Court of Justice limits the Commission’s investigatory powers in antitrust proceedings, quashes excessive and insufficiently reasoned request for information

Introduction

On 10 March 2016 the European Court of Justice (“ECJ”) handed down landmark judgements in four parallel cases (“Judgments”)¹ in which it ruled that the General Court (“GC”) had at first instance² misinterpreted Articles 296 TFEU and 18 (3) of Implementing Regulation No 1/2003 (“IR”)³ when finding that the contested formal requests for information (“contested RFIs”) issued by the European Commission (“Commission”) in a cartel investigation contained an adequate statement of reasons. For the first time imposing clear legal limits on the Commission’s powers to investigate suspected infringements of antitrust rules by means of formal RFIs, the ECJ overturned the judgments of the GC and annulled the contested RFIs.

Background

Under Article 18 (3) IR, the Commission may, when investigating suspected infringements of antitrust rules, request undertakings by way of decision to provide all necessary information. These so-called formal RFIs (as opposed to simple RFIs pursuant to Article 18 (2) IR) oblige addressees to provide complete, correct and non-misleading information within the time-limit determined by the Commission, failure of which may result in the imposition of periodic penalty payments of up to 5% of the average daily turnover in the preceding business year per day and/or fines of up to 1% of the total turnover in the preceding business year (Articles 23 (1) (b), 24 (1) (d) IR).

The present case concerned a cartel investigation (AT.39520 – Cement and related products) which the Commission had initiated ex officio, i.e., by its own motion, without having been informed of alleged anticompetitive practices by a leniency applicant. It had carried out inspections (dawn-raids) in 2008 and 2009, issued a number of (simple) RFIs in 2009 and 2010 and opened a formal (in-depth) investigation against certain cement manufacturers in December 2010 (“opening decision”).

In March 2011 the Commission adopted the contested RFIs by decisions pursuant to Article 18 (3) IR in which it requested these manufacturers to respond to an extremely extensive questionnaire comprising between 78 and 94 pages and 11 sets of numerous questions, requiring the submission of a vast amount of detailed and very diverse types of information, such as the quantity and costs of CO2 emissions of production plants, statistics regarding building permits, VAT numbers of its customers, the means of transport and distance travelled for shipments of the goods sold, the type of packaging used, the transport and insurance costs for those shipments, the technology and fuel used in production facilities, and the costs of their repair and maintenance.

The Commission stated in the RFIs that it investigated suspected infringements of Article 101 TFEU which it described as “restrictions on trade flows in the European Economic Area (EEA), including restrictions on imports in the EEA coming from countries outside the EEA, market-sharing, price coordination and related anti-competitive practices in the cement market and related product markets” and explained that “additional information is also required in order to assess the compatibility of the practices under investigation [...] by having full knowledge of the facts and their exact economic context is sought in [the questionnaire]”.

The claims of respondents that the RFIs were insufficiently reasoned, leaving them completely in the dark as to the specific infringements they were suspected of by the Commission, were dismissed by the GC at first instance. On appeal, however, the ECJ concluded that the GC had wrongly interpreted Articles 296 TFEU and 18 (3) IR in finding that the statement of reasons of the RFIs was adequate, and, setting aside the judgments of the GC, also quashed the contested RFIs.

Judgments of the ECJ

The ECJ stated that the necessary elements of the statement of reasons for the RFIs, as required by Article 296 TFEU, were defined in Article 18 IR. Article 18 (1) IR entitled the Commission to require the disclosure only of information which may be necessary to investigate suspected infringements of antitrust rules. Article 18 (3) IR required the Commission to state the purpose of the RFI, which related to the obligation of the Commission to indicate the subject of the investigation and thus to identify the suspected infringement of antitrust rules. The ECJ followed and stressed that, in order to enable the Courts and the respondents to assess whether information requested in the RFIs is in fact necessary for the purpose of the investigation, the RFI had to disclose, clearly and unequivocally, the suspected infringement of antitrust rules.⁴

Assessing the contested RFIs in light of these principles, the ECJ considered that the description of the suspected infringement was excessively succinct, vague and generic, in particular when compared to the vast amount, detail and diversityof the information requested. The ECJ concluded that this description did not make it possible to determine with sufficient precision either the products to which the investigation relates or the suspicions of infringement justifying the adoption of the contested RFIs.⁵

The ECJ admitted that the contested RFIs had to be assessed in the light not only of their wording but also of their nature and the context in which they were issued, including the opening decision. However, it considered the description of the suspected infringements in the opening decision to be similarly succinct, vague and generic. Moreover, whilst acknowledging the investigative nature of RFIs which, by their very nature, are taken when the Commission does not yet have complete and precise information about the suspected infringement, the ECJ stressed that the contested RFIs had been adopted at an advanced stage of the proceeding – more than two years after the first inspections, following receipt of responses by undertakings to a number of RFIs and following the opening of formal proceedings – at which the Commission should have already had information allowing it to describe the suspected infringement in a more precise way.⁶

Comments

The ECJ imposed for the first time clear legal limits on the Commission’s powers to investigate suspected infringements of antitrust rules by means of formal RFIs. By requiring a clear and unequivocal disclosure of the suspected infringement, including in terms of the geographical scope and the products concerned, the ECJ tightened the requirements for the statements of reasons of formal RFIs, even though the exact degree of these requirements may depend to some extent on the stage of the proceeding at which the RFIs are issued.

The Judgments make clear that the powers conferred upon the Commission in Article 18 (3) IR do not allow it to engage in “fishing expeditions”, i.e., to request information on a speculative basis without having any concrete indicia for an infringement7, or to rely on RFIs to get disproportionate - and likely irrelevant - amounts of information. They also strengthen the ability of respondents and their antitrust counsel to assess the scope of their duty to provide the requested information and of the correlated risk of imposition of potentially hefty pecuniary sanctions in case of a breach of that duty and of their rights of defence, e.g., to refuse to provide requested and potentially self-incriminatory information which is not necessary for the investigation of the suspected infringement and, overall, to devise an appropriate defence strategy.

And even though the RFI in the present case is certainly an extreme example, its annulment shows that the challenge of an RFI before the Courts can be an option worth considering, in particular since information submitted in response to an RFI which is subsequently annulled by the Courts should in principle not be eligible to serve as evidence for the finding of an infringement of antitrust rules.8 In the present case, however, this issue will not arise, as the Commission did not find sufficient grounds to support the initial suspicion of cartel arrangements and closed the investigation in July 2015 without a finding of an infringement.

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