Some thoughts on the standard of proof in competition wrongdoings

Drivers for evolution of case law over time

As competition law has evolved over time so has the topic at issue, although not necessarily in a consistent way. Likely partly due to the hybrid nature of this subject (the standard of proof involves both procedural law, such as in the case of a lack of motivation, and substantial law, when the grounds upon which the reasoning relies are not factually correct).

The evolution process at EU level, that we will shortly review below, also led to harmonisation among Member States, despite Recital 5 of the Preamble to Regulation 1/2013, stating, inter alia, that it does not affect “national rules on the standard of proof”.

Main drivers in this regard were the following:

• First of all, the San Giorgio case law (CJEU, Amministrazione delle Finanze v. San Giorgio, 199/82), where the Court held that procedural laws of Member States cannot make enforcement of rights under European law impossible in practice or extremely difficult, and must be applied without discrimination: one of its implications was that – in order to avoid discrimination - a positive obligation may exist for national authorities in certain instances (due to the specific features of some European law cases) to apply procedural rules different than the ones applicable to comparable national cases, with the risk of even further fragmentation of the procedural framework (traditionally reserved to the competence of Member States); hence, the natural tendency from national authorities (NCAs and national courts) to look at the standards set out from the European Courts,
• introduction of Regulation 1/2013, the related ECN (European Competition Network), and similar processes for national courts (intervention of the Commission as amicus curiae in national court proceedings, the AECLI action, harmonised private enforcement rules…),
• the pervasive action in the last 30-40 years of the compliance process, which necessarily brings with it the need for a common reference, a bench-mark valid for all: this process has applied also to the public sector,
• the growing weight that the European Convention on Human Rights (now part of the European constitutional framework under article 6(3) TEU and articles 52(2) and 52(3) of the Charter) has assumed in Member States procedural rules.

The current state of play

As anticipated, the above-mentioned evolution has brought mixed results.

On the one hand, over time the law developed by the CJEU, has brought the following to the standard of proof which must be met by the party making an allegation, including against legal persons:

1. Any kind of evidence is allowed, provided that
   a. it is credible by taking into consideration all relevant factors (including the nature and dynamics of the affected markets),
   b. it was lawfully acquired and
   c. in the case of evidence brought against the defendant, the latter has been given proper opportunity to defend against it;
2. The standard of proof appears to cover evidence which is sufficiently convincing support for the asserted fact (and whose pieces are concordant with each other);
3. The benefit of the doubt is always granted to the part against which the evidence is brought;
4. When documentary evidence is at stake, the document’s author, who intends to give a possible alternative reconstruction of it, shall do it overall and with a consistent behaviour (e.g., by bringing forward first-hand witnesses for this purpose, rather than professional advisors or experts) in order to be effective and convincing;
5. Finally, it may be drawn from evidence admitted, provided that conclusions follow as a matter of common sense or ordinary experience of affairs from “sufficiently precise and coherent” evidence.

Doubt, an ambiguous table companion

Points 1, 2, 4 and 5 above are not only stated in principle but consistently applied. On the contrary, case law has been more blurred with regard to the basic point as to WHEN evidence is “sufficiently convincing”.

Initially, and despite the United Brands case (CJEU, judgment of February 14, 1978, United Brands Company v. Commission, C-27/76, parr. 265 and 267) where it quashed the Commission decision because “there is doubt which must benefit the applicant” while it “appears that the Commission has not adduced adequate legal proof”, the Court of Justice of the European Union based its views on the assumption that, at least in the case of direct evidence, the “balance of probabilities” or “reasonable likelihood”, (more likely than not that the alleged fact follows from the evidence relied on) was standard for sufficiency (CJEU, Rhone Poulenc SA v. Commission, T-1/89, see extensively AG Vesterdorf Opinion). In the case of indirect evidence (such as parallel behaviour in the case of concerted practices), on the contrary, the view of the Court was that truth of the proposition should be “beyond reasonable doubt” (Ahlstrom Osakythio et all. v. Commission, cases 89, 104, 114, 116, 177, 125 to 129/85, AG Darmon Opinion, par. 195).

Later, due to the growing reliance on the presumption of innocence (which requires a high standard of proof) and the ascertained quasi-criminal nature of competition proceedings, the Court came to a revirement on the point in accordance also with general legal principles common to Member States and the case law of the ECHR (European Court of Human Rights). So, it held that doubt must benefit the investigated company (CJEU, judgment of July 8, 2004, JFE Engineering Corporation formerly NKK Corp v. Commission, T-67/00, T-68/00, T-71/00 & T-78/00, par. 177). No final specification as to which kind of doubt, whether reasonable or not, may be found in that judgment or in the following ones. However, it is arguable that this issue may be logically solved: in view of the near impossibility to get absolute certainty in our reality, any doubt would be unrealistic standard, while a “reasonable doubt” standard appears to match both Member States standard applied in criminal matters and the requirements set under ECHR’s case law. Reasonable doubt should be the standard.

On the other hand, in front of these “law principles” in many instances the European courts made qualifications, for instance by stating that doubt matters “in some cases” (EFTA Court, judgment of April 18, 2012, Norway Post, E-15/10)or accepting Commission’s findings based on a body of indirect indicia taken as a whole (CJEU, judgment of September 27, 2006, Dresdner Bank, joint cases T-44/02 OP, T-54/02 OP, 56/02 OP, 60/02 OP and 61/02 OP, parr. 63-64), or refusing alternative explanations of documentary evidence relied upon from the Commission (General Court, judgment of June 27, 2012, Coats Holdings, T-439/07, par. 72). In fact, the CJEU has often ignored the basic rule “reasonable doubt = acquittal” in competition cases over these years.

The case of leniency

Is the required standard of proof complied with when the competition authorities make use of the current leniency schemes (that do not allow direct and complete access to leniency statements nor cross-interrogation of the subjects who rendered those statements)?

It is argued here that it is not complied with, because an untested leniency applicant, a witness who could not be the subject of cross-interrogation, does not meet the ECHR legal standards as incorporated in direct effect and directly applicable European provisions with value of primary law. And, consequently, such evidence does not trump the applicable “doubt” rule.

First, according to article 6.3.d) ECHR, everyone charged with a criminal offence has the right “to examine or having examined witnesses against him”. Pursuant to article 6.1 TEU, after the Treaty of Lisbon became effective on 1 December 2009 and due to the direct applicability of Art. 48.2 of the Charter of Fundamental Rights of the European Union (“Respect of the rights of the defence of anyone who has been charged shall be guaranteed”), as now integrated by content of Art. 6.3, letter d), ECHR, the ECHR provision has now been fully “communitarised”. To be clearer, the ECHR right at issue corresponding to the EU Charter right set out in its article 48.2 is directly incorporated into the European legal system, with the value of primary law (“the same legal value as the Treaties”).

Second, the “explanations” to the Charter take pains to clarify that the scope of application of Art. 48.2 of the Charter in European Union countries goes beyond that of article 6.3.d) ECHR (“In Union law, the right to a fair hearing is not confined to disputes relating to civil law rights and obligations”). Art. 6.3, letter d), ECHR as reflected in the Charter and, through it, incorporated in the TFEU, thus goes beyond the scope of mere civil disputes (and criminal cases, as it originally contemplated) to also extend to the various administrative disputes (including antitrust ones), thus following the expansive applicative approach previously adopted by the European Court of Human Rights. This even makes irrelevant the findings reached by the European Court of Human Rights in the Menarini (ECHR, judgment of September 27, 2011, Menarini s.r.l. v. Republic of Italy, 43509/08) case and by the ECHR in the so called Engel case law.

According to Art. 51.1 of the Charter, Member States (and EU institutions) must “respect the rights” and “observe the principles”, since the “explanations” relating to Art. 52.5 remove all doubt regarding the direct effect of attribution of rights to the legal part in relation to the Member State as a result of Art. 48, where they clarify that:

“According to that distinction, subjective rights shall be respected, whereas principles shall be observed (Article 51(1)). Principles may be implemented through legislative or executive acts (adopted by the Union in accordance with its powers, and by the Member States only when they implement Union law)” [emphasis added]

The “explanations” of Art. 51 further clarify, if at all necessary, that:

“it follows unambiguously from the case-law of the Court of Justice of the European Union that the requirement to respect fundamental rights defined in the context of the Union is only binding on the Member States when they act in the scope of Union law … Of course this rule, as enshrined in this Charter, applies to the central authorities as well as to regional or local bodies, and to public organisations, when they are implementing Union law” [emphasis added], as it is the case when applying articles 101-102 TFEU.

Third, and final, the “communitarisation” of Art. 6.3, letter d), ECHR (including its substance as interpreted by the case law of the European Court of Human Rights, see Art. 52.3 of the EU Charter) via Art. 48.2 of the EU Charter and the above principles of community law (as indisputably reconfirmed in the Court of Justice of the European Union case law listed in the “explanations”) brings with it an unavoidable consequence. In fact, the European Union States – unlike in the other non-EU Contracting States – no longer have the possibility (which is actually recognised by the European Court of Human Rights to ECHR member States) to limit full respect of defence rights for the court subsequently exercising full legal review (which could apply the guarantee provision and replace the authorities in the administrative proceedings that were the original addressees of the precept). With the entry into force of the Lisbon Treaty EU institutions and Member States have unequivocally renounced to the possibility for such a limitation of legal protection, since each of their bodies is bound to apply the directly applicable article 48.2 of the Charter, which has direct effects for EU right-holders.

It is argued hereby that the above is not contrary to the existing European courts case law.

It is true that in Coats Holding Ltd the General Court stated that the principle set out in article 6.3.d) “does not require that those undertakings be afforded, in the administrative procedure, the opportunity themselves to cross-examine the witnesses heard by the Commission (see, to that effect, Aalborg Portland and others v Commission, paragraph 42 above, paragraph 200)” (General Court, judgment of June 26, 2012, T-439/07, Coats Holdings Ltd., par. 174). And that the Court of Justice of the European Union has similarly refused the right to cross-examination, more recently and this time after the entry into force of the Lisbon Treaty, in the Silver Plastic case (CJEU, judgment of October 22, 2020, Silver Plastics GmbH v Commission, C-702/19 P). However, it appears that both cases may be distinguished.

The judgment in Coats Holding Ltd was issued by the General Court before the entry into force of the Lisbon Treaty, while in Silver Plastics apparently the appellant made a simple reference to the ECHR provision, and not to the “communitarised” version thereof. Furthermore, in the latter case the Court relied also on some special fact circumstances, i.e., that “the fact remains that it was that undertaking [and not Mr. W.] which was liable for those statements” (ibidem, par. 53), that “it is not apparent from the judgment under appeal that the general Court took account of any written statement of Mr. W. produced by the Commission” (ibidem, par. 52) (actually, the general Court had not even dealt with the issue since Silver Plastics had raised the issue only at the oral hearing stage, too late under the applicable procedural rules) and that “the appellants were in a position to contact Mr. W. themselves in order to obtain a statement, which they did, moreover, since the written statements obtained in that way were produced before the general Court and taken into consideration by it” (ibidem, par. 54). Overall, it is reasonable to argue that the European courts never truly intervened on the specific issue, all the less after the entry into force of the Lisbon Treaty.

Conclusions

So, what for a competition lawyer when it comes to evidence? Fight, fight, fight!

Always fight to remind the court or regulator about the applicable principles of European law. Always check admissibility of any single piece of evidence and, if found admissible, verify its possible alternative explanations. Do not ask for but require that the benefit of doubt be applied to the investigated company. Cross-interrogation of leniency applicants is, or will in the future be, the reality of competition proceedings in the EU.

Remember that human rights defence has nothing to do with the substance of facts, but with safeguarding procedural rights, everyone’s rights! Never forget the a priori statutory imbalance in favour of the investigated company, which is called “presumption of innocence”.

It’s a matter of law, and that’s what lawyers are for! For testing new frontiers of law. For the defence of rights.

For further information please contact Nicola Ceraolo.

VISIT OUR COMPETITION & EU HOMEPAGE