Sharing is caring? Commission can take over NCA probe
Companies cannot pick and choose the competition authority handling their antitrust investigations. The competition authority handling their case may even change over time: a national competition authority’s lingering investigation can be reallocated to the European Commission.
The General Court (GC) has confirmed that the Commission could take over cartel investigations that the German competition authority had been mulling over for three years. Two rounds of dawn raids by two different authorities, and diminished recollections by employees due to the lapse of time, did not persuade the GC to rule otherwise.
Companies should anticipate this type of cooperation between the Commission and national competition authorities (NCAs) by factoring potential parallel procedures, case takeovers and time delays into their defence strategies.
Background
The German competition authority opened an antitrust investigation into the metal packaging sector in March 2015. However, German law that applied at the time prevented it from imposing fines on the metal packaging producers’ subsidiaries due to a series of internal restructurings before the conclusion of its investigation (this loophole in the law has since been closed).
The German competition authority therefore requested the Commission to take over the case in June 2017. More than ten months after this request (in April 2018), the Commission initiated investigation proceedings. In July 2022, the case was settled with the imposition of fines of EUR 31.5 million on two metal packaging producers for allegedly participating in a cartel regarding sales of metal cans and closures. The metal packaging producers appealed against the Commission’s cartel settlement decision before the GC, contesting the reallocation of their case to the Commission.
GC’s ruling
On appeal, the GC underlined the Commission’s leading role in investigating and finding infringements of the EU competition rules, with NCAs having to back down as soon as the Commission initiates proceedings. The Commission Notice on cooperation with the Network of Competition Authorities (the cooperation notice) sets out the practicalities of this case sharing and refers to a two-month period for competition authorities to agree on possible case reallocations.
The GC rejected the applicants’ claim that the reference to this two-month period gave rise to a legitimate expectation that the case reallocation procedure would not exceed two months. Not only does it follow from the cooperation notice’s wording that this two month-period is merely indicative, the GC also found there had been good reasons to exceed this two-month period in this particular case: the internal restructurings and the rising suspicions of competition law infringements in a number of other Member States during the investigation had led to a material change to the facts.
The GC also rejected the applicants’ claim that their ability to defend themselves effectively suffered due to the delay in case reallocation. First, the applicants’ argument that they had had to defend themselves before two different authorities was rejected because that circumstance had had only procedural effects. Second, their argument that the lapse of time resulted in diminished recollections and key employees retiring or leaving the company was rejected for being too abstract and imprecise for the GC to establish any breach of the rights of defence.
Conclusion
This ruling confirms that the EU case cooperation mechanism does not create any rights for companies to have their case dealt with by a particular authority. Companies will need to keep the different possible scenarios under this mechanism in mind when dealing with EU competition law investigations.
Not only can parallel EU competition law investigations be initiated by different NCAs for their respective territories (within the boundaries of the non bis in idem principle; see our April 2022 newsletter), the Commission can also decide to take over the investigation during the course of these parallel proceedings. Moreover, even in this scenario, companies cannot rely on it that the Commission will deal with their case in its entirety. It is possible for the Commission to carve out certain jurisdictions from its investigation, thereby leaving that part of the investigation to the NCA (see our May 2023 newsletter).
It is therefore wise for companies to pre-emptively factor potential parallel procedures, case takeovers and time delays into their defence strategies.
