By Rick Busscher, Martin Herz, and Hans Vedder

Competition law judgments are notorious for their length. An extreme example is the 5134 paragraph judgment in Cement. In most cases the appeal judgment is significantly shorter, as with the 391 paragraphs in the appeal in Cement. AC-Treuhand is no exception to that rule, but it takes it to the extreme by reducing the Court’s reasoning to a single paragraph. This single paragraph supports the finding that cartel facilitators are also liable under Article 101 TFEU. The issue whether a company that is not active on the affected market should also be brought under the scope of article 101, is a difficult matter. However, the Court finds it ‘surprisingly’ easy to solve this matter, which raises practical points as well as some fundamental questions. We will discuss and comment on this one paragraph below, as well as on some of the fluff that surrounds it, but we will start with the facts.

Introduction: what happened before

Basically, we have a bog-standard cartel and as with any cartel, there needs to be supervision and enforcement. This is tricky for cartelists themselves, as the supervisor is exposed to the risk of being qualified as a ringleader, negating the possibility of immunity under the Leniency Guidelines. Hence, the heat stabilisers cartel thought of a better way, namely hiring an independent firm to ensure that parties stick to the cartel. Swiss consultancy AC-Treuhand was more than willing to offer its services in overseeing the cartel and the compliance of the cartel members. It also provided a place to meet for the cartelists, collected and shared market data, and worked to secure compromises between the members of the cartel, thus clearly qualifying it as a cartel facilitator.

However, despite the efforts, one of the cartelists blew the whistle on the cartel, thus exposing the chemical companies, and AC-Treuhand. This resulted in a decision that imposed fines of a total amount of 173 million Euro’s on several chemical companies, including a fine of € 174.000 on AC-Treuhand for having facilitated the cartel. AC-Treuhand’s appeal, based on Article 49 of the Charter, the principle that offences must be defined by law, nullum crimen, nulla poena sine lege priori, was rejected by the General Court. In the view of AC-Treuhand, the GC infringed Article 49 of the Charter of Fundamental Rights of the European Union by reaching this conclusion. The main question before the ECJ is whether the text of Article 101 TFEU is sufficiently precise to also catch cartel facilitators and not just the undertakings that have some kind of relationship on the market(s) where competition is restricted (paras. 18 and 20). This question is answered in the affirmative in a single paragraph:

“It should also be noted that the main objective of Article [101(1) TFEU] is to ensure that competition remains undistorted within the common market. The interpretation of that provision advocated by AC‑Treuhand would be liable to negate the full effectiveness of the prohibition laid down by that provision, in so far as such an interpretation would mean that it would not be possible to put a stop to the active contribution of an undertaking to a restriction of competition simply because that contribution does not relate to an economic activity forming part of the relevant market on which that restriction comes about or is intended to come about.” (para. 36)

This affirmative answer of the ECJ, therefore, is essentially, solely based on the full effectiveness of Article 101(1) TFEU. Granted, the judgment also reveals some arguments put forward by the Court to substantiate the conclusion. Firstly, there is something close to an a contrario reason given in paragraph 27: nothing in the wording of Article 101(1) suggests that it is only directed at the undertakings active on the market where competition is restricted. This is followed by a series of recitals (paras. 28 – 35) that regurgitate the Court’s case law to the effect that this shows that Article 101(1) has a very broad scope.

Secondly, the Court describes the role played by AC-Treuhand in the cartel to find that this role is ‘directly linked’ to anti-competitive objectives. This means that these activities cannot be qualified as ‘mere peripheral services’ unconnected with the restriction of competition (paras. 38, 39).

The final fluff added to the effet utile reasoning in paragraph 36 comes in paras. 40 – 45, where the Court explains the civil law doctrine that applies to Article 101. This means that there is room for a ‘gradual, case-by-case clarification’ of the rules by judicial interpretation, provided that this clarification was ‘reasonably foreseeable’. This reasonable foreseeability may still exist when the person involved must take legal advice (para. 42). Therefore, the Court finds that AC-Treuhand ‘should have expected’ its conduct to be incompatible with Article 101, in particular in the light of the broad scope of this provision. AC-Treuhand’s other grounds for appeal received similarly short shrift.

Commentary

There are five remarks we want to make regarding this judgment. The first and most obvious of all: the judgment that AC-Treuhand’s conduct was foreseeable, is rather questionable. There is a simple test to check the foreseeability: read Article 101 para. 1 TFEU, the facts of the case, and the judgment up to and including para. 35. When interpreting ‘parties’ as just the parties to the agreement or on the market, the ruling that a facilitator would also be liable for infringing art. 101 para. 1 TFEU was clearly unexpected, and thus not foreseeable. And even the Court seems to acknowledge this, as it only recites case law that involves cartelists. We, just as AG Wahl in para. 87 of his Opinion, expected the unexpected, as the Court (again) used its ‘classic’ effet utile argument, and solely on this basis came to its conclusion (or in reverse order). This, however, does not make the outcome ‘foreseeable’.

Secondly, AC-Treuhand is yet another wonderful example of the redundancy of learned Opinions. On 29 October 2015, Lenaerts, our fresh new ECJ president, related to this in an interview in the Dutch Financieel Dagblad (Financial Daily Newspaper):

“We do not do politics or (enact) monetary policy and are no master of our own agenda. The Court has to wait until a case is submitted to it. Each decision requires legally conclusive and compelling arguments. Within this straitjacket we have some discretion, I will not deny this, but we exercise this very cautiously”. “There is a dialectic between the conclusion of the Advocate General and the collegial judgment of the Court of Justice. The Advocate General, independently and entirely impartially, draws a conclusion in every major case. The Court follows, refines, or rejects the proposed conclusion. Hence, in fact the Advocates General deliver the concurring and dissenting opinions” [free translation by the authors].

It could be argued that the ECJ had not been able to properly establish the scope of Article 101 TFEU by declaratory judgment, in accordance with the principles of civil law on which the EU legal order is supposedly based, as there was no earlier case in which it could ‘clarify’ this. Hence, as per AC-Treuhand, the Court grasped the opportunity to state that facilitators also fall within 101’s scope. However, Lenaerts also opines ‘we do not need dissenting opinions in EU law, because we have Advocates General’. In our opinion, just having them is not enough. In AC-Treuhand II, AG Wahl puts forward sound arguments why ‘the facilitator’ should not be covered by Article 101 TFEU, but the Court does not, not even once, refer to his Opinion.

Wahl focuses on a necessary relation between the parties and the restriction of competition. His main point is that there is no competitive relation between AC-Treuhand and the cartel parties. In this regard, we could even point to the Court’s earlier case law referred to as authoritative by the Court itself in paragraph 30, where it reiterates the need to pursue ‘common objectives’ and ‘same objectives’ for the finding of participation in an infringement of Article 101 TFEU. It simply flies in the face of reality to hold that AC-Treuhand pursued the same objective as the chemical companies. AC-Treuhand’s objective was to maximise profits regarding its consultancy services, which is fundamentally different from the objective of restricting competition and raising prices. A reasoned argument by the Court to refute the reasoning put forward by the Advocate General would have added some foundation to Lenaerts’ claim that the EU can do without dissenting opinions.

The third comment is focused on the consequences of this decision. The commandment is clear: thou shalt not facilitate cartels. Now, what does ‘facilitate’ mean? Obviously, AC-Treuhand facilitated the cartel, but what if it only aggregated data or provided a place to meet? On a similar note, we are often told – by the lawyers involved – that they have a feeling that compliance courses also lead to more (refined) cartels (see also the point made by Wils, p. 13). Does that mean that a cartel that adapts its actions to the teachings of a compliance course was facilitated by the teaching lawyers? The other side of this coin would be the question what precautions a potential facilitator would have to take to avoid infringing Article 101? Should Alfonso – Chillin’Competition – Lamadrid now advise his parents that they should request the visitors to their hotel to declare that they will not hold cartel meetings in any of their rooms? In other words, the Court ‘introduced’ a new open-ended term into Article 101 TFEU, that can undoubtedly be further ‘clarified’. Perhaps the Court has more categories up its sleeve.

Another noteworthy consequence relates to the financial liabilities for the undertakings involved: who gets to pay what fine or which damages? For the cartelists, this is easy, and the point of departure is the gain derived from the cartel calculated on the basis of the value of the affected sales. This ensures some linkage between the fine imposed and the harm to competition. However, this does not work for a facilitator, which was rightly indicated by AC-Treuhand, considering that the Commission imposed a lump sum in this case. Speaking of harm, and causation, we will not even begin to open Pandora’s box of issues relating to damages claims against facilitators.

Fourthly, we return to the only relevant paragraph of the case, para. 36, and the doctrine or principle of full effectiveness. In many cases, the ECJ put forward this doctrine, and when it relies on it everybody instantly knows something is going to happen: expect the unexpected! However, a quick look behind the sensible words – especially in this case where the facts are clear – can cast doubt on the statement that the full effect would be negated when not including facilitators in Article 101. Firstly, it must be remembered that the cartelists are still very much in its scope. The only thing this ruling does, in terms of effectiveness, is adding one other party, the facilitator, to the list of potential leniency claimants. In addition, it may potentially remove the need to have a ring leader, resulting in more cartelists with an incentive to blow the whistle on the cartel. This increase in the number of leniency claimants may (significantly) increase the chance of one of those parties actually blowing the whistle, and may thus add to the already impressively effective leniency instrument. We could also agree that the specific role of AC-Treuhand in this case increased the cartel’s effectiveness. Prohibiting such actions will arguably increase the effectiveness of Article 101. So, yes, this ruling means more effectiveness, but to argue that the alternative negates the full effect, ignores reality.

The last remark we want to make is focused on the principles of civil law that underlie EU law, which determines that the legislator is the primary source of the law. This is in contrast with the common law tradition, in which judges can create new law. If a judge in a civil law system is in doubt about the fact whether its decision is creating new legal rules, it should leave matters to the legislator. This should have been the route taken by the Court, as the ‘foreseeability’ is rather questionable. It also shows the weakest point in the Court’s argument, which is the claim that if it did not decide the case in this way, “it would not be possible to put a stop to the active contribution of an undertaking to a restriction of competition”. This is simply not the case, as the legislator can create new legal rules that apply to these situations. Further, as AG Wahl points out, the UK, with its common law tradition, also took the legislative route to address the same problem.

So, in the end, the ECJ should have left it to the legislator to decide whether it wants to create new legal rules that include accomplices of 101 infringements. If the Court, however, found that the matter was of such importance or urgency that it should be dealt with instantly, it should have at least provided (to speak with Lenaerts) ‘conclusive and compelling legal arguments’. We see no such reasoning here.

Rick Busscher is a PhD student at the University of Groningen. His research is focused on EU Competition Law and on Political Philosophy.

Martin Herz is a teacher of European and Competition Law at the University of Groningen.