracting authority is able to ascertain whether the bids submitted satisfy the criteria applying to the contract in question (see, to that effect, judgment in Commission v CAS Succhi di frutta, C‑496/99 P, EU:C:2004:236, paragraphs 108 to 111).

In particular, in so far as the contracting authority takes the view that that omission is not a purely formal irregularity, it cannot allow the tenderer subsequently to remedy the omission in any way after the expiry of the deadline for submitting bids.

Furthermore, in such circumstances, Article 51 of Directive 2004/18, which provides that the contracting authority may invite operators to supplement or clarify the certificates and documents submitted pursuant to Articles 45 to 50 of the directive, cannot be interpreted as permitting such authority to accept any rectification of omissions which, as expressly provided for in the contract documentation, must result in the exclusion of the bid.

Noteworthy

 A rigourous construction of the Directive 2004/18 in the light of the principles of equal treatment and transparency.

State aid — Aid to support the deployment of next generation broadband networks in the Cornwall and Isles of Scilly region

Judgment

C-362/10

5.11.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Appeal

Vtesse Networks Ltd v European Commission

CJEU

9th Chamber

A. Popescu

/

State aid —

Procedural rights of the plaintiff

Key-words

State aid — Aid to support the deployment of next generation broadband networks in the Cornwall and Isles of Scilly region — Decision declaring the aid compatible with the internal market — Article 107(3)(c) TFEU — Action for annulment —Locus standi — No substantial effect on the competitive position— Procedural rights of the interested parties — Partial inadmissibility — No doubts which justify initiating the formal investigation procedure

Summary

The mere fact that a measure may have an influence on the competitive relationships existing on the relevant market and that the undertaking concerned was in a competitive relationship with the addressee of a measure cannot in any way suffice to show that its circumstances distinguish it in a similar way from the undertaking in receipt of the aid enabling such undertaking to be regarded as being individually concerned by that measure and thus to be empowered to challenge it (see Case C-487/06 P British Aggregates v Commission, paragraph 47).Notably, the existence of a substantial effect on the applicant’s position on the market does not depend directly on the amount of the aid, but on the significance of the adverse effect which that aid may have on that position.

It cannot be inferred solely from the applicant’s participation in the administrative procedure that the notified measure was likely to substantially affect its position on the market (see, to that effect, Case C‑260/05 P Sniace v Commission [2007] ECR I‑10005, paragraph 60).

By contrast, being a competitor of the beneficiary of the measure, the applicant has standing to bring proceedings against the contested decision in so far as, by its action, it seeks to safeguard its procedural right (i.e. the decision not to initiate the formal proceedings).

The applicant does not have the right to be in a position to submit its observations on the information sent by the concerned Member States in the course of the preliminary investigation. The obligation imposed on the Commission to give the parties concerned notice to submit their comments comes into being upon the adoption of a decision to initiate the formal investigation procedure, the object of which is to enable the Commission to be fully informed of all the facts of the case.

The procedure for reviewing State aid is, in view of its general scheme, a procedure initiated in respect of the Member State responsible, in the light of its EU law obligations, for granting the aid. Under that procedure, interested parties other than the Member State concerned essentially fulfill the role of sources of information for the Commission and, in that regard, they cannot themselves lay claim to an exchange of arguments with the Commission such as that initiated in regard to that Member State. Interested parties other than the Member State concerned only have the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case (see, to that effect, Case T‑442/03 SIC v Commission [2008] ECR II‑1161, paragraph 222, and Case T‑62/08 ThyssenKrupp Acciai Speciali Terni v Commission [2010] ECR II‑3229, paragraphs 161 and 162).

Lastly, it must also be pointed out that the Court cannot, on the basis of general principles of EU law, such as the right to be heard or sound administration, extend the procedural rights which the Treaty and secondary legislation confer on interested parties in procedures for reviewing State aid. Nor does the fact that the applicant has legal standing to bring an action against the contested decision permit the Court to do so (see, to that effect, Case T-62/08, ThyssenKrupp Acciai Speciali Terni v Commission, paragraph 167).

 

Noteworthy

Judgment excessively long and repetitive.

In addition, lack of coherence between, on the one hand, the drawing of a distinction of principle between the locus standi of a competitor in so far as it challenges a decision to close the preliminary investigation as such or in so far as the latter implies the refusal to initiate the formal procedure and, on the other hand, its application in the present case – and contentious statement on the inability to extend fundamental rights in state aid proceedings on the basis of the general principles of EU Law.