On March 10, 2016, the European Court of Justice (CoJ) handed over an important series of judgments in the Cement case (C-247/14PC-248/14 PC-267/14 PC-268/14 P).  These rulings indicate greater deference towards rights of defence of investigated companies, insofar as they set boundaries to the power that the European Commission (EC) has to request information in cartel investigations.

Quick Recap

Article 18(1) of Regulation 1/2003 provides that “In order to carry out the duties assigned to it by this Regulation, the Commission may, by simple request or by decision, require undertakings and associations of undertakings to provide all necessary information”.  When doing so, the EC is required to indicate, among others, the purpose of the request for information (RFI).

In the case at hand, the EC made extensive use of its power to request information.  After conducting dawn raids at the premises of companies active in the cement sector, the EC sent RFIs to several companies, including HeidelbergCement, Buzzi Unicem, and Italmobiliare, in 2009 and 2010.  The EC then initiated proceedings on December 6, 2010.

On March 30, 2011, the EC sent a new RFI – this time, by decision (“the RFI decision”) – to the aforementioned companies as well as Schwenk Zement KG.  The RFI consisted of a 94-page long questionnaire comprising 11 sets of questions.  The companies were given 12 weeks for the first 10 sets of questions and 2 weeks for the 11th set to provide their responses to the EC under a specific and mandatory format.

The companies brought separate appeals against the RFI decision on the basis that, inter alia:

  • It infringed the provisions of Article 18 of Regulation 1/2003, insofar as it neither provided an adequate description of the alleged infringement, the geographic scope, and the products concerned, nor indicated the purpose of the RFI.
  • It infringed the general principle of proportionality by requesting a large volume of information to be provided under a specific format.  

On March 14, 2014, the General Court (GC) rejected these claims by confirming the lawfulness of the EC’s RFI decision.  The companies then brought the case before the CoJ.

The CoJ Sets Boundaries to the EC’s Power to Request Information

The CoJ conceded that the EC has wide discretion when requesting information.  In this regard, the CoJ drew an analogy with the Nexans judgment (C-37/13P), on inspection decisions, and noted that the EC is not required to share all the information at its disposal with the investigated businesses.

At the same time, however, the CoJ recalled that the EC is under the obligation to state reasons, which, in the case of a RFI, translates into a requirement to identify the alleged infringement. This obligation aims at protecting the addressees’ rights of defence: absent such identification, they would not be able to assess whether the requested information fulfills the requirement of necessity set in Article 18 of Regulation 1/2003.  Importantly, the CoJ stressed that the statement of reasons must be assessed with regard (1) not only to its wording, but also (2) its context.

In the case at hand, the CoJ considered that:

  1. The wording of the statement of reasons of the RFI decision, which referred to “restrictions on trade in the EEA (…) as well as other anti-competitive practices relating thereto in the cement and related products markets,” was excessively vague and generic.  That was all the more true having regard to the fact that the questionnaire required the disclosure of a very large amount of information with no clear connecting thread among questions.  Therefore, it was not possible for the addressees of the RFI to check whether the information requested was, indeed, necessary.
  2. The context of the statement of reasons, i.e. the decision to initiate proceedings, adopted three months earlier, did not offset the vagueness of the statement of reasons of the RFI decision, since it was equally vague and ambiguous.

Finally, the CoJ noted that the vagueness of the statement of reasons was particularly unacceptable given that the RFI decision was adopted more than two years after the first dawn raids, at a time when the EC already had sufficient information to identify the alleged infringement in a precise way.

As a result of the above considerations, the CoJ found that the RFI decision was unlawful and set aside the GC’s judgments.

Why Do these Judgments Matter?

These judgments follow a recent line of case-law of the European Courts that increasingly recognizes that investigative measures may irremediably compromise one’s rights of defence (see, in the context of dawn raids, our briefings on the Nexans and Deutsche Bahn rulings).  Therefore, first and foremost, these judgments are welcome insofar as they provide greater protection of investigated companies’ rights of defence at particularly sensitive stages of the proceedings.

This being said, it is perhaps regrettable that the CoJ did not examine the other grounds of appeal put forward by the appellants.  In particular, it would have been interesting to have the CoJ’s take on the alleged breach of proportionality stemming from the burdensome format of the response imposed on the addressees – especially since AG Wahl, in his non-binding opinion, took the view that this ground of appeal should be upheld.

Nota Bene: Much ado about nothing? On July 31, 2015, the Commission decided to close the antitrust proceedings in the cement case (AT.39520)

For more information about rights of defence in EU cartel proceedings, please refer to our briefings on the Nexans and Deutsche Bahn rulings and our Lexis Nexis practice note on the European Commission’s Investigative Powers and the Rights of Defence