judicial review Archives - ANTITRUST ALERT

Recent Judgments Illustrate How the European Commission Can Correct Its Errors Post-Annulment

As a general proposition, when the validity of a European Commission antitrust decision is challenged before the General Court of the European Union (GCEU), the procedure is one of judicial review, not a retrial on the merits (although the GCEU does have special jurisdiction to increase or reduce the amount of any fine). Thus there are only three possible outcomes: annulment of the Commission’s decision; variation in the amount of any fine, upwards or downwards; or rejection of the challenge altogether.

In the case of annulment, Article 266 of the Treaty on the Functioning of the European Union requires that the Commission “take the necessary measures to comply with the judgment” of the GCEU. Provided that the limitation period has not expired, the Commission may take a new decision on the case, taking care to avoid the illegalities identified by the GCEU in respect of the first decision. The new decision can be different from the first decision, as illustrated by the recent judgments in Mitsubishi Electric and Toshiba, but it can also be substantially the same, as illustrated by the recent judgment in Éditions Odile Jacob.

The Mitsubishi Electric and Toshiba cases arose out of the gas insulated switchgear cartel. Mitsubishi Electric and Toshiba were fined for their participation in the cartel. The companies challenged the Commission’s decision imposing the fines, and the GCEU annulled the fines imposed individually on Mitsubishi Electric and Toshiba on the ground that the Commission had infringed the principle of equal treatment by choosing, when calculating the fine, a reference year for Mitsubishi Electric and Toshiba which was different from that chosen for the European participants in the infringement.

Following the annulment, the Commission addressed a letter of facts to Mitsubishi Electric and Toshiba informing them of its intention to adopt a new decision remedying the unequal treatment criticised by the GCEU. Mitsubishi Electric and Toshiba submitted comments on the Commission’s letter of facts and had meetings with the Commission team responsible for the case. Subsequently the Commission adopted a new decision imposing lower individual fines on Mitsubishi Electric and Toshiba than in the first decision.

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Relief for harm incurred as a result of protracted judicial review must be sought before General Court

On 26 November 2013, the European Union’s top court, the European Court of Justice, gave a seminal ruling establishing the principle that a claim for damages for losses incurred as a result of excessively long judicial review proceedings before the General Court must be brought in a separate action before the General Court itself.

Introduction

On 26 November 2013, the European Union’s top court, the European Court of Justice (ECJ), gave a seminal ruling establishing the principle that a claim for damages for losses incurred as a result of excessively long judicial review proceedings before the European Union’s court of first instance (the General Court) must be brought in a separate action before the General Court itself. Allowing the General Court to decide on whether it acted too dilatorily, may raise eyebrows in practitioner circles and amongst potential damages claimants alike.

The ECJ decided to distance itself from the stance it had taken in a previous judgment, Baustahlgewebe v Commission (Case C-185/95 P), where it took it upon itself to simply reduce the fine to reflect the excessive length of proceedings before the lower instance court. The ECJ’s 26 November ruling instead implies that parties seeking compensation for losses incurred as a result of excessively long proceedings will have to invest more money and time in preparing a separate action before the General Court.

Background

In 2005, the European Commission (Commission) levied fines exceeding €290 million on 16 firms for operating a cartel in the industrial bags sector (Industrial Bags Case COMP/38354). The majority of the addressees of the Commission decision lodged an appeal before the General Court seeking to have the Commission’s decision annulled or to have their respective fines annulled or reduced. Nearly six years later, in judgments handed down on 16 November 2011, the General Court ruled on the actions, dismissing those brought by Kendrion NV (Case T-54/06), Groupe Gascogne SA (Case T-72/06) and Sachsa Verpackung GmbH (now Gascogne Sack Deutschland GmbH) (Case T-79/06).

The General Court took five years and nine months to decide to uphold the Commission’s findings, considerably longer than the average 24.8 months currently required for the General Court to examine and rule on a Commission decision. In Case T-54/06, during the course of the proceedings, Kendrion NV raised the slow nature of the General Court’s proceedings before the General Court itself. The General Court stated simply “The legality of [the] decision may be considered only in the light of the facts and circumstances at the disposal of the Commission at the date of the adoption”. The General Court therefore rejected as ineffective the ground of appeal which alleged that the Court had failed to observe the principle that it must adjudicate within a reasonable time, on the ground that only the legality of the decision fell within its review jurisdiction.

Not satisfied with this response, Kedrion NV, along with Groupe Gascogne SA and Gascogne Sack Deutschland GmbH complained to the ECJ that the General Court had taken far too long to [...]

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Recent Judgments Illustrate How the European Commission Can Correct Its Errors Post-Annulment

Relief for harm incurred as a result of protracted judicial review must be sought before General Court

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