due process and EU and ECHR jurisprudence  European Judicial Training Network Rome, 8th November 2018 Procedural fairness, due process and EU and ECHR jurisprudence   Roberto Chieppa Secretary General Italian Presidency of the Council of Ministers President of Section Italian State Council  

Overview The growing importance of procedural fairness   The growing importance of procedural fairness Differences between the European and Italian procedural framework Effective separation between investigative and decision- making powers Judicial review Conclusions

The growing importance of procedural fairness   Procedural fairness has a direct impact on the effectiveness and credibility of the investigative process Public consultation is important in establishing fair rules

The growing importance of procedural fairness Why is it so important? to ensure that all subjects of competition investigations are treated fairly to ensure accountability of competition enforcement decisions to maximize the quality of competition agencies’ analysis and decisions

The European vs. the Italian procedural framework Very similar, especially in the guiding principles Right to be heard Right of access to the file Right to submit documents and evidence

The European vs. the Italian procedural framework But with some notable differences Absence of a Hearing Officer Formal decision by the Board for opening investigation Dawn-raids regime after a formal opening decision is adopted and Board’ s decision, subject to judicial review «other premises» Final hearing before the board of the Authority Guidelines on the method of setting fines

Main stages of proceedings ITA vs EU ITALIAN PROCEEDINGS Main stages of proceedings ITA vs EU  Start of proceedings Fact finding phase (dawn raids, request for information, hearings) Final communication on the outcome of the investigation Final hearing before the Board FINAL DECISION Ex officio evidentiary acquisition EUROPEAN PROCEEDINGS 20 months (2015); 17 months (2016); 13 months (2017) Complaints Average duration 48+ months - In 2016, from the SO, until the final decision : 20 months (cartel) and 31 months (abuse) Leniency applicants Fact finding phase (dawn raids, request for information, hearings) - Informal investigation - Statement of Objections Final hearing before DG Comp FINAL DECISION

Length of competition proceedings (a comparison) GOOGLE SEARCH (Shopping) case (EU) Length of competition proceedings (a comparison) Telecom Italia (KO) case (ITA) Start of proceedings 30 November 2010 Preliminary assessment (commitments) 13 march 2013 Commitments rejected on 4 September 2014 Statement of objection (1) 15 April 2015 Supplementary SO 14 July 2016 and 28 February 2017 Final hearing before the Board Google did not request for an oral hearing FINAL DECISION 27 June 2017 Overall length: 6.8 years Start of proceedings 23 June 2010 Preliminary assessment (commitments) 4 August 2011 Commitments rejected on 14 March 2012 Statement of objection (1) 11 December 2012 Final hearing before the Board 6 February 2013 FINAL DECISION 9 May 2013 Overall length: 2.9 years

The obligation to adjudicate within a reasonable time (art The obligation to adjudicate within a reasonable time (art. 47 EU Charter Fundamental Rights) is applicable to competition jurisdictional proceedings «it should be noted that the second paragraph of Article 47 of the Charter of Fundamental Rights of the European Union provides in particular that ‘everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law’.” “Such a right, the existence of which had been affirmed before the entry into force of the Charter of Fundamental Rights as a general principle of EU law, was held to be applicable in the context of proceedings brought against a Commission decision” (see judgment of 16 July 2009, Der Grüne Punkt — Duales System, C‑385/07 P, § 178; judgment of 10 January 2017, Gascogne, T-577/14 §§77-78 ). Court proceedings

Court proceedings (ii) When is duration «reasonable»? In Gascogne (T-577/14) and Guardian (T-673/15), the General Court imposed the EU to pay compensation due to an excessive duration of first-instance proceedings before the General Court Court proceedings (ii)

Court proceedings (iii) “A period of 15 months between the end of the written part of the procedure and the opening of the oral part of the procedure is, in principle, an appropriate length of time for dealing with cases concerning the application of competition law” Proceedings lasted 46 (Gascogne) and 41 (Guardian) months, between the end of the written phase and the opening of the oral phase Factors to be assessed: - degree of complexity of the competition field; - necessity to ensure a parallel treatment of different cases; - conduct of the parties; - supervening procedural matters. In Gascogne, the GC awards €5000 for non-material harm (arising from the influence of the state of uncertainty on planning decisions) and approx. €45,000 as material harm (recovery for costs of the bank guarantee)

Court proceedings (iv) Reputational damages have to be proved … and in any event, the finding of an infringement of the obligation to adjudicate within a reasonable time would be sufficient to make good the damage to reputation (T- 673/15, Guardian, §146)

Intel case Inspections Statement of Objection Supplementary SO The Commission decision The GC judgment The ECJ judgment July 2005 July 2007 July 2008 May 2009 June 2014 Sept 2017

Intel case (ii) …what’s next? Effects: The ECJ referred the case back to the General Court of the European Union The final judgment is likely to be ten years after the decision Effects: Uncertainty for market players during court proceedings Obsolescence

Competition proceedings Court Proceedings Average length of judicial review in Court proceedings Source: (1) ECJ Judicial Activity 2017 (p. 215); (2) EU Justice Scoreboard 2017 (p. 12); (3) State Council data-base Source: (1) ECJ Annual Report 2017 (p. 14); (2) Annual Report by the Italian State Council Competition proceedings EU (1) Italy (2) First instance 21,6 months 10 months Second Instance 17,1 months 14 months (*) All proceedings EU (1) Italy (2) First instance 16,3 months 30 months Second Instance 16,4 months 7 months

Guidelines on the method of setting fines Describe the method used by the Commission to examine infringements and the criteria that the Commission requires to be taken into account in setting the amount of a fine. Rules of practice the administration may not depart in an individual case without giving reasons compatible with the principle of equal treatment, It is therefore for the Commission, when stating the reasons for its decision, in particular, to explain the weighting and assessment of the factors taken into account. Scope: ensure transparency and increase predictability and objectivity

Guidelines on the method of setting fines EU Commission (2006) and Italian Guidelines (2014) Deterrence and leniency policy Specific criteria to calculate the basic amount of fine and to assess gravity and adjustment for mitigating/ aggravating circumstances Right of defence and judicial review Fining criteria to be anticipated in the statement of objection ( stimulate right of defence even on the calculation of the fine)

ECN Plus In order to improve effectiveness and uniformity, the 2017 EU Directive proposal aims to: provide NCAs with appropriate enforcement tools to bring about a genuine common competition enforcement area (strong investigative powers, to collect evidence, effective leniency programmes; appropriate fines). reinforce legal guarantees of their independence when enforcing EU competition law, to secure public trust; ensures the protection of the fundamental rights of companies which are subject to competition proceedings Art. 3: “the exercise of the powers referred to in this Directive by national competition authorities shall be subject to appropriate safeguards, including respect of undertakings̕ rights of defence and the right to an effective remedy before a tribunal, in accordance with general principles of Union law and the Charter of Fundamental Rights of the European Union”

Grande Stevens judgement (Consob proceedings) Effective separation between the investigation and the decision-making powers (1) ECtHR case law Grande Stevens judgement (Consob proceedings) Lack of adversarial procedure (SO, final hearing) Lack of impartial adjudicators (investigative units and adjudicating body under the same chairman)

Effective separation between the investigation and the decision-making powers (2) AGCM procedural safeguards The opening of proceedings is taken by the Board Formal SO adopted by investigative units Final hearing before the board Separation between Sectorial (investigative) units, under the supervision of the Secretary General --- Authority’s board (principle of collegiality) in some cases, final decision clearing the case Risk of an instrumental use of procedural rights

Effective separation between the investigation and the decision-making powers (3) Case CNF vs AGCM (2016) The jurisprudence extends the SO to non-compliance proceedings The SO as a procedural safeguard, essential to distinguish the fact-finding case from the decision- making phase It defines the scope of the fining decision It directs the contents of the parties’ right of defence

Economic analysis What role can it play in competition enforcement? The usefulness of economic analysis varies according to the context: In all cases, economic analysis can be helpful in identifying the type of infringement: major role in unilateral conduct cases and mergers In some cases, economic analysis is useful in the assessment of infringements by object where there is no direct evidence of explicit collusion In some other cases, economic analysis is needed to better understand the companies’ conduct in order to evaluate its anticompetitive effect (for infringements by effect) In all cases, economic analysis may help to identify the effects and be of relevance for determining the amount of fines

The “effect based approach”: two positive spill-over effects To exert a positive overall impression on the judges, which may help them better evaluate and properly assess the importance of the case To facilitate private enforcement (follow-on damage claim decisions), thus showing clearly to consumers the advantages of antitrust interventions

How to help judges to … Understand economic issues? - Develop a common language/jargon between judges and economists Offset the lack of economic expertise? allow judges to appoint an economic expert (how do we ensure a truly independent economic expert?) use the adversary system other solutions (integrate economic experts within the Courts) above all, develop and improve drafting techniques

Right of defense and economic analysis Case UPS/TNT (2017) The General Court annulled the Commission’s decision because the final econometric model used by DG Comp office was not discussed with the parties “Accordingly, the applicant’s rights of defence were infringed, with the result that the contested decision should be annulled, provided that it has been sufficiently demonstrated by the applicant not that, in the absence of that procedural irregularity, the contested decision would have been different in content, but that there was even a slight chance that it would have been better able to defend itself” As per Solvay (C-109/10, §57)

Judicial review Full jurisdictional review Menarini principle: full jurisdictional review would ensure compliance with ECtHR principle (art. 6 ECHR) Review of legality v. full review Main issue: not to limit the quality of judicial control but to guarantee the quality of such control Former EU Commissioner Mario Monti: “…the relationship between agencies and courts is dynamic, where agencies test the extension of their powers. Judges will, sometimes, put a limit on the agencies’ power. On other occasions, judges will allow interpretations of the law that extend and reinforce the agencies’ power.” An effective and high quality judicial control necessary to improve the agencies’ output

Conclusions Procedural fairness has now become a fundamental issue Positive effects towards Parties (reinforced procedural rights) Agencies (better quality of enforcement) Courts (effective judicial review) Separation between prosecutorial and adjudicating functions is not the real problem Importance of full judicial review