EU Law Blog

Antitrust Fines, Due Process and the ECHR

Over at the highly recommended ECHR Blog, there's an excellent post on EU antitrust fines and ECHR fair trial rights.

The author of the post, Felix Ronkes Agerbeek, is an eminent lawyer, who works in the Commission's presitigious legal service, and who marshals his arguments very carefully.

He makes a telling point: The case law of the European Court of Human Rights on Article 6 of the ECHR is unclear and imprecise when it comes to transposing it to the Commission's antitrust procedure. He draws the following general conclusion:

"One thing is clear, though. The simple fact that Article 6[ECHR] applies does not prevent the adoption of sanctions by an administrative body. On the contrary, according to the case-law it is perfectly acceptable that certain sanctions are imposed by way of an administrative decision."

There's no doubt that he's right about that. But the procedure used by the Commission's DG Competition may need a few modifications all the same. For example, the European Court of Human Right's judgment in Dubus SA v. France may require a reorganization of that department in order to separate the investigative and adjudicative roles currently exercised by the same people. We'll see what the General Court makes of that judgment in the case pending before it in Case T-56/09 Saint Gobain Glass France and Others v. Commission.

For our post on the Dubus case see here.

And as a commentator pointed out on the ECHR Blog, the General Court's caselaw on ne bis in idem may need revisiting in the light of the European Court of Human Right's recent judgment in Sergey Zolotukhin v. Russia. As it happens, the Court of Justice itself has the opportunity to do just that and to align the EU case law with that of the European Court of Human Rights in the pending case C-17/10 Toshiba Coroporation and others v. v Úřad pro ochranu hospodářské soutěže. Again, we'll have to wait and see what happens.

We're very grateful to Mr. Ronkes Agerbeek for having started an interesting and worthwhile debate in blogosphere with such a thoughtful and interesting post.

Consumer Collective Redress: Comments of EESC

The European Economic and Social Committee has published an interesting opinion on the Commission's Green Paper on Consumer Collective Redress (or class actions, to call it by another name).

For a brief explanation of what a Green Paper is, see here, and here's a list of all the Green Papers published to date.

The opinion supports the idea that collective redress should be introduced into EU legislation by means of a directive.

On the other hand, the EESC wishes to avoid the introduction of US-style class actions and states:

"Any EU legal measure adopted should reflect European cultural and legal traditions, have compensation as its only goal and establish a fair balance between parties leading to a system that safeguards the interests of society as a whole. The Com­mittee fully supports the Commission’s suggestion that whichever measure is adopted to institute a judicial collec­tive redress mechanism in all Member States ‘should avoid elements which are said to encourage a litigation culture such as is said to exist in some non-European countries, such as punitive damages, contingency fees and other elements’.

Also the EESC prefers an opt-in system to collective action to an opt-out system.

The opinion makes interesting reading and contains a wealth of references on EU consumer law.

Meanwhile, the Commission's work on collective redress and damages for antitrust violations is not progressing much. You can find documents on that here and the EESC's opinion of 2006 here.

Data Privacy, Independence of National Supervisory Authorities and Scrutiny: Case C-518/07

We need to catch up on some juicy judgments!

A while back, the Court of Justice declared in Case C-518/07 Commission v. Germany that Germany had breached Article 28 §1 of Directive 95/46/EC on data protection because the authorities it had established to monitor the processing of personal data were subject to state scrutiny and thus were not completely independent as required by that provision.

The judgment is a bit of a surprise.

Article 28 of Directive 95/46, entitled ‘Supervisory authority’, provides:

‘(1) Each Member State shall provide that one or more public authorities are responsible for monitoring the application within its territory of the provisions adopted by the Member States pursuant to this Directive.
These authorities shall act with complete independence in exercising the functions entrusted to them.

While German law makes a distinction depending on whether or not data processing is carried out by public bodies, it provides that all the authorities responsible for monitoring the application of the Directive are subject to some kind of scrutiny or other by Federal or State bodies.

The Commission considered that subjecting those authorities to State scrutiny was contrary to Article 28 §1 of the Directive. It considered that the requirement that the supervisory authorities exercise their functions ‘with complete independence’ must be interpreted as meaning that a supervising authority must be free from any influence, whether that influence is exercised by other authorities or outside the administration. Germany on the other hand disagreed with the Commission and considered that Article 28 §1 of Directive 95/46 requires the supervisory authorities to have functional independence only: Those authorities must be independent of bodies outside the public sector which are under their supervision and that they must not be exposed to external influences.

The Court held in favor of the Commission.

It held that contrary to what Germany submitted, there is nothing to indicate that the requirement of independence concerns exclusively the relationship between the supervisory authorities and the bodies subject to that supervision. On the contrary, it found that the concept of ‘independence’ is complemented by the adjective ‘complete’, which implies a decision-making power independent of any direct or indirect external influence on the supervisory authority.

The Court also held that the supervisory authorities provided for in Article 28 of Directive 95/46 are the guardians of the fundamental rights and freedoms in respect of data privacy. In order to guarantee that protection, the supervisory authorities must ensure a fair balance between, on the one hand, observance of the fundamental right to private life and, on the other hand, the interests requiring free movement of personal data. The guarantee of the independence of national supervisory authorities is intended to ensure the effectiveness and reliability of the supervision of compliance with the provisions on protection of individuals with regard to the processing of personal data. It was established not to grant a special status to those authorities themselves as well as their agents, but in order to strengthen the protection of individuals and bodies affected by their decisions. It follows that, when carrying out their duties, the supervisory authorities must act objectively and impartially. For that purpose, they must remain free from any external influence, including the direct or indirect influence of the State or the Länder, and not of the influence only of the supervised bodies.

Amendment to the Lisbon Treaty: Protocol N° 36 on Number of MEPs

There's a proposal to amend the Lisbon Treaty and its Protocol n° 36 already!

It concerns the number of Members of the European Parliament (MEPs). At present there are 736 members. When the European elections were last held, in June 2009, the Treaty of Lisbon was not yet in force and thus those elections had to take place according to the rules in force at the time and that meant having 736 members. Article 14 §2 TEU, as introduced by the Lisbon Treaty, provides that there will be 750 members plus the President, with a maximum of 96 members per member State.

At its meeting on December 11 and 12, 2008 the European Council declared (at page 14) that in the event of the Treaty of Lisbon only entering into force after the European elections in June 2009, transitional measures would be adopted as soon as possible in order to increase the number of MEPs until the end of the 2009-2014 legislative period, in accordance with the numbers agreed at the time of the Intergovernmental Conference 2007. The declaration explicitly states that the total number of MEPs will rise from 736 to 754 until the end of the 2009-2014 legislative period. It also states that the modification should enter into force, if possible, in 2010.

Consequently, Spain has proposed to the Council, under the procedure for amendment of the Treaty set out in Article 48 §2 TEU, to revise the Treaty to increase the number of MEPs by 18 bringing the total to 754 until the end of the 2009-2014 parliamentary term. According to that procedure, it is possible to amend the Treaty without convening a full-blown Convention and simply convene a conference of the representatives of the member States.

According to the Spanish procedure, the number of seat in the European Parliament will be increased as follows:
- Bulgaria, Italy, Latvia, Malta, the Netherlands, Poland, Slovenia and the United Kingdom get one more MEP each;

- France, Austria and Sweden get two extra MEPs each,

- and Spain gets four extra.

The proposal, if adopted, aims to enter into force in December 1st 2010. It sets out how the extra MEPs should be selected:
(a) either in ad hoc elections by direct universal suffrage in the member State concerned, in accordance with the provisions applicable for elections to the European Parliament;

(b) or by reference to the results of the European elections from June 4 to 7 2009;

(c) or by designation by the national parliament of the Member State concerned from among its members of the requisite number of members, according to the procedure determined by each of those ember States.

The Parliament's Committee on Constitutional Affairs adopted a report on April 12 2010 approving the Spanish proposal.

The Commission has recently given its favorable opinion - COM (2010) 189 final - on the Spanish proposal pursuant to Article 48 §3 TEU.

We'll see what happens in the end.

Freezing of Terrorist Funds, Social Assistance to Spouses and Interpretation of EU Law: Case C-340/08

The Court of Justice recently narrowed the scope of EU measures taken to freeze the funds of designated terrorist organizations in Case C-340/08 M v. Others.

The Council adopted Regulation (EC) No 881/2002 of May 27th 2002 imposing certain specific restrictive measures directed against certain persons and entities associated with Usama bin Laden, the Al-Qaeda network and the Taliban in order to implement UN Security Council Resolution 1390 (2002). That Resolution required all countries to:

"Freeze without delay the funds and other financial assets or economic resources of these individuals, groups, undertakings and entities, including funds derived from property owned or controlled directly or indirectly, by them or by persons acting on their behalf or at their direction, and ensure that neither these nor any other funds, financial assets or economic resources are made available, directly or indirectly for such persons’ benefit, or by their nationals or by persons within their territory”.

The United Kingdom interpreted the "on their behalf" requirement strictly by withholding payment of social security and other entitlements to the spouses of individuals designated by the UN Al Qaeda and Taliban Sanctions Committee. The UK regulations issued required that such benefit payments could be paid to terrorist spouses only if they applied for a license granting such payments, and then only to a bank account held in the name of the spouse. Payments would be made in limited amounts calculated to cover each member of the household except the designated individual.

“M”, who purports to be the spouse of a designated individual challenged the British measures measures in the English courts and the House of Lords referred the case to the Court of Justice which asked a question on the scope of Article 2 of Regulation 881/2002 and in particular whether that provision requires the freezing of funds in the form of social security paid to spouses of designated persons who will or may use the money to pay for goods and services which the designated person will consume or benefit from.

The Court of Justice held that the British measures were too strict and that member States are not required by Article 2 of Regulation 881/2002 to freeze payments to spouses on the grounds only that the spouse lives with the designated person and that person may or will use some of those payments to pay for goods or services which he will consume or benefit from.

The Court noted that the different language versions of Regulation 881/2002 diverged: Support for the UK's interpretation of Article 2 to include making funds available indirectly for the benefit of a designated person could be found in the English, Hungarian, Dutch, Finnish and Swedish versions. On the other hand, the Spanish, French, Portuguese and Romanian versions were different. And the German and Italian versions were different again.

Consequently, the Court recalled its settled case-law that the different language versions of a text of EU law must be given a uniform interpretation and hence, in the case of divergence between the language versions, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms a part (Case C‑341/01 PlatoPlastik Robert Frank [2004] ECR I‑4883, paragraph 64 and case-law cited). Also to interpret Regulation No 881/2002, account must also be taken of the wording and purpose of Resolution 1390 (2002) which that regulation is designed to implement (Joined Cases C‑402/05 P and C‑415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR I‑6351, paragraph 297 and case-law cited).

The Court held that the objective of Regulation No 881/2002 is to prevent designated persons from having at their disposal any financial or economic resources, in order to impede the financing of terrorist activities (Case C‑117/06 Möllendorf and Möllendorf-Niehuus [2007] ECR I‑8361, paragraph 63) in order to combat international terrorism, in particular to cut it off from its financial resources by freezing the economic funds and resources of persons or entities suspected of involvement in activities linked to terrorism (Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 169).

The Court went on to find that it was not argued that the spouses concerned hand over those funds to a designated person instead of allocating them to their basic household expenses. It was not disputed that, in the cases in the main proceedings, the funds in question are in fact used by the spouses concerned to meet the essential needs of the households to which the designated persons belong. If the funds are misappropriated then such a misappropriation of funds would, moreover, be covered by the prohibition laid down in Article 2(2) of that regulation and would constitute an offence punishable under national criminal law.

Accordingly, the Court concluded that having regard to the differences in the language versions of Article 2(2) of Regulation No 881/2002, that provision must, in the light of its object, be construed as meaning that it does not apply to the payment of social security or social assistance benefits in circumstances such as those in issue in the main proceedings.

The Court added for good measure that in construing a provision of secondary EU law, preference should as far as possible be given to the interpretation which renders the provision consistent with the general principles of European Union law and, more specifically, with the principle of legal certainty (C‑1/02 Borgmann [2004] ECR I‑3219, paragraph 30 and case-law cited). That principle requires legislation, such as Regulation 881/2002, which imposes restrictive measures having considerable impact on the rights and freedoms of designated persons (Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 375) and which, as provided in Article 10 of that regulation, in domestic law involves penalties, in this instance criminal penalties, for infringement of those measures, to be clear and precise so that the persons concerned, including third parties such as the social security bodies involved in the main proceedings, may know unambiguously their rights and duties and take measures accordingly. If Regulation 881/2002 were to be construed differently, legal uncertainty would be endangered, in particular so far as concerns triangular situations in which funds are made available, directly or indirectly, not to a designated person but to someone else to whom the designated person is more or less closely connected and in which the latter indirectly derives some benefit from those funds.