The competition rules have played a vital role in the establishment of the European Union by prohibiting collusive arrangements, abuses of a dominant position, state aid that distorts competition, and anti-competitive mergers. The enforcement of these rules has been entrusted to the European Commission, which enjoys extensive investigative and decision-making powers. Moreover, undertakings which have violated Articles 101 and 102 TFEU may incur heavy financial sanctions of a criminal nature. Because of the combination of these two features, EU competition enforcement has been criticised by undertakings as ‘unfair’ and has provided fertile ground for the development of procedural due process rights and guarantees. For along time, the EU Courts have relied on Article 6 ECHR as their primary source of inspiration for this. However, the Charter provided an EU equivalent in the form of Article 47. Drawing on the systematic examination of all the competition judgments containing a reference to Article 47 until 31 December 2020 (131 records in total), this post aspires to illuminate the application and role of Article 47 in the field of competition policy since the Treaty of Lisbon elevated the Charter into primary law.
Article 47 in the Field of Competition policy in Numbers
In quantitative terms, the competition case law of the EU Courts yields some interesting findings.
- Firstly – and unsurprisingly, more than 90% of the coded references were located in judgments concerning the application of Articles 101 and 102 TFEU, while only 4% of the relevant judgments concerned merger control and about 5% concerned state aid.
- Secondly, except for two preliminary rulings, all other Article 47 references were made in the context of judicial review proceedings; 54% of them were detected in judgments delivered in the context of an action for annulment, while 45% in judgments delivered in the context of an appeal.
- Thirdly, about one-tenth of all competition judgments delivered by the Court of Justice and by the General Court in the relevant timeframe contained a reference to Article 47 (approximately 13% and 10% respectively). However, this number increases significantly if we isolate cases concerning the application of Articles 101 and 102 TFEU, where the percentage rises to almost 30% for Court of Justice judgments and 18% for General Court judgments.
- Fourthly, Article 47 has been referenced regarding a variety of protections. The most commonly cited protection was the right to a hearing by an independent and impartial tribunal (38% of all references), followed by the right to a hearing within a reasonable time (20% of all references). About 18% of all references concerned the duty to state reasons, 16% concerned the right to an effective remedy, 14% concerned the equality of arms principle, 8% concerned the presumption of innocence, and 3% concerned other matters.
The Protective Scope of Article 47 in Competition Enforcement
Numbers aside, the analysis of all competition judgments containing a reference to Article 47 post-Lisbon demonstrates that its scope consists of a hard ‘core’, which includes the rights explicitly provided for in the letter of this provision, but also of a wider ‘perimeter’ covering broader safeguards and guarantees implicitly stemming from it. Overall, the protection afforded by Article 47 is broad and flexible, albeit not limitless.
For example, concerning the right to an effective remedy, the EU Courts have emphasised that the possibility to bring an action for annulment against a Commission decision based on Article 263 TFEU constitutes an effective remedy within the meaning of Article 47 and that this right is not prejudiced by the fact that applicants must satisfy certain admissibility requirements. At the same time, the EU Courts have stressed that the rules governing the admissibility of appeals cannot be such as to restrict the very substance of the right to an effective remedy, while, in the absence of a specific legal basis, restrictions on the exercise of a natural or legal person’s right to initiate proceedings under Article 263 TFEU are contrary to Article 47.
Furthermore, the EU Courts have consistently dismissed arguments that given the criminal nature of competition fines, the administrative model of EU competition enforcement violates the right to a hearing by an independent and impartial tribunal under Article 47, insofar as the Commission combines the functions of the prosecutor, investigator and decision-maker, and the EU Courts defer to the Commission with respect to complex economic assessments and questions of policy. Drawing on Menarini and its previous judgments in KME and Chalkor, in Schindler Holding, the Court of Justice underscored that not only the EU Courts can scrutinise the legality of Commission decisions and carry out an in-depth review of the law and the facts, but they have unlimited jurisdiction with respect to financial penalties.
Article 47 also protects the right to a hearing within a reasonable time. As the EU Courts have explained, the reasonableness of the duration of the proceedings is to be assessed on a case-by-case basis. Most importantly, in Gascogne Sack Deutschland, the Court of Justice clarified that, in cases of excessive delay, the appropriate remedy is an action for damages for non-contractual liability of the EU, rather than a fine reduction.
Last but not least, Article 47 encompasses protections that do not explicitly derive from the letter of this provision – such as the obligation to state reasons, the presumption of innocence, the rights of defence and the equality of arms principle – and has often been cited, among others, in connection with the admissibility and evaluation of the evidence. Interestingly, the duty to state reasons is an essential procedural requirement and an autonomous ground for annulment under Article 263 TFEU, while the presumption of innocence and the rights of the defence are explicitly protected under Article 48 of the EU Charter.
Three additional observations are worth highlighting. Firstly, although most references to Article 47 were triggered by parties’ pleas, in several competition judgments, this provision was embedded in the Courts’ reasoning of their own accord. Secondly, while there is a surprising degree of inconsistency and overlap in the choice of the legal basis for the same protection, more recent judgments tend to differentiate among the various Charter provisions, citing Article 48 in relation to the presumption of innocence and Article 41 in relation to the fairness of the administrative proceedings, instead of Article 47. Thirdly, the EU Courts have continued to draw inspiration from Article 6 ECHR, and the parallel symbiosis of that provision and Article 47 has not weakened or undermined the significance of either legal basis in EU competition enforcement.
The Role of Article 47 in EU Competition Enforcement
Article 47 has played a pivotal role in EU competition enforcement, as far as it has strengthened the fairness of competition procedures and decision-making. On the one hand, it provides parties with extensive due process rights and guarantees. On the other hand, it imposes stringent obligations on the Commission and the EU Courts. Generally, Article 47 mirrors Article 6 ECHR and, minor criticisms aside, it entails a high level of protection. At the same time, Article 47 sets the bar of procedural fairness not only for the Commission, but also for national competition authorities and courts in their application of EU competition law, and thus serves as a driver towards greater procedural convergence.
That said, the principle of effective judicial protection has also had a crucial incidental effect: it has enhanced the legitimacy of EU competition enforcement. Article 47 reinforces throughput legitimacy by mandating fair procedures and by setting high evidentiary and reasoning expectations from the Commission and the EU Courts, while it may strengthen output legitimacy, too, to the extent that evidence-based reasoning leads to better substantive outcomes. The EU Courts have noted the legitimacy connotations of procedural due process. For instance, in Commission v ICAP the Court of Justice held that the disclosure of the factors on which the authority intends to base its decision is not only mandated by the rights of defence but also ‘contributes to the fairness, impartiality, and quality of the Commission’s decisions which, ultimately, is the basis of the trust that the public and business place in the legitimacy of the Commission’s action in competition matters’ (paragraph 34).
In any event, Article 47 has had a further corollary: it has significantly curbed the Commission’s discretion. Traditionally, institutional competence considerations have justified a degree of judicial deference to the Commission’s complex economic evaluations and policy choices as the expert institution. Drawing, however, on the principle of effective judicial protection, the EU Courts have slowly but surely placed increased evidentiary demands on the Commission and have recently started skipping altogether the customary references to its margin of appreciation, as in CK Telecoms, Qualcomm or Google Android. Coupled with the shift towards a ‘more economic’ approach, the principle of effective judicial protection has thus imposed constraints on the Commission’s discretion in the field of competition policy. This observation is not a criticism of the EU Courts’ judicial review as overly strict. Thorough judicial scrutiny of administrative action is a core component of any legal system priding itself on being predicated on the rule of law. Rather, it highlights a perennial dilemma at the heart of the discussion: how to strike the right balance between fairness and effectiveness of competition enforcement? The trade-off ultimately depends on the specific issue and circumstances, but while Article 47 does not always trump effectiveness, it often tips the scales in favour of fairness.
In the field of competition policy, Article 47 CFR entails the right to an effective remedy; the right to a hearing by an independent and impartial tribunal; the right to a hearing within a reasonable time; the duty to state reasons; the presumption of innocence; the rights of defence; and the equality of arms principle. The examination of each of these protections in the EU Courts’ competition case law post-Lisbon reveals that the scope of Article 47 is broad and flexible, albeit not limitless. In the field of competition policy, the principle of effective judicial protection has been instrumental in setting high procedural fairness standards. At the same time, it has also had one incidental effect and one important corollary: it has enhanced the legitimacy of EU competition enforcement and it has significantly curbed the Commission’s discretion.
Posted by Andriani Kalintiri, Senior Lecturer in Competition Law, King’s College London
This post is a brief presentation of a chapter on ‘Article 47 of the EU Charter of Fundamental Rights in EU Competition Enforcement: A Quantitative and Qualitative Assessment’ that is forthcoming in Matteo Bonelli, Mariolina Eliantonio, and Giulia Gentile (eds), Article 47 of the EU Charter and Effective Judicial Protection – Volume 1: The Court of Justice’s Perspective (Bloomsbury Publishing 2022).
Suggested citation: A. Kalintiri, “Article 47 of the EU Charter of Fundamental Rights in EU Competition Enforcement: A Quantitative and Qualitative Assessment”, REALaw.blog available at https://realaw.blog/?p=2111