Op-Ed: “Whiteland (C‑308/19): More on how effectiveness limits national rules for enforcement of EU Competition Law (NCA limitation periods)” by Miguel Sousa Ferro
In 2015, the Romanian National Competition Authority (‘NCA’, Consiliul Concurenţei) found that Whiteland, an import export company active in food distribution, had infringed Article 101 TFEU and its national equivalent, and imposed a fine.
This infringement had ended in July 2009. Under Romanian law, the official opening of the investigation, in September 2009, interrupted the five-year limitation period, which thus ended in September 2014. Romanian law (at least as interpreted by most national courts) does not foresee the possibility of additional interruptions or suspension. Although several investigative steps were taken prior to that date, the final Decision was adopted in April 2015.
The Bucharest Court of Appeal agreed with Whiteland that this meant the investigation had taken too long, and that the infringement had become time-barred. The NCA appealed, arguing that this would jeopardize the uniform and effective application of EU Law, namely because the solution under Article 25(3) of Regulation (EC) 1/2003 is different. According to this EU Regulation, various procedural steps taken by the Commission throughout the investigation interrupt the limitation period, restarting the clock. This means Commission investigations into infringements of Article 101 TFEU can take longer than five years, without becoming time-barred.
The Romanian Supreme Court asked the Court of Justice of the EU (CJEU) for clarifications. The question facing the CJEU was not so much whether Regulation 1/2003 applied to this issue in proceedings by NCAs. Obviously, it doesn’t, as the CJEU confirmed (paragraphs 30-41). The real question was whether Member States are entirely free when defining their rules on limitation periods for NCA enforcement of Articles 101 and 102 TFEU. If some limits do apply, do such limits mean that national law must allow for successive interruption of the limitation period, if the investigation takes a long time?
Today’s judgment – in line with AG Pitruzzella’s Opinion – was entirely unsurprising, at least for anyone who is familiar with the implications, in EU case law, of the almighty principles of effectiveness and sincere cooperation, namely as they have been applied by prior case law to limitation periods for enforcement of EU Law in other fields. It was also unsurprising given this exact position of principle set out by the EU legislator in the ECN+ Directive (see recital 70). Indeed, as a corollary of effectiveness, the Directive requires interruption or suspension of the limitation period ‘for the duration of enforcement proceedings’ before NCAs, ending only with the adoption of the final decision (Article 29(1)).
In an EU-mandated system of decentralised enforcement of Articles 101 and 102 TFEU, Member States cannot be free to frustrate the enforcement of EU Competition Law by imposing time-barring rules which make it impossible for investigations to be duly carried out by the NCAs. If more time is needed, more time must be granted. And knowing whether more time is needed can only be decided on a case-by-case basis.
The Court noted that, in the absence of EU harmonisation of rules on limitation period (prior to the ECN+ Directive), it is up to each Member State to set out those rules and ensure that NCAs are empowered to apply Articles 101 and 102 TFEU (paragraphs 44-45). However, Member States must do so ‘in compliance with EU law and, particularly, the principle of effectiveness’ and taking into account the special nature of competition law. They cannot make it ‘impossible or excessively difficult to enforce EU Law and, specifically, in the field of competition law, they must ensure that the rules they set out do not jeopardize the effectiveness of Articles 101 and 102 TFEU’ or the ‘uniform application of EU Law’ (paragraphs 46-47 and 52). Reasonable limitation periods are fine and necessary for legal certainty (paragraph 48), but a balance must be sought between the conflicting interests (paragraph 49). To assess whether the equilibrium has been duly achieved, one must consider the national regime, as a whole, and the specificities and degree of complexity of the specific cases (paragraphs 50-51). Time-barring rules cannot systematically prevent the imposition of fines (paragraph 53). It follows that an absolute rule of national law which does not allow for case-by-case assessment of case specificities, which may require a longer interruption or suspension of the limitation period, is not compatible with EU Law (paragraph 56), and must be interpreted in accordance with EU Law, to the extent possible (paragraphs 60-62). If an interpretation in accordance with EU Law is not possible, the national rule must be set aside by the national court (paragraphs 58 and 63).
The Court stopped short at declaring that this was the case of the Romanian rule, and left that decision up to the national court (paragraph 57). This is because it believed an interpretation of Romanian law in accordance with EU Law ‘seems possible’ in this case (paragraph 64), and thus invited the Romanian Supreme Court to interpret the national rule differently from the view of the Appeal Court.
I would argue that the consequences of this judgment for the outcome of the national case are, necessarily, that the subsequent investigative acts adopted by the NCA also interrupted the limitation period, and that the Decision was not time-barred when it was adopted.
This case serves to confirm the broader point (coming, for example, from Pfleiderer and VEBIC) that any and all procedural rules set out in national law for the enforcement by NCAs of Articles 101 and 102 TFEU must not deprive these provisions of their effectiveness, must be interpreted, if possible, in a way that ensures effectiveness, and, if this is not possible, must be set aside by national courts. This has implications on countless fronts, not just for the rules for enforcement by NCAs (for example on issues such as access to evidence, liability of the economic unit, or scope of protection of legal privilege), but also for the procedural rules applicable to judicial review of NCA decisions. In several Member States (prior to transposition of the ECN+ Directive), such as my own, NCA fines have often been declared time-barred in the past, in situations where this was arguably not compatible with the principle of effectiveness (compare the requirement of Article 29(2) of the ECN+ Directive), without this discussion even coming up.
In this case, the Bucharest Appeal Court, as the expression goes, ‘să îmbeți cu apă rece’ (got drunk on cold water). National law could have been interpreted differently. It takes a very formalistic and rigid approach to the written law to say that, regardless of the circumstances of the specific case, the limitation period cannot be interrupted more than once.
The Supreme Court duly identified the problem of compatibility with EU Law. But this discussion only exposes a deeper problem, which we find time and time again in the application of EU Law’s principle of effectiveness to the interpretation of national rules. How is it possible that different solutions are arrived at in our Member States, depending on whether EU Law is applicable or not, when what is at stake is the lack of effectiveness of the laws in question? If Romanian rules on limitation period deprive competition law of its effectiveness in some cases, when investigations need to take longer, surely the Romanian Appeal Court and Supreme Court could have arrived at this same result by applying its Constitution and the general principles of its legal order. But they didn’t. Just like the Courts of most other Member States also wouldn’t have. At the national level, we’re so positivist, that we’re fine with rules being deprived of their effectiveness.
It shouldn’t be this way. But, as long as it is, let’s not forget how important it is to fight for the correct interpretation and application of the criterion of effect on trade between Member States. National courts’ tendency to interpret that criterion restrictively often leads to an under-protection of rights and under-enforcement of competition law, as a result of the principle of effectiveness not being taken into account when enforcing national law.
Miguel Sousa Ferro is a Professor at the University of Lisbon Law School, and Managing Partner of a law firm in Lisbon. His recent publications include ‘The EU Antitrust Damages Directive: Transposition in the Member States’ (Oxford University Press), and ‘Market Definition in EU Competition Law’ (Edward Elgar).